England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Mr Justice Morison

		Royal Courts of Justice Strand, London, WC2A 2LL Thursday 19 December 2002

Lord Justice Waller:

Introduction

1. The defendant works as a surveyor and is domiciled in Italy. The claimant is a chartered accountant who contemplated buying a yacht which was berthed in Italy. Having received a recommendation from a third party, the claimant contacted the defendant by telephone to discuss the possibility of the defendant carrying out a survey of the yacht. The claimant then visited Italy to inspect the yacht and to discuss the terms on which the defendant would carry out the survey. The claimant returned to England, and the defendant faxed the terms to the claimant in England seeking his signature on that fax. The claimant signed the fax and returned it, and paid the fees requested by the defendant to a Bank account in London. The claimant alleges that the survey was negligently carried out and commenced an action in the Plymouth District Registry. The defendant applied to stay the proceedings on the grounds that the English court had no jurisdiction.
2. The defendant's submission before the District Judge was that he was domiciled in Italy and therefore entitled to be sued there. He relied on Article 2 of the Brussels Convention of 1968, as amended, introduced into English Law by the Civil Jurisdiction and Judgments Act 1982. Article 2 provides by the relevant paragraph:-

"Subject to the provisions of this Convention, persons domiciled in a Contracting State shall, whatever their nationality, be sued in the courts of that State.

Persons who are not nationals of the State in which they are domiciled shall be governed by the rules of jurisdiction applicable to nationals of that State."

3. It was the claimant's submission that the case fell within one of the exceptions to Article 2. The exceptions relied on were Article 5(1) and (3), and Article 13 and 14. Article 13 and 14 are the only Articles relevant to this appeal, and they provide as follows:-
Article 13

"In proceedings concerning a contract concluded by a person for a purpose which can be regarded as being outside his trade or profession, hereinafter called "the consumer", jurisdiction shall be determined by this Section, without prejudice to the provisions of Article 4 and point 5 of Article 5, if it is –

1 a contract for the sale of goods on instalment credit terms, or

2 a contract for a loan repayable by instalments, or for any other form of credit, made to finance the sale of goods, or

3 any other contract for the supply of goods or a contract for the supply of services, and

(a) in the State of the consumer's domicile the conclusion of the contract was preceded by a specific invitation addressed to him or by advertising; and

(b) the consumer took in that State the steps necessary for the conclusion of the contract.

Article 14

A consumer may bring proceedings against the other party to a contract either in the courts of the Contracting State in which that party is domiciled or in the courts of the Contacting State in which he is himself domiciled.

Proceedings may be brought against a consumer by the other party to the contract only in the courts of the Contracting State in which the consumer is domiciled.

These provisions shall not affect the right to bring a counter-claim in the court in which, in accordance with this Section, the original claim is pending."

4. The District Judge held that Article 13 did confer jurisdiction on the English court. His reasoning in brief was (1) the claimant was a consumer in that he had concluded a contract for a purpose which can be regarded as being outside his trade or profession; (2) the fax sent to the claimant in England was "a specific invitation" which preceded the conclusion of the contract, holding against the submission of the defendant that any concluded contract was reached in Italy as a result of the discussion that took place there; and (3) that the claimant had taken the steps necessary for the conclusion of the contract in England by returning the fax signed and paying the fees asked in London.
5. Morison J reversed the decision of the District Judge. He accepted proposition (1) that the claimant was a consumer. He would have upheld the District Judge on proposition (3). But he held that the conclusion of the contract was not preceded by a "specific invitation" to the claimant in this country within the meaning of those words. He put his conclusion in these words:-

"The reason why I consider that the Claimant's argument is wrong is that it loses sight of an essential feature of the operation of Article 13, namely that a contract for services (in this case) is procured by an initial approach [but not necessarily the very first step] amounting to a solicitation made to an individual or company here. The argument loses sight of the wood for the trees. The wood in this case is to be seen in the first sentence of the second paragraph of the two professors' report cited above "The first indent relates to situations where the trader has taken steps to market his goods or services in the country where the consumer resides".

The fact that, as a matter of language, one could describe the offer document as a 'business proposal' does not lead to the conclusion contended for. The question is whether the defendant has been marketing his services in this country. What the Convention is looking for is the solicitation of business here. The facts in this case show, clearly I think, that the business was not solicited by the defendant at all: he was sought out in Italy and negotiations took place there, the fruits of which were transposed into a written agreement as a result of the two faxes. The consumer has not been solicited in this country by the service provider; rather the service provider's business has been solicited by the consumer. In this case, therefore, there has been no marketing of the defendant's services here and the offer letter cannot properly be described as such. That being the case, and using the guidance provided by the two professors, I am of the view that Article 13, and thus Article 14, does not apply. If Steel J in Standard Bank London Ltd v Apostolakis & Another New Law Online 201022803 was saying that it was irrelevant whether the business was initiated by the provider or the consumer then I beg to differ. His decision was, on the facts of the case, obviously right."

6. This is an appeal brought by the claimant against Morison J's decision, the critical issue being the meaning of "a specific invitation" in Article 13 . The defendant has also put in a respondent's notice seeking to reverse the decision of Morison J and the decision of the District Judge on the question whether the claimant took the steps necessary for the conclusion of the contract in England.
7. I can dispose of the respondent's cross-appeal quite shortly and I do so at this stage because in so doing I can put the all important facts in their proper context.
8. The claimant and the defendant were at one in their evidence that serious negotiations went on in Italy. The defendant's contention was that those negotiations led to a final contract being concluded in Italy. The defendant said this in paragraph 7 of his first witness statement:-

"We met again on Monday, the 26^th April, which was a national holiday, the Festa della Liberazione. Mr Rayner and Mr Frederiksen told me that Mr Rayner's offer for the vessel was likely to be accepted and Mr Rayner, who was very enthusiastic about the yacht, pressed me to go ahead immediately with the survey. As is my normal practice, I told him that I could not do so until I had received funds from him (and a brief confirmation of the terms agreed between us the previous day). The following day I sent him a short fax setting out what had been agreed and details of my bank account. It is expressed as an "offer" because that is my usual wording, but as the first paragraph of my covering fax shows, this was inappropriate in this case, with the arrangements having in fact been agreed already. He returned the fax signed under cover of a fax dated the 28^th April 1999. That correspondence is exhibited to the statement of Mr Powell."

9. The fax he referred to was headed "offer" and commenced in the following terms:-

"Dear Mr Rayner,

subsequent to our meeting in Viareggio last week-end and our subsequent telephone conversations, we are pleased to make the following offer for a condition survey regarding the Van Dam Nordia class sailing yacht currently in Viareggio Italy; -."

The fax then continued with full details of the contractual arrangements. At the end of the fax it contained places for signature by both parties. The covering letter referred to, in its body said:-

"Following you will find a formal offer for the services you have requested."

that being a reference to the fax. That covering letter also referred to the fact that the fees quoted in the fax were reduced from those previously discussed.

10. The District Judge in his judgment decided "on the balance of probabilities" that the contract had not been concluded prior to the sending of the fax. Criticism of the test applied by the District Judge was made before Morison J. That criticism was justified in that the appropriate yardstick is "good arguable case" reflecting in that context that one party has a much better argument on the material available see Canada v Stotzenburg (No 2) [1998] 1 WLR 547 at 555G. The judge revisited this question and held that "the claimant's argument that no contract was made in Italy is much better than the defendant's contrary argument."
11. In my view, on the material available, the claimant's case that the contract was not made in Italy, and that the fax was an offer capable of acceptance by the claimant, was clearly the stronger case. Even on the defendant's own evidence, he was foreseeing a need for a "confirmation of terms" before he was obliged to commence work.
12. The real issue on this appeal thus relates to the meaning of "specific invitation", and whether the fax from the defendant to the claimant constituted a specific invitation as envisaged by Article 13(3). On that issue the claimant has sought to put in fresh evidence. The defendant's first statement before the District Judge stated that the defendant had what he described as "a modest website which appears to be entirely ineffective." The claimant in his evidence before the District Judge, and before the judge, made nothing of the existence of that website. Before us the claimant sought to put in details of the website and suggested that after contacting the defendant he had examined the same. There was no suggestion of the website being "interactive". There was no reliance on the website itself either being "advertising" or being a "specific invitation".
13. We refused the application first because on any view if the evidence had been of materiality there was no legitimate reason why it should not have been produced before the District Judge, or at the very least before the judge, and in any event, it seemed to us that it did not actually take matters any further so far as the point in issue was concerned. To this point in issue I now therefore turn.
14. In seeking to interpret the Convention, Section 3 of the Act provides the following guidance:-

"3 Interpretation of the [Brussels Conventions]

(1) Any question as to the meaning or effect of any provision of the [Brussels Conventions] shall, if not referred to the European Court in accordance with the 1971 Protocol, be determined in accordance with the principles laid down by and any relevant decision of the European Court.

(2) Judicial notice shall be taken of any decision of, or expression of opinion by, the European Court on any such question.

(3) Without prejudice to the generality of subsection (1), the following reports (which are reproduced in the Official Journal of the Communities), namely

(a) the reports by Mr. P. Jenard on the 1968 Convention and the 1971 Protocol; and

(b) the report by Professor Peter Schlosser on the Accession Convention [; and

(c) the report by Professor Demetrios I. Evrigenis and Professor K.D. Kerameus on the 1982 Accession Convention] [; and

(d) the report by Mr. Martinho de Almeida Cruz, Mr. Manuel Desantes Real and |Mr. P. Jenard on the 1989 Accession Convention,]

may be considered in ascertaining the meaning or effect of any provision of the [Brussels Conventions] and shall be given such weight as is appropriate in the circumstances."

15. Thus it was that both Mr McParland and Mr Nolan relied on various decisions of the European Court, Opinions of various Advocate Generals, and the reports referred to in subsection (3). In particular they relied on the report of Professor Peter Schlosser which itself referred to the Giuliano and Lagarde Report on the Convention on the law applicable to contractual obligations (the Rome Convention) where wording similar to that in Article 13 is employed. It was this latter report on which Morison J placed great reliance. The passage quoted by him reads as follows:-

"The first indent [ a reference to wording in the Rome convention similar to Article 13(3)] relates to situations where the trader has taken steps to market his goods or services in the country where the consumer resides. It is intended to cover inter alia mail order and door-step selling. Thus the trader must have done certain acts such as advertising in the press, or on radio or television, or in the cinema or by catalogues aimed specifically at that country, or he may have made business proposals individually, through a middle man or by canvassing. If, for example, a German makes a contract in response to an advertisement published by a French company in a German publication, the contract is covered by the special rule. If, on the other hand, the German replies to an advertisement in American publications, even if they are sold in Germany, the rule does not apply unless the advertisement appeared in special editions of the publication intended for European countries. In the latter case the seller will have made a special advertisement intended for the country of the purchaser.

The Group expressly adopted the words 'steps necessary on his part' to avoid the classic problem of determining the place where the contract was concluded. This is a particularly delicate matter in the situations referred to, because it involves international contracts normally concluded by correspondence. The word 'steps' includes inter alia writing or any action taken in consequence of an offer or advertisement."

16. Since Morison J delivered his judgment, the European Court has delivered a decision in which it considered Article 13, Gabriel v Schlank and Shick GmbH (Case C-96/00) [2002] I.L.Pr. 36. The facts of the case were dissimilar to the facts of the instant case relating as it did to a German company seeking mail orders by distributing letters addressed personally to persons in Austria, a classic case one would have thought for the application of Article 13(3). But the judgment, as it seems to me, supports the approach taken by the Giuliano and Lagarde Report when considering Article 13 in the following passages:-

"40 With regard, more specially, to a contract for the supply of services – other than a contract of transport, which is excluded from the scope of Section 4 of Title II of the Brussels Convention pursuant to the third paragraph of Article 13 thereof – or a contract for the supply of goods, as referred to in Article 13(3), that provision sets out two additional conditions of application, namely that the conclusion of the contract was preceded in the State of the consumer's domicile by a specific invitation addressed to him or by advertising, and that the consumer took in that State the steps necessary for the conclusion of the contract.

41 As is clear from the Schlosser Report on the Convention on the Accession of Denmark, Ireland and the United Kingdom to the Brussels Convention, those two concurrent conditions are designed to ensure that there are close connections between the contract in issue and the State in which the consumer is domiciled.

42 With regard to the scope of the concepts employed in those conditions, Professor Schlosser refers, at page 119 of his report to the Giuliano and Lagarde Report on the Convention on the law applicable to contractual obligations, which was opened for signature in Rome on 19 June 1980 ("the Rome Convention"), in view of the fact that Article 5(2), first indent, of that Convention, relating to consumer contracts, contains two conditions which use wording identical to that in Article 13(3)(a) and (b), of the Brussels Convention.

43 According to the Giuliano and Lagarde Report, that provision of the Rome Convention is intended to cover situations in which the trader has taken steps to market his goods or services in the country where the consumer resides and, inter alia, situations of mail-order and doorstep selling.

44 The concepts of "advertising" and "specific invitation addressed" features in the first of those conditions common to the Brussels and Rome Conventions cover all forms of advertising carried out in the Contracting State in which the consumer is domiciled, whether disseminated generally by the press, radio, television, cinema or any other medium, or addressed directly, for example by means of catalogues sent specifically to that State, as well as commercial offers made to the consumer in person, in particular by an agent or door-to-door salesman.

45 With regard to the second of those conditions, the expression "steps necessary for the conclusion" of the contract refers to any document written or any other step whatever taken by the consumer in the State in which he is domiciled and which expresses his wish to take up the invitation made by the professional."

17. The citations from the above report and the above judgment are helpful in showing the right approach to Article 13(3), but they do not, as I would read them, necessarily make the answer to the question posed on the facts of this case easy. To resolve the issue it is still necessary to be clear precisely what was contemplated by a 'specific invitation' and what was not.
18. The proper approach to construction of the convention was not seriously in issue. Mr Nolan set out in his written submissions what he suggested were the essential points.

"1. The Brussels Convention is to be interpreted and applied in accordance with European law principles and must be interpreted independently by reference to the system and objectives of the Convention

Shearson Lehman v TVB [1993] ECR 139 at 186-7.

2. The basic principle is that a person domiciled in a contracting state is entitled to be sued in his place of domicile.

Per Lord Goff in Kleinwort Benson v Glasgow [1999] 1 AC 153 at 163-164.

3. It is only by way of derogation from the general principle that the Convention provides for cases in which a defendant may be sued in the courts of another contracting state. Accordingly the Articles conferring special jurisdiction are to be construed restrictively and not as going beyond the situations envisaged by the Convention. It is not to be forgotten that the Defendant can always be sued in his own domicile.

Kleinwort Benson v Glasgow [1999] 1 AC 153 at 163-164.

4. This principle of restrictive interpretation applies a fortiori in the case of Articles like Articles 13 and 14 which permit the consumer to sue a party in the consumer's own domicile. In general the Convention is hostile to the attribution of jurisdiction to the courts of the Claimant's domicile.

Shearson Lehman v TVB [1993] ECR 139 at 187.

5. The fact that the Convention does not adopt the simple route of excluding all consumer contracts from its scope is a further reason for ensuring that Articles 13 and 14 are not to be extended beyond the scope of the cases envisaged by the makers of the Convention.

Standard Bank v Apostolakis New Law Online 201022803 – 9/2/2001, para 40."

19. Mr McParland would not accept that the principle of restrictive interpretation applied to Article 13. He stressed that the objective of Article 13 of the Convention is to protect the consumer, and he relied on Gabriel in so far as it laid stress on that objective in its approach to construction. In this context it is of interest that although Mr Nolan is right in submitting that the basic principle enshrined in Article 2 is that a person should be entitled to be sued in his own domicile, and the court in Kleinwort suggested that Articles derogating from a general principle should be construed restrictively, Advocate General Jacobs in Gabriel was not so sure that Article 13 should be construed restrictively if a restrictive interpretation would have run contrary to the objective of protecting consumers (see para A46). He advocated simply giving the legislative provision its proper meaning.
20. Mr McParland stressed that an "offer" can be an "invitation"; indeed he pointed out how the word offer is used in Mietz by the Advocate General at paragraph 70 and indeed in paragraph 44 of the judgment in Gabriel cited above. Second, Mr McParland's main submission was that whatever is the appropriate approach to Article 13, the language cannot be ignored.
21. This offer, he submitted, was a specific invitation to the claimant and thus fell within the language. He argued that to hold that some offers or invitations addressed to consumers did fall within Article 13 and that others did not, would be a recipe for confusion and simply contrary to the wording of Article 13.
22. Mr Nolan submitted that the judge explained the position precisely, and that he could not put the matter better than the judge had done. The offer in this case was simply not the form of specific invitation that Article 13(3) had contemplated.
23. In my view the judge was right in the view he formed, and for the reasons he gave. As it seems to me, Article 13(1) and (2) apply to certain types of consumer contract however those contracts were brought into being; Article 13(3) could have provided simply for all types of consumer contract to come within Article 13 but deliberately did not do so. Only consumer contracts that had the particular attributes of being preceded by "specific invitation" (or "advertising") and where "the consumer took in that State the steps necessary for the conclusion of the contract" qualified. Thus it is that Mr McParland's submission that the Article must be construed to give effect to the objective to protect consumers, has this weakness as Mr Nolan pointed out, that by its terms it can be seen that it is not to apply to all consumers.
24. Second "specific invitation" is coupled with "advertising" preceding the conclusion of the contract. That seems to contemplate some positive conduct on the part of the seller of goods or services preceding the contract, and (I would suggest normally) preceding the involvement of the consumer.
25. Third the word "invitation" carries with it the concept that it is the seller who has invited the business and not the consumer.
26. If one stood back from the factual situation in this case and asked the question who invited whom to do business, the answer would be that the claimant invited the defendant. That would seem to me an appropriate test. That and what I have said above, may not mean that in every situation the one who makes the first move will be bound to be the invitor. One could contemplate situations in which albeit the consumer made the first move e.g. by entering a shop or warehouse in the country concerned, the real invitation to do business came from the follow up by the seller. But in this case, albeit a final contract had not been made in Italy, it was the claimant who went to Italy, almost all the negotiations took place in Italy, it was fortuitous that a contract was not made in Italy, and the connection with England was tenuous. It would not be a fair description of what occurred to say that the defendant was inviting persons in England and in particular the claimant to do business.
27. I should just note in passing that in Council Regulation 44/2001 which came into effect on the 1^st March 2002 (but only in respect of cases commenced after that date), the wording of Article 13(3) has been replaced by a different form of language in Article 15(1)(c). Mr Nolan sought to suggest that the change assisted him in that the new provision contains no requirement that steps should have been taken by the consumer in his country to conclude the contract; the aim appears to be simply to protect consumers in relation to whom sellers had marketed goods or services. Mr McParland suggested that the amendments assisted him in that the wording was broader and would include he suggested what had occurred in this case. I have not thought it right to consider the new Article and whether the change in language would bring the factual situation with which this case is concerned within it or not. I have simply sought to construe Article 13(3) without regard to the change in language of the new Article.
28. However, for the reasons I have given, I would dismiss the appeal.

Lord Justice Mummery

29. I agree that the appeal should be dismissed for the reasons given by Waller and Pill LJJ, whose judgments I have read in draft. Morison J rightly allowed the appeal from the refusal of the District Judge to stay the proceedings.
30. By virtue of Article 2 of the Brussels Convention Mr Davies is entitled to insist that any proceedings against him by Mr Rayner for the alleged negligent marine survey report of 1 May 1999 on the yacht purchased by him are brought in the courts of Italy, as the Contracting State in which he is domiciled.
31. The exception in the consumer contract provisions of Article 13 of the Convention (as amended) invoked by Mr Rayner to entitle him to bring proceedings in the courts of England, as the place of his domicile, does not apply. Although the contract sued upon was for the supply of services to a "consumer," Mr Rayner has not established that the conclusion of the contract was "preceded by a specific invitation addressed to him or by advertising."
32. Mr Rayner's case, at its highest, is that the conclusion of the contract occurred when an offer contained in Mr Davies's fax of 27 April 1999 to Mr Rayner in England was accepted by Mr Rayner on 28 April 1999. In my judgment, that is not in itself sufficient to satisfy the requirements of Article 13(3). In order to decide whether the requirements of Article 13(3)(a) are satisfied, it is necessary to examine what was done by Mr Davies in England before the conclusion of the contract, not just the process of offer and acceptance by which the contract was concluded.
33. If a "specific invitation" was " addressed" to anyone in this case before the conclusion of the contract, it was by Mr Rayner to Mr Davies in Italy, not the other way round in England as required by Article 13(3)(a). The dual purpose of Mr Rayner's Italian journey was to inspect the yacht berthed at Viareggio and to meet Mr Davies there to discuss terms for the survey of the yacht. Mr Davies had not advertised his surveying services in England nor had he sought to address a "specific invitation" to Mr Rayner in England before the conclusion of the contract in the correspondence.
34. For these reasons and those given by my Lords the Courts of England have no jurisdiction over Mr Rayner's negligence claim against Mr Davies.

Lord Justice Pill:

35. On 27 April 1999 the defendant faxed to the claimant, then in England, a document headed "offer" which stated that "we are pleased to make the following offer for a condition survey regarding the Van Dam Nordia sailing yacht currently in Viareggio, Italy". I agree with Waller LJ that the fax was an offer capable of acceptance by the claimant. Indeed, it set out the proposed terms with clarity and in appropriate detail. It made provision for the document to be "signed for acceptance" by the claimant. I also agree with Waller LJ that the claimant's case that the contract was not made in Italy was clearly the stronger case.
36. The question is whether the fax constituted a "specific invitation addressed to the consumer" within the meaning of those words in Article 13 of the Brussels Convention of 1968, as amended, which has been set out in full in the judgment of Waller LJ. In agreeing with Waller LJ, I add words of my own to explain why I have overcome my reluctance to categorise what in ordinary language is plainly a specific invitation addressed to the claimant does not come within the meaning of that expression in Article 13.
37. Mr McParland has forcefully submitted that the words of the Article are clear. It is not permissible to rewrite them as, he submitted, the judge has done when holding that an essential feature of Article 13 is that "a contract for services (in this case) is procured by an initial approach but not necessarily the first step amounting to a solicitation made to an individual or company here".
38. Section 3 of the Civil Jurisdiction and Judgments Act 1982 provides that certain reports may be considered in ascertaining the meaning or effect of the Convention, including a report of Professor Peter Schlosser. His report commends reference to the then forthcoming report of Professor Giuliano for "further details of what is meant by 'a specific invitation' or 'advertising' in the State of the consumer's domicile". The relevant paragraphs from Professor Giuliano's report have been quoted in the judgment of Waller LJ. The effect of the Article has recently been considered in the European Court of Justice in Gabriel v Schlank and Shick GmbH (Case C-96/00) and paragraphs 43 and 44 of the judgment, also set out by Waller LJ, are pertinent.
39. A broader view must in my judgment be taken of the relevant transaction than a consideration of a single document however central that document may be to the contract concluded. Article 13(3)(a) is intended to cover situations in which the trader has taken steps to market his goods or services in the country where the consumer resides. In the examples given in the Giuliano Report and in Gabriel, the concepts of "specific invitation addressed to him" and "advertising" are kept separate but the presence of the second concept colours the approach to be taken to the first. Both require steps taken to market goods or services in the country where the consumer resides, "advertising" expressly so, "invitation" by implication.
40. When considering whether "an invitation has been addressed" it is necessary to look beyond the documents which constitute the contract to the circumstances in which the contract came to be made. Jurisdiction is established only if steps to market can be shown. I would not exclude the possibility of such steps being directed to an individual consumer though proof is likely to be easier if the conduct includes the general activities considered in Gabriel.
41. On the facts of this case, Morison J was in my view fully entitled to reach the conclusion he did and for the reasons he gave. I agree that the appeal should be dismissed.
Order: Appeal dismissed with the costs. (Order does not form part of the approved judgment)