Scottish Court of Session Decisions

[1] The pursuers are a partnership which carries on the practice of chartered surveyors. They have a place of business in Glasgow. They have other places of business elsewhere in the United Kingdom, including London. The defender has an address in London. He is domiciled in England and Wales.

[2] In this action the pursuers sue the defender for payment of an introduction fee alleged to be contractually due by him as a consequence of a portfolio of properties, owned by the Royal Bank of Scotland plc, having been acquired by a company in which the defender, through certain corporate mechanisms, had a beneficial interest. Some of those properties were situated in Scotland and others in England and Wales. The pursuers aver that, having become aware of the possibility of that portfolio being for sale, they contacted a client in Aberdeen who in turn introduced them to two individuals who operated as investors in property through certain corporate bodies in England. A contract, it is averred, was entered into between the pursuers and those two individuals in terms of which the pursuers were entitled, on a relative purchase of the portfolio being completed, to an introduction fee. Prior, however, to the portfolio being sold these two individuals ceased to be involved in the proposed purchase but the defender, who had in turn been introduced by them, maintained an interest in such purchase. The pursuers aver that the defender adopted the agreement between the pursuers and the two individuals, becoming thereby subject to the latter's obligations thereunder, and further and in any event, that, by virtue of a custom of the relative trade, he became directly subject to a like obligation of payment to the pursuers in the event of the purchase being completed. A relative purchase was completed in early October 1998. The defender denies any liability to the pursuers.

[3] The defender challenges the jurisdiction of this court to adjudicate upon the pursuers' substantive claim. Parties were heard at debate on the defender's contention that the pursuers' averments were irrelevant to instruct jurisdiction in this court and that the action should for that reason be dismissed. The ground of jurisdiction invoked is the special jurisdiction in matters relating to a contract identified in the first place in the 1968 Brussels Convention and enacted, as modified for the allocation of jurisdiction within the United Kingdom, in Schedule 4 to the Civil Jurisdiction and Judgments Act 1982. Article 5, as so modified, provides -

[4] Certain matters are not in dispute. The present action relates to a contract. The obligation in question is the obligation of payment thereunder. The system of law applicable to the relevant relationship is, or at least for present purposes may be taken to be, Scots law. The place of performance of that obligation falls to be determined by that law.

[5] As regards the ascertainment under Scots law of the place of performance of a contractual obligation of payment, the leading authority is Bank of Scotland v Seitz 1990 S.L.T.584. Although that case was concerned with the interpretation and application of Article 5(1) of the Convention without modification, the material provisions in the Convention as modified in Schedule 4 are in identical terms. In that case the First Division approved the statement in Gloag on Contract (2nd Ed) at p.709 -

The court further addressed the question, relevant also to this case, of the place of performance of a contractual obligation of payment where the creditor has places of business in more than one jurisdiction. It held that the Convention postulated a single place at which the creditor could insist on performance of the unfulfilled obligation of payment. I followed and endeavoured to apply that ruling in William Grant & Sons International Limited v Marie Brizard Espana S.A. 1998 S.C.536. The question for decision in the present case is whether the pursuers have averments relevant to instruct the proposition that under the alleged contract between the pursuers and the defender there was, when the action was raised, a single place at which the pursuers could insist that the obligation of payment be performed and that that place was their place of business in Glasgow.

[6] The circumstances on which the pursuers rely on averment may be summarised as follows. Although they have offices in London, the work for which payment is sought in this action was undertaken by staff in Scotland. While many of the properties in the portfolio were situated in England and Wales, the investigations into their values were "initiated from Scottish staff". The partner dealing with the matter was based in the Glasgow office. The pursuers' accounting procedures were such that the Glasgow office had distinct accounts. In accordance with those procedures the pursuers, shortly before the purchase was completed, wrote to the defender from the Glasgow office asking to whom the account should be issued. As no response was received, no invoice was in the event issued; had one been issued, it would have been issued in accordance with the pursuers' practice from the Glasgow office. It is not suggested that those accounting procedures were at any stage of the transaction known to the defender.

[7] Mr Currie for the defender submitted that these circumstances fell well short of meeting the requirements for jurisdiction under Article 5(1). The jurisdiction under that Article was a derogation from the basic principle of jurisdiction based on domicile. As such, its scope required to be construed restrictively (Kleinwort Benson Limited v Glasgow City Council [1999] 1 A.C.153, per Lord Goff at pp. 163-4, Lord Nicholls at p.173, Lord Clyde at pp.179-180 and p.184 and Lord Hutton at p.188). While those observations were immediately directed to the issue of interpretation of the Convention, the principle of a restrictive approach was also by implication appropriate to the application of the relative rule to the facts. That was consistent with the basic policy of the Convention and with decisions under it. Reference was made to Dumez France and Tracoba v Hessische Landesbank (Helaba) [1990] E.C.R.I-49 and to Marinari v Lloyds Bank plc [1996] Q.B.217. There was no hardship in so applying the policy; a defender could always be sued in the place of his domicile. In Ferguson Shipbuilders Limited v Voith Hydro GmbH & Co KG 2000 S.L.T.229 Lord Penrose at page 233F observed that a narrow approach to the application of Article 5 must be adopted. A similar approach had been adopted by Lord Eassie in Eddie v Alpa srl, 10 March 2000, unreported.

[8] In any event, whether or not a restrictive approach to application was appropriate, the test laid down in Bank of Scotland v Seitz and subsequently applied in William Grant & Sons International Limited v Marie Brizard Espana S.A. was clearly not satisfied here. The defender was content to adopt the formulation used in the latter case at page 541G-H. The present pursuers clearly had no averments to the effect that they were "contractually entitled to insist on payment at [their] place of business at [Glasgow] and only at that place". There was nothing in the pursuers' averments to show that, on an objective assessment, a person in the position of the defender (or of the individuals whose contract he had allegedly adopted) would reasonably infer that the pursuers intended to insist that payment be made at the Glasgow office. Correlatively, there is no ground for inferring that the pursuers intended to exclude the entitlement of the obligant to pay at the London office. Nor was there any basis on averment for any inference that any obligant had any such intention. The present circumstances could readily be contrasted with those in Bank of Scotland v Seitz (where under banking law and practice an account was localised at a particular branch) and William Grant and Sons International Limited v Marie Brizard Espana S.A. (where the Court had proceeded on a regular course of dealings and an express acknowledgement in evidence by the obligant's Director General that the obligant was prepared to make payment in accordance with the method specified by the supplier). The place of performance could not be fixed unilaterally by the payee. The action should be dismissed.

[9] Mr McNeill for the pursuers submitted that the pursuers' averments were relevant to instruct jurisdiction in this court. The passages in their Lordships' speeches in Kleinwort Benson Limited v Glasgow City Council were concerned with the interpretation of Article 5 as set against Article 2. No such question of interpretation arose here. The pursuers' claim was clearly one relating to a contract. Where the issue was the application of Article 5, no question of derogation arose. The issue at this stage was simply whether the place of performance had, in accordance with the relative rules, been identified. There was no presumption against its identification.

[10] It was not essential that a pursuer invoking Article 5 in respect of a contractual obligation of payment should identify a contractual term that payment be made at a particular place. Where the contract was silent as to the place of performance, the appropriate exercise was to analyse the facts relied on to see whether they showed that the claimant could in the whole contractual context insist on performance at only one place. The provision in Article 5 existed "because of the existence, in certain clearly defined situations, of a particularly close connecting factor between a dispute and the court which may be called upon to hear it, with a view to the efficacious conduct of the proceedings" (Martin Peters etc v ZNAV [1983] E.C.R.987, quoted by Lord Goff in Kleinwort Benson Limited v Glasgow City Council at p.164). The factual context in a particular case might demonstrate such a connecting factor in relation to the place of performance. The potential place of performance might vary during the subsistence of the contract and come to be localised only at the end of the day (Bank of Scotland v Seitz, per Lord Prosser at p.593). A consideration of the whole context had been the approach adopted both in Bank of Scotland v Seitz and in William Grant and Sons International Limited v Marie Brizard Espana S.A.. In the latter case the accounting arrangements of the pursuers had been of importance. There was nothing in that case to the effect that an agreement had been reached that the account be localised in Bellshill. Looking at the totality of the facts relative to payment (including Grants' accounting system) the court had there held that there was no alternative place of payment of such importance as Bellshill. In the present case, provided that the pursuers were able to say that they had a place of business in Glasgow and that the circumstances pointed importantly to the localisation there of the obligation of payment, that was sufficient. It was unnecessary that the defender should have prior knowledge of the pursuers' accounting arrangements. Often the place of payment would be of no importance to the payer, though it might for accounting reasons be of importance to the payee. The subsumption was that parties impliedly accepted that there might be a localisation of the place of payment and that such place might change. It was then a question of fact whether it had been so localised and, if so, where.

[11] For the purposes of the disposal of this case it is unnecessary, in my view, to decide whether, when a court comes to apply Article 5(1) to the circumstances of the case before it, it should or should not adopt a restrictive or narrow approach; however, lest this case goes further, I express my opinion on that question. By that stage the court will have decided (if it has not been conceded) that the defender is being sued in a matter relating to a contract. It will also have decided (if it has not been conceded) what is the applicable law and ascertained the relevant rules of that law as to the place of performance of the obligation in question. The final stage will be the application of those rules to the circumstances before it - whether on averment or after proof on the evidence. My view is that at that stage, at which no question of construction of the Convention arises, a restrictive or narrow approach is inappropriate. I find nothing in the speeches in Kleinwort Benson Limited v Glasgow City Council or in the judgments in any of the European cases cited to me that requires such an approach at that stage. Insofar as the approach indicated by Lord Penrose in Ferguson Shipbuilders Limited v Voith Hydro at p.233 is to a different effect, I would respectively disagree. My view appears, however, to be broadly consistent with that adopted by Lord Eassie in Eddie v Alpa srl where (in the context of obligations largely of delivery) his Lordship said:

The court has, I believe, at that stage simply to apply the ascertained rules of law to the facts averred or proved. For the purposes of disposal of this case, I proceed on that basis. Accordingly, the earlier stages being undisputed, the only issue is whether the pursuers have averred facts and circumstances which, if proved, would entitle the court to hold that the pursuers' Glasgow office was the sole place of performance of the obligation of payment.

[12] It is, in my view, important to notice that, in construing Article 5(1) and applying it in the context of Scots law to the place of performance of contractual obligations of payment, the judges in Bank of Scotland v Seitz emphasised that, for the purposes of Article 5(1), the sole place of performance must be one which arose as a matter of obligation, not of choice (Lord President Hope at p.588I-J; Lord Sutherland at p.592L, Lord Prosser at p.593G-I). The test adopted by them was not simply whether on the facts there was a particularly close connection between the obligation of payment and a particular place. Lord Prosser observed at p.593I-J that the place of performance might vary during the currency of the agreement. With that observation I agree. But, if the special jurisdiction is successfully to be invoked in the Court of Session, there must, at the time when it is invoked, in my opinion be in Scotland a place of performance at which and at which alone the creditor in the obligation is entitled to insist that the obligation be discharged. That entitlement may arise by reason of an express or an implied term of the contract - in the latter case to be inferred from the whole circumstances of the case, including in some circumstances the parties' actings in furtherance of the contract; a course of dealings between the parties or practice in the relevant trade may also give rise to such an implication. The entitlement may, as in Bank of Scotland v Seitz, arise from what has come to be a rule of law relative to the localisation of banking obligations. I do not exclude the possibility that it might arise in other ways. The entitlement might not exist at the outset of the contract but come to exist, by express or implied variation, by the time the obligation comes to be enforced. But, however it arises, it must be an entitlement in the creditor to insist, if he chooses, on payment at such a place, with a correlative restriction on the freedom of the debtor to choose where he will pay. The circumstances must be such that the parties' mutual rights and obligations have, prior to the jurisdiction being invoked, come to be so ordered.

[13] In my view the circumstances averred in the present case are insufficient to found the jurisdiction relied on. The circumstances that the initiative for the transaction occurred at the pursuers' Glasgow office and that the partner in charge was based there (even if known to the defender or his authors) hardly advances matters, particularly in circumstances where the properties in the portfolio were spread throughout the United Kingdom and the prospective seller of them was a financial institution with interests equally widely spread. The circumstance that the pursuers' accounting arrangements for this transaction were localised at the Glasgow office is not suggested to have been known to the defender or his authors, far less to have been expressly or implicitly concurred in by him or them. That state of affairs may be contrasted with that established in William Grant and Sons International v Marie Brizard Espana S.A.. In short, the factors relied on, singly or in combination, are insufficient, in my view, to confer on the pursuers, as creditors in the payment obligation, an entitlement to insist that payment be made at the Glasgow office. For those reasons I shall sustain the defender's first and second pleas-in-law and dismiss the action.