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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Mackays Stores Ltd v. Topward Ltd [2006] ScotCS CSOH_99 (30 June 2006) URL: https://www.bailii.org/scot/cases/ScotCS/2006/CSOH_99.html Cite as: [2006] ScotCS CSOH_99, [2006] CSOH 99 |
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OUTER HOUSE, COURT OF SESSION [2006] CSOH 99 |
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CA53/05 |
OPINION OF LORD CLARKE in the cause MACKAYS STORES LIMITED Pursuers; against TOPWARD LIMITED Defenders: ________________ |
Pursuers: Connal, Q.C., Solicitor Advocate; McGrigors
Defenders: Fairley; Semple Fraser
Introduction
[2] The pursuers aver, in Article 1 of the condescendence, that the terms and conditions of trade between the parties which applied to the goods supplied between August 2001 and January 2005, contained a term to the following effect:
"Any disputes or differences of whichsoever nature arising out of the order, the contract or the delivery of the goods shall be governed by the law of Scotland and the Supplier agrees that any such dispute or difference unless otherwise settled amicably between the Company and the Supplier shall be subject to the exclusive jurisdiction of the Scottish Courts and the parties hereby agreed to such jurisdiction."
The defenders are domiciled in
[3] The defenders have a preliminary plea to the effect that the Court has no jurisdiction. They also have a preliminary plea as to the relevancy of the action. In answer 1 they make the following averments:
"Explained and
averred that esto the purported
contractual term condescended upon by the pursuer formed part of any agreement
between the parties which is relevant to this action (which is denied), such a
term would not, in any event, have the effect of conferring jurisdiction upon
this Court in relation to the subject matter of this action, the subject matter
which is a claim for repetition and not a 'dispute ... arising out of the order,
the contract or the delivery of the goods'.
Separatim, the defender is not
domiciled in
[4] The pursuers' first plea-in-law is to the following effect:
"The sum sued for having been paid for by the Pursuers to the Defenders in error, and it being equitable so to order, decree for payment by the Defenders to the Pursuers of the sum concluded for should be pronounced."
[5] The parties were originally allowed a debate on their respective preliminary pleas. Shortly before the debate diet the pursuers sought to lodge a minute of amendment. The defenders' counsel advised the Court that this would require to be answered, if allowed. Both parties were, however, in agreement that the debate should proceed to dealt with the relevancy of the pursuers' averments regarding jurisdiction, for if the defenders' attack on these was successful that would dispose of the action. I agreed that the debate should proceed on that footing.
The Defenders' Submissions
[6] In opening his submissions, counsel for the defenders immediately formulated his approach by identifying the pursuers' "claim" as being one based on unjust enrichment. The sub-heading of that general categorisation, upon which the pursuers appeared to rely on, was repetition, but counsel for the defenders suggested that, in truth, the claim was more properly described as one being based on restitution. In any event, the remedy sought and the legal basis upon which it was sought, it was submitted, required that the defenders be sued in the country of their domicile. Counsel for the defenders referred me to a particular averment in Article 1 of condescendence which is to the following effect:
"In the current action the Pursuers seek repetition of money paid in error to the Defenders under a contract of supply between the Pursuers and the Defenders."
That averment, it was said, sought, as it were, to elide the question of jurisdiction. For jurisdiction to exist in this Court the pursuers were required to base their claim expressly on rights arising from the contract, whereas in reality what they were driven to do was to base their claim on the legal basis of repetition.
[7] In
support of his approach to the matter, counsel for the defenders sought to rely
on certain obiter dicta of
Lord Macfadyen in the case of Compagnie
Commercial Andre SA v Artibell
Shipping Co Ltd 1999 SLT 1051. In
that case charterers of a ship for a voyage from
"Had I been persuaded that cl 40 was an effective prorogation of the jurisdiction of the English Courts, I would have been inclined to hold that its language - 'All disputes arising out of this contract' - is not apt to cover more than the pursuers' contractual claims. In light in particular of what was said in Union of India and Fillite I would have held that it did not cover the unjust enrichment claim or the constructive trust claim. In the event, however, that issue does not arise."
"in matters relating to a contract, in the Courts for the place of performance of the obligation in question."
The case of Kleinwort Benson Ltd v Glasgow
City Council (1999) 1 AC 153 was concerned with the construction and
interplay of those provisions, as they then appeared in Schedule 4 as
Articles 2 and Articles 5(3) respectively. In the Kleinwort Benson
case the plaintiff bank entered into certain interest rate swap transactions
with the defendant Scottish local authority.
The transactions were subsequently held by the House of Lords to be ultra vires and void. The bank then brought an action in
The Pursuers' Reply
Decision
[10] I agree with Mr Connal for the pursuers that the law which is directly in point in relation to the matters discussed before me is that which was applied in the case of McGowan v Summit at Lloyds, that is, the question raised is one of construction of the agreed prorogation clause and that the canons of construction to be applied are those which are applicable to any mutual contract provision. The cases based on the jurisdictional rules set out in the 1982 Act, where there is no prorogation clause, are not in point. In the present case, it is not suggested by the defenders that the legal relationship between the parties was not based on a course of contractual dealings between the parties. The action relates, in ordinary language, to a dispute between the parties as to whether certain discounts fell to be applied, as a matter of contract, to the prices to be paid by the pursuers in respect of certain goods supplied to them during that course of dealing. In other words there is a dispute as to the true contractual price which had to be paid for these goods. The defenders take their stance that no such discounts were due under the contract (see answers 3, 5 and 6). They do not take their stance, even on an alternative basis, that whereas the discounts might have been due, nevertheless any money paid over by the pursuers was paid to them as a result of a unilateral, uninduced error on the part of the pursuers. The de quo of the action is that there is a dispute between the parties as to whether or not discounts fell to be made under the contract in question in relation to the goods in question. The question of what remedy (if any) the pursuers are entitled to, if the answer to that first question is in the affirmative, is consequential or ancillary to that dispute being resolved in the first place. The pursuers seek to have that dispute resolved. If the approach to the question, as I have held it to be, is to look at the wording of the relevant clause and to give to that wording its ordinary meaning, I find it difficult to reach any other conclusion, but that parties intended, by using that wording, that the very sort of difference of dispute which has arisen between them, namely whether or not the pursuers were entitled to pay only discounted prices in relation to the relevant goods, was to be resolved by the Scottish Courts. Any suggestion that a more restricted, narrow or technical interpretation falls to be applied to the clause, is, in my view, negatived by the fact that the parties used the words "of whatsoever nature" and included references not only to the contract but to the order and delivery of the goods. Counsel for the defenders, as has been previously noted, accepted, in discussion, that a layman would probably reach the view that the words fell to be read as conferring jurisdiction on the Scottish Courts to deal with the issue raised in the present proceedings. I would go further and hold that commercial parties contracting, in circumstances like the parties to the present action, would have intended the wording of that clause to have the same effect. The defenders' argument, in my judgment, focused too exclusively, on the remedy being sought by the pursuers, rather than applying the usual canons of construction to the wording of the relevant clause itself. That approach was, in my judgement, also wrongly influenced by the decision in the case of Kleinwort Benson. The House of Lords in Kleinwort Benson were concerned with considering whether the language of the relevant provisions of the legislation was met so as to confer jurisdiction against the defendants in the English Courts as the plaintiffs contended. The present case is concerned with a different question viz, does the agreement of the parties mean that they have prorogated the jurisdiction of this Court to deal with and to determine the issue now raised by the pursuers. The decision in the Kleinwort Benson case, therefore, is of no direct assistance in relation to the question raised before this Court. That question, as I have already indicated, has to be determined applying the ordinary rules of contractual construction in relation to mutual contracts. In any event, I am not persuaded that, even if it were appropriate to have regard to the decision in Kleinwort Benson for present purposes, and to seek to apply its reasoning to the present case by analogy, it would provide the defenders with any great assistance. It is clear, beyond doubt, that the majority of the House of Lords reached the decision they did on the fundamental point that, in that case, both parties were in agreement, at least by the time the matter came before the House of Lords that, "contract" had been void ab initio. For example, Lord Clyde, at page 181, after an analysis of the relevant language in the Brussells Convention and, in particular, Article 5(1) focused on the words "relating to". His Lordship, in that context, said:
"the present participle indicates that there is a relationship still continuing between the current issue and a contract. The contract is not a matter of past history forming the background to the current controversy but is still of present relevance. Furthermore, the reference to 'a' contract appears to envisage an identifiable agreement."
His Lordship later on in the same page said:
"... the later words of article 5(1) in the courts for the place of performance of 'the obligations in question' are of considerable importance. The use of the definite article shows that there is a particular obligation to be performed. Moreover the reference is to 'the obligation in question'. That is a reference not to the contract but to the obligation which is at the heart of the dispute. That obligation is the obligation on which the claim is based. There must be an obligation to be performed and the obligation must be in dispute. I can see no other obligation which could here be intended than an obligation based on contract. The 'question' concerns a contractual obligation. The existence of a contract then becomes an essential element. And while the question may appear in a variety of forms essentially at the heart of the dispute will be a consideration relating to its performance. It can then be seen that the later words demonstrate the narrow scope of the phrase 'relating to'. It is not every connection with a contract however remote or tenuous which is intended here. The relationship is one whereby the matter is based on a contractual obligation. In my view it is essential for jurisdiction to lie under article 5(1) that there should be at the heart of the proceedings a dispute about the performance of a contractual obligation. If there is no obligation because there has never been a contract then there is no jurisdiction under the article."
At page 182 his Lordship continued:
"Where on the other hand there has undoubtedly ... been a contract constituted and the court has the jurisdiction under article 5(1) the court should be able to deal not only with such issues as whether the obligation is still enforceable or indeed whether the contract is still extant but also with any claims which arise consequentially on the determination of any issue about performance, such as damages or an award quantum meruit". (Emphasis added).
That last quoted dictum would, it appears to me, to be rather against the approach put forward by the defenders in the present case if drawing on the Kleinwort Benson case is appropriate for the present discussion. In the speech of Lord Hutton in Kleinwort Benson the factor of the non-existence of any contract being crucial to the majority decision in that case was further emphasised. At page 191, his Lordship, in considering the European jurisprudence on the interpretation of the relevant Brussels Convention provisions said:
"A further
consideration referred to by the European Court is that the reason why under Article 5(1)
a court for the place of performance of the contractual obligation is given
jurisdiction is that the bringing of an action in such a court will enable the
action to be brought in an efficacious way and the place of performance of the
contractual obligation will be a place where the case can conveniently be heard
... . However in the present case this consideration
is not applicable and the 'particularly close connecting factor' between the
dispute and the English court does not exist, because the action is brought,
not to enforce a contract performed in England, but to recover moneys which are
repayable to the plaintiff because the contract never existed and because the
plaintiff cannot seek to enforce it. In
this case where Kleinwort is suing
What those passages, just cited, and the speeches of the majority as a whole in the Kleinwort Benson case, once they are carefully considered, show is that the ratio decidendi of their Lordships' decision is of no direct assistance, even by analogy, in determining the question in the present case and, as I have noted, one passage from the speech of Lord Clyde, at least, appears to me to be inconsistent with the kind of argument advanced on behalf of the defenders.
[11] The defenders, of course, relied on the obiter dicta of Lord Macfadyen in the Artibell case. His Lordship referred, in the passage in question, to two cases, namely Union of India v E.B. Aaby's Rederi A/S (1975) A.C. 797 and Fillite (Runcorn) Limited v Aqua-Lift (1989) 45 B.L.R. 27. Neither of those cases, however, was analysed in any detail in the Opinion of the Lord Ordinary. There was no need for him to do so as he had decided the case on other grounds. An analysis of those decisions, however, in my judgment, establishes that they do not, in fact, support the defenders' position adopted before this Court. In the first place, I remind myself that the wording of the relevant clause in the present case contains the expression "Any dispute or difference of whatsoever nature" and the phrase "arising out of the order, contract or delivery". The English authorities, as well as will be seen, have drawn a distinction between the phrase "disputes arising out of a contract" and "disputes arising under a contract" where they appear in arbitration clauses or otherwise fall to be considered in relation to certain jurisdictional questions. In the Fillite case, the arbitration clause in the relevant contract provided "any dispute or difference or question arising under these Heads of Agreement shall be referred to a single arbiter... ." One of the parties to the action sought to invoke that clause in relation to claims based on express and implied terms of the contract, negligent mis-statements and misrepresentations, and claims based on "an express oral guarantee or warranty" and lastly, claims based on "a collateral contract". The Court of Appeal held that the claims based on negligent mis-statements and misrepresentations being claims based in tort were not covered by the particular arbitration clause as not "arising under the Heads of Agreement". They also reached the same view regarding the claims based on oral guarantees or warranties and collateral contracts. It seems to me reasonably clear, however, that the approach of Slade L.J., who gave the leading judgment, would have been different had the wording in the clause been "any dispute or difference or question arising out of these Heads of Agreement". The judge, at first instance, in that case, had held that the words "arising under" fell to be given a wide meaning namely "arising out of" or "connected with", (see page 41 of the judgment of Slade L.J). Slade L.J., however, in relation to the approach of the judge of first instance said this:
"I respectfully disagree with his view that the phrase 'arising under' can properly be read as meaning 'arising under, out of or connected with'. As Lord Brandon of Oakbrook recognised in the Antonis P Lemos, (1985) 1 A.C. 711 at p. 727, on the ordinary and natural meaning of words the expression 'connected with' is wider than 'arising under'."
The full dictum to which Slade L.J. was referring to in the speech of Lord Brandon was as follows:
"I would readily accept that in certain contexts the expression 'arising out of' may, on the ordinary and natural meaning of the words used, be the equivalent of the expression 'arising under', and not that of the wider expression 'connected with'. In my view, however, the expression 'arising out of' is, on the ordinary and natural meaning of the words used, capable, in other contexts of being the equivalent of the wider expression 'connected with'. Whether the expression 'arising out of' has the narrower or the wider meaning in any particular case must depend on the context in which it is used."
The Antonis P Lemos case involved the House of Lords considering one of its previous decisions, namely the Union of India case, referred to above, which is one of the two cases referred to by Lord Macfadyen in his obiter dicta. In the Union of India case, two of their Lordships in the House of Lords, Viscount Dilhorne and Lord Salmon, at pages 814 and 817, respectively, referred to the dictum of Lord Porter in the earlier decision of the House of Lords in Heyman v Darwins Ltd (1942) A.C. 356 at 358 to the effect that the words "arising out of a contract" had a wider meaning than the words "under a contract". Both of their Lordships had difficulty in discerning a difference in the meaning of these two phrases. These observations, however, appear to have been obiter dicta and, in any event, Lord Brandon in the Antonis P Lemos case, in giving the judgement he did, which was agreed with in its entirety by all of the other judges of the House of Lords, decided that there could be a difference in the meaning of these phrases, depending on the context. It follows that close consideration of the two cases referred to in Lord Macfadyen's obiter dicta do not, in my view, give the defenders the support for the position they argued for in the present case.
[12] In the result, I am satisfied that by applying the ordinary rules of construction to the words used in the prorogation clause in the present case, one arrives at the result that the parties intended by those words that a dispute of the kind that has arisen between them and which requires judicial determination should be made subject to the jurisdiction of the Scottish Courts. The "dispute" once properly identified as such, on the ordinary meaning of words, is one arising out of the contract.
[13] For the foregoing reasons I reject the defenders' arguments. In the circumstances I shall have the case put By Order for discussion of further procedure in the case.