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JARRETT v. BARCLAYS BANK PLC ROYAL BANK OF SCOTLAND PLC and JONES v. FIRST NATIONAL BANK PLC and PEACOCK v. FIRST NATIONAL BANK PLC  EWCA Civ 847 (31st October, 1996)
THE SUPREME COURT OF JUDICATURE
THE COURT OF APPEAL (CIVIL DIVISION
APPEAL FROM IPSWICH COUNTY COURT
HONOUR JUDGE BRANDT
APPEAL FROM LIVERPOOL COUNTY COURT
HONOUR JUDGE HAMILTON
APPEAL FROM BRISTOL COUNTY COURT
HONOUR JUDGE RAYMOND JACK QC
Courts of Justice
31st October 1996
e f o r e
BANK OF SCOTLAND PLC
U D G M E N T
approved by the court)
(instructed by Messrs Carruthers & Co, Cambridge), appeared on behalf of
the Appellant (Plaintiff).
(instructed by Messrs Shoosmiths & Harison, Northampton) appeared on behalf
of the 1st Respondent (1st Defendant).
FRED PHILPOTT and MISS JULIA SMITH
(instructed by Messrs Manby & Steward, Wolverhampton) appeared on behalf of
the 2nd Respondent (2nd Defendant).
(instructed by Messrs Kennan Bell & Co, Merseyside) appeared on behalf of
the Appellant (Plaintiff).
(instructed by Messrs Davis & Co, Harrow, Middlesex) appeared on behalf of
the Respondent (Defendant).
(instructed by Messrs Davis & Co, Harrow, Middlesex) appeared on behalf of
the Appellant (Defendant).
(instructed by Messrs Kennan Bell & Co, Merseyside) appeared on behalf of
the Respondent (Plaintiff).
down transcript of
Bernal Reporting Limited, 180 Fleet Street
0171 831 3183
Shorthand Writers to the Court)
JUSTICE MORRITT: Each of these appeals raises the question whether proceedings
brought in the United Kingdom against a creditor pursuant to ss.56(2) or 75
Consumer Credit Act 1974 in consequence of misrepresentations or breaches of
contract by the supplier to the debtor of "timeshares" in respect of land in
another state party to the Brussels Convention are within the exclusive
jurisdiction of the courts of that state pursuant to Article 16 of the
Convention. It is not disputed that if the answer to the question is in the
affirmative the Courts of the United Kingdom are obliged to stay such
proceedings pursuant to Article 19 of the Convention.
relevant provisions of the Consumer Credit Act 1974 are:
In this Act 'antecedent negotiations' means any negotiations with the debtor or
by the supplier in relation to a transaction financed or proposed to be
financed by a debtor-creditor supplier agreement within section 12 (b) or (c),
'negotiator' means the person by whom negotiations are so conducted with the
debtor or hirer.
with the debtor in a case falling within subsection (1) ... (c) shall be deemed
to be conducted by the negotiator in the capacity of agent of the creditor as
well as in his actual capacity.
Liability of creditor for breaches by supplier
If the debtor under a debtor-creditor-supplier agreement falling within
section 12 (b) or (c) has, in relation to a transaction financed by the
agreement, any claim against the supplier in respect of a misrepresentation or
breach of contract, he shall have a like claim against the creditor, who, with
the supplier, shall accordingly be jointly and severally liable to the debtor.
Subject to any agreement between them, the creditor shall be entitled to be
indemnified by the supplier for loss suffered by the creditor in satisfying his
liability under subsection (1), including costs reasonably incurred by him in
defending proceedings instituted by the debtor."
Brussels Convention was enacted as part of the domestic law of England and
Wales by the Civil Jurisdiction and Judgments Act 1982 s.2. So far as
relevant, Articles 16 (as amended) and 19 provide:
following courts shall have exclusive jurisdiction, regardless of domicile:
proceedings which have as their object rights in rem in immovable property or
tenancies of immovable property, the courts of the Contracting State in which
the property is situated;
a court of a Contracting State is seised of a claim which is principally
concerned with a matter over which the courts of another Contracting State have
exclusive jurisdiction by virtue
of Article 16, it shall declare of its own
motion that it has no jurisdiction."
facts relevant to these appeals may be shortly stated.
v First National Bank
arguments of Counsel revealed four principal issues, namely:
reference to which system of law does this Court determine whether or not the
Timeshare Agreements are tenancies (or, in the case of the Jones, the grant of
rights in rem in immoveable property) within Article 16(1) of the Brussels
reference to that system of law identified in answer to the first issue are
these Timeshare Agreements tenancies (or, in the case of the Jones, the grant
of rights in rem in immoveable property) within Article 16(1)?
the Timeshare Agreements are such tenancies (or grant) are they the "object" of
the respective proceedings within Article 16(1)?
any, and if so which, of these questions be referred to the European Court of
Justice pursuant to The Protocol on the Interpretation of the Convention on
Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters
propose to deal with these issues in the order in which I have set them out.
the Jones and the Peacocks it was submitted that the question whether the
Timeshare Agreements in their cases were tenancies should be determined by the
lex situs of the property in respect of which the rights were to be
exerciseable, namely Spain. They submit that it would not be right to apply
English Law in the absence of any evidence as to what the relevant law of Spain
is because the orders appealed from struck out the actions on a preliminary
application and were not decisions reached after a full trial. The Jarretts
adopted this argument but submitted in the alternative that the proper
construction of the relevant words in Article 16(1) was that laid down by the
European Court of Justice. The Banks
submitted that the alternative argument
for the Jarretts
was the correct answer to this issue.
have no hesitation in accepting the alternative argument for the Jarretts
the arguments for the Banks
on this Issue. First, s.3(1) Civil Jurisdiction
and Judgments Act 1982 requires the meaning and effect of the Brussels
Convention, if not referred to the European Court of Justice "to be determined
in accordance with the principles laid down by and any relevant decision of the
European Court of Justice". By s.3(3) this Court is enjoined to consider the
Reports specified in s.3(2), including that of Professor Schlosser on the
Accession Convention, in ascertaining the meaning or effect of any provision of
principles and decisions do not suggest that the lex situs of the property over
which the rights are exerciseable should determine whether there is a tenancy
or not. However our attention was drawn by counsel for the Jones and Peacocks
to paragraph 168(c) of the Schlosser Report [O.J.1979 C59] in which it is stated
an action relating to immovable property is brought in a particular State and
the question whether the action is concerned with a right in rem within the
meaning of Article 16(1) arises, the answer can hardly be derived from any law
other than that of the lex situs."
is evident that in order to ensure that the rights and obligations arising out
of the Convention for the Contracting States and for individuals concerned are
as equal and uniform as possible, an independent definition must be given in
Community Law to the phrase 'in proceedings which have as their object rights
in rem in immovable property'..."
the case of
v Euro-Relais GMBH
 ECR 1111 the Advocate-General in his opinion at paragraphs 7 and 8 said:
Court established the principle that the concept [tenancies of immovable
property] should be interpreted independently on the basis of the Convention
itself without reference to the law applicable under the conflict rules of the
national court hearing the main proceedings.
Only if there is uniformity of interpretation will uniform application of the
Convention in all the Contracting States be ensured in this area and the free
movement of decisions which constitutes the primary objective of the Convention
for the Jones and the Peacocks submitted that the uniformity of interpretation
required was in relation to the ascertainment of the "object" of the
proceedings, leaving the identification of rights in or tenancy of immoveable
property to the lex situs. I do not accept that submission. It is
inconsistent with the opinion of the Advocate-General in
just quoted, which was given in answer to a question asking specifically
whether there was a tenancy agreement; that question did not ask what was the
object of the proceedings. Moreover the need for uniformity arises at least as
much in relation to the construction of the word "tenancy" as it does in
relation to the word "object".
in my judgment the questions whether the Timeshare Agreements in each of these
three appeals were or are tenancies (or the grant of rights over immoveable
property) must be determined by this court applying to the facts of the three
cases the interpretation placed by the European Court on the relevant words in
Article 16. It is not material to consider whether the Timeshare Agreements
were or are tenancies or the grant of such rights by the domestic law of Spain
or, in the absence of any evidence what that is, by the domestic law of England
turn then to the second question whether these timeshare agreements are
tenancies or, in the case of the Jones, the grant of rights in rem over
immoveable property. It is convenient to consider first the basis for the
suggested distinction between the case of the Jones and that of the Peacocks
and the Jarretts.
It depends on the provision in the contractual conditions
that the Company will allow the Jones exclusive occupancy "in perpetuity". It
is suggested that such a perpetual right cannot be a tenancy. I do not agree.
The right to occupy is still limited to week 45 in each year. I can discern
nothing in the decisions of the European Court of Justice to suggest that there
is a distinction between cases in which the weekly right of occupancy is
expressed to endure for 80 years, in perpetuity or where, as in the case of the
the agreement is silent as to the number of years. In my view
each of the timeshare agreements is a tenancy within Article 16 or none of them
regards the matters listed under subparagraphs (2), (3), (4) and (5) of that
article it is clear that the courts which are given exclusive jurisdiction are
those which are best placed to deal with the disputes in question.
The same applies to the assignment of exclusive jurisdiction to the courts of
the Contracting State in which the property is situated in matters relating to
rights in rem in, or tenancies, of immovable property.
In fact, actions concerning rights in rem in immovable property are to be
judged according to the rules of the State in which the immovable property is
situated since the disputes which arise frequently in checks, inquiries and
expert assessments which must be carried out on the spot, with the result that
the assignment of exclusive jurisdiction satisfies the need for the proper
administration of justice.
Tenancies of immovable property are generally governed by special rules and it
is preferable in the light of their complexity, that they be applied only by
the courts of the States in which they are in force.
The foregoing considerations explain the assignment of exclusive jurisdiction
to the courts of the State in which the immovable property is situated in the
case of disputes relating to tenancies of immovable property properly
so-called, that is to say, in particular, disputes between lessors and tenants
as to the existence or interpretation of leases or to compensation for damage
caused by the tenant and to giving up possession of the premises.
The same consideration do not apply where the principal aim of the agreement is
of a different nature, in particular, where it concerns the operation of a
Furthermore, the assignment, in the interests of the proper administration of
justice, of exclusive jurisdiction to the courts of one Contracting State in
accordance with Article 16 of the Convention results in depriving the parties
of the choice of the forum which would otherwise be theirs and, in certain
cases, results in their being brought before a court which is not that of the
domicile of any of them.
Having regard to that consideration the provisions of Article 16 must not be
given a wider interpretation than is required by their objective.
Article 16(1) is not to be construed any wider than is necessary to achieve its
object. The object is that the courts of the situs should have exclusive
jurisdiction in those cases in which the complexities of local law or the needs
in the interests of the proper administration of justice for local knowledge or
assessments so require. The court concluded that those considerations did not
require the categorisation of the agreement in that case as a tenancy for it
was concerned with the operation of a business.
The question submitted by the Bundesgerichtshof is designed to ascertain
whether exceptions may be made to the general rule laid down in article 16
owing to the special character of certain tenancies, such as short-term
lettings of holiday homes, even though the wording of that article provides no
indication in that respect.
It must be emphasised in this regard that, as the Italian Government has
rightly pointed out, inherent in any exception to the general rule laid down in
article 16(1) is the risk of further extensions which might call in question
the application of national legislation governing the use of immovable property.
Account must also be taken of the uncertainty which would be created if the
courts allowed exceptions to be made to the general rule laid down in article
16(1), which has the advantage of providing for a clear and certain attribution
of jurisdiction covering all circumstances, thus fulfilling the purpose of the
Convention, which is to assign jurisdiction in a certain and predictable way.
It follows that the provision in question applies to all tenancies of immovable
property irrespective of their special characteristics.
The reply to the first question must therefore be that article 16(1) of the
Convention applies to all lettings of immovable property, even for a short term
and even where they relate only to the use and occupation of a holiday home."
the court recognised the short term letting as a tenancy and concluded that
there was no justification for any exceptions to the generality of Article
16(1) in its application to a "tenancy". Accordingly that decision throws no
further light on what are the necessary features of a tenancy within Article
16(1). Article 16(1) was subsequently amended by the Lugano Convention so as
to exclude short term lettings for private use between natural persons and this
amendment was carried forward by the Treaty of Accession dealing with the
admission of Spain and Portugal. Neither the fact of the amendment nor its
form throws any further light on the meaning to be attributed to the word
appears to me from a consideration of those cases that though the need for a
uniform interpretation of the word "tenancy" has been repeatedly recognised no
such interpretation has yet emerged from the decisions of the European Court of
establish two classes of agreement which are not tenancies.
demonstrated that there was no exclusion for short term lettings but went no
in the light of the Court's decision in
I can see no reason for denying to the agreements in these cases the status of
tenancies within Article 16(1). In each case one party is entitled to the
exclusive occupation of immovable property assumed by the contract to be owned
by the other for a specified period in return for a sum of money. It is true
that the period is shorter than in
namely a week at a time, but I do not think that that can affect the question
of principle particularly as the amendment to Article 16(1) subsequently made
does not apply to this case as one of the parties is not a natural person. All
the considerations which led to the Court construing Article 16(1) so as to
include short term lettings apply as much to the agreements in these cases as
to the short term letting in
for the Jones and the Peacocks submitted that the agreements should be
distinguished from the tenancy which might result from the subsequent grant of
the licence to occupy. For this purpose he relied on para 172(c) of the
Schlosser Report which states that:
based on contracts for the transfer of ownership or other rights in rem
affecting immovable property do not therefore have as their object rights in
rem. Accordingly they may also be brought before courts outside the United
that passage is dealing with the laws of the United Kingdom on the supposition
earlier referred to in paragraph 168(c) that the lex situs would determine what
was a tenancy for the purposes of Article 16(1). As I have already noted that
was not adopted by the European Court of Justice. In my judgment the
distinction recognised by English Law between the grant of a right in rem and a
contract for such a grant is not recognised as a valid
distinction in relation
to tenancies by any principle laid down by the European Court of Justice. Nor,
bearing in mind the principles established by that Court to be observed in the
construction of Article 16, do I see any logical reason why it should.
for all these reasons I would answer the second question in the affirmative.
do not accept these submissions. The reference to the like claim in s.75
Consumer Credit Act 1974 must refer to the like cause of action. Plainly the
remedies cannot be the same, for the remedies available to the debtor against
the supplier may include injunctions or orders for specific performance which
could not lie against the creditor. Further the use of the words "the like"
presupposes some differences. I can see no reason at all for supposing that
Parliament intended to enact in relation to the statutory cause of action
conferred by s.75 (or s.56) any jurisdictional requirement to be observed in
proceedings against the supplier. But I do not think that the answer to the
question lies in a consideration of the statute rather than the Brussels
Convention and in the principles established by the European Court of Justice
in the interpretation of the words "proceedings which have as their object.."
16(1) must be interpreted as meaning that the exclusive jurisdiction of the
Contracting State in which the property is situated does not encompass all
actions concerning rights in rem in immovable property but only those which
both come within the scope of the Brussels Convention and are actions which
seek to determine the extent, content, ownership or possession of immovable
property or the existence of other rights in rem therein and to provide the
holders of those rights with the protection of the powers which attach to their
 Q.B. 696 the European Court of Justice was concerned with a claim by a
father that his son held a flat in France purchased by the son with funds
provided by the father on a resulting trust for the father. The son submitted
that only the courts of France had jurisdiction for the proceedings had as
their object rights in rem in immovable property. The European Court of
Justice rejected that submission. In paragraph 14 of the judgment of the Court
it is stated:
16 confers exclusive jurisdiction in the matter of rights in rem in immovable
property on the courts of the contracting state in which the property is
situated. In the light of the court's judgment in Reichert v.
A.G. (Case C-115/88)  ECR I-27
, where the court had to rule on the
question whether the exclusive jurisdiction prescribed by that article applied
in respect of an action by a creditor to have a disposition of immovable
property declared ineffective as against him on the ground that it was in fraud
of his rights by his debtor, it follows that it is not sufficient, for article
16(1) to apply, that a right in rem in immovable property be involved in the
action or that action have a link with immovable property: the action must be
based on a right in rem and not on a right in personam, save in the case of the
exception concerning the tenancies of immovable property."
court concluded that the claim by the father against his son was not an action
in rem within the meaning of Article 16(1) but an action in personam. In my
it is clear that the exception concerning tenancies recognised by the last
sentence of that paragraph relates to the status of tenancies in some member
states as personalty and not to the requirement that the action must be based
on, as opposed to having a link or connection with, rights in
or a tenancy.
distinction was emphasised by the decision of the Court in
 ECR 2535 at 2550 para.13.
when one considers the principles established by the European Court of Justice
which justify an interpretation sufficient to give effect to the object of
Article 16(1) but no more, in my judgment one is driven to the same conclusion.
There is no reason to suppose that it was the intention of the signatories to
the Brussels Convention that rights conferred by the legislation in one
contracting state for the protection of the consumer should, if those rights
are linked to a dispute between the consumer and a third party concerning
rights in rem or a tenancy, only be enforced in the courts of another
all these reasons I would answer the third question in the negative. It
follows that I would allow the appeal in the case of the Jones and the Jarretts
and dismiss it in the case of the Peacocks. But before reaching a final
conclusion it is necessary to consider the fourth question.
Protocol on the Interpretation of the Convention on Jurisdiction and
Enforcement of Judgments in Civil and Commercial Matters  O.J. C97/1
entitles, but does not require, this court to request the European Court of
Justice to give a ruling on a question of interpretation of the Convention
raised in a case pending before it "if it considers that a decision on the
question is necessary to enable it to give judgment".
a request is not necessary. In respect of each of the three questions
involved it appears to me that the relevant principles are clearly established
by the decisions of the European Court of Justice to which I have referred.
The arguments are concerned with how those principles are to be applied. That
is not a matter of interpretation of the Convention but a matter within the
exclusive province of the courts of England and Wales.
my judgment the appeals of the Jones and the Jarretts
should be allowed and
that of First National Bank
in the action brought by the Peacocks should be
dismissed. In each case the action should proceed to trial in the County Court
in the usual way.
JUSTICE WARD: I agree.
JUSTICE POTTER: I also agree.
for leave to appeal to the House of Lords dismissed.
allowed with costs; costs in court below be paid by second defendant; costs
be taxed and paid forthwith.
allowed with costs; legal aid taxation of plaintiffs' costs up to 10.10.95;
costs be taxed and paid forthwith.
dismissed with costs; legal aid taxation of plaintiff's costs; costs be taxed
and paid forthwith.
© 1996 Crown Copyright
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