Heriot-Watt University v Schlamp
| Jurisdiction | Scotland |
| Judge | Sheriff Principal AY Anwar,Sheriff HK Small,Sheriff WH Holligan |
| Judgment Date | 22 February 2021 |
| Court | Sheriff Appeal Court |
| Docket Number | No 5 |
[2021] SAC (Civ) 12
Sheriff Principal AY Anwar, Sheriff HK Small and Sheriff WH Holligan
Benincasa v Dentalkit Srl (C-269/95) ECLI:EU:C:1997:337; [1997] ECR I-3767; [1998] All ER (EC) 135; [1997] ETMR 447; [1997] ILPr 559
Costea v SC Volksbank Romania SA (C-110/14) ECLI:EU:C:2015:538; [2016] 1 WLR 814
Gruber v Bay Wa AG (C-464/01) ECLI:ECLI:EU:C:2005:32; [2005] ECR I-439; [2006] QB 204; [2006] 2 WLR 205; [2005] ILPr 12
Karel de Grote Hogeschool v Kuijpers (C-147/16) ECLI:EU:C:2018:320
McLeod v Tancred Arrol & Co (1890) 17 R 514; 27 SLR 348
RTA (Business Consultants) Ltd v Bracewell [2015] EWHC 630; [2015] Bus LR 800; [2015] Lloyd's Rep FC 357; [2015] CTLC 221
Schrems v Facebook Ireland Ltd (C-498/16) ECLI:EU:C:2018:37; [2018] 1 WLR 4343; [2018] CEC 111; [2018] IL Pr 11
Weco Projects ApS v Loro Piana and ors [2020] EWHC 2150
Briggs, A, Civil Jurisdiction and Judgments (6th ed, Informa Law/Routledge, Abingdon, 2015)
Chitty, J, Contracts (33rd Beale ed, Sweet and Maxwell, London, 2018), vol 2, paras 38.036, 38.037
Hartley, TC, Civil Jurisdiction and Judgments in Europe (Oxford University Press, Oxford, 2017)
Jurisdiction — Contract — European law — Consumer contract — Relevancy of averments to found jurisdiction — Whether onus on defender to establish status as consumer
Heriot-Watt University raised proceedings in the sheriffdom of Lothian and Borders at Edinburgh seeking payment of fees. The cause called before the sheriff (NA Ross) for debate, on 21 January 2020. On 24 February 2020, the sheriff dismissed the action. The pursuers appealed to the Sheriff Appeal Court.
Article 7 of the Regulation (EU) No 1215/2012 of the European Parliament and of the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast) ([2012] OJ L351/1) (‘the 2012 Regulation’), provides, inter alia, “A person domiciled in a Member State may be sued in another Member State: (1)(a) in matters relating to a contract, in the courts for the place of performance of the obligation in question”. Article 17(1) provides, inter alia, “In matters relating to a contract concluded by a person, the consumer, for a purpose which can be regarded as being outside his trade or profession, jurisdiction shall be determined by this Section”. Article 18(2) provides, inter alia, “Proceedings may be brought against a consumer by the other party to the contract only in the courts of the Member State in which the consumer is domiciled”.
The defender enrolled on a distance-learning academic study programme provided by the pursuers. The defender was domiciled and resident in Germany during his studies. In July 2018, the defender completed his studies and, subsequently, the pursuers demanded payment of outstanding fees. The pursuers relied upon a contract for the provision of educational services. The pursuers raised an action for payment in the sheriff court at Edinburgh. The defender raised a preliminary challenge to the jurisdiction of the court and contended that his contract with the pursuers had been a consumer contract, as opposed to a contract for services, and thus, in terms of the 2012 Regulation, the court did not have jurisdiction. The sheriff sustained the defender's preliminary plea to jurisdiction and dismissed the action. The pursuers appealed.
The pursuers argued that the sheriff had erred in searching for the predominant purpose to the contract and that the question ought to have been whether the connection between the contract and the defender's profession was more than negligible.
The defender argued that a contract which was partly for business and partly for professional purposes fell to be regarded as a consumer contract if the professional purpose was not predominant and that the onus had been on the pursuers to show whether the professional purpose was predominant or not and that the sheriff had been correct in his approach.
Held that: (1) the consumer jurisdiction in the 2012 Regulation was a derogation from the general rule that a party should be sued in the courts of their domicile and, as such, what defined a consumer contract required to be strictly construed; a contract was a consumer contract where there was both private use and use as part of a trade or profession, so long as the trade or professional aspect was negligible or marginal, and the burden of proof rested with the party invoking the consumer jurisdiction, the opponent having the right to lead evidence to the contrary (para 27); (2) the onus of proof had been on the defender, as the party invoking the special jurisdiction as a consumer, to establish his status as a consumer and the sheriff had erred in determining the issue on the adequacy of the pursuers' averments; the correct test to be applied had been the non-negligible test and not the predominant purpose test (para 33); and appeal allowed.
Observed that the definition of consumer in European legislation had an autonomous meaning that did not fall to be interpreted or defined by reference to national law (para 32).
Benincasa v Dentalkit Srl [1997] ECR I-3767, Gruber v Bay Wa AG[2005] ECR I-439, Costea v SC Volksbank Romania SA[2016] 1 WLR 814 and Schrems v Facebook Ireland Ltd[2018] 1 WLR 4343considered.
The cause called before the Sheriff Appeal Court, comprising Sheriff Principal AY Anwar, Sheriff HK Small and Sheriff WH Holligan, for a hearing, on 19 January 2021.
At advising, on 22 February 2021, the opinion of the Court was delivered by Sheriff WH Holligan—
Opinion of the Court—
[1] In this appeal, the pursuers and appellants (‘the pursuers’) seek payment from the defender and respondent (‘the defender’) of the sum of £7,000. The pursuers raised an action for payment against the defender in Edinburgh Sheriff Court. The defender resides in Germany. The pursuers' cause of action is founded upon a contract whereby they provided educational services to the defender. The sum sued for relates to unpaid fees. The educational services provided by the pursuers to the defender led to the award of a doctorate in business administration (‘DBA’).
[2] The pursuers aver that the contract was a contract for services and that payment for the services was to be made to the pursuers by the defender at the pursuers' premises in Edinburgh. The pursuers also aver that the place of performance of the contract was at the pursuers' premises in Edinburgh. The defender avers that the contract was a consumer contract and that the court has no jurisdiction. He avers that the courts in Germany have jurisdiction.
[3] The action went to debate. The sheriff sustained the defender's plea of no jurisdiction and dismissed the action. Against that interlocutor the pursuers have appealed.
[4] In art 3 and answer 3, the parties condescend in detail as to why they say the court does, or does not, have jurisdiction. Without setting out all of the averments in detail, most of the pursuers' averments are directed at refuting the defender's averments that the contract was a consumer contract. In support of their averment as to jurisdiction, the pursuers say little other than the place of performance of the contract was in Edinburgh and that payment was to be made in Edinburgh. Whether the place of performance relates to the provision of services, payment or both is not, as a matter of averment, entirely clear.
[5] In support of his proposition that the contract was a consumer contract, and paraphrasing the defender's averments, the defender says that he resides in Germany and undertook studies via the pursuers' distance-learning programme. The course was online and not based at the pursuers' campus. The defender undertook his studies on a full-time basis. He did not have a career in economics or private equity nor is he now employed in such a field. He avers that he undertook his studies as a student and ‘not a professional’. As an individual, he was self-funding. He avers that he worked occasionally as a self-employed consultant prior to the award of the DBA. His earnings were below the threshold which would attract the payment of taxation in Germany; he was latterly exempted from the payment of tax in Germany on account of his full-time studies with the pursuers. All the work which he undertook in relation to his studies was undertaken in Germany, including the sitting of exams. All written submissions, coursework and engagement of supervision was conducted online or by telephone. The defender's thesis was conducted by video conference. In short, the defender avers he was not acting in a professional capacity in relation to the subject-matter of the dispute between the parties.
[6] In answer, the pursuers aver that the contract is not a consumer contract. They aver that the defender was employed in the fields of tax, audit accounting and financial control between 1993 and 2002. They aver that in 2003 he became self-employed in the fields of finance and business administration. In 2009, he completed a two-year part-time master's degree in business administration (‘MBA’) in Germany. The purpose of that qualification was to provide him with knowledge and skills to take on greater responsibility and obtain higher-level management positions. The pursuers aver that the MBA was a professional qualification which the defender intended to use to promote his business as a self-employed consultant. In particular, the pursuers aver that in his application he described himself as a ‘busy self-employed consultant’. The pursuers offer to prove that the defender studied on a part-time basis while continuing to work. The subject-matter of his chosen field of study was closely connected to his self-employment as a consultant in finance and business administration. The defender's study had a business purpose, namely the furtherance of...
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