1. By a lease dated 2 September 1998 (“the Lease”) made between (1) the Claimant as landlord (2) Hancock Inns (Southern) Ltd as tenant (“the Lessee”) and (3) the Defendant as guarantor, the Claimant let to the Lessee a public house at Welling in Kent for a term of 20 years from 20 March 1997 at an initial rent of £25,000 per annum.
2. By clause 7(i) of the Lease the Defendant in consideration of the demise contained in the Lease covenanted with the Claimant that the Lessee should pay the rent payable under the Lease and should duly perform and observe all the covenants on the Lessee’s part contained in the Lease. It was further provided that in default of performance or observance of any of the covenants by the Lessee during the Term, the Defendant would on demand make good all loss damage costs and expenses thus arising or incurred by the Claimant.
3. At the date of the Lease all the parties were resident in
4. Forfeiture was affected by peaceful re-entry on 5 August 2008, demand was made in
5. At some point, I believe in 2003, the Defendant went to live in Council the Regulations, domiciled in
“1. Persons domiciled in a
6. My attention has been invited to the following Articles of the Regulation
“Article 5
A person domiciled in a
1-(a) in matters relating to a contract, in the courts for the place of performance of the obligation in question;
Article 22
The following courts shall have exclusive jurisdiction, regardless of domicile:
1. in proceedings which have as their object rights in rem in immovable property or tenancies of immovable property, the Courts of the Member States in which the property is situated ……….”
7. Before considering the submissions of each party, I would mention that the Court of Appeal in Ashurst v Pollard and another [2001] Ch 595 has given guidance on the meaning of “object” as used in Article 22(1) of the Regulation (which was then Article 16(1)); at paragraph 41 of the judgment Jonathan Parker LJ said:
“Thus the Advocate General equated proceedings which have “as their object” rights in rem (see article 16(1)) with proceedings where the “principal subject matter” of the claim relates to rights in rem.”
8. Returning to Article 5(1)(a) the Defendant says that the Claimant’s claim although expressed in terms of arrears of rent, damages, interest and legal and other costs is, in fact, a claim for compensatory damages for non-performance, as opposed to, say, a claim in debt: Moshi v Lep Air Services Ltd [1973] AC 331. The Claimant accepts that this is a correct view of the law.
9. This being so, Mr Macpherson, for the Defendant, submits, in his skeleton argument, that the obligation to pay damages for non-performance is a separate independent obligation from the obligation to discharge alleged sums owing under the guarantee. The alleged obligation of the Defendant does not arise until such time as he was served with a demand. The demand was made of the Defendant in
10. As to Article 22 Mr Macpherson dismisses its applicability to this case by pointing out that the claim is against a guarantor for damages, whereas Article 22 is concerned with rights in rem and lessees, as opposed to the Defendant’s position as a guarantor.
11. Mr Steinert focused his argument on Article 22 of the Regulation, pointing out that if it applies it confers exclusive jurisdiction on the English courts.
12. Mr Steinert asks what is the “principal subject matter” of this case (per Ashurst v Pollard)? The answer, he says, is the lease and the obligations and liabilities arising under it. He points out that there is a claim for dilapidations which involves a factual investigation of the state of repair of the Public House and the possibility of the Defendant raising a defence under s. 18 of the Landlord and tenant Act 1927. He drew my attention to paragraph 53 of Ashurst v Pollard:
“In considering whether Article 16(1) applies in any particular case …. [consider] whether the proceedings involve a factual investigation which is best carried out by the Courts of the state in which the property is situated and/or questions of local law and practice are raised.”
13. The Claimant relies on Roesler v Rottwinkel [1986] QB 33, a decision of the European Court of Justice, particularly paragraph 14 at page 57 and paragraphs 18-20 pages 58/59. At paragraph 20 the Court commented
“Article 16(1) seeks to ensure a rational allocation of jurisdiction by opting for a solution whereby the court having jurisdiction is determined on the basis of its proximity to the property since that court is in a better position to obtain first-hand knowledge of the facts relating to the creation of tenancies and to the performance of the terms thereof.
He also drew my attention to paragraphs 23-29 (pages 59/60).
14. In another decision of the European Court Elizabeth Hacker v Euro Relais GmbH (22 February 1992) the court considered Roesler v Rottwinkel and indicated its agreement to the view of the legislation described by the Court in the earlier case.
15. On the reasoning to which I have referred, the Claimant argues that the proper approach is to adopt a purposive interpretation of the provisions of Article 22.
16. In reply Mr Macpherson rejected this, saying, in effect, that the Claimant’s view of the matter is over elaborate in that the only issue is to establish what the value of the claim is, and as it does not involve complex legal issues then there is nothing to preclude the French Court from dealing with the case in accordance with Article 2.
17. I understand Mr Macpherson’s argument that we are dealing with a matter which is to be categorised simply as the assessment of damages, an investigation which the French Courts could normally undertake. However, in my judgment that is to overlook the fact that a guarantor of the obligations in a lease is able to avail himself of any defence that would be, or, would have been, available to a lessee. In particular, a claim involving dilapidations, will almost always require expert valuation evidence, particularly where a section 18 defence is raised. In short, I accept that the subject matter of the action is the lease.
18. I accept Mr Steinert’s argument that the Courts, both European and domestic, have, when considering Article 22 (or Article 16 as it was), favoured a purposive interpretation of the Article, even a pragmatic one: see for instance paragraph 53 of Ashurst v Pollard. The English Court is in my judgment, not only the best forum for establishing the factual basis of the claim but also the only court which can deal with the questions of the English law of landlord and tenant which arise. For these reasons I hold that the English Courts have exclusive jurisdiction under Article 22 and I refuse, for this reason, the declaration as sought by the Defendant.
19. It follows that I do not need to consider the arguments with regard to the application or otherwise of Article 5(1)(a), as my decision on Article 22 is sufficient to dispose of the matter. However out of deference to the very full arguments which have been made I ought to deal with this aspect, as well.
20. The Defendant reminds me that his alleged obligation to pay the Claimant, is for the payment of damages. The demand was made in
“[the Lessor] will pay and make good to the Company on demand all loss and damage costs and expenses thereby arising or incurred by the Company ….”
21. It seems to me that my task is to ascertain whether the Lease imposes an obligation to pay in
22. It is my judgment that it is an irresistible implication of the Lease that the place for payment by the Tenant’s guarantor, in respect of any liability under the guarantee, is
23. The demand for payment may have been made in
24. Having found that the place of payment is