Dr John Refalo Noe vs Garden Of Eden Limited

Court of Appeal

Chief Justice Vincent De Gaetano

Judges

Albert J. Magri

Tonio Mallia

13 March 2007

This was an appeal from a First Hall, Civil Court decision of 6 October, 2006 that ordered the enforcement of a judgement delivered by the Central London County Court in England on 14 December, 2005.

In January 2002, Susan and John Gray, both domiciled in the UK, bought a package holiday to Malta from Travelsphere Ltd, a company registered and domiciled in the UK. The holiday cost £638, and included flights, transfers and accommodation. They were informed that if, while in Malta, they were interested in a tour or any other activity, they had to book and pay for such tour at their hotel.

In fact, while in Malta, the couple paid for an excursion to Gozo. The coach on which they travelled during this excursion was the property of the defendant company. On the day of the excursion, the coach was involved in a traffic accident and the couple

suffered injuries. They claimed that this constituted a breach of contract and sued both Travelsphere Ltd and Garden Of Eden Ltd for damages.

The plaintiff was acting as a special mandatory and in representation of the absent John and Susan Gray. The English Court condemned the defendant company to pay the Grays £4,000. The First Hall ordered the execution of the English sentence by virtue of Article 33 of Council Regulation 44/2001 of the EU.

Garden of Eden Ltd appealed against the judgement on the basis of Article 43 of the same regulation. It stated:

A sentence delivered in a member state of origin of the EU can be declared enforceable in another member state (member state addressed) on the basis of Regulation 44/2001, so long as certain fundamental conditions are fulfilled.

The Court of the member state addressed before which the plea for the declaration of enforceability of the judgement delivered by the Court of the Member State of Origin is made must first and foremost ensure that all the fundamental conditions necessary to declare the sentence enforceable in the member state addressed are effectively satisfied.

The company contested the fulfillment of the first condition (ie that the case falls within Regulation 44/2001, or the Brussels or Lugano Convention… both as to its subject matter and by reference to the transitional provisions;) stating that it was not verified due to Article 66 of the Regulation which applies “to legal proceedings instituted and to documents formally drawn up or registered as authentic instruments after the entry into force thereof”.

It was not contested that the Regulation came into force in Malta on 1 May 2004, when Malta formally joined the EU. Since the acts were presented to the English Courts on 15 December, 2003, the appellant company stated that, in principle, the regulation should be deemed inapplicable to this case since the transitory provisions allegedly did not apply to this case.

Article 66(2) however states:

“… if the proceedings in the member state of origin were instituted before the entry into force of this regulation, judgments given after that date shall be recognised and enforced in accordance with Chapter III,

(a) if the proceedings in the member state of origin were instituted after the entry into force of the Brussels or the Lugano Convention both in the member state of origin and in the member state addressed;

(b) in all other cases, if jurisdiction was founded upon rules which accorded with those provided for either in Chapter II or in a convention concluded between the member state of origin and the member state addressed which was in force when the proceedings were instituted.”

The Court of Appeal felt that the relevant aspect to be determined was whether the English Court had jurisdiction to decide the case in question “founded upon rules which accorded with those provided for in Chapter II”.

According to these rules, the jurisdiction of the Court varied according to whether the obligation arose ex contractu (arising contractually), in which case the jurisdiction lies “in the courts of the place of performance of the obligation in question” or ex delictu (arising out of tort), where the jurisdiction lies in the hands of “the courts of the place where the harmful event occurred or may occur”.

Admittedly, the contract between the spouses and Travelsphere did not include the excursions but rather the option to take such excursions. The couple did not freely contract with local tour operators but with such individuals as the travel agent had directed them to deal with. Although optional, the excursions were part of the package holiday. Garden of Eden Ltd was a sub-contractor and was responsible ex contractu.

Hence, it transpires that the applicable jurisdiction was Malta, since it was the place of performance. However, Article 15 of the Regulation relates to consumer contracts under which this contract in question falls since it is a contract that was made “with a person who pursues commercial or professional activities in the member state of the consumer’s domicile or, by any means, directs such activities to that member state or to several states including that member state, and the contract falls within the scope of such activities”.

The excursion was bound and incidental to the package holiday. The couple were “consumers”, since they acted “in a private capacity… and not in the course of their business to pay by instalments for goods and services used” (Alexander Layton et, ed., Sweet and Maxwell, 2004). Article 16 provides that “A consumer may bring proceedings against the other party to a contract either in the courts of the Member State in which that party is domiciled or in the courts for the place where the consumer is domiciled”.

Hence, the fact that the Grays brought an action in the UK was legitimate and the jurisdiction of the English Court was “founded upon rules which [accord] with those provided for... in Chapter II ...”.

This particular rule does not apply to every “consumer contract” such as if it was “a contract of transport”. However, the contract was deemed by the Court as not being merely a transport contract but a tour comprehensive that included an excursion. Hence, it did not fall within the exception.

The Court also commented that Article 6 of the Regulation also deals with situations where the defendants are not of the same domicile: “A person domiciled in a member state may also be sued... where he is one of a number of defendants, in the courts for the place where any of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings”.

The Court felt that there was a clear link between the contracts in question. It said it would have been nonsensical to take separate actions against the two companies, risking conflicting judgments. It was desirable that the case be heard by one Court, and since the UK was the domicile of one of the defendants, this abided by the Regulation.

For the above reasons, the Court of Appeal rejected the appeal and confirmed the judgement of the First Hall.