Muireann Gaffney t/a Art of Fitness v Life Fitness (UK) Ltd

• Jurisdiction: Ireland
• Judge: Mr Justice Michael Peart
• Judgment Date: 26 February 2015
• Neutral Citation: [2015] IEHC 123
• Docket Number: Record Number: No. 4515P/2012
• Court: High Court
• Date: 26 February 2015

[2015] IEHC 123

THE HIGH COURT

Record Number: No. 4515P/2012

Muireann Gaffney t/a Art of Fitness v Life Fitness (UK) Ltd

No Redaction Needed

Between:

Muireann Gaffney trading as Art of Fitness

Plaintiff

And

Life Fitness (UK) Limited

Defendant

Contract law – Breach of contract – Negligence – Breach of duty – Damages – Period of notice – Jurisdiction clause – Whether Irish court had jurisdiction to hear and determine plaintiffs claim – Defendant sought striking out of proceedings – EU law – Regulation No. 44/2001

Facts The plaintiff is a distributor of gym equipment. She entered into an exclusive distribution agreement with the defendant company, who manufactured said equipment, in 2001. The defendant company was a UK company with registered offices in Ely, Cambridgeshire. The agreement was for the duration of three years and was to expire in July 2006. Upon expiry, no renewal or further agreement was entered into, however, a year later one was executed by the plaintiff but not the defendant, yet the relationship continued as before. A renewal contract was proposed in 2009 but was executed by neither party. Notably, the latter Agreements contained a jurisdiction clause in precisely the same terms as the 2001 Agreement.

Pursuant to the proceedings, the plaintiff alleged the parties' agreement was unlawfully terminated in circumstances where only three months' notice of termination was given by the defendant after the contractual relationship between the parties had endured for eleven years. She claimed damages for breach of contract, negligence and breach of duty. She also sought a declaration that the period of notice given was in violation of the terms of the contract. The defendant sought an order pursuant to Order 12, rule 6 RSC either dismissing or striking out the proceedings on the basis that the parties had mutually agreed to submit to the jurisdiction of the English courts for the purpose of any disputes arising on foot of their agreement and as a result the Irish Court had no jurisdiction to hear or determine the plaintiffs claim.

Held On inspection of the emails exchanged between the two parties there was no doubt that each party considered itself contractually bound, even after the expiration of the 2001 Agreement. They continued to trade together as they had before, even though the 2007 Agreement was never executed by the defendant company and the 2009 Agreement was executed by neither. The judge was satisfied that execution of the 2007 Agreement by the plaintiff was sufficient evidence that she was satisfied that the English jurisdiction clause that bound the parties under the 2001 Agreement should continue to bind them.

-The judge made an order pursuant to Order 12 RSC striking out the proceedings by virtue of Regulation No. 44/2001. He concluded the Court had no jurisdiction to hear or determine the plaintiff's claim against the defendant.

Judgment of

Mr Justice Michael Peart

1 The plaintiff is a distributor of gymnasium equipment and a sales person. In July 2001 she entered into an exclusive distributor agreement with the defendant company which is a UK company with registered offices in Ely, Cambridgeshire, United Kingdom. It manufactures such equipment. The agreement was for a period of three years expiring in July 2006, and extended to the island of Ireland. Upon the expiry of the agreement in July 2006 no further agreement was executed by both parties, though the plaintiff executed a renewal contract in 2007 which the defendant had furnished to her. It was never executed by the defendant thereafter. However, the relationship continued as before.

2 The plaintiff in these proceedings alleges that the parties' agreement was unlawfully terminated in circumstances where only three months' notice of termination was given by the defendant after the contractual relationship between the parties had endured for eleven years. She claims damages for breach of contract, as well as for negligence and breach of duty. She also seeks a declaration that the period of notice given is unreasonable and in breach of contract. The facts alleged to constitute breach of contract are relied upon also in respect of the claims which she makes in tort.

3 The plaintiff commenced her proceedings by way of Plenary Summons, and served notice of such proceedings upon the defendant at its registered office in the United Kingdom pursuant to the provisions of Order 11 A RSC. That notice contained the endorsement required in such cases stating that"this Honourable Court has power under Article 5(1) of Regulation No. 44/2001 ("the Regulation") to hear and determine the instant claim; and no proceedings between the parties concerning the same cause of action are pending between the parties in another member state of the European Union".

4 Where the proceedings are brought against a defendant company whose registered office is in a member state of the European Union other than Ireland, the proceedings may, in accordance with the Regulation, be served outside this jurisdiction without any order of the Court, provided that there is no reason under the Regulation why the proceedings must be commenced in the jurisdiction where the defendant's registered office is located.

5 Having been served with notice of these proceedings, the defendant instructed Irish solicitors to enter a conditional appearance only, so that it could contest jurisdiction. Having entered such an appearance on the 25^th June 2012, the plaintiff delivered a Statement of Claim on the 19^th December 2012. Thereafter on the 18^th June 2013 the defendant's solicitors issued and served the present motion which seeks an order pursuant to Order 12, rule 6 RSC either dismissing or striking out these proceedings on the basis that the parties had mutually agreed to submit to the jurisdiction of the English courts for the purpose of any disputes arising on foot of their agreement, be that written or oral in nature, and that therefore under Article 23 of the Regulation this Court has no jurisdiction to hear and determine the plaintiff's claim against the defendant.

6 Article 5 of the Regulation provides at (1) that a person domiciled in a member state may be sued in matters relating to contract in"the courts for the place of performance of the obligation in question", and for the purpose of that provision, the Regulation goes on to state that "unless otherwise agreed, the place of performance of the obligation in question shall be - in the case of the sale ofgoods, the place in a Member State where under the contract the goods were delivered or should have been delivered…".

7 Article 5 (3) provides that a person domiciled in a Member State may be sued in relation to a claim in, inter alia, tort"in the courts for the place where the harmful event occurred or may occur".

8 However, the defendant relies upon Article 23 (1) of the Regulation in order to deprive this Court of jurisdiction to determine the issues raised in these proceedings by the plaintiff. This provides:

9 2 "23. 1. If the parties, one or more of whom is domiciled in a Member State, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction. Such jurisdiction shall be exclusive unless the Parties have agreed otherwise. Such an agreement shall be either:

a (a)in writing or evidenced in writing; or

10 b (b)in a form which accords with practices which the parties have established between themselves; or

11 (c) in international trade or commerce, in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by parties to contracts of the type involved in the particular trade or commerce concerned."

12 9. The defendant's motion is grounded upon the affidavit of its National Sales Manager, Richard Burden. He sets out the business relationship that developed between the defendant and an Irish company, Art of Fitness Limited (AoF) in 2001. As stated at the outset, the defendant manufactures gymnasium equipment, and by written agreement...