Crowther and Another v Rayment and Another
| Jurisdiction | England & Wales |
| Judge | Mr Justice Andrew Smith,Mr Justice Andrew Smith: |
| Judgment Date | 25 February 2015 |
| Neutral Citation | [2015] EWHC 427 (Ch) |
| Docket Number | Case No: 2014-000056 |
| Court | Chancery Division |
| Date | 25 February 2015 |
[2015] EWHC 427 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Andrew Smith
Case No: 2014-000056
Iain Quirk (instructed by Fox Williams LLP) for the Claimants
Saira Paruk (instructed by Miller Rosenfalck LLP) for the Defendants
Hearing dates: 12 & 13 February 2015
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
By a series of agreements made in and after 2008 Mr and Mrs Paul Crowther leased a property in France to Mr Stephen Rayment or Ms Jayne Perrott, who were married in 2013. I shall refer to Mr and Mrs Crowther as "the lessors", and the term "the lessees" refers to Mr Rayment or Ms Perrott or both of them, according to the context. The lessors have brought proceedings for an order under section 18 of the Arbitration Act, 1996 for the appointment of an arbitrator or directions therefor, and the lessees have brought proceedings for relief under section 72 of the 1996 Act on the basis that there is no valid and relevant arbitration agreement.
The evidence
There is no important issue of primary fact between the parties. The lessors rely on two statements made by Ms Rebecca Richardson of their solicitors, Fox Williams LLP. The lessees rely on statements of Mr Mathieu Doublet, a French avocat and a solicitor with Miller Rosenfalck LLP, who act for them, and of Ms Rita Massad, an avocat who is acting for them in French litigation.
The lessees also sought to rely on evidence of Mr Alexis Mourre, a French avocat, about whether French law would consider that the terms between the lessors and lessees give rise to an arbitration agreement. They had not sought or obtained permission to do so, although Fox Williams said in an email dated 29 October 2014 that this was required. At the hearing Ms Saira Paruk, who represented the lessees, sought to argue that evidence of foreign law is not expert evidence for which permission is required under the Civil Procedure Rules ("CPR") 35.4(1). I do not accept that: although in some ways it is an atypical species of the genus, evidence of foreign law is undoubtedly regarded as expert evidence in civil proceedings: see Civil Evidence Act, 1972 s.4(1) and Dicey, Morris & Collins, The Conflict of Laws (15 th Ed, 2012) para 9–013. Therefore, Ms Paruk made an oral application for permission to adduce Mr Mourre's statement. However, the relevant question in this case is whether the terms agreed by the lessors and lessees gave rise to an arbitration agreement within the meaning of the 1996 Act, and, when asked the relevance of evidence about how French law would regard the agreement, Ms Paruk did not press the application. The statement of Mr Mourre is therefore not in evidence. I add only that in my judgment it opined on the application of French law to the facts of the case more directly than is permissible: see Phipson on Evidence (18 th Ed, 2013) para 33–75.
The lease agreements
The first lease of the property was dated 19 December 2008, and the parties were the lessors and Mr Rayment as tenant. It was for a term of two years from 1 January 2009 to 31 December 2010. The lease was written in English. The address given for the lessors was in England, and Mr Rayment's address was in Dubai. Ms Perrott was named as a "Permitted Occupant" of the property (as was a housekeeper). In the "Tenancy Particulars", under the heading "The Parties", "The Agent" was named as "Royal Villas Europe, c/o Mrs Janette Gimbert, Royal Villas Management Ltd, Reg no 168380, Reg Office, 2 Kastoras Street, CY 1087 Nicosia, Cyprus", and in the General Tenancy Conditions the lease defined "Agent" in similar terms. The lease also included in the General Tenancy Conditions an agreement that:
"the laws of England and Wales shall apply to this Agreement. In the event of a conflict between any legal or procedural requirements applicable to a property based in France, where the Laws of England do not apply, the Laws of France shall apply".
The Tenancy Particulars referred to a deposit of €60,000 to be paid by 5 July 2009 and "held by The Landlord's solicitors as Stakeholders until the expiration or sooner determination of the Tenancy and to be returned with any interest gained by them as detailed in clause 5.2 hereunder", and the "Stakeholders" were named as Thompson, Snell & Passmore, a firm of solicitors. However, clause 5.2 of the General Tenancy Conditions contained contradictory provisions about the deposit, both as to when it was to be paid and who was to hold it: "Before the commencement of the Tenancy hereby created the Tenant shall deposit with the Landlord's Agent as stakeholders the aforementioned sum to be held against all possible liability arising by reason of the Tenant's failure to observe and perform" his obligations. It went on to make detailed provision about how and when the deposit might be used to compensate the lessors for losses and what should happen in the event of a dispute, including this:
"5.2.7 At the end of the tenancy the Agent must tell the tenant within 10 working days of the end of the tenancy if they propose to make any deductions from the deposit.
5.2.8 If there is no dispute the Agent will keep or repay the Deposit, according to the agreed deductions and the conditions of the tenancy agreement. Payment of the deposit or any balance of it will be made within 10 working days of the Landlord and the Tenant agreeing the allocation of the deposit.
5.2.9 The Tenant should try to inform the Agent in writing if the Tenant intends to dispute any of the deductions regarded by the Landlord or the Agent as due from the deposit within 20 working days after the termination or earlier ending of the Tenancy and the Tenant vacating the property.
The Agent is hereby granted the ability to instruct the release of funds from the Stakeholder but may only instruct for the transfer of those funds to either the landlord or the tenant and no other party. In the event that the Agent ceases to trade or to be available for any reason, then the Stakeholders will appoint a new Agent, independent of all parties and with experience in property leases, who will decide on any payments in respect of the damage deposit on behalf of the parties.
5.2.10 If after 10 working days following notification of a dispute the Agent and reasonable attempts having been made in that time to resolve any differences of opinion, there remains an unresolved dispute between the Landlord and the Tenant over the allocation of the Deposit the dispute will (subject to 5.2.11 below) be submitted to the ICE for adjudication. All parties agree to co-operate with the adjudication.
5.2.11 If the amount in dispute is over €40,000 the Landlord and the Tenant agree to submit to formal arbitration through the engagement of an arbitrator appointed by the ICE although, with the written agreement of both parties, the ICE may at his discretion accept the dispute for adjudication. The appointment of an arbitrator will incur an administration fee, to be fixed by the Board of The Dispute Service Ltd from time to time, shared equally between the Landlord and the Tenant; the liability for any subsequent costs will be dependent upon the award made by the arbitrator.
5.2.12 The statutory rights of the Landlord and the Tenant to take legal action through the County Court remain unaffected by clauses 5.2.7 to 5.2.11 above."
Thus, the parties distinguished between "adjudication" and "arbitration". For completeness, I add that the General Tenancy Conditions also provided for a "floating deposit" of €15,000 to €20,000 to cover the lessors' payments for utilities and staff costs, which was to be paid into an account of the lessors in France.
By a further lease between the lessors and Mr Rayment (the "second lease") it was agreed that the first lease be terminated and replaced with a term from 12 January 2010 to 11 January 2011. The lessors' and Mr Rayment's addresses were again in England and Dubai respectively. As in the first lease, Royal Villas Europe was named as the Agent, with the same address in Cyprus. There were English and French versions. According to Ms Richardson, the second lease was dated 12 January 2010, but the English copy in evidence is not dated. Under a (misleading) heading "Jurisdiction" it provided, "This agreement is subject to French law. An informal translation is attached to this agreement. The parties expressly agree that in the event of conflict or discrepancy between the French and the English version, the French version will prevail". (There was no relevant conflict between the versions of the second or the third lease, which has a similar provision.)
The second lease provided for a "floating deposit" of not less than €15,000 to cover utility and other charges, and then, with regard to the deposit, it provided that:
"In order to guarantee the performance of this Lease and to make provision for the damage that could be caused to the rental property, as well as the various charges and cost of utilities mentioned above, the Lessee will pay on the date of signature of this agreement an amount of [€60,000], as a guarantee, which amount does not bear interest. The Lessor expressly requests the Lessee to pay the deposit to the Agent. Such amount will be retained in escrow by the Agent which is accepted by the Agent. The deposit will be returned within two months from the date of departure of the Lessee, reduced by any the [sic] amount due to the Lessor under this lease plus amounts which were paid by the Lessor but should have been paid by the Lessee. … In the event the deposit is not returned to the...
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