Heifer International Inc. v Christiansen

Hearing dates: 8 th, 9 th 10 th

This is an application by five Danish Defendants against the Claimants, Heifer International Inc (Heifer), (1) to stay proceedings in this court pursuant to Section 9(1) of the Arbitration Act 1996, (2) that the claims against each of the Defendants should be dismissed and (3) that the Court has no jurisdiction to hear the claims against them. Each of the Defendants contends that any dispute between it and the Claimant should be heard in the Danish Building and Construction Arbitration Board in Copenhagen (the Danish Arbitration Board) according to Danish law.

The applications are made on two separate grounds. First, the Second to Fifth Defendants contend that they carried out work pursuant to binding contracts which contained an arbitration clause specifying the Danish Arbitration Board as the exclusive venue for the determination of disputes.

Secondly, if this Court finds that there was no contract, alternatively no contract which incorporates the arbitration clause, the First and Second named Defendants contend that the Court has no jurisdiction by reason of the Brussels Convention and Judgment Regulations made pursuant to the Brussels Convention namely that the normal rule is that persons domiciled in a member state shall be sued in the court of that member state. It is contended that, under Article 5 of the Convention, the first two Defendants, the architect and his firm, carried out their obligations in Denmark and therefore should be sued in Denmark.

The First Defendant claims that he did not enter into any agreements personally and that the claims against him should not proceed in any event. This is not the subject of a formal application before me but if necessary this application will be made if the outcome of the present application warrants it.

The Claimant disputes the applications made by the Defendants on the grounds:

i) That the arbitration provisions relied on by the Defendants were not incorporated into the relevant contract.

ii) If they were incorporated, they were unfair terms and are not binding on Heifer pursuant to Regulation 8(1) of the Unfair Terms in Consumer Regulations 1999.

iii) While the Claimant accepts that the Brussels Convention applies, it contends that Article 2 is subject to Article 5 and that “the place for the performance of the obligation in question was, when all relevant matters are considered, England and not Denmark”.

The dispute relates to the refurbishment of a substantial house known as Tor Point, Tor Lane, St Georges Hill, Weybridge in Surrey (the property). The property is a very substantial one which according to the plans has a very large number of rooms.

Mr Alex Temple, also known as Mr Alexsandr Aleksandrovich has given four witness statements and also extensive oral evidence. He is a Russian national who is at present residing full time in England with his wife and children and has been since September 2004. He has a shipping transportation business shipping oil.

In December 2005 Heifer purchased the property in the following circumstances set out in paragraph 4 of Mr Temple's first witness statement:

“When we were looking for a property to buy as our home, my wife was advised as part of her overall wealth management and Inheritance Act planning to establish an off-shore company and to use that company to purchase our home in England. She therefore established Heifer International Inc in the British Virgin Islands … The Claimant is beneficially owned by my wife and children.”

Mr Temple decided that the quality of Danish workmen was superior to those in the United Kingdom and the Defendants, all of whom are resident in Denmark, were retained in connection with the refurbishment of the property.

The First Defendant, Mr Christiansen, is a very experienced Danish architect residing and practising primarily in Denmark although he has carried out work in other countries. The Second Defendant is his firm, which is a Kommanditselskab, a legal entity under Danish law which is owned by Mr Christiansen. It is the entity under which he and his associates carry out their architects practice in Denmark.

The Third Defendant, Haslev-Hansen VVS (Haslev-Hansen) is a Danish company, resident in Denmark which provides heating, ventilation and mechanical engineering services.

The Fourth Defendant, Stevns El-Service A/S (Stevns) is a Danish company, also resident in Denmark which provides electrical installation services.

On 23 May 2007 Stevns brought proceedings against Heifer in the Danish Arbitration Court in connection with this dispute asserting the jurisdiction of the Danish Arbitration Court and claiming DKK 388,391.76 (about £40,000) for unpaid invoices. The pleading is in similar form to particulars of claim in this jurisdiction.

The Fifth Defendant, Listed El-Teknik ApS (Listed), is owned by Mr Listed who is also a director. It carries out electrical services and in the middle of November 2006 it took over the electrical works at Tor Point.

THE PARTICULARS OF CLAIM

Since I shall in due course have to consider where the principal obligation of the matters in dispute arose and/or the place where the harmful act occurred, it is important to set out how Heifer puts its case in the Particulars of Claim.

It claims that the dispute relates to alleged failures in connection with the refurbishment works at the house in St Georges Hill, Weybridge, owned by the Claimant.

The Particulars of Claim set out what is described as “the appointment” of the First Defendant alternatively the Second Defendant as the appointed architect namely that it was pursuant to an alleged oral agreement made at the Churchill Hotel in London in December 2005 (paras 7 —8).

The services to be provided by the First and/or Second Defendant and alleged to have been agreed were:

i) the preparation of all designs, drawings, specifications, bills of quantities and schedules of works (para 10(1));

ii) preparing tender documents and engaging suitably qualified building contractors to carry out the works (para 10(2));

iii) acting as Heifer's representative in relation to the works (para 10(3));

iv) the provision of all professional services necessary for the completion of the works (para 10(4)).

By forms of authority dated 31 March 2006 and 10 May 2006 it is alleged that the Claimant authorised and then gave the First Defendant a power of attorney to enter into contracts with craftsmen on behalf of the Claimant and to authorise payments for the craftsmen (paras 14 – 15).

In the event that there was no oral agreement in December 2005 and none which governed the relationship of the Claimant and the First and Second Defendants prior to April and May 2006, the Claimant will contend that there was no agreement between the parties (para 20).

The draft consultancy agreement signed in May 2006 did not, so it claims, constitute an agreement between the parties, alternatively, if it did, it expired on 25 May 2006 pursuant to Clause 1.5 of its terms. There was therefore no written agreement between the parties and no jurisdictional basis for the court to grant a stay under Section 9(1) of the Arbitration Act 1996.

The claim is made against the First and Second Defendants that the Claimant, through Mr Temple, made various payments during the course of the project totalling £1,476,432 (paid in Danish Krone, Euros and Sterling). It is contended that these funds were held on account by Mr Christiansen for the benefit of Heifer (para 34).

The work, so the Claimant alleges, remains incomplete and therefore it claims in paragraphs 38 and 39 of the Particulars of Claim:

i) an account of monies paid to the architect and the contractors;

ii) an enquiry into the balance of the money in the First Defendant's account;

iii) an order for payment out of any sums due and repayment of all sums paid to the Fourth Defendant;

iv) an order of delivery up of all work products prepared by the First and Second Defendant.

In relation to the Third Defendant it is claimed that the First Defendant acting on behalf of the Claimant engaged the Third Defendant to provide mechanical, heating and ventilation engineering services at the property. It is alleged (para 24 of the Particulars of Claim) that the Third Defendant was engaged on the basis of a lump sum quotation provided by the Third Defendant in relation to drawings prepared by or on behalf of the First Defendant.

The claim against the Third Defendant is for alleged defects in the works and the design of the works as set out in Appendix 2 of the schedule of defects.

It is claimed against the Fourth Defendant that it entered into an agreement with Mr Temple. It is claimed that since the material part of the arbitration agreement is not in writing and is inconsistent with the written form, the requirement of the agreement to be in writing is not satisfied.

In relation to the Fifth Defendant the Claimant makes the further argument that there is a distinction between the case where the arbitration agreement is incorporated by...