Grandlane Developments Ltd v Skymist Holdings Ltd

Citation: [2019] EWHC 747 (TCC)

Skymist was an offshore company. In 2013, they purchased a property for renovation, and appointed Grandlane to manage the development of the property. Grandlane appointed PTP as project architects and began work. In 2017, Skymist terminated Grandlane’s appointment on the basis of dissatisfaction with Grandlane’s performance. Grandlane initially claimed unpaid fees of around £480,000. Nine months later, they made a revised claim of £1.6 million, the majority of which related to PTP’s fees.

Skymist was concerned that Grandlane had colluded with PTP to present an inflated claim for fees. Grandlane referred the claim to adjudication, and the adjudicator made a decision in Grandlane’s favour.

At the same time that Grandlane applied to enforce the decision in the TCC, Skymist applied for pre-action disclosure in the Commercial Court. On the basis of the documents disclosed, Skymist took the view that Grandlane colluded with the architects in the presentation of Grandlane’s claim to the adjudicator.

Skymist made the following submissions in response to Grandlane’s application to enforce:

  • The adjudicator’s decision should not be enforced because it was tainted by fraud.
  • In the alternative, the application ought to be adjourned at least until after the further application for pre-action disclosure and the consideration of further disclosure.
  • If summary judgment were to be granted, then there should be a stay of execution.

Mrs. Justice Jefford granted Grandlane’s application for summary judgment and refused Skymist’s applications for adjournment and a stay.

The disclosed documents explained why PTP’s fees increased dramatically in nine months. In the first email, PTP had indicated that the fees would be higher. Given that Grandlane did not have the funds to discharge their liability, they agreed with PTP to mitigate their exposure by taking the claim to Skymist. There was nothing in the documents to infer that Grandlane was seeking to inflate the claim. There was no clear and unambiguous evidence of fraud.

Counsel for Skymist submitted that the effect of any agreement between Grandlane and PTP would constitute deceit. This was dismissed by the court. Grandlane’s liability was not reduced by some agreement that PTP would pay for something different. In any event, fraud could and should have been raised in the adjudication.

In the alternative, Skymist submitted that the hearing should be adjourned because they had a ‘continuing suspicion’ that there was clear evidence of fraud. They relied on the failure to disclose any agreement between PTP and Grandlane. This was dismissed. There was no dishonest attempt to keep from Skymist any agreement with PTP as to the payment of costs of the adjudication. Grandlane never positively denied that there was no agreement with PTP to ‘take a cut’. There was nothing in the pre-action disclosure which amounted to clear and unambiguous evidence of fraud.

Lastly, Skymist submitted that there was clear evidence that Grandlane would be unable to repay the judgment sum, and therefore a stay was justified. This was dismissed. There had been little change in Grandlane’s financial position since the date of its appointment and any impecuniosity had been caused by Skymist in any event.  Further, there was scant evidence that Grandlane would dissipate its assets to avoid repayment. It was still trading. None of the evidence submitted went far enough to justify a stay of execution.

Jonathan Selby QC acted for the claimant.

Full Judgment

Counsel

Jonathan Selby QC

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