Skymist Holdings Limited v Grandlane Developments Limited

Case reference: 
[2018] EWHC 3504 (TCC)
Wednesday, December 19, 2018

Key terms: 
Adjudicators – Termination – Jurisdiction – Approbation and Reprobation

The case concerned a Part 8 challenge to the decision of an Adjudicator. The dispute was between Skymist Holdings Limited (“Skymist”) and Grandlane Developments Limited (“Grandlane”). Grandlane was appointed by Skymist to provide development and project management services at a property in Hampshire. By a letter dated 27 October 2017, Skymist terminated Grandlane’s appointment. Grandlane claimed that it was owed substantial sums at the date of termination and commenced adjudication proceedings to recover those sums. Skymist and Grandlane accepted that the relevant contract between the parties was subject to the Scheme for Construction Contracts (England and Wales) Regulations 1998 (the “Scheme”), however, there was uncertainty over the actual documents which formed the contract.  

On 10 August 2018, Grandlane sent a Notice of Adjudication to Skymist. On 13 August 2018, in accordance with paragraph 2(1)(b) of the Scheme, Grandlane requested the CIArb to nominate an Adjudicator. Clause 14.2(b) (the “Clause”) provided that the CIArb was the Adjudicator Nominating Body (the “ANB”). Grandlane claimed that the Clause was part of the contract between the parties. Grandlane also referred to parts of a Draft Deed of Appointment (the “DOA”) in its application for an Adjudicator. The DOA was a heavily revised and redrafted agreement which was never signed by the parties. Mr Silver was nominated by the CIArb as the Adjudicator. Skymist contested the jurisdiction of Mr Silver, submitting that the contract between the parties did not include the Clause. As a result, Grandlane withdrew its Notice of Adjudication. 

Grandlane submitted a new Notice of Adjudication and asked the RICS to nominate an Adjudicator. This application was made pursuant to Paragraph 2(1)(c) of the Scheme, which provides that, where an Adjudicator or an ANB is not specified in the contract, the applicant can request any ANB to nominate the Adjudicator. The RICS nominated Mr Riches. Mr Riches accepted that he had jurisdiction and proceeded with the adjudication. Skymist made a Part 8 application, challenging the decision of the Adjudicator. In summary, Skymist claimed that:

(1) The Adjudicator found that the relevant contract between the parties included the DOA or, at the least, incorporated the Clause into the contract. Therefore, the Adjudicator should have been nominated by the CIArb and not the RICS; and

(2) Because Grandlane’s position was that the contract was constituted by the DOA, Grandlane had to follow the DOA when appointing an Adjudicator – i.e. it was required to apply to the CIArb for an Adjudicator. Skymist argued that Grandlane had effectively approbated and reprobated the DOA and was, therefore, precluded from applying to the RICS to nominate Mr Riches.   

On either basis, Skymist claimed that the Adjudicator did not have jurisdiction. 

Mr Justice Waksman dismissed Skymist’s claim. Firstly, the Judge held that the Adjudicator did not find that the DOA was the contract between the parties or, at the least, did not find that the Clause was a term in the contract. As the Adjudicator had not made this finding, they had not accepted that Grandlane was precluded from applying to the RICS for an Adjudicator nomination.   

Mr Justice Waksman summarised the principles which needed to be apparent for approbation and reprobation:

(1) The approbating act or conduct in question needed to be clearly defined and unequivocal; 

(2) The approbating party must gain a clear benefit from the approbation; and

(3) The reprobating act must be clearly inconsistent with the earlier approbation and must be clear and unequivocal too. 

Mr Justice Waksman held that Grandlane had not approbated the DOA in its entirety. Grandlane did not clearly suggest that its case was founded upon the DOA as a whole or upon a contract which included all or even most of the terms in the DOA including the Clause. Furthermore, the Judge explained that Grandlane received no clear benefit as a result of the alleged approbation. As a consequence, the Court held that Skymist’s approbation and reprobation claim failed, which meant that Skymist’s claim failed as a whole.  

The case highlights the importance of agreeing terms which outline a clear route for the appointment of an Adjudicator. This will provide certainty and avoid the time and cost implications involved with disputing the adjudication procedure.

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Tel: +44 (0)20 7421 1986