The developers of a Kent hotel who ran out of funding three weeks before opening have failed in a claim that their administrators later sold the premises at an undervalue.
The Court of Appeal upheld a ruling granting summary judgment to the administrators in the action brought by Innes Berntsen and Christopher Richardson, whose limited liability partnership Coniston Hotel (Kent) LLP sought to develop the hotel.
Berntsen and Richardson earlier failed in an action against the National Westminster Bank, the LLP’s lender, which they alleged had appointed administrators precipitately after the LLP ran out of loan facilities with the work not yet complete. The LLP was ultimately wound up.
The two men brought these claims of mismanagement and misconduct of the administration, alleging that the hotel was sold at an undervalue to another member of the Royal Bank of Scotland group, West Register. West Register finished the development and now runs the hotel.
They claimed that they had a valuation of the hotel from Savills showing the hotel would be worth £7.7m on completion, and that they could have finished the work for as little as £200,000.
However, the hotel was sold for only £4.25m, leaving a deficiency in the administration of almost £6.3m, with Berntsen and Richardson loan creditors for £4.4m.
However, upholding the grant of summary judgment to the administrators, Arden LJ said that the two men had “no real prospect of success at trial”.
She said that, while the sale to West Register made her “scrutinise what happened with scepticism”, she found that there had been a considerable marketing exercise carried out prior to sale of the hotel, and that it was impossible for Berntsen and Richardson to get round this evidence.
Berntsen and anr v Tait and anr Court of Appeal (Arden, Longmore & Jackson LJJ) 13 October 2015
The appellants appeared in person
Justin Fenwick QC and Ben Smiley (instructed by Mayer Brown International LLP) for the respondents
