Donnelly & Ors v Weybridge Construction Ltd

Damages must be supported by evidence addressing the value of the individual property or loss claimed. An aggregate valuation, or an expert assumption that contractual prices represented market value, may be insufficient. Fiduciary duties in a joint venture are shaped by the contractual relationship, but a partner’s existing business interests do not ordinarily qualify duties owed in respect of the very transaction comprising the joint venture. A conflict of personal interests does not cause the fiduciary duty to disappear. A claim for loss of a chance to settle must be properly pleaded and supported by evidence sufficient to establish both the lost opportunity and the recoverable loss.

The judgment determined reserved issues following the main trial judgment in Donnelly & Ors v Weybridge Construction Ltd [2006] EWHC 2678 (TCC). The issues concerned the value of flats for the claimants’ damages, the effect of the appointment of selling agents on fiduciary duties under a joint venture agreement, breaches of those duties, the resulting loss, and sums allegedly owed to the joint venture partners.

The defendant had entered administration after the main judgment, but the administrator consented to the reserved matters proceeding. The central questions were whether the claimants had established the value-based damages claimed, whether the Part 20 defendants’ conduct was contrary to the joint venture’s interests and known to be so, and whether the defendant had proved a recoverable loss of a chance to settle.

1. Value of the flats. The claimants failed to establish damages based on the market values at 8 June 2004. The expert evidence did not value the individual flats in their contractual condition at December 2002. The experts had assumed that the contractual prices represented market value, despite the off-plan Dublin sales, irregular individual pricing and high prices per square foot. Evidence of the general Battersea market increase of about 7 per cent could not cure the absence of a satisfactory starting value for each flat.
2. Scope of fiduciary duties. The principles in Global Container Lines Ltd v Bonyad Shipping Co [1998] 1 Lloyds Rep 528 and Kelly v Cooper [1993] AC 205, that fiduciary duties must be tailored to the facts, contractual terms and relationship, did not assist the Part 20 defendants. This was not competition involving separate pre-existing business. The relevant duty concerned the transaction forming the joint venture itself. The appointment of the partners and their associated company as selling agents therefore did not qualify the fiduciary duties owed under the joint venture agreement.
3. Breach and knowledge. The partners acted contrary to the joint venture’s interests by encouraging, funding and underwriting the claimants’ proceedings against Weybridge. They knew that their conduct conflicted with those interests. The earlier findings of breach were confirmed without the reservation previously made.
4. Loss. Although breach was established, Weybridge had not properly pleaded or proved a loss of a chance to settle. There was insufficient evidence that it would have sought to settle, that the claimants would probably have accepted any proposal, or that the alleged loss could be quantified. The claim for damages and equitable compensation therefore failed.
5. Amounts claimed by the partners. Mr Brohoon and Mr Carley did not pursue their claim for further sums. Weybridge accepted the earlier finding concerning contribution or indemnity, so that reserved issue required no further determination.

First-instance judgment determining reserved matters following the main trial judgment in Donnelly & Ors v Weybridge Construction Ltd [2006] EWHC 2678 (TCC).