Edmonds v Lawson & Anor (t/a Lawson Developments)

An oral joint venture concerning property development must be determined from the parties’ objectively established agreement. Where no agreed time limit or mechanism for sharing sale losses is proved, the court will not impose one. Legal ownership of the property remains significant, including the owner’s right to sell where no agreement requires consultation or consent. A claimed priority for repayment of an investment is not established where it conflicts with subsequently executed security documents and the surrounding evidence.

For construction work undertaken without an agreed price, the reasonable value may be assessed on a quantum meruit basis. The valuation may include properly evidenced labour, materials, overheads, profit, preliminaries and VAT, subject to deductions reflecting the contractor’s failure to obtain relevant consents or secure available VAT exemptions.

The claimant and the defendants were former friends who became involved in two related projects. The first concerned the purchase and proposed development of Wood House, which was conveyed into the claimant’s sole name. The claimant sought a contribution said to arise under an oral joint venture agreement, including priority repayment of his investment and a share of losses on sale. The defendants denied those terms and claimed sums for construction and renovation work undertaken at the claimant’s home, St Serf.

The court had to determine the scope of the oral arrangements, the effect of the security documents, whether any priority or loss-sharing terms were agreed, and the reasonable value of the St Serf works where no comprehensive price or specification had been settled.

1. Wood House. The parties had an oral arrangement to share the running costs of the property and interest on the £1.6 million loan, and for Mr Lawson to use his best endeavours to investigate planning potential. No agreement limiting the venture to two years was proved. The proposals were inherently medium- or long-term, and the parties had not reached a sufficiently definite agreement on that issue.
2. The property was conveyed into the claimant’s sole name. He therefore had control over the timing and manner of sale. No agreement required his consent to be obtained or consultation to take place before sale.
3. The claimant failed to prove a promise that his £300,000 contribution would be repaid in priority. That alleged promise was inconsistent with the second charge and deed of priority, which secured the defendants’ contribution. The arrangement also contained no agreement to share losses arising from the sale.
4. The claimant was entitled to a half share of the maintenance and outgoings, including interest on the Arbuthnot Latham loan, with credit for the defendants’ contributions, including £50,794.82. He was not entitled to the claimed priority repayment.
5. St Serf. The claimant failed to establish that the defendants agreed to provide project management, design and procurement services without charge or mark-up. The parties had not adequately settled the method of charging. The reasonable value of the work was therefore assessed on a quantum meruit basis.
6. The proper valuation began with evidenced labour, materials and plant costs. The court allowed a 15 per cent mark-up for overheads and profit and 8.5 per cent for preliminaries, including site management, co-ordination and design. The valuation included VAT, but £10,000 was deducted because the defendants had failed to deal properly with listed building and building regulation consents and potentially available VAT exemptions.
7. The defendants were entitled to £683,512, less sums already paid by the claimant. The claimant was entitled to the balancing payment identified in relation to the Wood House outgoings.