Donovan & Anor v Grainmarket Asset Management LLP

Where parties enter a joint venture through written communications and conduct, the court determines the contract and its terms objectively from the whole course of dealing. A contractual entitlement to remuneration is not conditional on complete performance unless the contract contains positive evidence of that intention. In a continuing joint venture, duties may be general and must be assessed in light of each party’s experience and expertise.

A party’s withdrawal from day-to-day participation does not amount to renunciation unless it evinces an absolute intention not to perform the contract. An agreed change in roles may instead be consensual. A term awarding a quantum meruit on withdrawal will not be implied merely because services have been provided. Estoppel requires reliance and detriment, or unconscionability in the case of convention.

Mr Daniel Donovan and NALED Ltd claimed sums from Grainmarket Asset Management LLP arising from a property-development joint venture. The claims concerned performance fees, management fees, and the alleged continuing exemption of NALED from performance fees on its investments. GAM counterclaimed for management and rebated performance fees.

The parties accepted that they had entered contractual relations but disputed the contract’s terms, whether Mr Donovan’s duties were limited principally to fundraising, whether payment was conditional on continuing performance, and whether his withdrawal in January 2015 was repudiatory. The court also considered the formation and effect of the fee-exemption arrangement and alternative quantum meruit and estoppel arguments.

1. Contract and duties. The parties had agreed the principal terms of their joint venture by the revised Heads of Term circulated in March 2013 and subsequently acted upon them. The agreement arose from the parties’ written and oral communications together with their conduct. Mr Donovan’s duties were not confined to fundraising. Each party was required to work towards the success of the projects in a manner consistent with their experience and expertise.
2. Conditionality of remuneration. Applying the principles concerning conditions precedent, there was no positive evidence that Mr Donovan’s entitlement to performance fees depended upon complete or continuing performance of all his contractual duties. The promises to perform duties and to pay performance fees were independent. His prior fundraising and investor-relations work therefore remained remunerable.
3. Renunciation. The email stating that it was best for Mr Donovan to leave did not evince an absolute intention not to perform the contract. In context, the parties agreed that he would cease day-to-day involvement and remain a passive investor. GAM’s conduct was consistent with consensual change of roles, not acceptance of repudiation. The alternative finding was that, if the conduct had been repudiatory, GAM’s response would have accepted it.
4. Alternative claims. Mr Donovan had not wholly or substantially performed the joint venture obligations. A term allowing recovery on a quantum meruit after withdrawal was neither necessary for business efficacy nor obvious. The unjust-enrichment issue was left undecided because it was academic and required further submissions in light of Barton v Jones [2019] EWCA Civ 1999. If valuation had been necessary, the court would have assessed the services at 1.5% of the York investment, producing £252,570.
5. Fees and exemption. Acceptance of £12,500 paid on account made the management-fee compromise binding; a further £12,500 was due. The fee-exemption agreement formed part of the joint venture and therefore would have ended on termination. Since no repudiatory breach or termination was established, it continued. The alternative estoppel arguments would have failed for want of reliance, detriment, or unconscionability.
6. Disposition. Mr Donovan recovered his share of performance fees and the further £12,500 management-fee balance. NALED recovered performance and/or administration fees deducted from distributions. GAM’s counterclaim failed. Consequential orders and permission to appeal were adjourned.