Donnellan v Ward & Ors

A late-disclosure default justifies striking out a case at trial only in exceptional circumstances. The court must consider whether the conduct has made a fair trial impossible or prevented it from doing justice, rather than imposing punishment.

Partnership requires an agreement, express or implied, to carry on a business in common with a view of profit. Informal dealings, references to a person as a business partner, or financial cooperation do not themselves establish a legal partnership. A joint venture may nevertheless carry fiduciary obligations where the parties entrust each other with control of project assets and funds.

An arbitration award may be declaratory where it records the parties’ rights without ordering payment. Challenges under the Arbitration Act 1996 require prompt action; substantial delay will ordinarily defeat an extension of time.

Three sets of proceedings were tried together. Mr Donnellan claimed that he and Mr Ward had formed a partnership or joint venture concerning Creative House and later property developments, with profits divided 25% and 75%. The dispute also concerned whether flats held by Mr Keane and Ms Howard were held for the alleged partnership or for Ebonair Investment SA.

Mr Keane separately sought to enforce an alleged arbitration award made by Ms Howard concerning the Manor Road development and related projects. He also brought possession proceedings concerning two flats. An oral application to strike out certain defences for late disclosure was made during closing submissions.

The central questions were whether a partnership existed, the beneficial ownership of the relevant properties, the effect of the arbitration agreement and award, and whether the late-disclosed documents made a fair trial impossible.

1. Strike-out application. The application under CPR 3.4(2)(c) was dismissed. Following Arrow Nominees v Blackledge, Dadourian Group International Inc v Simms, Masood v Zahoor and Summers v Fairclough Homes Ltd, strike-out at this stage is not punitive and is justified only where the default has placed a fair trial in jeopardy or made it impossible for the court to do justice. The late documents were not sufficiently significant and the trial could fairly proceed on the merits.
2. Partnership and joint venture. Section 1(1) of the Partnership Act 1890 requires a business carried on by two or more persons in common with a view of profit. Partnership also requires a binding agreement, which may be express or inferred from conduct. Mr Donnellan failed to prove any such agreement concerning Creative House. His changing account, absence of contemporaneous accounts or profit calculations, his role principally as mortgage broker, and the absence of reliable evidence of a common business were decisive. References to him as a business partner were colloquial and did not establish the legal relationship.
3. The later developments were joint ventures between Mr Keane and Chelsea Bridge Apartments Ltd, with profits shared according to contributions. Applying Ross River Ltd v Waveley Commercial Ltd, those arrangements imposed fiduciary obligations to account because each party entrusted the other with project funds and assets.
4. Mr Keane and Ms Howard therefore held the relevant flats on trust for Ebonair, not for the alleged partnership. They were ordered to account and to transfer the flats to Ebonair. Ebonair’s claim against Mr Keen was dismissed because the money paid to him had been transferred to Ms Howard.
5. Arbitration claim. Mr Ward signed the arbitration agreement as agent for Chelsea Bridge Apartments Ltd. The agreement and Ms Howard’s spreadsheet were sufficiently workable. The award was declaratory: it recorded the parties’ contributions and the sums due without ordering either party to pay money. The claim against Mr Ward was dismissed, but the award was effective against CBA.
6. Challenges under sections 67 and 68 of the Arbitration Act 1996 were introduced nearly three years late. The delay was substantial, CBA had notice of the arbitration and award, and it had initially sought enforcement rather than challenge. No extension of time was justified.
7. As Mr Keane held Flats 13 and 14 for Ebonair, his possession claims were dismissed and Ebonair’s counterclaim for a declaration of beneficial ownership was granted.