![]() |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] [DONATE] | |||||||||
England and Wales Court of Appeal (Civil Division) Decisions |
||||||||||
PLEASE SUPPORT BAILII & FREE ACCESS TO LAW
To maintain its current level of service, BAILII urgently needs the support of its users.
Since you use the site, please consider making a donation to celebrate BAILII's 25 years of providing free access to law. No contribution is too small. If every visitor this month gives just £5, it will have a significant impact on BAILII's ability to continue providing this vital service.
Thank you for your support! | ||||||||||
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Donovan & Anor v Grainmarket Asset Management LLP [2021] EWCA Civ 686 (12 May 2021) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2021/686.html Cite as: [2021] EWCA Civ 686 |
[New search] [View without highlighting] [Printable PDF version] [Help]
ON APPEAL FROM THE HIGH COURT
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
LONDON CIRCUIT COMMERCIAL COURT
HHJ Pearce
Strand, London, WC2A 2LL |
||
B e f o r e :
LORD JUSTICE MALES
and
LORD JUSTICE ARNOLD
____________________
(1) DANIEL DONOVAN (2) NALED LIMITED |
Respondents/ Claimants |
|
- and - |
||
GRAINMARKET ASSET MANAGEMENT LLP |
Appellant/ Defendant |
____________________
Andrew Green QC & Dominic Howells (instructed by Quinn Emanuel Urquhart & Sullivan UK LLP) for the Respondents
Hearing dates: 27th & 28th April 2021
____________________
Crown Copyright ©
Lord Justice Males:
Background
"I have thought about this overnight and below are my thoughts. They are only that. It is really important that this rather minor issue doesn't spoil what I think can be profitable for us both though the vast majority of the profits will come from Lime. It's also really important for personal reasons you and I don't fall out -- I really have had enough of angst. …
First and foremost as it is you that want to change it [the joint venture agreement concerning permitted development] the suggestions should come from you. I accept you say you don't know how to do this but the onus is on you to try. Therefore what follows below is not a solution but maybe a path to one.
Firstly if we can't both be happy we should try and separate the PD business and take it out from my office as a first step. This way any costs that it incurs will be clear and it will have to pay them. …
Following on from that if you want to take the PD business on your own and I don't want this to be the case I am happy to discuss a price for you buying me out. …
I do think this would give us a problem with York because we did agree to see the schemes through but perhaps your relationship with them could persuade. I certainly don't want to deal with York without you. I also accept that this would be a draconian solution and I put it first so that we are both aware that this must be the natural solution if we can't agree. …
I am sorry I haven't had any eureka moment. I am also open to any compromise you can think of. …"
"Have you any further thoughts on this -- if we are to change the agreement we should try and do so -- if not we just let the agreement continue but I was under the impression you were not happy with that.
I would reiterate that my suggestion that you buy me out (at a to be agreed fair price) should be considered by you."
"You are right, I should have responded on this sooner.
You are right that I agreed to change the terms but I don't feel that they are fair to me. You think differently and I can't do anything about that and thus can't and won't ask for any changes.
We could move the office, I have looked into it. Andrew Rice has space that will cost pretty nothing – However, this is hardly the point is it?
The real issue is that this doesn't suit either of us. I don't have the expertise on the build phase; you do; so it is logical that I should leave.
If you think what I have done, to date, merits compensation that would be nice but as it isn't documented, so clearly I can't ask for anything.
I will finish off working out the loan drawdown payments to York etc."
"Thanks for this but you leaving doesn't address the issue we have with York. … I don't say this can't be addressed but the point is we have to get York comfortable and happy as we all agreed to see out the schemes. York is very much your relationship and I really think they would be happier with you than me. I don't want you to discount carrying it on your own as the build has commenced on Farnborough and Reading. We have PD consent on Elstree. HW [High Wycombe] won't be an issue. What about your architect friend?
However if the above doesn't suit you and if I take over I certainly want and expect you to make return – I don't think we have a situation where nothing is documented – it is – see attached. This would have to be adjusted in the same way as it would if I left but hopefully given the sums involved we must be able to work that out.
Above all I don't want this to be acrimonious but let's face it you and I don't work together well and we have to keep a relationship going for Lime St's sake.
Perhaps when you are next over we can work out the exit."
"Mark, it is best that I leave. I hope York will be ok with it. They understand that you are the person with the build expertise. I am happy to speak with them.
I really doubt an entire switch would work with York or indeed be possible.
My point re documentation isn't that there isn't any agreement per se rather that it would be nice to be paid for the work I have done to date but I know I can't ask/enforce it. …"
"OK then let's discuss how we tell York about it."
"I haven't thought about it but I think I will, in the first instance, speak with Diego. I don't think much commentary is needed. Simply my work is done as all the projects are in the build phase. Susanna, I presume will deal with their reporting needs. I need to concentrate on the loan issue so unless you really disagree with that approach I need to focus on this for the next few hours."
"Ok whatever we agree will be dated to 28th Feb then. I will formally write to York next week just to dot the 'i'."
The claims and counterclaim
(1) 40% of the performance fees received by GAM from the investors in the joint venture projects, on the grounds that he was unconditionally entitled to such fees; alternatively
(2) 40% of these fees on the ground that he had wholly or substantially performed the work upon which payment to him was conditional; alternatively,
(3) a quantum meruit award in respect of the services that he provided to GAM; and in any event,
(4) the sum of £12,500, being the balance of the total sum that he contended to have been agreed to be due as administration fees.
The judgment
"157. On the issue of the alleged conditionality of Mr Donovan's entitlement to fees under the contract, the relevant law can be summarised as follows:
(a) Whether the fulfilment of a contractual obligation by one party is a condition precedent to the contractual liability of another party is a matter for construction of the contract (Stavers v Curling (1836) 3 Bing NC 355);
(b) In order to show that the right to remuneration is conditional on prior complete performance of under the contract requires positive evidence of an intention to create such a situation (Appleby v Myers (1866-67) LR 2 CP 651;
(c) Such an intention is relatively uncommonly found in contracts of retainer for professional services (Smales v Lea [2011] EWCA Civ 1325);
(d) Where payment is found to be conditional upon performance of the entirety of a party's obligations under the contract, the potential severity of this is mitigated by the rule that, where the contract has been substantially performed, a party may recover the contractual sum due subject to abatement or set off as allowed by the law (Sim v Rotherham [1987] Ch 216 and Wiluszenski v Tower Hamlets LBC [1989] ICR 493."
"200. On the evidence before me, the promises of performance of contractual duties on the one hand and payment of fees on the other were independent, at least in respect of the so-called performance fee."
"… I reject the argument that Mr Donovan was in repudiatory breach of the JV agreement. Consequently, the putative acceptance of that alleged breach cannot have terminated the contract. Further, I find no other evidence that the JV agreement was terminated. It follows that, on my findings, the fee exemption agreement continued."
The appeal
(1) first, that the judge was wrong to find that Mr Donovan's right to receive the performance fees was independent of his obligations under the joint venture agreement;
(2) second, that the judge was wrong to find that Mr Donovan had not renounced the agreement by sending his email at 15:06 on 26th January 2015;
(3) third, that the judge was wrong to find that Mr Donovan was not in repudiatory breach of the agreement for failing to continue to work after the end of January/February 2015;
(4) fourth, that the judge's findings as to whether the agreement had been terminated were inconsistent, and that inconsistency should be resolved by finding that it had been terminated;
(5) fifth, that the judge was wrong to find that GAM was liable to pay interest to Mr Donovan under the 1998 Act; and
(6) sixth, that the judge was wrong to dismiss GAM's counterclaim to recover fee rebates given to Naled in January and March 2016.
Ground 1 – was the right to receive performance fees conditional on performance of Mr Donovan's obligations under the joint venture agreement?
Ground 2 – Renunciation
"158. As to the argument of repudiation/renunciation, the relevant principles are:
(a) Repudiation by renunciation arises where a party evinces an absolute intention not to perform its duties under a contract (Spettabile Consorzio Veneziano v Northumberland Shipbuilding Co (1919) 121 KT 627, approved in Woodar Investment Development v Wimpey Construction [1980] 1 WLR 277).
(b) The aggrieved party accepts a repudiation by clear and unequivocal conduct showing that it is treating the contract [as being] at an end (Vitol SA v Norelf Ltd [1996] AC 800)."
"When a party to a simple contract, upon a breach by the other contracting party of a condition of the contract, elects to treat the contract as no longer binding upon him, the contract is not rescinded as from the beginning. Both parties are discharged from further performance of the contract, but rights are not divested or discharged which have already been unconditionally acquired. Rights and obligations which arise from the partial execution of the contract and causes of action which have accrued from its breach alike continue unaffected."
Ground 3 – Repudiation
Ground 4 – Inconsistent findings whether the joint venture agreement remained in force
Ground 6 – the fee exemption agreement
Disposal – liability
Ground 5 – Interest
"(1) Statutory interest runs in relation to a qualifying debt in accordance with this section (unless section 5 applies).
(2) Statutory interest starts to run on the day after the relevant day for the debt, at the rate prevailing under section 6 at the end of the relevant day.
(3) Where the supplier and the purchaser agree a date for payment of the debt (that is, the day on which the debt is to be created by the contract), that is the relevant day unless the debt relates to an obligation to make an advance payment. The date so agreed may be [a] fixed one or may depend on the happening of any events for the failure of an event to happen. …
(4) Where the debt relates to an obligation to make an advance payment, the relevant day is the date on which the debt is treated by section 11 as having been created."
"(1) A qualifying debt created by virtue of an obligation to make an advance payment shall be treated for the purposes of this Act as if it was created on the day mentioned in subsection (3), (4) or (5) (as the case may be).
(2) In this section 'advance payment' means a payment falling due before the obligation of the supplier to which the whole contract price relates ('the supplier's obligation') is performed, other than a payment of a part of the contract price that is due in respect of any part performance of that obligation and payable on or after the day on which that part performance is completed.
(3) Where the advance payment is the whole contract price, the debt shall be treated as created on the day on which the supplier's obligation is performed. …"
Lord Justice Arnold:
Lady Justice King:
ORDER
UPON the Defendant's appeal by notice filed on 10 July 2020 against the Orders of HHJ Pearce dated 8 and 24 June 2020
AND UPON Permission to Appeal having been granted by order of the Court on 26 October 2020.
AND UPON hearing Paul Lowenstein QC and James Kinman for the Defendant and Andrew Green QC and Dominic Howells for the Claimants
IT IS ORDERED THAT
Dated 12th May 2021