England and Wales High Court (Technology and Construction Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		15/06/2007

See also: Donnelly & Ors v Weybridge Construction Ltd [2006] EWHC 2678 (TCC) (27 October 2006)

The Hon Mr Justice Ramsey:

1. On 27 October 2006, when I handed down judgment ("the Judgment") following the main hearing of this action, the parties indicated that they wanted to provide further submissions on certain of the issues. As a result, as set out in the Judgment, I reserved various matters for further argument.
2. On 3 November 2006, shortly after the Judgment, the Defendant, ("Weybridge") entered into administration and the further conduct of these proceedings was put on hold. However the administrator has now consented to the matter proceeding to its conclusion and this has enabled the reserved matters to be the subject of further submissions for determination by the Court.
3. The reserved matters relate to the following Issues in the Judgment:

(1) Issue 14: What were the value of the flats in the Icon at the date fixed for completion?

(2) Issue 36: What was the impact, if any, of the appointment of Mr Brohoon and Mr Carley/Brohoon & Associates as selling agents on the duties covered under the Joint Venture Agreement?

(3) Issue 39: Have there been breaches of fiduciary duties owed by Weybridge's joint venture partner as set out in the Re-Amended Part 20 Particulars of Claim at paragraph 28B? In relation to this issue, I set out the Part 20 Defendants' reservation at para 317 of the Judgment.

(4) Issue 41: What were the consequences of any breaches? Did Weybridge suffer a loss as a result? What position would Weybridge be in, if any breaches had not been committed?

(5) Issue 45: What sums (if any) are owed to Mr Brohoon and Mr Carley under the Joint Venture?

4. I now turn to consider the reserved matters under each of the Issues.

Issue 14

5. In para 15.5 of the Re-Amended Particulars of Claim the Claimants pleaded a claim for damages against Weybridge as follows:

"Damages, comprising the difference between:

The price agreed in the contracts for each of the apartments; and

the market value which those apartments would have had (if completed in accordance with the Contracts) as at (i) the date of the trial of this action; or (ii) the date of the Defendants' repudiatory breach (8 June 2004); or (iii) the date of the Claimants' acceptance of that breach (10 June or 14 July2004); or (iv) such other valuation date as to the Court may seem appropriate".

6. The Claimants now base their claim on the difference between the price agreed in the contracts for each of the flats and the market value of the flats at 8 June 2004. There is no challenge to that basis of claim.
7. Subject to one issue, the price agreed in the Contracts is common ground between the parties. That one issue relates to the price for flats 4, 11, 15 and 16 which were all bought by Mr Phillip Donnelly. The prices for those flats were £325,000; £335,000; £340,000 and £350,000 respectively. But Mr Donnelly obtained a discount of £100,000. There is an issue as to how the £100,000 should be allocated as between the price of the various flats.
8. The main issue on the matters remaining is the value of the flats as at 8 June 2004. Both parties instructed valuers. Mr. James Wyatt of John D. Wood & Co was instructed on behalf of the Claimants and Mr Jonathan Harris of Jonathan Harris Associates was instructed on behalf of Weybridge. The issue with which those experts were concerned, however, was the question of the diminution of value of the properties because of various deficiencies which the Claimants had alleged to exist. Whilst both experts did consider the movement in market value, neither expert considered the issue of what the value of the flats would have been in 8 June 2004, if they had been completed in accordance with the Contracts.
9. In those circumstances, Mrs Galley on behalf of Weybridge submits that there is no proper evidence on which damages can be assessed. However, Mr Dutton on behalf of the Claimants submits that an analysis of the expert evidence demonstrates that, in fact, the relevant value of the flats at 8 June 2004 can be ascertained from the existing evidence. I now turn to consider the evidence which is relied on by both parties.
10. As Mrs Galley points out, there is evidence on this issue contained in the witness statements of the Claimants. Each witness statement contained a statement similar to the following: "I have been asked by my Solicitor what I would have done on completion as the valuer instructed has valued my apartment for £240,000 despite the fact that I contracted to pay £285,000": see Witness Statement of Bernadette Dowling at para 13 or "I have been told by my Solicitors that if my flat had been built according to specification, it would have been worth £315,000 rather than £325,000 which I had contracted to pay. I would have not sold it on in June 2004 if it was going to make a loss": see Witness Statement of Brendan Pluck at para 17.
11. The evidence of the valuer who came to the values commented on in the Claimants' Witness Statements is not before the Court. However Mrs Galley summarises the position as follows:

(1) Brendan Pluck, Bernadette Dowling, Cathal Dervan (conflict between contract price in paragraph 2 and in paragraph 14), Dylan Pitt, John Lyons, Paul Gallagher, Mark Donnelly, Gerald Dooley, Michael Rigney, Peter O'Brien (flat 1), Philip Donnelly (flats 11 and 15) say in their statements, with varying degrees of clarity, that had the flats been built in accordance with the specification i.e. there had been no breaches of contract, the flats they had contracted to buy (or those specifically referred to in this paragraph) would have been worth, at completion, less than they had contracted to pay. [bundle 8A]

(2) Martin Keane makes no comment about what the flat he had agreed to buy, flat 18, would have been worth at completion had it been built in accordance with the specification, [8A/5]

(3) Joseph Lalor says that had his flat (flat 17) been built in accordance with the specification it would have been worth £5,000 more than he agreed to pay for it [8A/4]

(4) Peter O'Brien indicates that he might have made a profit of £15,000 on each of flats 9 and 14 had they been built in accordance with the specification [8A/14]

12. Although the valuation evidence underlying those comments has not been provided, the fact that the witnesses refer to such calculations is a matter which I consider that I can take into account in assessing the evidence, although as hearsay of expert evidence it carries little if any weight in itself. I now turn to the expert evidence.
13. In his submissions on behalf of the Claimants, Mr Dutton takes as his starting point the Contract Prices agreed between the Claimants and Weybridge for the flats in December 2002 and submits that the evidence shows that two conclusions can be drawn:

(1) The Contract Prices can be reasonably assessed to be the market value of the flats at December 2002.

(2) The Increase in the market value between December 2002 and June 2004 was 7.01 %.

14. In respect of the first conclusion Mr Dutton submits that this is implicit in Mr Wyatt's report at para 142-144. However, as Mr Wyatt says at paragraph 6.3:

"Within this report I have made the special assumption that the Development has been marketed and sold to groups of investors on two separate occasions and this represents the best evidence within the market."

15. Mr Wyatt had evidence of the sales value of the whole development in December 2002 of £5,450,000 (applying the £100,000 discount to Mr Donnelly) and of the similar sale in 2006 of £5,425,680. The sale in December 2002 was based on the flats being in the condition specified in the Contracts; that in 2006 was in the existing condition.
16. Mr Wyatt at paragraph 9.1 of his report said that the value of the development at 8 June 2004, based on his assumptions, was £5,832,000 as he explains:

"I have examined the comparables and market evidence and believe that local property prices increased by approximately 7.01% from December 2002 to June 2004 and have applied this to the sale price of £5,450,000."

17. However, it can be seen that this was based on the "special assumption" made by Mr Wyatt that the sale price in December 2002 was the best evidence of value within the market. In addition the valuation by Mr Wyatt was, as he explains, on the basis that the development was being sold to a group of investors. At para 6.1 of his report he says that whilst the collective price agreed in December 2002 was £5,450,000, he had "analysed the sale prices and they do not seem to follow a particularly logical pattern. Examples of this range from first floor Flat 7 which sold at £325,000 at £448 per square foot and second floor Flat 12 which sold at £335,000 at £462 per square foot. They both have the same footplate but typically first floor flats command a premium because there is a shorter walk."
18. In the circumstances, two points arise on Mr Wyatt's evidence. First, there is a question over the validity of the assumption that the sale price represented the market value of the property and, secondly, there is an issue whether, within the overall sales price, the price agreed for each individual flat represents the market value of that flat.
19. Mr Dutton also relies on the evidence of Mr Harris. At paragraph 9.2 of his report (wrongly numbered 14.2), in the course of setting out his valuation approach Mr Harris said this: "My instructions are to consider the effect upon value of particular claimed defects or changes in specification on the basis that the flats, when completed by the Defendant, are alleged not to be in accordance with the Claimant's expectations. In these circumstances, I believe that my starting point is to assume that the original contractual price of each flat represented its Market Value at the time. Using this as a base, I am then required to consider if a particular item raised, is of value significance. If I believe it is, then I am to quantify that value significance in the context of that particular flat in isolation."
20. Again it can be seen that, as with Mr Wyatt, an assumption was made by Mr Harris that the price represented the market value. Mr Dutton relied, though, on some passages within the cross examination of Mr Harris on day 14 at pages 125 to 129 of the transcript. The relevant passages are as follows:

(1) Mr Harris was first asked about paragraph 14.2 of his report and his statement: "I believe that my starting point is to assume that the original contractual price of each flat represented its market value at the time."

Q: …You are happy with that assumption?

A. That is the assumption that I believe I was instructed to take, yes.

Q. But you are an expert valuer. Have you any reason to believe that that is a silly assumption to be making?

A. No.

(2) He was then later asked:

Q. …. Are you telling me that it is your evidence that the market value of the flats in their contracted condition in June 2004 was a certain value? Or are you simply saying that you are simply assuming that that is the value of the property? Which is right? Is it your evidence or is it your assumption?

A. My assumption.

Q. Are you in any position to confirm or deny the truth of that assumption or the validity of that assumption?

A. I was not asked to carry out a separate valuation exercise in terms of were the contracted prices a good, bad or otherwise deal.

(3) He was asked again:

Q. Do you have any reason to doubt that the prices that were contracted for in December 2002 are anything other than the market value of the premises on that date?

A. I have not gone through the valuation exercise. In order to do that properly, you would need to look to comparable evidence of other transactions, similar transactions, at or around the valuation date and apply those.

Q. But would you not accept that if a property realises a price on a particular date, that is the best evidence of its value on that date?

A. Yes, in normal circumstances.

Q. So what is there about this transaction, if anything, to suggest that the value of the premises in 2002 was anything other than the price that the purchaser agreed to pay?

A. Having regard to the work that I did in looking at the Savills' Index, which shows that there is actually very little movement between 2002 and 2004 --

Q. We will come on to Savills in due course.

A. -- it shows that there was actually very little change in the market between those two dates. Therefore, yes, I think I would tend to agree that the value at the date of contract appears to be broadly what one would expect at the --

(4) Finally he was asked:

Q. … Is there any reason to doubt, is there any fact about the transactions in 2002, that makes you think that the prices that were agreed in 2002 did not reflect the value of the premises at that date?

A. That is a difficult -- clearly, the 2002 transactions were at arm's length.

Q. Yes.

A. They were, however, in circumstances where the properties were being sold off-plan through an exhibition in Dublin.

Q. Yes.

A. In those circumstances, the degree of diligence that the prospective purchasers put in, one might argue, would be less than in other circumstances. However, this scenario was not an unusual scenario. There are many blocks of investment properties that were sold off-plan in Dublin and other places around that time.

Q. So unless something strange has happened you would accept, would you not, that the value of the flats as built, or as contracted for, the best evidence of that is that in December 2002 their aggregate value was something in the region of 5.4 million, yes?

A. Yes, I think I would.

21. Mr Harris was, evidently, expressing a view on a matter which he had not considered in his report. Generally, this is not a satisfactory basis for an expert to provide an opinion to assist the court. In any event, the effect of Mr Harris' evidence was to confirm that the price of the property on a particular date would, in normal circumstances, be the best evidence of the value on that date but that in relation to these particular flats he raised the fact that they were sold off-plan in Dublin as investment properties. Again, though, he confirmed that it was the aggregate value of the development with which he was concerned rather than the values of the individual flats.
22. In addition, as Mrs Galley points out, when Mr Wyatt came to provide his data in Appendix 10 to his report, from which he derives the figure of 7.01% as the increase between December 2002 and June 2004, he bases that figure on an increase from £385 to £412 in the average price per square foot for properties in the Battersea area. Applying £385 to the floor area of flat 1 (590 square feet) gives a value of £184,670 compared to a sales price of £250,000.
23. As Mr Wyatt himself calculates at para 6.1 of his report, based on the Contract prices in December 2002, the price for flat 7 represented £448 per square foot and, for flat 12, £462 per square foot. This, in my judgement, suggests that the price of the flats was high and therefore casts further doubt on the contention that the sale price represented the market value in December 2002.
24. In this case I am not satisfied that the price agreed for the individual flats provides a satisfactory basis on which to base the value of those flats in December 2002. In my judgement these are these main difficulties, supported by the other matters, as I have indicated above:

(1) The expert evidence was not directed to the property value of the individual flats at December 2002 and the issues pleaded in paragraph 15 of the Re-Amended Particulars of Claim was not the subject of expert evidence.

(2) Both Mr Wyatt and Mr Harris proceeded on the basis of an assumption that the price of the flats reflected the value at December 2002. However in the particular circumstances of Claimants buying flats off plan in Dublin, mainly for investment purposes, there can be no confidence that the price represented the value. This is further confirmed by the abnormalities in the level of pricing and the high level of value per square foot which those prices represented.

(3) Even if the overall price of the development might be shown to represent the value of the development as a whole, I am far from convinced that this provides a valid basis on which to award damages on a flat by flat basis. The issue of the value of each flat has simply not been addressed in the evidence.

(4) I also bear in mind the evidence of the Claimants themselves which indicated that a valuation had been produced which showed that the prices did not represent the values at June 2004. On the basis of the suggested 7% increase they could even less represent the values at December 2002.

25. I therefore do not consider that Mr Dutton has established his first conclusion.
26. The second conclusion on which Mr Dutton relies is the fact that the increase in value between December 2002 and June 2004 was 7.01%. In relation to the movement in the market value there are three pieces of evidence:

(1) The 7.01% itself is derived, as Mr Wyatt explains, from a graph prepared by using data from 250 flat sales in the Battersea area. That data was obtained from his firm's database for flats in the £200,000 to £500,000 price range in the relevant period. He says, fairly, that no allowance was made for the length of lease or condition. That graph gives a figure of 7.01% from December 2002 to June 2004.

(2) There is also a "Savills Index" for SW flats which Mr Wyatt considered was likely to have been derived by that firm from flats from Chelsea to Fulham to Wandsworth but which Mr Wyatt thinks is under-representative of Battersea where Savills have no office. That index, he says, shows a rise in the index from December 2002 to June 2004 of 283.9 to 287.1. However, he does not exhibit the data to demonstrate those figures. Mr Harris also refers to the Savills Index. He set out in Appendix 5 a copy of a document which shows that the index was 290.3 in December 2002 and 285.6 in June 2004. On the face of that document it appears that those are the figures for the relevant index for SW Flats. The discrepancy was not investigated in evidence.

(3) A third piece of evidence is the Land Registry Data which is referred to by Mr Harris but not relied on by him. For flat sales in SW11 the average price in the fourth quarter of 2002 was £254,104 and for the second quarter of 2004 was £335,528. There are large fluctuations in the average price between the quarterly figures in 2004 and also the average price significantly decreased in 2005.

27. I consider that based on this evidence, the exercise carried out by Mr Wyatt is more likely to represent the increase in price in the Battersea area. The problem with the Savills Index is that it does not include data in the Battersea area but is based on data from Putney, Barnes, Wandsworth, Fulham and Richmond. In my judgment the Savills Index is therefore less likely to reflect the movements in Battersea. I also consider that the land registry data does provide some general support for the increase in Battersea. However, I consider that the data, particularly given the wide fluctuation in the average prices, would need further explanation before conclusions could be based upon it.
28. On that basis I consider that there is evidence to show that the general increase in value of Battersea flats between December 2002 and June 2004 would be about 7% but some allowance would have to be made for the uncertainty arising from the variation in flats, length of lease and condition. However, without the first conclusion Mr Dutton does not have a price in December 2002 to which to apply a percentage increase.
29. In these circumstances I am not satisfied that the Claimants have established their claim for damages based on the values of the flats on 8 June 2004.

Issue 36

30. This issue, as developed by Ms Tozer on behalf of the Part 20 Defendants, concerns the impact on the fiduciary duty of the appointment of Mr Brohoon and Mr Carley and of Brohoon & Associates to act in the sale of the flats and act as a selling agent.
31. In summary, Ms Tozer submits that Mr Brohoon and Mr Carley were attractive as Joint Venture partners precisely because of their connections and, in particular, Mr Brohoon's connection with potential purchasers and his reputation as a selling agent. She contends that it was an "intrinsic part" of the Joint Venture that Mr Brohoon would market the flats and that this might give rise to a conflict of interest. She submits that Weybridge cannot assert either that Mr Brohoon and Mr Carley owed the Joint Venture a duty not to be in a position of conflict, or that in acting so as to protect their/Mr Brohoon's own commercial reputation as a selling agent, this amounted to a breach of duty. It is submitted that the duties which would otherwise have been owed were qualified because Weybridge intended that Mr Brohoon (and to a lesser extent Mr Carley) would have a dual role.
32. Mrs Galley submits that the provision in the Joint Venture agreement by which it was agreed that Mr Brohoon and Mr Carley would arrange sales and that Brohoon & Associates would be appointed by the Joint Venture to act as selling agent, did not give rise to any conflict as a selling agent acts as agent for the vendor and not the purchaser.
33. Ms Tozer relied on the decision of Rix J, as he then was, in Global Container Lines Ltd v. Bonyad Shipping Co [1998] 1 Lloyds Rep 528 as showing that the duties imposed on a fiduciary are to be tailored to the facts and circumstances of the case.
34. She submits that Weybridge knew of Mr Brohoon's existing business and consented to Mr Brohoon (and Mr Carley) seeking to sell to contacts with whom they had existing business relationships and that no duty can be imposed on Mr Brohoon (or Mr Carley) to avoid potential conflict between their duties to the Joint Venture and their own business interests.
35. Accordingly she submits that the duties which Mr Brohoon and Mr Carley owed to the Joint Venture were qualified by their entitlement to act in their own business interests, even if this was at odds with the Joint Venture, provided only that they acted reasonably
36. In Global Container Lines, two companies agreed to establish a joint venture to provide shipping services in various areas. The joint venture was not successful. In subsequent proceedings Bonyad contended that Global were not entitled to continue certain existing shipping services for their own account and that they were in breach of fiduciary duties in doing so. Rix J held that Global was entitled to compete in relation to existing services; that Global owed no fiduciary duty so as to limit that competition and that such competition was only limited to the extent that a term was to be implied to the effect that the parties must act reasonably towards one another in relation to the area of competition.
37. At 543 Rix J said this :

"If Bonyad knew all about Global's existing business, and made no complaint about it, either before or during the joint venture, how could Bonyad say, in the absence of express agreement that such business should be sacrificed to the joint venture, that it was inherent in the nature of the joint venture relationship that Global could not continue with what that were doing for their own account? …

In these circumstances, it seems to me that it was taken for granted between Global and Bonyad that Global's existing business would continue to exist outside the joint venture."

38. In relation to fiduciary duties Rix J said at 545:

"If the parties' relationship has been premised, as I have found, on the possibility of competition within such areas, then I do not see how, in those respects at any rate, the parties can owe to one another the full range of fiduciary duties. It seems to me that Mr Vos was right to place reliance on modern authorities which have stressed that duties, even of agents and such like who are natural candidates for the status of fiduciaries, have to be tailored to the facts and circumstances of the case and do not come wholesale under the label of "fiduciary relationship."

39. In coming to that conclusion he referred to the advice of the Privy Council in Kelly v. Cooper [1993] AC 205 where an estate agent had been retained by the owners of two adjacent houses. A purchaser offered to buy both houses and the estate agent did not tell either of the owners of the offer on the other house. It was contended that in doing so the estate agent breached a fiduciary duty to provide information to the other party.
40. In Lord Browne-Wilkinson's advice to the Privy Council he said at 214:

"It is not possible to say that all agents owe the same duties to their principals: it is always necessary to have regard to the express or implied terms of the contract…

In a case where a principal instructs as selling agents for his property or goods a person who to his knowledge acts and intends to act for other principals selling property or goods of the same description, the terms to be implied into such agency contract must differ from those to be implied where an agent is not carrying on such general agency business. In the case of estate agents, it is their business to act for numerous principals: where properties are of a similar description, there will be a conflict of interest between the principals each of whom will be concerned to attract potential purchasers to their property rather than that of one another. Yet despite this conflict of interest, estate agents must be free to act for several competing principals otherwise they will be unable to perform their function. Yet it is normally said that it is a breach of an agent's duty to act for competing principals. In the course of acting for each of the principals, estate agents will acquire information confidential to that principal. It cannot be sensibly suggested that an estate agent is contractually bound to disclose to any one of his principals information which is confidential to another of his principals. The position as to confidentiality is even clearer in the case of stockbrokers who cannot be contractually bound to disclose to their private clients inside information disclosed to the brokers in confidence by a company for which they also act. Accordingly in such cases there must be an implied term of the contract with such an agent that he is entitled to act for other principals selling competing properties and to keep confidential information obtained from each of his principals."

41. In Kelly v. Cooper Lord Browne-Wilkinson then continued by referring to a passage from Lord Wilberforce's speech in New Zealand and Netherlands Society Oranje Inc v. Kuys, [1973] 1 WLR 1126 at pp 1129-1130 where Lord Wilberforce stressed that the precise scope of the obligation not to profit from a position of trust "must be moulded according to the nature of the relationship". Lord Browne-Wilkinson then cited from the judgment of Mason J in the High Court of Australia in Hospital Products Ltd v. United States Surgical Corporation (1984) 156 CLR 41 at 97 where he said:

"That contractual and fiduciary relationships may co-exist between the same parties has never been doubted. Indeed, the existence has in many situations provided a foundation for the erection of a fiduciary relationship. In these situations it is the contractual foundation which is all important because it is the contract that regulates the basic rights and liabilities of the parties. The fiduciary relationship, if it is to exist at all, must accommodate itself to the terms of the contract so that it is consistent with, and conforms to, them. The fiduciary relationship cannot be superimposed upon the contract in such a way as to alter the operation which the contract was intended to have according to its true construction."

42. Rix J concluded as follows at 547:

"…within the scope of the joint venture and outside the scope of Global's existing business, I would agree… that Global did owe the duties of a fiduciary or at any rate business duties akin to fiduciary duties and premised on an obligation of non-competition. In this area, Bonyad were trusting Global, and Global were likewise trusting Bonyad, to avoid competition, to act fairly, and be loyal to one another. …

Within the area of Global's existing business it is much harder to say what, if any, implied obligations existed. Within this area, Global's existing business and joint venture's businesses could compete. Competition clearly does not leave room for duties of loyalty, or the duty to avoid conflict of interest, and so on. It was Mr. Paksima's evidence that, in practice, all problems were dealt with by means of daily telephone conversations between the parties, and the expedient of putting any cargo to be lifted on the next suitable vessel to call at a port, whether that vessel to be a joint venture vessel or a Global vessel. In theory, it seems to me that, given the situation of competition, the only obligation that can be implied is the standard contractual obligation which is used when it is necessary to fill a lacuna, that the parties act reasonably."

43. I do not consider that either Global Container Lines or Kelly v. Cooper assists Ms Tozer in her submissions in this case. This is not a case where Mr Brohoon or Mr Carley are being criticised for acting with the Claimants in respect of some separate area of pre-existing activity, such as in respect of the sale or purchase of other properties. Rather the criticism is in relation to the very transaction which is the subject of the Joint Venture Agreement.
44. In this case Weybridge obviously wanted to form a Joint Venture with Mr Brohoon and Mr Carley so that those individuals could use their contacts in Dublin to sell the flats. The fact that they were contacts with whom Mr Brohoon and Mr Carley had or may have had other transactions did not, in my judgement, limit their fiduciary duties to their Joint Venture partner, Weybridge, in relation to the transaction for the Battersea Development. Indeed it is precisely in these circumstances that Weybridge was trusting Mr Brohoon and Mr Carley to "act fairly and to be loyal to one another" to use the phrase in Global at 547. That duty owed to Weybridge would not, of course, apply to other business which Mr Brohoon and Mr Carley may have with the Claimants in relation to other transactions.
45. In this case Ms Tozer submits that the events of June 2003 when Weybridge gave Notice to Complete to the Claimants was a circumstance where either a fiduciary duty was no longer owed or there was no breach of that duty because that action was potentially damaging to the future business interests of Mr Brohoon and Mr Carley.
46. I do not accept that submission. Even if the action were potentially damaging to other business interests, this was merely a case, in my judgement, where the fiduciary duty owed to Weybridge as a JV partner conflicted with the individual interests of Mr Brohoon and Mr Carley in relation to that transaction. In Global, if the performance of the JV Services had conflicted with the general business interests of Global, the fiduciary duty would not come to an end and be replaced by a duty to act reasonably. Indeed, otherwise every time the individual interests conflicted the fiduciary duty would fall. It is precisely to guard against such conflicts that the fiduciary duty applies.
47. I therefore do not accept that the appointment of Mr Brohoon and Mr Carley or the appointment of Brohoon & Associates had any relevant impact on the fiduciary duties owed under the JV Agreement.

Issue 39

48. The relevant issue concerns the conduct of Mr Brohoon and Mr Carley in the light of the fiduciary duty which, as I found in paragraph 308 of the Judgment, was one "not to act in a manner which it knew was contrary to the interests of the joint venture throughout its duration". At paragraph 317 of the Judgment I reserved matters relevant to the issue of whether Mr Brohoon and Mr Carley knew that what they did was contrary to the interests of the Joint Venture.
49. Although the issue was not reserved, Mrs. Galley sought to argue that the wording "which it knew was" should be deleted from the terms of the fiduciary duty. Indeed, in the course of submissions Ms. Tozer herself sought to reformulate the duty as "a duty not to act against the interests of the Joint Venture unless it was reasonable to do so balancing the interests of the JV and of Joe Brohoon and Damien Carley's existing business", omitting any reference to knowledge.
50. It seem to me that, in the light of those submissions, I should also express a view on the position if the duty were to be that suggested in the amended wording proposed by Mrs Galley; that is, whether Mr Brohoon and Mr Carley acted in a manner contrary to the interests of the Joint Venture.
51. Ms Tozer submits, first, that Mr Brohoon and Mr Carley were not acting contrary to the interests of the JV. She contends that the Joint Venture partners' interests lay in maximising the profit, for each party, under the Joint Venture and that, in circumstances where the Claimants were refusing to complete, the Joint Venture partners had to determine whether the profit would be maximised by conceding the Claimants' claim to rescission, or contesting it
52. She submits that the actions of Mr Brohoon and Mr Carley were not contrary to the interests of the JV because:

(1) Had Weybridge conceded that the Claimants should not be required to complete, Weybridge is very likely to have been considerably better off than it now is, following its decision to contest the claim. If Mr Brohoon/Mr Carley had agreed with Weybridge that the Joint Venture should contest the Claimants' claims, then the Joint Venture/Mr Brohoon and Mr Carley would also have had this liability in costs.

(2) Since the Claimants were entitled to refuse to complete, the Joint Venture partners risked significant adverse perception by contesting their rescission. Rather, the Joint Venture's interests would be best served in resolving the Claimants' justified complaint in a way which would have preserved a good relationship with the Claimants (a number of whom are high net worth individuals with substantial property portfolios) in the hopes that the Joint Venture partners could, in the future, sell other properties to them.

53. Ms Tozer concludes that Mr Brohoon and Mr Carley were not acting against the interests of the Joint Venture in intimating that the claims should be conceded. She submits that had Weybridge agreed, the Joint Venture partners would together have been better off and that it was Weybridge who acted against the interests of the Joint Venture in contesting the Claimants' claims. She states that the Joint Venture partners disagreed as to the interests of the Joint Venture, and in the result, Mr Brohoon /Mr Carley were correct that the interests of the Joint Venture were best served by enabling the Claimants to rescind the contracts and Weybridge should have agreed with them.
54. Mrs Galley submits that the Joint Venture's best interests lay in selling the flats at the highest possible price at the earliest possible opportunity. Even if, as the Court has found, there were beaches of contract which permitted the Claimants to refuse to complete, the best interests of the Joint Venture were not served by one of the Joint Venture partners taking the following steps:

(1) Informing the Claimants from an early stage that there had been unacceptable changes of specification as opposed to seeking a mutually acceptable way forward.

(2) Encouraging the Claimants to believe that they would not have to complete unless "on-sales" could be arranged.

(3) Once "on-sales" failed to materialise, encouraging the Claimants to refuse to complete.

(4) Instructing CHH (ostensibly on behalf of the Claimants) to register unilateral notices, thus preventing Weybridge from being able to sell the flats.

(5) Instructing CHH (again ostensibly on behalf of the Claimants) to reject as invalid the notices to complete which were served.

(6) Arranging for alternative and more aggressive solicitors, Wakefields, to be instructed on behalf of the Claimants, without the Claimants' knowledge.

(7) Offering to fund the Claimants' claims, repay their deposits plus variable uplifts if the Claimants agreed to instruct this new firm of solicitors and allow Mr Brohoon and Mr Carley to run the case on their behalf.

(8) Doing all the above without the contemporaneous knowledge and consent of their Joint Venture partner.

55. I accept Mrs Galley's submissions. When the problems arose with completion and the limestone flooring, balconies and parking spaces, the actions of Mr Brohoon and Mr Carley clearly conflicted with the interests of the Joint Venture. In particular, instead of acting in the interests of the Joint Venture and seeking to assist Weybridge in resolving their differences with the Claimants, Mr Brohoon and Mr Carley encouraged, funded and underwrote proceedings by the Claimants against Weybridge. I find it impossible to argue that this was in the best interests of the Joint Venture.
56. I therefore find that Mr Brohoon and Mr Carley acted in a manner contrary to the interests of the Joint Venture
57. In relation to the question of whether Mr Brohoon and Mr Carley knew that what they were doing was contrary to the interests of the Joint Venture, Ms Tozer submits that they believed that it was both in the Joint Venture's interest and their own business interests for the Claimants' claims to rescission to be accepted and when Weybridge did not do so to support the Claimants against Weybridge. She states that Mr Brohoon and Mr Carley rejected the suggestion that they were acting in order to damage Weybridge and it was not put to them that they knew that what they were doing was contrary to the interests of the Joint Venture. Ms Tozer submits that it can be inferred that they would have denied it and that it would be wholly at odds with the evidence and common sense to conclude otherwise.
58. Ms Tozer relies on the evidence given by Mr Brohoon when he was asked why he offered to underwrite the Claimants. He said he was "between a rock and a hard place" and as a Joint Venture partner "I was up to my neck in it" and his Joint Venture partner was "just disregarding this potential major problem". Mr Brohoon said he felt the Joint Venture could be sued and "I felt that the right thing to was to try to keep the Claimants on side." Again, later in his evidence, Mr Brohoon said that he felt exposed as a Joint Venture partner and a selling agent. He said that he acted at all times in the best interests of the Joint Venture but Weybridge did not.
59. Ms Tozer also relies on evidence from Mr Carley who said that he gave the Claimants an indemnity in relation to their costs against the Joint Venture because he felt that they had been badly let down by the Joint Venture partner who he had introduced them to.
60. As I indicated in paragraph 115 of the Judgment, Mr Brohoon tended to exaggerate or embellish his evidence with matters which supported his case. In the light of the clear conflict of interests which, in my judgement, the actions of Mr Brohoon and Mr Carley represented, I do not accept that Mr Brohoon or Mr Carley can properly or credibly assert that they did not know that what they were doing was against the interests of the Joint Venture.
61. Mr Brohoon's evidence shows that he was well aware that there was a conflict. He was more concerned with his own business interests than the interests of the Joint Venture. He was highly experienced in the property business and, for instance, by acting in secret with Mr Carley in encouraging the Claimants to proceed against Weybridge, was evidently aware that what he was doing was against the interests of the Joint Venture.
62. It is clear that Mr Carley was concerned to look after the interests of the Claimants rather than those of the Joint Venture. It is evident that he was acting in the interest of the Claimants and in a manner which was contrary to the interests of the Joint Venture. As a solicitor he must have known that what he was doing was contrary to the interests of the Joint Venture and could not credibly suggest otherwise.
63. I therefore consider that Mr Brohoon and Mr Carley knew that what they were doing was contrary to the interests of the Joint Venture and that the conclusions which reached in paragraphs 318, 320, 322, 324 and 326 of the Judgment and which were subject to the reservation of the matters in paragraph 317 are now confirmed without that reservation.

Issue 41

64. In the prayer to the Re-Amended Particulars of Claim to the Part 20 Claim Weybridge claims against the Part 20 Defendants "Damages for Breach of the joint venture agreement" and "Equitable compensation for breach of fiduciary duty". No particulars were or have been given as to that loss.
65. Mrs Galley submits that there were effectively three findings against Weybridge which entitled the Claimants to refuse to complete. These were:

(1) Failure to fit limestone flooring to all flats;

(2) Failure to install balconies to flats 4, 9 and 14; and

(3) Failure to provide an underground parking space for flats 12, 13 and 14.

66. Mrs Galley contends that, in essence, the choice of alternative flooring made by Mr Brohoon was not selected on the basis that it would avoid the problem of the limestone flooring, by being of equivalent quality which did not diminish the value, as it should have been.
67. Otherwise, for all three heads Mrs Galley submits that there is no finding that the Claimants would have brought the present claim had they not received the offer of indemnity and guarantee from Mr Brohoon and Mr Carley. She states that from the date they received and accepted the offer from Mr Brohoon and Mr Carley the Claimants had nothing to lose by pursuing the claim and nothing to gain by settling. Any settlement would have involved some element of compromise on the part of all parties but the Claimants had no incentive to compromise when they were guaranteed the return of their deposit, an uplift of varying amounts and all their costs paid. As a result, Mrs Galley submits that Weybridge was deprived of the opportunity to settle.
68. Mrs Galley submits that, consequently, the loss which has been suffered is the loss of a chance to compromise the claims on more favourable terms. She submits that the ability to recover damages for loss of a chance is now well established and she refers me to McGregor on Damages 17^th Edition paragraph 8-024 to 8-037, Chaplin v Hunter [1911] 2KB 786 and Allied Maples v Simmons & Simmons[1995] 1 WLR 1602.
69. She submits that, in this case, Mr Brohoon and Mr Carley perpetrated wrongful acts which prevented Weybridge from being able to avoid this litigation and deprived it of the chance of a sensible settlement. She contends that this falls in the third category in Allied Maples in that the loss depends on the actions of the Claimants and so the Court has to determine on the balance of probabilities whether, but for the actions of Mr Brohoon and Mr Carley, Weybridge would have had a more than a significant chance of avoiding the litigation or settling it on more advantageous terms. If the Court concludes that there was such a chance then it must assess the level of that chance and deal with the claimed damages accordingly. Weybridge must satisfy the Court on the balance of probabilities that they would have sought to settle and that there was a significant chance, albeit not necessarily likely, that it would have succeeded
70. On that basis Mrs Galley submits that I must assess the chance of settlement and then consider the losses suffered by Weybridge. So far as quantum is concerned she submits that the losses will include all or part of the £450,000 deposits which have been ordered to be repaid and the costs incurred by Weybridge in fighting the claim together with any costs which it is ordered to pay to the Claimants. She states that as future costs orders have an impact on this, the determination of quantum should be left over until after costs orders have been made.
71. Ms Tozer Submits that Weybridge's submissions advance a wholly new case in relation to loss and that Weybridge's claim that it has suffered a loss of a chance to settle as a result of the alleged breach of fiduciary duty should be rejected because:

(1) This has never been pleaded as a head of loss, and it is too late to raise this issue;

(2) No witness evidence was adduced to support it either in evidence-in-chief from Weybridge's witnesses stating, for instance, what offers Weybridge would have been prepared to make or in cross-examination of the Claimants.

(3) No specific offers were put to any of the Claimants and there is no basis for the Court to infer that there would have been any chance of any of the Claimants accepting any particular offer.

(4) There is no factual basis for the Court to conclude either that Weybridge, on the balance of probabilities, would have been prepared to settle on any particular basis at any particular time beyond the price reductions referred to by Mr Feeney or that there would have been any chance, let alone a substantial one, of the Claimants accepting any such offer if they had not had the costs indemnity.

(5) Furthermore, without evidence as to what Weybridge would have settled for on the basis that the Claimants had been willing to do so, the Court cannot assess the damages, that is the difference between Weybridge's present position, and the position that they would have been in, if the costs indemnity had not been provided.

72. I consider that Ms Tozer is correct in those submissions. While I have held that there is a clear breach of the fiduciary and contractual duty, I do not consider that Weybridge have properly pleaded or adduced evidence to show that, on the balance of probabilities they would have sought to settle but instead, because of the proceedings, they have lost that chance. Nor is there any pleaded case or evidence which would allow the court to assess any such damages.
73. The evidence of the Claimants on what they would have done in the absence of the support for Mr Brohoon and Mr Carley shows, as would be expected, that they would have had to consider their position and what they would then have done depended on legal advice and the possibility of commencing proceedings with other Claimants.
74. I do not have a sufficiently pleaded case or evidence of what, absent proceedings, Weybridge would have done. There is only limited evidence of offers being made. In June 2004 Thomas Eggar made an offer in respect of Flats 4, 9 and 14 for the return of deposits but Wakefields indicated they would not accept this unless they could secure damages and costs.
75. Mr Feeney's witness statements at para 42 refers to a meeting with Mr Brohoon and Mr Carley in April 2003. He says: "During the meeting in Dublin which took place at Joe's office, I suggested that we should offer the Claimants a discount of £4000-5000 for the loss of the three balconies and £1000 per flat to compensate for the change in the flooring. Joe and Damien were against this and they proposed that we should enhance the specification in other areas to compensate for changes".
76. There is no evidence that, at any stage Weybridge made such an offer to the Claimants. I consider that this proposal in April 2003 does not establish that, on the balance of probabilities, Weybridge would have sought to settle when, as appears, there was no further mention of this subject except for the possible return of the deposits.
77. In those circumstances, I do not consider that Weybridge have put forward a case which establishes either an entitlement to damages or any damages.

Issue 45

78. This issue raised the question of what sums if any were owed to Mr Brohoon and Mr Carley under the JV. Having concluded that they are not entitled to the sums which they claimed under the JV Agreement, I reserved for further argument in paragraph 336 of the Judgment the issue of whether they would be entitled to the return of any part of the sum of £450,000 deposit or any other sums. Mr Brohoon and Mr Carley do not pursue this claim.
79. Under Issue 38, the question was raised as to whether the repayment of the deposits to the Claimants meant that Mr Brohoon and Mr Carley had to pay a contribution or indemnity to Weybridge in relation to the sum of £450,000 which Weybridge had to repay to the Claimants. In paragraph 311 of the Judgment I reserved this issue.
80. In the light of the findings set out above, Weybridge have stated that they will accept my finding in paragraph 311 of the Judgment and I therefore do not need to consider further the matters raised in that paragraph.