In this practice area
Disputes between business partners and joint venturers over profits, contributions, control, fiduciary obligations and how the venture is unwound.
What these disputes involve
Partnerships and joint ventures depend on trust between the participants. When that trust fails, the disputes tend to focus on money and control: who contributed what, how profits and losses should be shared, whether one party has taken an opportunity for itself, and what happens to the assets and the business when the relationship ends.
Many arrangements are not formally documented, or the written agreement no longer reflects how the parties actually operated. Sometimes the first question is whether the relationship was a partnership, an incorporated joint venture, an unincorporated joint venture or something else.
The legal framework
In NSW, partnerships are governed by the Partnership Act 1892 (NSW) and the general law, subject to any partnership agreement. Partners owe each other fiduciary duties, including duties not to make an unauthorised profit from the partnership and not to act where their interests conflict with those of the partnership. A court may order dissolution of a partnership on the grounds set out in section 35, including where it is just and equitable to do so, and may order that the affairs be wound up and an account taken between the partners.
Joint ventures are more varied. An incorporated joint venture operates through a company, so the Corporations Act and the shareholders' agreement will usually govern the dispute. An unincorporated joint venture is primarily contractual, and whether the participants owe each other fiduciary duties depends on the terms and the nature of the relationship, as the High Court discussed in United Dominions Corporation Ltd v Brian Pty Ltd. Remedies can include damages, an account of profits, equitable compensation, constructive trusts over property acquired in breach of duty, and the appointment of a receiver.
How these matters typically run
The documents that matter are the agreement, the financial records, bank statements and communications about contributions and decisions. A forensic accountant is often needed to reconstruct the partnership or venture accounts. Where one party controls the books or the bank account, early steps to preserve records and assets can be important.
Many of these disputes settle through a negotiated separation, a buy-out or an agreed sale. Where they do not, proceedings are usually brought in the Supreme Court, which has the equitable jurisdiction to order accounts, appoint receivers and grant relief for breach of fiduciary duty.
How we act
We start by pinning down the legal character of the relationship, because that determines the duties and remedies available. We then work towards a clean separation on fair terms and litigate where the other side will not engage.