Partnership and joint venture arrangements typically start out with the best of intentions but do not always work out. Disputes within the context of these types of arrangements are frequent especially once it is clear that the business is no longer viable or won't make a profit. Knowing your options for resolving a partnership or joint venture dispute is key as it is often necessary to act quickly to protect assets and ensure that each party obtains their entitlements when it is wound up.
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Joint Venture Disputes
A voint venture is when a legal person (people or companies) join their forces to engage in a venture to mutually gain from it.
Many joint ventures:
- are a one-off thing
- involve assets being held as tenants in common
- set out the rights (although sometimes it can be verbal deal which would complicate matters).
Sometimes a joint venture can also be a partnership. To work this out one needs to consider if the joint venture ticks all the boxes under the Partnership Legislation.
What are some of the duties of joint venturers?
A key question will be whether the relationship between the parties attracts fiduciary obligations.
Should the arrangement also be a partnership then there will be the usual fiduciary obligations. However, if it is not a partnership then a great deal will depend on the facts of the arrangement.
If there is a fiduciary duty on the part of the joint venturers, then it can be a potent weapon for addressing legal wrongs that arise between the parties.
How are joint venture agreements enforced?
When things go wrong in a joint venture then, depending upon the facts, the remedy of a constructive trust may be available.
This can be particularly relevant where property has been bought and the legal title holder is the person who has somehow breached their obligations.
Clearly, some of these types of arrangements simply fail and the parties are unable to work it out between them so that it may be necessary for the court to jump in and help them resolve it.
There are a range of other remedies that should also be considered such as the need to obtain injunctive relief to prevent a party dealing with property where the circumstances warrant it. Particular problems can arise where title is transferred to third parties and then questions arise about what such third parties knew and then did.
Ultimately, where joint ventures go wrong it may be necessary to dissolve the arrangement
How we help with joint venture disputes
When there is a dispute about the joint venture or one of its participants does something “dodgy” by:
- registering assets in their own name contrary to the agreement
- transferring assets to family members (without permission)
- not holding up their side of the deal
… we can often advise on rights and help with preparing the court application to try and set it right.
Partnership Disputes
What is a partnership?
In a basic sense, a partnership is defined by the Partnership Legislation and involves the partners carrying out a business in common with each other with a view to make a profit. It is different to a joint venture because the partners are carrying out the activity as agents for each other rather than separately.
When partners fall out
When partners fall out due to a dispute or if the partnership is no longer viable it probably needs to be ended (aka dissolution of the partnership).
In such cases there may be a need to go to court to stop the other partner dealing with assets, appoint a receiver and then to take stock of who is owed and to whom it is owed (aka taking of accounts). However, sometimes the partnership is ended without the help of the court and in accordance with the agreement between the partners.
Dissolution of the Partnership by the Court
Under the Partnership Legislation there can be a range of reasons why a partnership should be dissolved including:
- mental infirmity,
- where there is a wilful and persistent breach of the partnership,
- because the business cannot be carried on except if a loss is made, and
- if there is a deadlock between the partners.
These applications are made to the Supreme Court of NSW and ask for orders that the partnership be dissolved.
Often, where there is misconduct it may also be necessary to appoint a receiver to take charge of the partnership and protect its assets from being dissipated. In these types of matters there is also quite often the need for the taking of accounts so that the court can work out the liabilities of the partnership and the entitlements of the participants.
How we help with partnership disputes
Once it is clear the partnership is not going work:
- we can advise on rights,
- help end the partnership (if it has not already ended), and
- assist with the preparation of court proceedings to seek injunctive relief (if warranted), appoint a receiver (if necessary) and seek other orders for the dissolution of the partnership and taking of accounts between the partners.
We normally also brief counsel to assist with the court application and appearances.
Talk to a Dispute Lawyer today!
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