Lawfund Australia Pty Ltd v Lawfund Leasing Pty Ltd & 2 ors [2008] NSWSC 144

New South Wales Supreme Court

CITATION : Lawfund Australia Pty Ltd v Lawfund Leasing Pty Ltd & 2 ors [2008] NSWSC 144

HEARING DATE(S) : 4, 5, 6, 7, 8, 11, 14 February 2008

JUDGMENT DATE : 28 February 2008

JURISDICTION : Equity Division Expedition List

JUDGMENT OF : Brereton J

DECISION : The Plaintiff Lawfund did not repudiate or otherwise breach the joint venture agreement. Lawfund did not engage in misleading and deceptive conduct. After termination, Lawfund did not breach its fiduciary obligations by establishing its own business, Probitas Leasing. Lawfund is entitled to retain the name "Lawfund", but both parties are entitled to use the database. The Second Defendant Ms Ward contravened her duties as a director of the joint venture vehicle, the First Defendant Lawfund Leasing, by terminating the joint venture business and transferring it to her own company the Third Defendant A-Ward, and is liable to pay compensation or account for profits. A-Ward was involved in her contravention. Lawfund is not precluded by unclean hands from claiming relief, nor required to bring to account the profits of its own business. Lawfund Leasing should be wound up on the just and equitable ground, and Ms Ward is not entitled to relief for oppression. Declarations of contravention of Corporations Act duties; inquiry as to compensation ordered; declaration of trust and order for transfer of trademark; cross-claim dismissed.

CATCHWORDS : CORPORATIONS – incorporated joint venture – whether fiduciary obligations superimposed on corporate relationship – whether obligation of good faith precludes termination of joint venture – whether joint venture terminable on notice – rights of parties on termination of joint venture – whether upon termination of joint venture parties entitled to carry on separate businesses in competition with joint venture vehicle – whether one or other party entitled to name of firm – entitlements to undivided assets. - CORPORATIONS – Internal management – Directors – duties – statutory duties – where following failure of joint venture director terminates business of joint venture vehicle and transfers it to her own corporation – whether breach of director's duty – Oppression – where corporation under management of alleged victim – whether desire of other party to wind up corporation oppressive - CORPORATIONS - External management – winding up – just and equitable ground – where substratum of trust and confidence underlying incorporated joint venture fails – whether company should be wound up - CONTRACT – Termination – repudiation – where party proposes termination of joint venture upon terms – whether repudiatory – election – where other party evinces intention to continue to perform contract – whether election to affirm – abandonment – where both parties treat agreement as no longer on foot – whether agreement terminated by abandonment - CORPORATIONS – Remedies – derivative action - compensation – profits – where plaintiff sues on behalf of corporation – where claim is for statutory relief - whether plaintiff can be debarred from statutory relief in derivative action by "unclean hands" - TRADE PRACTICES – Misleading and deceptive conduct – pre-contractual negotiations – expressions of aspiration and intent – whether representations as to future matters