Legal News & Analysis – Asia Pacific – Australia – Dispute Resolution

The recent decision of the High Court of Australia (High Court) in Alliance Craton Explorer Pty Ltd v Quasar Resources Pty Ltd & Anor [2013] HCATrans 215 provides important confirmation regarding a joint venturer’s right to access documents associated with the joint venture.¹

The High Court refused special leave to appeal a decision of the Full Federal Court of Australia (Full Court) that the applicant Alliance (a 25% joint venture partner) did nothave a right to access all records of the joint venture created or held by the joint venture manager (and associated contractors).²

The key question upon which the appeals to the Full Federal Court and High Court turned was whether the relationship between the joint venturers and the manager was one of principal and agent, such as to support a proprietary right of access to joint venture documents. The Full Court concluded that the relationship was not one of principal and agent, ultimately relying upon the express disclaimer of agency in the parties’ written joint venture agreement and a number of other provisions of the joint venture agreement.

The High Court, in considering whether to grant leave to challenge that finding of the Full Court, concluded that, having regard to the terms of the joint venture agreement, the prospects of Alliance’s ultimate success in an appeal were not sufficient to warrant the grant of special leave.

Special leave was refused, and the Full Court’s conclusion that there was no general relationship of principal and agent between the manager and the joint venturers stands.

Key Facts

The case involved a dispute between Alliance, Quasar and Quasar’s related entity, Heathgate Resources Pty Ltd (Heathgate). The joint venture was between Alliance and Quasar. Heathgate was retained by Quasar to provide services in respect of the joint venture on a tenement near the Flinders Ranges in South Australia.

In late 2008, Quasar, as manager of the joint venture, made a decision to mine certain uranium deposits discovered within the tenement, and Alliance was required to contribute 25% of expenditure on the mine development, in accordance with its 25% joint venture interest.

Throughout 2009, Alliance raised issues with Quasar relating to the provision of records concerning the joint venture. In late 2009, Alliance commenced litigation seeking, among other orders, declarations regarding its interest in documents described in the application as ‘JV records’. The judge, Mansfield J, dismissed Alliance’s application.³ Alliance appealed that decision to the Full Court, and then, following the Full Court’s dismissal of the appeal,⁴ sought special leave from the High Court to appeal the Full Court’s decision.⁵

Principal/Agent – Fiduciary Obligations

The key question in the Full Court appeal, and the challenge before the High Court, was whether the relationship of Quasar, in its capacity as manager of the joint venture, and the joint venturers, was one of agent and principal, thereby supporting Alliance’s claim for a proprietary right to access and retain copies of documents created or held by Quasar in its manager capacity.

The Full Court concluded that the relationship was not one of principal and agent. In doing so, the Full Court observed that the mere existence of a joint venture does not justify the conclusion that one of the venturers is the agent of the other or otherwise imply fiduciary obligations. An agency relationship can only be established with the consent of the principal and agent and in this case the court found there was no such consent.

Ultimately, the Full Court’s conclusion relied upon a clause in the joint venture agreement which expressly disclaimed any agency relationship, except where expressly contemplated for limited activities set out in the agreement.

Three Judges of the High Court heard Alliance’s application for special leave to appeal the Full Court’s decision. In delivering the High Court’s oral decision, the Chief Justice observed that, in the opinion of the Justices, having regard to the provisions of the joint venture agreement, the prospects of Alliance’s success on a further appeal were not sufficient to warrant the grant of special leave.

Implications For Unincorporated Joint Ventures

This decision confirms that the mere existence of a joint venture arrangement will not lead to a conclusion that the manager is the agent of the joint venturers, nor that the venturers are entitled to access all joint venture documents/records.

Whether the relationship is one of agency, and the extent of a venturer’s entitlement to access documents/records, will depend on what the parties have agreed and, to the extent no agreement is express, how they have conducted their joint venture activities.

If a party wishes to ensure that it has an entitlement to access documents/records associated with the joint venture, it should ensure that the joint venture agreement(s) contains express rights to that effect.

End Notes:

1. A copy of the transcript of the proceedings is available here.
2. Alliance Craton Explorer Pty Ltd v Quasar Resources Pty Ltd (2013) 296 ALR 465. A copy of the full judgment of the Full Court is available here.
3. Alliance Craton Explorer Pty Ltd v Quasar Resources Pty Ltd [2012] FCA 291.
4. Alliance Craton Explorer Pty Ltd v Quasar Resources Pty Ltd (2013) 296 ALR 465.
5. Alliance Craton Explorer Pty Ltd v Quasar Resources Pty Ltd & Anor [2013] HCATrans 215.

For further information, please contact:

Anna Sutherland, Partner, Herbert Smith Freehills

[email protected]

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