In Alliance Craton Explorer Pty Ltd v Quasar Resources Pty Ltd [2013] FCAFC 29 it was found that there was no implied term in a joint venture agreement giving the right to one of the parties to inspect records of the other party.

Alliance had entered into a joint venture agreement with Heathgate to explore a mining lease in South Australia. Heathgate was appointed as manager of the joint venture agreement during the exploration and mining phases, however, later assigned all its rights, title and interest in the venture to a related company Quasar. Despite this, Heathgate continued to act as manager.

Difficulties in the relationship between Alliance and Quasar began to emerge in late 2008. By November of 2009 Alliance had filed an application in the Federal Court seeking orders that Quasar give preliminary discovery of certain documents. Alliance had argued, among other things, that it had a proprietary right, arising from the agreement to access and retain copies of certain documents. The primary judge dismissed Alliance’s application and Alliance appealed to the Full Court of the Federal Court of Australia.

The first issue on appeal was whether the relationship between Heathgate (and after the assignment, Quasar) and Alliance was one of agent and principal. If this argument was successful, then by virtue of the agency the documents created by Heathgate or Quasar during the course of their employment would be the documents of Alliance.

The Court rejected this argument stating that the mere existence of a joint venture does not justify the conclusion that one of the venturers is the agent of the other in relation to the former’s dealings with third parties. An agency relationship could only be established by consent and in this case the parties expressly agreed they were not in any relationship of principal and agent.

The second argument advanced by Alliance was that a term providing it access to the documents should be implied in the joint venture agreement in order to give it business efficacy. The Court held that there was no implied term in the agreement since it was not necessary to imply a term giving Alliance access to the documents in order to give business efficacy to the agreement. Alliance’s obligations under the agreement could be met irrespective of whether it had access to the documents in question.

For joint venture parties who want to access documents, drafting provisions into agreements is highly recommended.