The recent decision of the Full Federal Court of Australia in Alliance Craton Explorer Pty Ltd v Quasar Resources Pty Ltd & Anor (2013) 296 ALR 465 contains important statements regarding a joint venturers right to access documents associated with the joint venture.

The Full Court upheld the decision of Mansfield J at first instance that the applicant Alliance (a 25% joint venture partner) did not have a right to access all records associated with the joint venture held by the Manager of the Joint Venture and associated contractors.1

The decision focused on the terms of the parties’ written joint venture agreement (JVA) and considered in some detail whether the relationship between the two joint venturers, Alliance (25%) and Quasar (75%) (Quasar also being the manager of the joint venture) was one of principal and agent and therefore, fiduciary in character.

The court concluded there was no general relationship of principal and agent and therefore, no fiduciary relationship entitling Alliance to call for access to all documents. Alliance’s entitlement regarding access to documents was set out in the terms of the JVA.

Key facts in the case

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 in the Frome Basin region of South Australia.

By 2008, Quasar, as manager of the joint venture, had 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% JV interest.

In 2008 and 2009, Alliance raised issues with Quasar relating to the provision of records to it concerning the joint venture. Litigation commenced by Alliance in respect of Quasar’s conduct of management meetings of the joint venture was concluded in Quasar’s favour.2

Alliance then commenced separate litigation seeking declarations regarding its interest in documents described as “JV records” and seeking preliminary discovery. Mansfield J refused Alliance’s application3, and Alliance appealed that decision to the Full Court.

Legal questions determined

Principal/agent – fiduciary obligations

The key question on appeal was whether Quasar, in its capacity as manager of the JV, was an agent of the joint venturers thereby giving Alliance a proprietary interest in all documents created or held by Quasar in that capacity.

There was no dispute between the parties that documents created by an agent are the documents of the principal and must be provided to the principal on request. The issue turned upon the characterisation of the parties’ relationship by reference to what they had agreed in the JVA and their conduct of the joint venture.

The 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. Importantly, there was a clause in the JVA expressly disclaiming any agency relationship (except where expressly dealt with for limited activities set out in the agreement). There was no evidence to suggest that the express disclaimer was a sham and accordingly, the court said that full weight must be given to the words of the clause.

The court also found that a number of other provisions in the JVA lead to the conclusion that the manager was not an agent, including a clause imposing limits on the liability of the manager inconsistent with those that would ordinarily arise from a principal and agent relationship.

Implied term argument

Alliance also submitted that the JVA conferred a right on Alliance to access the JV documents, either expressly or by implication.

The court found that the implication of the term proposed by Alliance was not necessary to give business efficacy to the JVA. In particular:

  • there was no need for Alliance to have access to the documents in order to comply with its obligations under the JVA;
  • the requirement to meet cash calls and contribute to the costs of the JV was not expressed in the JVA as being subject to Alliance’s satisfaction with the documentation; and
  • Alliance’s rights and responsibilities under the JVA continued independent of whether it had access to documents.

Implications for unincorporated joint ventures

The Full Court’s decision affirms 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 reflecting the commercial needs.4