Fiduciary duties after a joint venture has ended?

Active Profit Ltd v Nissho Iwai Hong Kong Corp Ltd ([2006] 4 HKLRD 467, CFA) concerned a joint venture arrangement set up for the sole purpose of developing a site in Tai Wai. K and C (though a company they owned) were to contribute part of the land for the development. A was one of the parties providing the finance. Ultimately the plan to develop the site was abandoned for compelling financial reasons. The joint venture was terminated in accordance with the terms of the agreement between the participants and K and C  sold the shares in the vehicle through which they held the site to a developer at a profit. A claimed that as a result of the terms of the joint venture agreements K and C were under a duty to account to A for part of the proceeds of sale of the ‘joint venture’ assets. The CFA (Lord Scott giving the only full judgment) rejected this. The terms of the joint venture agreements subjected neither the site nor the shares to any trust in favour of A. Once the joint venture had ended, K and C were free to sell the site (or the shares in the company that owned the site) without having any duty to account to A. The outcome might have been different had A or the joint venture done anything to enhance the value of the site / vehicle. Despite A’s efforts to introduce fiduciary duties into the analysis, the CFA’s analysis focuses on the contractual rights and duties of the parties. As Lord Scott said: ‘This case raises no issue about the scope of fiduciary duties owed by one joint venturer to another.’ (para. 42)

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