Thames Cruises Ltd. v George Wheeler Launches Ltd & Anor

A commercial association is not a partnership merely because its members co-operate in common activities and share profits. The decisive question is whether they carry on a single business in common, accepting mutual rights and obligations, rather than separate businesses supported by shared administrative arrangements.

Where parties agree to pursue a joint tender for a commercial opportunity, the resulting equity may prevent one party from secretly withdrawing and acquiring the opportunity for itself. A perceived commercial risk may justify reconsideration, but the party must raise the concern openly and give the others a proper opportunity to address it. A court will not imply non-competition or fiduciary obligations where they are unnecessary to give effect to the parties’ agreement.

The claimant and defendants had operated passenger boat services through the Westminster Passenger Services Association. After the existing pier licence was put out to competitive tender, the parties initially agreed to submit a single joint bid.

The defendants secretly discussed the claimant’s ageing vessels with the licence owner and formed a rival consortium. They argued that the claimant’s vessels might jeopardise the joint tender and that the claimant had indicated that it would not honour commitments to acquire newer vessels. The claimant alleged partnership obligations, implied duties of good faith and a constructive trust arising from the agreement to bid jointly.

The central issues were the legal nature of the association, the effect of its rules, whether any implied or fiduciary obligations existed, whether the defendants were entitled to withdraw from the joint bidding arrangement, and what remedy followed.

1. Partnership. The association was not a partnership. Although it operated a commercial venture and shared certain income and expenses, each member traded through its own company, supplied and operated its own vessels at its own risk, and remained responsible for its own business. The essential requirement of a single business carried on in common was absent. The rules’ declaration that the association did not constitute a partnership was not conclusive, but it was significant when considered with the surrounding circumstances. (paras [45]–[57])
2. Effect of dissolution and rules. Even if a partnership had existed, the defendants were entitled to dissolve a partnership at will on 27 November 2001 and thereafter compete, subject to the proper treatment of partnership assets and the continuing duties relevant to winding up. The association’s rules had originally been adopted, but the parties had not operated them in practice and they provided little assistance in governing the dispute. (paras [42]–[44], [59]–[64])
3. Implied and fiduciary duties. The absence of a partnership did not automatically create quasi-partnership obligations. The court declined to imply a general duty of good faith or a non-competition obligation because such terms were not necessary to give efficacy to the contractual relationship constituted by the rules. Nor did the circumstances establish a fiduciary relationship. Any such obligation, if it existed, could not continue after the association had effectively ended. (paras [65]–[70])
4. Joint tender. The parties’ agreement to submit a joint bid gave rise to an equity of the kind recognised in Pallant v Morgan and discussed in Banner Homes Group Plc v Luff Developments. The obligation was not absolute: a reasonable apprehension that the claimant’s conduct would jeopardise the tender could justify withdrawal. The defendants established a legitimate concern about the age profile of the vessels, but not that the claimant intended to promise new vessels and then renege, nor that the claimant’s inclusion made withdrawal necessary.
5. The defendants breached the joint-bid agreement by raising their concerns secretly with the licence owner, forming a rival consortium and denying the claimant an opportunity to address the perceived problem. It was unconscionable for them to retain the benefit of the successful rival bid without recompense. Judgment was therefore given for the claimant on the constructive-trust/equitable claim. The form of relief, including a possible constructive trust, account of profits or damages, was reserved for further submissions. (paras [91]–[97], [101]–[123])