Daniels & Ors v Deville & Ors

A joint venture conducted through companies may retain a distinct hybrid character, combining corporate vehicles with personal rights and obligations between the participants. The court must identify the parties’ actual arrangements from the documents and surrounding circumstances.

Where a dissolution deed provides for a winding-up accounting, its agreed asset schedule and accounting mechanism govern unless validly amended. A later document that is backdated and intended to mislead does not amend the dissolution deed merely because it purports to describe earlier arrangements.

Participants must act in good faith, avoid conflicts of interest and not appropriate joint venture opportunities for themselves. Inter-company loans remain repayable loans unless the evidence establishes otherwise. Loan-note liabilities may be subject to equitable or legal set-off where the instruments contain no contrary provision.

The judgment concerned four connected Chancery actions arising from a property-development joint venture between members of the Daniels family, Alan Deville, the Lewis family and associated companies.

The principal disputes concerned the nature and scope of the joint venture, the effect of a 2001 Deed of Dissolution, a backdated Confirmatory Joint Venture Agreement, the ownership and treatment of development assets, inter-company and personal loans, loan notes issued on a share sale, and the validity of administrative receivers’ appointments.

The court also considered whether accounts and inquiries should be ordered to resolve competing claims across the litigation and whether particular properties remained joint venture assets.

1. Nature of the venture. The arrangements created a hybrid joint venture involving individuals and companies. They were not merely a group of companies and did not constitute a Partnership Act 1890 partnership. The participants owed implied duties of good faith, to avoid conflicts of interest, and not to exploit for personal benefit opportunities acquired through the joint venture.
2. Governing documents. The Deed of Dissolution was carefully negotiated and provided the governing framework for winding up. It identified the relevant assets and required a pooled accounting based on the statement-of-affairs balances of the venture vehicles. Inter-company loans shown in the accounts were genuine repayable loans and were not gifts or subventions.
3. The Confirmatory Joint Venture Agreement, although dated 1996, was signed in 2002, was intended to mislead or deceive, and materially invented or altered the parties’ supposed earlier arrangements. It therefore did not amend or replace the Deed of Dissolution. The Share Purchase Agreement altered earlier arrangements only to the extent expressly provided.
4. Assets listed in the Deed of Dissolution could not be passed out of the joint venture without approval or knowing acquiescence by the Supervisory Board, and the burden of proving that approval lay on the person asserting it. Inquiries were ordered concerning Elstow and Volvo. Cricketers remained subject to the earlier beneficial trusts, while Squires Close and its proceeds remained relevant to the joint venture accounting.
5. The loan-note and guarantee liabilities were prima facie established, subject to deductions and set-off. The defences based on joint venture ownership, intercreditor default, illegality and fraud failed. Rent arrears, possible misappropriation and personal-loan claims required determination in the global account.
6. The administrative receivers were validly appointed, both because consent had been given and because the relevant debenture condition had been satisfied. The Receivership Action was otherwise dismissed, subject to the global accounting. No immediate payment was ordered in the Loan Notes Action, and no substantive relief was granted in the Pickenham Action pending the accounts and inquiries.

This was a first-instance judgment in four connected actions. No appellate history is stated in the judgment.