Chauvidul- AW v Phongphongsavat & Anor

The claimant asserted that a VDO streaming venture was a joint enterprise and that she was entitled to a one third share in the business operated through DOOTV Ltd (DTVL). She sought damages for breach of contract, an account of profits, rectification of the register of members under section 125 of the Companies Act 2006, a declaration of partnership and ancillary relief. The court found that documentary and contemporaneous evidence (company formation documents, invoices and e-mails with a streaming provider, a spreadsheet of contributions and PayPal records available to the claimant) established that the claimant actively participated in and funded the initial venture and was a participant in DOOTV Media Ltd.

However, the judge concluded there was insufficient evidence of any agreement between the claimant and the principal defendant that she would acquire a one third share in DTVL. There had been no direct discussion between the claimant and the principal defendant to transfer that interest, the pleaded ostensible authority case failed because there was no representation by the principal that the agent had authority, and the proposed constructive trust claim was inadequately pleaded and lacked a necessary fiduciary basis and common intention. The applications to amend the particulars were allowed to be argued but the substantive claims failed. The action was dismissed.

Background and parties:

• The claim arose from the development in 2007–2008 of an online Thai video streaming service (DooTV). The claimant (Narisa) said the idea was hers and that she and a technical partner (Tua) formed DooTV Media Ltd. She said that in or about September 2007 the defendant Rote was to join and that the three would each take one third of the business, and that in about April–May 2008 the trading would continue through DOOTV Ltd (DTVL) with the claimant retaining a one third interest.
• The defendants (Rote and DTVL) said the idea and company originated with Rote and Tua, that the claimant provided financial assistance and communications help but was never intended to be a shareholder, and that the current business had been taken over and developed by Rote's nephew Job (and later a Thai company).

Relief sought:

• The claimant sought (i) a declaration or finding that she had a one third share in DTVL and/or the VDO business, (ii) damages for breach of contract, (iii) an account of profits, (iv) rectification of the register of members under section 125 Companies Act 2006, (v) a declaration of partnership, and (vi) ancillary remedies including a freezing order (the latter was applied for without notice against Job and ThaiMedia during trial).

Issues for decision:

1. Whether there was a contract or agreement making the claimant a one third shareholder of DTVL or giving her a one third beneficial interest in the VDO business.
2. Whether Tua had actual or ostensible authority to bind Rote in relation to any transfer or creation of such an interest.
3. Whether, alternatively, equitable relief in the form of a constructive trust arose such that the defendants held the claimant's one third interest on trust.
4. Whether rectification of the register under section 125 Companies Act 2006 or a declaration of partnership should be granted.
5. Whether a without-notice worldwide freezing order against Job and ThaiMedia should be granted.

Court's reasoning and findings:

• The court accepted that the claimant was actively involved in the early venture: she helped to form DooTV Media Ltd, paid invoices (notably to the streaming provider T2eUK/Prostream and a Thai web designer), signed an acceptance as director on a proposal, engaged in extended correspondence with the streaming provider, and had records of PayPal receipts and Google Analytics showing activity. A spreadsheet of contributions dated April 2008 supported her participation and contribution to costs.
• As to the alleged April/May 2008 agreement that she would have a one third share in DTVL, the judge found there was no contemporaneous documentary or direct testimonial evidence of any agreement between the claimant and Rote. There were no direct discussions between the claimant and Rote about such a transfer and the claimant’s own account showed she dealt mainly with Tua. The spreadsheet and other documents did not evidence a conversion of that contribution into a one third share in DTVL.
• The ostensible authority/agency amendment failed because ostensible authority requires a representation by the principal that the agent has authority; an agent’s own conduct cannot alone create apparent authority. The pleaded formulation was insufficient and the facts did not show Rote had represented that Tua could bind him to create a shareholding or similar interest.
• The constructive trust amendment failed because it was inadequately pleaded, lacked an identified fiduciary relationship or clear common intention after May 2008 that would give rise to a proprietary equitable interest, and the claimant did not establish the necessary elements for an equitable proprietary remedy.
• Rectification and partnership claims were similarly unsupported by the evidence for the relevant periods.
• The without-notice freezing order application against Job and ThaiMedia was refused because on the judge’s findings there was no arguable basis for the relief against those persons and for other procedural and merits reasons.

Outcome:

The court dismissed the claimant's claims in full and refused the freezing order application.

First instance: The action is dismissed. The judge accepted that the claimant actively participated in and helped fund the initial DooTV venture but found there was no agreement with the defendant Rote that she would receive a one third share in DOOTV Ltd, that ostensible authority was not established because there was no representation by the principal that his agent had authority, and that the constructive trust/rectification and partnership claims were not made out on the evidence; the without-notice freezing order was refused for lack of a proper basis.