In the matter of Act Land Pty Ltd (in liquidation)

Act Land Pty Ltd (in liquidation) brought an action against five other parties regarding a joint venture agreement. The parties had agreed to conduct their development business through a special purpose vehicle, holding shares equally between themselves. The agreement included a mechanism to reconcile unequal contributions, requiring a “call” on a share for further contribution. After a party failed to meet this call, the others purported to forfeit their shares and exclude the defaulting party from the joint venture. The company subsequently went into liquidation, and the liquidator sought to establish that the joint venturers breached the agreement by forfeiting the shares and excluding the defaulting party. The court was required to decide whether the joint venturers breached the agreement and, if so, whether the company suffered any loss as a result.

The court found that the joint venturers breached the agreement by purporting to forfeit the shares and excluding the defaulting party. The court held that the breach was established as a matter of contract. However, the court found that the company did not suffer any loss as a result of the breach. The court held that there was no evidence that the venture would have been profitable, and the subsequent history of the venture led to the company’s liquidation. The court found that there was no evidence that the course would have been different but for the breach, and therefore no loss was established. The court awarded nominal damages to the company.

The court ordered that the defendants pay nominal damages to the plaintiff. The court also found that the plaintiff was not entitled to leave to proceed with its claim for loss of profits because the shares had no value. The court held that the plaintiff’s cause of action was in contract only, and therefore it was not entitled to claim damages for loss of profits. The court dismissed the plaintiff’s claim for loss of profits and ordered the plaintiff to pay the defendants’ costs of the proceeding.