How we helped settle a joint venture agreement dispute – stress removed and smiles all round

We recently assisted an individual client in defending a complex claim brought against them by an individual alleging that they had entered into a joint venture business agreement (verbally) to share profits to exploit business opportunities.

We were successful in resolving the proceedings and settling the claim before trial by robustly addressing the claim itself and negotiating from a strong strategic position.

Background

Joint ventures can be an important mechanism for parties to work together to build a successful business. Such joint ventures can either be start-up companies or the strengthening of an existing business with one party contributing tangible assets and the other bringing concepts and knowledge to the table. In this case, there was no written agreement in place (a formal Joint Venture Agreement is always preferable), so the verbal and written exchanges between the parties were relevant. There was uncertainty when things started to go wrong with the business, the parties’ professional relationship broke down, and proceedings were brought against our client by the other disgruntled party, proceedings which our client was required to defend.

One of the main issues with joint ventures (making joint ventures particularly sensitive and unique) is that, unlike disputes which can arise from existing detailed written contracts and agreements, these arrangements are often structured on a much more informal basis, with less agreement in writing and more verbal decisions or with terms agreed between the parties set out ‘on the back of an envelope’.

Joint business ventures are entered into in the spirit of optimism and excitement for the future, with little consideration at the start of what could happen if things go wrong.

Decisions not being put into writing, important details being missed, and a lack of communication between parties commencing a joint business venture is a recipe for disaster. A robust, detailed and professionally drafted Joint Venture Agreement can mitigate the risk of problematic situations arising further down the line, and can help to safeguard the parties and alleviate risk of nuclear fallout in the future.

How we helped

We onboarded our client in the usual way and added ourselves to the court record given that the other party (the Claimant) had already commenced proceedings against our client (the Defendant).

We took full details of the background from our client. We produced a suitable and well-written defence to the Claimant’s claim formally setting out the client’s version of events and response to the claim.

There is considerable stress, time, and cost associated with all litigation. Risk must be carefully evaluated. Defendants to a legal claim are often at a disadvantage as they do not have control of the court proceedings, such control inevitably lies with the Claimant – this causes considerable anxiety to a Defendant. Proper preparation of a case on behalf of a Defendant will allow the balance to be redressed and from that improved position an equitable solution is much more likely to be found.

We advised our client that they could try to settle the claim by making an offer of settlement to the other side on a ‘without prejudice save as to costs’ basis. This is a means by which the person making the offer can gain a potential advantage in placing the opponent at risk on costs – a decision at trial more favourable to the offer will potentially penalise the other party for not accepting the offered terms.

Our client decided that they wanted to make such an offer. This was carefully crafted. The Claimant took time to consider. A counteroffer was made and flatly rejected. Having carefully evaluated our client’s case we were not willing to make any concessions. The strategy worked and the offer we had made was accepted. The terms agreed were at the low end of the formulated claim enabling our client to exit the proceedings well within budget and at considerable savings of time, cost and anxiety.

To protect our client’s position, we produced a detailed Tomlin Order, which is a document required to let the court know that the action has been settled and detailing the terms agreed between the parties. The terms agreed and set out in a Tomlin Order, once sealed by the court, are fully enforceable – meaning that if a party has agreed to do something (e.g., pay a sum of money) the court can be asked to make that happen.

In this case, it was agreed that each side pay their own solicitor costs – a considerable cost and risk saving to our client.

How we can help you

Getting prompt and competent legal advice at the outset will ensure that you can put your best foot forward and protect your position as much as possible if you are looking to go into business with someone else.

If you require assistance with court proceedings (whether it is a business joint venture gone sour or a housing dispute), we can advise and guide you toward a suitable solution.

A practical, cost-saving resolution is always better than becoming embroiled in long-winded expensive litigation.

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