“Tell ‘em about the legal fees!”
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A joint venture kicked off by two natural persons, P and D, and involving a number of Cos, fell apart.
A deed was entered into to deal with the wind down.
The deed was between the natural persons and the relevant Cos. It dealt with the appointment of new independent directors to take an arm’s length approach to realising the JV’s assets.
The deed included a provision apparently granting the new directors an indemnity for their costs, paid from the venture’s funds: [3]
One venturer, P, sued: the Cos, the D and the new directors.
Over time, it became apparent the new directors were having the legal costs of their defence paid by the relevant Cos.
P sought an injunction stopping the Cos from paying the new directors’ legal costs.
The new directors said the terms of deed protected them whether by its operation or estoppel, allowing them an indemnity for their legal costs: [4]
Based on the evidence before it, the Court found it unnecessary and undesirable to rule on a fiddly construction or estoppel point on an interlocutory basis: [5], [7]
Instead, the Court required the new directors to disclose their lawyers’ fees to the P and his related entities on a regular basis: [8], [11]
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