Russell v Cartwright and others  EWHC 41 (Ch)
The claimant (Mr Russell) was one of four individuals involved in a joint venture property development business. The parties entered into a joint venture agreement which obliged them to act with good faith towards each other, in certain limited respects. Mr Russell departed the business pursuant to the terms of a settlement deed. Shortly after that deed was executed, the remaining parties entered into an attractive development project that Mr Russell claimed the other parties did not tell him about, or give him the opportunity to participate in. Mr Russell claimed he was wrongfully excluded by the dishonest actions of the other joint venturers. The claims alleged were: (a) breach of fiduciary duty; (b) breach of the express/implied terms of the joint venture agreement; (c) fraudulent non-disclosure; (d) unlawful means conspiracy. As a result of the terms of the settlement deed, Mr Russell needed to establish fraud or dishonesty to succeed.
The claims all failed. The Judge (Falk J.) found Mr Russell to be an unsatisfactory witness who “avoided straight answers to a high proportion of questions asked”  whereas the defendants were all found to be “straightforward and honest” , , ; not a promising start for a claimant in a judgment to fraud claim.
The following points of interest arise from the judgment:
Two straightforward messages can be drawn from this case. First, the scope for imposing fiduciary duties and far reaching duties of good faith in commercial joint venture arrangements are limited, particularly where the relationship is structured to facilitate each joint venture pursuing their own commercial interests. Second, time and time again, the ability for witnesses to respond to questioning in a straightforward manner will often be a highly determinative factor at trial. This, together with the need to establish the precise state of the individual’s mind, makes predicting the outcome of fraud claims particularly difficult.
Written by Nick Goodfellow
Nick Goodfellow acts in wide variety of complex civil fraud claims. Nick is currently head of Littleton’s Civil Fraud Group.