Beverage Freight [2022] NSWSC 874

Breach or fiduciary? Hmm, how about neither!

In 2001, some Companies came together to incorporate a new company to contract with a big client. The client’s work would then be shared between the shareholders.

The new company would invoice the big client, and each shareholder would then invoice the new company such that the new company never made a profit.

A dispute arose: did that 2001 agreement establish a partnership?

The 2001 agreement did not create a partnership including because no profit was shared.

The new company did the work for the big client from 2001 to 2012.

Through this time there was discontent about the allocation of the work between the shareholders.

In 2012 the big client made a direction that the new company was to ensure its trucks were speed limited.

There were heated exchanges between the new company’s shareholders about the certification of the speed limiters installed on relevant trucks.

The Plaintiffs said the speed-limiter issue was a pretext manufactured to remove the Plaintiffs from the business.

The Court disagreed, finding: the big client had a legitimate concern about speed limiters.

After an August 2012 meeting, the content of which was subject to heavy dispute, Newer Company was founded without the Plaintiffs involved.

The Plaintiffs claimed the pivot from the new company to the newer company was a breach of the 2001 agreement, or the relevant fiduciary duties owed.

The Plaintiffs said the Defendants had caused the new company’s work with big client to cease in order for the newer company to do that work.

There was a “troubling inconsistency” in relation to some of the Plaintiff’s evidence of the 2012 meeting.

The Court found it was not implausible that the Plaintiffs attempted to take their own “shot” of working with the big client after the 2012 breakdown in the relationship, rather than sit with a deal they considered unfair.

The Plaintiffs claims were made for their own benefit and not for the benefit of the new company.

After a heavy and lengthy analysis of the evidence, the Plaintiffs failed in all of their claims.

Plaintiff’s failed to show that the natural persons were parties to the 2001 agreement and the companies, are not in partnership.

If you require assistance with any kind of corporate dispute you should seek legal advice.

Our team of qualified corporate and commercial lawyers at Chamberlains Law Firm can assist you with these issues to ensure that the dispute is managed correctly.