Venkataramanujam v Ramasurbamanian [2024] NZHC 3591 (28 November 2024)

Last Updated: 16 December 2024

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-799 [2024] NZHC 3591

UNDER	Part 20 of the High Court Rules 2016
IN THE MATTER	of an appeal from a judgment of the District Court
BETWEEN	BAGATHSINGH VENKATARAMANUJAM and HEMA PREUMALSAMY Appellants
AND	PREMA RAMASUBRAMANIAN and RAM NARAYANARAJA Respondents

Hearing:	29 August 2024
Appearances:	M Lloyd for Appellants N Tetzlaff for Respondents
Judgment:	28 November 2024

JUDGMENT OF BECROFT J

This judgment was delivered by me on 28 November 2024 at 4pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

..........................................

Solicitors/counsel:

Paul Gallagher Legal/M Lloyd, Barrister, Auckland Smith & Partners, Auckland

VENKATARAMANUJAM v RAMASUBRAMANIAN [2024] NZHC 3591 [28 November 2024]

What is this appeal about?

• [1] The two parties are both married couples. They entered into a joint venture agreement to carry out small-scale property investment together. Three years later, their relationship, including their business relationship, completely broke down. Matters came to a head over the sale of the joint venture’s last remaining asset: a domestic dwellinghouse on Boundary Road, Blockhouse Bay, Auckland (the Boundary Road property). It was to be sold by “private auction”.

• [2] Before the private auction, one of the parties—Mr Venkataramanujam and Ms Preumalsamy (the appellants)—entered into a very favourable private, conditional, on-sale agreement of the Boundary Road property. However, it was conditional upon them first buying that property at the private auction. They did not disclose this to their erstwhile joint venturers—Mr Ramasurbamanian and Ms Narayanaraja (the respondents). They were successful at the private auction and immediately on-sold the property. They did not share the profits of that sale with the respondents. Having discovered the Boundary Road property was on-sold in these circumstances, the respondents brought a claim alleging a breach of the joint venture.

• [3] The District Court found that at the time of sale, the appellants were still in a joint venture with the respondents and owed continuing fiduciary duties to them.¹ In particular, the Judge found that prior to the private auction the appellants had a duty to disclose the separate on-sale agreement they had entered into and a duty to share the profits of that sale with the respondents. The appellants were found to have breached those obligations. There was judgment in favour of the respondents for

$43,750 (being half the profit made from the on-sale).

• [4] On appeal, the appellants argue that the joint venture had ended, and they did not owe the respondents fiduciary (or any) obligations at the time they on-sold the Boundary Road property.

¹ Ramasubramanian v Venkataramanujum [2024] NZDC 1389.

The facts

• [5] The facts are agreed between counsel. They are set out in a 66-paragraph agreed statement of facts that was prepared for the District Court hearing, which I summarise below.

• [6] The two couples were introduced to each other in 2014 through a mutual friend. As they became closer, they had discussions about purchasing property together to leverage the benefits of their pooled resources. They wished to secure a residential property to live in together, and to accumulate a portfolio of properties for equally shared financial gain and investment purposes.

• [7] The parties did not enter into a formal written agreement, but both accept that the arrangement was, at various times, a joint venture.

• [8] In 2015, the parties jointly purchased two properties—the first on Pleasant Road, Glen Eden, Auckland (the Pleasant Road property) and then the Boundary Road property. They both moved into the Pleasant Road property.

• [9] The legal ownership of both properties was allocated between the parties at 50 per cent to the first named respondent,² and 25 per cent each to the first and second appellants respectively. The mortgages over both properties were in the names of all the parties.

• [10] In May 2016, the parties agreed that the appellants would move into the Boundary Road property so they could host family members visiting from India. Once those family members had returned to India in January 2017, the parties were unable to agree about the appellants moving back into the Pleasant Road property. That resulted in a falling out. Agreement could not be reached regarding how the properties should be finally dealt with.

2. Although the second named plaintiff (respondent in this appeal) was not recorded on the title it was accepted the 50 per cent share held by the first named plaintiff (respondent in this appeal) was for the mutual benefit of them both.

• [11] In those circumstances, the appellants applied to the High Court seeking directions regarding the sale of both properties. Consent orders were issued.³ The Pleasant Road property was to be sold by way of private auction between the parties. The Boundary Road property was to be placed on the open market.

Private auction of the Pleasant Road property

• [12] On 7 August 2018, the respondents were the higher bidders for the Pleasant Road property. The proceeds of sale were applied towards the repayment of the mortgage and the balance was divided equally between the parties.

Sale of the Boundary Road property

• [13] The parties were unsuccessful in selling the Boundary Road property on the open market. The offers that were received nowhere near exceeded the original purchase price of $830,000, so the parties understandably declined them.

• [14] Following negotiations between the parties in October and November 2019, they agreed to sell the Boundary Road property by private auction between themselves. The auction was scheduled to proceed on 15 March 2020 with a reserve of $684,000 being 90 per cent of the last (and unacceptable) offer they had received.

• [15] On 1 March 2020, one of the appellants attended an auction for a property adjacent to the Boundary Road property. At the auction, he spoke to a Mr Lekinwala, who was a prospective purchaser. Mr Lekinwala was unsuccessful at that auction. The appellant then invited Mr Lekinwala to view their Boundary Road property.

• [16] Email negotiations between the appellant and Mr Lekinwala resulted in Mr Lekinwala agreeing to purchase the Boundary Road property for $857,500. I observe that this was significantly above the agreed reserved price. The agreement was conditional on the appellants acquiring the Boundary Road property in the private auction with the respondents.

³ Venkataramanujan v Ramasubramanian [2018] NZHC 1478.

• [17] The appellants did not disclose to the respondents that they had a conditional agreement with Mr Lekinwala. The agreed summary of facts records that the appellants did not believe they were under any obligation to do so and thought that the parties were free to compete to obtain a profit in their dealings with the remaining property. The respondents disagree. The agreed statement of facts records that this is an issue to be determined in these proceedings.

• [18] Later that month, on the 15 March 2020, the appellants purchased the Boundary Road property at private auction for $770,500. Settlement concluded on 30 April 2020. The on-sale agreement with Mr Lekinwala went ahead and settled on the same day. The appellants made a profit of $87,500.

• [19] The respondents later discovered the sale to Mr Lekinwala. These proceedings were issued as a result.

Legal principles on appeal

• [20] This appeal proceeds by way of rehearing.⁴ Those exercising appeal rights are entitled to judgment in accordance with the opinion of the appellant Court.⁵ The appellant bears the onus of identifying the respects in which the judgment under appeal is said to be in error.⁶

• [21] This Court is required to reach its own view on the material before it.

• [22] I note that neither party seeks to introduce new evidence on appeal.

Decision under appeal

• [23] Judge Clark concluded that without evidence from the parties as to whether, and if so when, they expressly agreed to terminate the joint venture, he was unable to find a termination date earlier than settlement of the sale of the Boundary Road property. He considered that finding an earlier date would be arbitrary without conclusive evidence of the parties’ intentions.

⁴ High Court Rules 2016, r 20.18.

⁵ Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [16].

⁶ At [4].

• [24] The Judge reasoned:

• [59] I reject the defendants view then I can reach this conclusion based solely on the decision to enter into a competitive auction process. Whilst the competitive process may be the antithesis of cooperation if viewed from a potential purchaser’s position, such a view ignores the underlying purpose of an auction which is to drive up the price. In doing so the process benefits the vendor who, in this case, were the parties in their joint capacities. If, as what has happened here, the process is influenced in any way because of information which is known by one party and not the other, then the mutual benefit of the process is lost.
• [60] I am further fortified in reaching the view the joint venture arrangement did not end any earlier than settlement of the Boundary Road property because the parties had rejected offers whilst the property was on the open market as those offers were less than what they had paid for the property. The decision to reject these offers demonstrated the parties clearly wanted to maximise the profits from any sale rather than sell for any price. For the reasons I have set out, the private auction process is consistent with the intention to maximise profits and therefore, importantly, consistent with the intention as to why the parties entered into the joint venture arrangement in the first place.

• [25] The Judge considered that Chirnside v Fay was clear authority for the point that fiduciary obligations will continue until the joint venture is brought to a conclusion which is “fair to all concerned” or the venture becomes contractual in nature, or there is a clear withdrawal of one party from the joint venture.⁷

• [26] He then applied that authority to the facts before him:

• [63] The ability for the defendants to profit from the sale of the Boundary Road property, only arose because they possessed information which demonstrated a profit was achievable when previously the parties did not think it was possible. However, because the defendants gained this knowledge whilst they were joint owners, and they were only joint owners because they were assisted by the use of the plaintiff’s resources, they were therefore obligated to disclose the existence of Mr Lekinwala’s interest in the property to the plaintiffs. To keep this information from the plaintiffs would not be “fair for all concerned” and would remain so until disclosure was made.
• [64] By negotiating the conditional offer with Mr Lekinwala and by not disclosing the same to the plaintiffs, especially when they knew a profit was going to be achieved, was a clear conflict of the defendants own personal interests above the fiduciary obligations they owed to the plaintiffs. Accordingly, in my view, and consistent with Chirnside, the defendants’ failure to disclose was a breach of their fiduciary obligations and they must pay damages.

⁷ Chirnside v Fay [2006] NZSC 68, [2007] 1 NZLR 433.

Appellants’ submissions

• [27] Mr Lloyd, for the appellants, submits that the joint venture was terminated prior to the sale of the Boundary Road property. He points to three different times when the joint venture could, and he says should, have been found to have terminated:

(a) When the relationship between the parties broke down in 2016/2017 and they agreed to divide the two joint venture properties between them.

(b) When the appellants, in late 2017, filed proceedings in the High Court seeking orders for the sale of the two properties.

(c) When the parties agreed to compete against each other, by way of private auction, for the purchase of the Boundary Road property.

• [28] On any of these scenarios, the joint venture had ended before the private auction (and on-sale) of the Boundary Road property. Mr Lloyd effectively submits these are the only three options and, on any analysis, the joint venture must have ended before the on-sale of the remaining property.

• [29] Therefore, Mr Lloyd submits that the appellants did not, and simply could not, owe fiduciary obligations to the respondents at the time of the sale.

• [30] Accordingly, the appellants should not be required to account to the respondents for the profit they made from their on-sale of the Boundary Road property to Mr Lekinwala.

• [31] Mr Lloyd uses the following example to demonstrate his argument. If the appellants, without telling the respondents, had discovered they could profitably subdivide the Boundary Road property and then, after purchase, did subdivide and make a profit, then applying the Judge’s reasoning they would have to share the profits of that subdivision with the respondents. This, argues Mr Lloyd, cannot be so.
• [32] The appellants’ case is that the District Court judgment should be set aside, and the matter remitted back to the District Court for findings in relation to the remaining and still undecided cause of action (tort of deceit), and for costs to be dealt with in relation to matters that were heard, or are to be heard, in that jurisdiction.

Respondents’ submissions

• [33] Mr Tetzlaff, for the respondents, submits that the Judge’s conclusion about the end date of the fiduciary relationship must be correct—especially in light of the agreed statement of facts on which the judgment is based.

• [34] Mr Tetzlaff further argues that, irrespective of when the joint venture ended, it would have been open to the Judge to determine that fiduciary obligations continued between the parties until final settlement and disposition of the joint venture assets.

• [35] The agreed formulation of the joint venture was the accumulation of a portfolio of properties for shared investment purposes and financial gain. The case law makes clear that a joint venture does not terminate upon the end of “fair weather” in the relationship between the parties. The deterioration of the parties’ personal relationship was not relevant to their shared financial interests in the joint venture property, and the outcome of that venture. As long as the parties owned the properties, regardless of whether they were seeking to dispose of them, the joint venture and obligations arising therefrom necessarily continued.

• [36] Mr Tetzlaff says that at the relevant time, the parties were still required to protect the assets to ensure that they all profited equally.

• [37] Accordingly, Mr Tetzlaff submits that the appellants owed the respondents fiduciary obligations to disclose that they had entered into a conditional agreement with Mr Lekinwala, and to not personally profit from that sale.

Law of fiduciary obligations

• [38] The following general principles, formulated by the courts, are of assistance in this case.
• [39] In Chirnside, Blanchard and Tipping JJ reasoned that a joint venture is the type of relationship that can well give rise to fiduciary obligations:

[74] There is a strong case for saying that most joint venture relationships can properly be regarded as being inherently fiduciary because of the analogy with partnership. The relationship between partners is one which has traditionally been regarded as a classic example of a fiduciary relationship in that the parties owe to each other duties of loyalty and good faith; and they must, in all matters relevant to the activities of the partnership, put the interests of the partnership ahead of their own personal interests.

(footnotes omitted)

• [40] Since Chirnside, I recognise that the courts have cautioned against too readily concluding that an arrangement between parties is a joint venture giving rise to a fiduciary obligations:⁸

[167] The term ‘joint venture’ is not a technical one with a settled common law meaning. As a matter of ordinary language, it connotes an association of persons for the purposes of a particular trading or commercial undertaking or endeavour, with a view to mutual profit, with each participant usually, but not necessarily, contributing money, property or skill. The term ‘joint venture’ can cover many forms of arrangement, not all of which will necessarily give rise to fiduciary obligations. The absence of a written agreement does not preclude there being a joint venture.

• [41] It is not the case that every joint venture will give rise to those obligations. What must be undertaken is a close analysis of the nature of the relationship between the parties. Only then can a court determine whether fiduciary duties arise.

• [42] In respect of the obligations owed by fellow joint venturers to each other, in

Chirnside, Elias CJ explained that:

[15] Not every breach of duty by a fiduciary is a breach of a fiduciary duty. The distinguishing obligation of a fiduciary is the obligation of loyalty. Within the scope of the joint venture, both Mr Chirnside and Mr Fay were subject to that obligation. Consistently with it, neither was permitted to place himself in conflict of interest with the venture. Each was obliged to account to the other for any unauthorised profit obtained by opportunity arising through the venture. The appropriation of a joint venture by one of the parties to his sole account is as fundamental a breach of fiduciary duty as can be imagined.

(footnotes omitted)

⁸ Pure Elite Holdings Ltd v Bodco Ltd [2019] NZHC 2191 (footnotes omitted).

• [43] As to when fiduciary obligations arising in a joint venture may terminate, Blanchard and Tipping JJ relevantly observed in Chirnside:
  • [92] The resulting fiduciary relationship is not one from which a party is unable to withdraw, albeit withdrawal will usually require appropriate arrangements to be made in consideration of the severance of the joint interests and the release of the parties from their duties of loyalty to each other. Because there is, as yet, no contract between the joint venture parties, each will ordinarily be free to withdraw, on giving the other notice to that effect. On the giving of that notice duties of loyalty for the future will come to an end but confidentiality obligations may remain; and any assets, tangible or intangible, held on behalf of the joint venture will still usually be held on trust for both the erstwhile joint venturers. Appropriate steps will be necessary to agree, or obtain some external resolution as to how those assets are to be dealt with. There is, in a general sense, some analogy with the steps necessary when a formal partnership is dissolved.
  • [93] The point, in short, is that joint ventures, like partnerships, can generally be brought to an end by appropriate notice. The previous joint venturers must, however, still act equitably towards each other in the steps necessary to bring the affairs of the joint venture to a conclusion which is fair to all concerned. The further the joint venture has progressed the more complex those obligations may be. Once the venture becomes contractual the contract will normally govern what is to happen on the termination of the venture or the withdrawal of a party from it. In the absence of contractual regulation, equitable principles will supply the solution.

(footnote omitted; emphasis added)

• [44] It seems settled, that given the protective nature of fiduciary obligations arising from a joint venture, clear notice of withdrawal is necessary to bring those obligations to an end. Anything less would not be fair to a beneficiary of those important obligations. In the absence of such clear agreement, the previous joint venturers must still act equitably to each other in bringing the affairs of the joint venture to an end.

First issue: was there a joint venture that gave rise to fiduciary obligations?

• [45] Both parties accept there was a joint venture in this case that gave rise to fiduciary obligations. The parties did not describe their relationship in this way, but the agreed statement of facts makes clear that the arrangement was nonetheless a joint venture.

• [46] Put simply, the arrangement between the parties can be characterised as a joint venture formed for the purposes of acquiring a residential property to live in, and to develop a property portfolio for financial gain.
• [47] That joint venture, it is agreed, gave rise to fiduciary obligations because it required each party to place trust and confidence in the other. The parties pooled financial resources with the shared intention of purchasing property for mutual gain.

• [48] That finding is supported by the following observations of Blanchard and Tipping JJ in Chirnside:⁹

The essence of a joint venture which is not yet contractual is that it is an arrangement or understanding between two or more parties that they will work together towards achieving a common objective. It is fallacious to think that there can be no joint venture unless and until all the necessary details have been contractually agreed. A joint venture will come into being once the parties have proceeded to the point where, pursuant to their arrangement or understanding, they are depending on each other to make progress towards the common objective. Each party is then proceeding on the basis that he or she is acting in the interests of all or both parties involved in the arrangement or understanding. A relationship of trust and confidence thereby arises; each party is entitled to expect from the others loyalty to the joint cause, loose as the formalities of the joint venture may still be. This in essence is the position which was reached between Messrs Chirnside and Fay. Neither of them was thereafter entitled to act solely in his own interests.

• [49] None of this seems in dispute. It is the next issue that divides the parties.

Second issue: when did the joint venture and the fiduciary obligations come to an end?

• [50] The appellants responsibly concede that if fiduciary obligations are found to have continued until the settlement of the Boundary Road property sale between the parties, then they have breached those obligations. But the appellants’ argument is that the joint venture had already terminated, and so, too, had all the fiduciary obligations. Therefore, the key question in this case is when did the appellants cease to owe the respondents those fiduciary obligations?

• [51] In this respect, the District Court Judge found himself confronting a difficulty. The parties had agreed to proceed to hearing on the basis that evidence would not be called and there would be no cross examination of the parties.¹⁰ Instead, the Court was asked to issue judgment based on the carefully prepared agreed statement of facts.

⁹ At [91] (emphasis added).

¹⁰ See [5] above.

• [52] Those facts record, “[t]he date that the joint venture ended, and the parties’ obligations at and leading up to the termination of the joint venture, are legal questions which are not agreed.”

• [53] As the Judge observed, “[w]hat that means is the Court is limited to assessing the terms of the joint venture agreement based on the agreed statement of facts”.¹¹ The Judge noted that hearing evidence from the parties may have allowed him to find that they had expressly agreed to terminate the joint venture (and the associated fiduciary obligations) before the private auction of the Boundary Road property. But in the absence of evidence, he concluded he was unable to find the joint venture and the fiduciary obligations terminated any earlier than the settlement of the Boundary Road property. On this basis, in the absence of any express agreement to the contrary, the fiduciary obligations continued.

• [54] Further, the Judge held that for him to choose an earlier date for termination, as Mr Lloyd urged him to do, would be to arbitrarily pick a date when the evidence was inconclusive as to the parties’ intentions.

• [55] In fact, as I understand the authorities, simply picking one of the three “dates” suggested by Mr Lloyd would have not only have been arbitrary but would not have been determinative of the issue. I accept that any (or all) of those three dates indicate the parties’ intention to bring the joint venture to an end. But they are not consistent with a clear agreement that in the winding up of the joint venture assets they would be released from all their fiduciary obligations to each other. Simply picking any of those dates does not resolve the question of when those fiduciary obligations ended. According to the authorities, clear agreement that they would end before the joint venture was wound up was required. There simply was not evidence to that effect. As was observed in Chirnside, “[t]he previous joint venturers must, however, still act equitably towards each other in the steps necessary to bring the affairs of the joint venture to a conclusion which is fair to all concerned.”¹²

¹¹ At [57].

¹² At [93].

• [56] I agree with the District Court Judge that on the facts before him, the parties’ decision to go to private auction actually represented a continuation of the joint venture’s purpose of maximising the financial gain from the sale of property. The parties had together agreed to reject the offers they received while the Boundary Road property was on the open market because those offers were less than what they paid for the property—thereby agreeing to proceed with the mechanism they believed would fetch the highest price possible for the property.

• [57] I also agree that although the competitive private auction process was “the antithesis of cooperation if viewed from a potential purchaser’s position, such a view ignores the underlying purpose of an auction which is to drive up the price”¹³—hence the shared profit for the parties. I would add, that was also the case with the previous private auction of the Pleasant Road property.

• [58] Given that clear notice of termination would be required to end the fiduciary obligations arising from the joint venture, like Judge Clark, I cannot find that such termination occurred here. I am not prepared to infer, from the decision to take the Boundary Road property to a private auction, a clear intention by the parties to bring to an end of their shared venture and all their fiduciary obligations.

• [59] I can understand Mr Lloyd’s apparent frustration. His submission to this Court was that having agreed to streamline the District Court hearing by relying on the agreed statement of facts, he now feels prejudiced by that concession.

• [60] In any case, Mr Lloyd is quite clear that hearing from the parties would not have assisted. In his view, it is “blindingly obvious” the joint venture must have ended at the very latest when the parties agreed to compete against each other, by way of private auction, for the purchase of the Boundary Road property. However, in my view, what is not “blindingly obvious” is whether that agreement relieved the parties of all their fiduciary obligations to each other.

¹³ District Court decision, above n 1, at [59].

• [61] It would seem strange if the very assets acquired as part of a fiduciary relationship could be disposed of, at least without clear agreement, in a way that was completely contradictory to the fiduciary obligations under which they were accrued and maintained. Moreover, it would undermine the reason for the fiduciary obligations in the first place.

• [62] On Mr Lloyd’s analysis, any one of three occurrences that have been set out previously brought the joint venture to a complete end. As I have already explained, in my view, none of them necessarily have that effect. All of them constitute a realisation that the business relationship could not continue. And they represent a commitment to winding up the joint venture in an orderly and agreed way to maximise profit for the joint venture. But, in my view, they are not tantamount to an abrupt end of their fiduciary obligations. As Mr Lloyd would have it, at least by the time of the private auction, “all bets were off” and the parties were then free to act in an entirely self-interested way. However, in my view, clear agreement was required for the previous joint venturers to descend to that level.

• [63] Put another way, there is a difference between an agreement for outright and immediate termination of the joint venture and all its fiduciary obligations on the one hand (which Mr Lloyd submits is the effect of any one of the three occurrences he highlights), and a recognition that the business relationship cannot continue and must be wound up on the other hand. The latter situation, in the absence of agreement to the contrary, is far more consistent with the agreed facts of this case. In that scenario, the fiduciary obligations continue until winding up is complete. This is the decision that the District Court Judge reached. I can see no error in his approach. It is sound and consistent with the authorities. I would reach, and do reach, the same conclusion.

• [64] In the absence of the agreed summary of facts showing any agreement to the contrary, I consider the fiduciary obligations arising from the joint venture, and certainly the obligation for fair dealing between the parties, continued until the sale between them was settled and the profits fairly distributed.

Third issue: have the appellants breached their fiduciary obligations?

• [65] This issue is easily resolved. The appellants conceded that if (contrary to their argument) this Court held that the parties owed continuing fiduciary obligations to each other until the settlement of the Boundary Road property, then they had breached them. Given the obligations of fair dealing, discussed previously in Chirnside, that must be the case.

• [66] For the sake of fullness, and given my previous findings, the answer to the Mr Lloyd’s hypothetical question he posed in argument is equally clear, though strictly unnecessary for this decision. If the appellants had, without telling the respondents, discovered that the Boundary Road property could be profitably subdivided, thereby significantly enhancing the value of the property, then they would have been obliged to disclose that to the respondents prior to the private auction also. Fair dealings between the parties in disposing of the joint venture assets would have demanded it.

• [67] In deciding whether the appellants had breached their fiduciary obligations, I agree with the reasoning of the District Court Judge:
  • [63] The ability for the defendants to profit from the sale of the Boundary Road property, only arose because they possessed information which demonstrated a profit was achievable when previously the parties did not think it was possible. However, because the defendants gained this knowledge whilst they were joint owners, and they were only joint owners because they were assisted by the use of the plaintiff’s resources, they were therefore obligated to disclose the existence of Mr Lekinwala’s interest in the property to the plaintiffs. To keep this information from the plaintiffs would not be “fair for all concerned” and would remain so until disclosure was made.
  • [64] By negotiating the conditional offer with Mr Lekinwala and by not disclosing the same to the plaintiffs, especially when they knew a profit was going to be achieved, was a clear conflict of the defendants own personal interests above the fiduciary obligations they owed to the plaintiffs. Accordingly, in my view, and consistent with Chirnside, the defendants’ failure to disclose was a breach of their fiduciary obligations and they must pay damages.

• [68] In circumstances where the appellants owed the respondents duties of fair dealing, they have taken advantage of an opportunity that ought properly to have been presented to the joint venturers.
• [69] The appropriate remedy in these circumstances is an account of the unauthorised profits. I uphold the District Court Judge’s conclusion.

Tort of deceit

• [70] The remaining cause of action, not addressed in the District Court, is the tort of deceit. The elements of this tort were agreed between the parties, as follows:¹⁴

(a) there must be a false representation by the defendant as to a past or existing fact;

(b) the defendant must know the representation to be untrue; or have no belief in its truth; or be reckless as to its truth;

(c) the defendant must have intended that the plaintiff act in reliance on the representation;

(d) the plaintiff must in fact act in reliance on the representation; and

(e) the plaintiff must suffer damage as a result.

• [71] In his decision, Judge Clark said that because he determined liability based on breach of fiduciary obligations, it was unnecessary for him to then consider this cause of action. I take the same approach.

Conclusion

• [72] The appeal must fail. It is dismissed.

• [73] There is no reason why costs should not follow the event. A previous minute of this Court records that the appeal has been categorised as a category 2 proceeding.¹⁵ If the parties cannot agree, and I urge them to do so, the respondents are to file concise costs submissions (no more than three pages) within 10 working days of this judgment.

¹⁴ Amaltal Corp Ltd v Maruha Corp [2006] NZCA 112; [2007] 1 NZLR 608 (CA) at [46]–[58], per Hammond J.

¹⁵ Venkataramanujum v Ramasubramanian HC Auckland CIV-2024-404-000799, 20 May 2024.

The appellants have 10 working days to file concise submissions in reply on the same basis.

Becroft J