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ARELJ - Article - The Grounds Not Taken: Reliance on Additional Matters to Support the Refusal of Consent to the Assignment of a Joint Venture Interest

Stuart Cobbett
Senior Associate, King & Wood Mallesons

A joint venture participant alleged to have unreasonably withheld its consent to the assignment of another party’s interest may wish to rely on additional grounds and supporting material which did not influence the refusal. Courts in England, Canada and Australia have reached different conclusions on whether the decision-maker can bolster its refusal in this manner. Under English law, the decision-maker is restricted to the reasons that influenced the refusal and the material available at the date of the refusal of consent. An even stricter approach is taken under Canadian law, with the decision-maker limited to the reasons given for the refusal. In contrast, as a result of the High Court decision in Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HC 51, Australian law permits reliance on grounds not taken at the time of refusal and material existing but unknown to the decision-maker at the date of refusal. It has also been held that, in challenging the refusal, the assignor is permitted to rely on material unknown to the decision-maker at the date of refusal. This paper argues that the Australian approach is unduly broad and may assist unreasonable decision-makers and punish reasonable decision-makers. The paper proposes an alternative approach whereby a party is only permitted to rely on additional material if the other party has failed to comply with its contractual duty of cooperation.

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