Stewart Maurice Dixon v John Edward Willan & Ors.

A contemplated joint venture does not necessarily create a partnership or binding agreement. Where parties agree to use a company as the vehicle for their venture, a claimant must establish a later variation or sufficiently certain alternative agreement before claiming profits or proprietary interests outside that structure.

A Pallant v Morgan equity requires a common intention that specific property will be acquired for the parties’ joint benefit, reliance conferring an advantage or causing detriment, and circumstances making it unconscionable for the acquiring party to retain the benefit. The court has a broad discretion as to the remedy.

The claimant, a property developer, alleged that he and the first defendant had formed a 50:50 joint venture concerning several Cumbrian development sites. He claimed contractual, partnership, constructive trust, proprietary estoppel and unjust enrichment remedies.

The defendants argued that the parties had agreed in July 2017 to conduct any joint venture through Wren Place Homes Ltd, subject to the claimant contributing or procuring appropriate funding. The court distinguished between three residential sites and two commercial properties, Myers Lane and the Redhills Site.

1. Residential sites. The discussions before July 2017 were preparatory and did not establish a partnership or binding joint venture. In July 2017 the parties agreed to pursue the venture through Wren Place Homes Ltd, which was to acquire the sites and obtain funding. The claimant failed to prove that this arrangement was later superseded by a partnership, binding profit-sharing agreement or agreement giving him interests in the residential sites.
2. The claimant’s participation in the residential venture was conditional on making a financial contribution or procuring suitable 100% funding. As he did neither, no Pallant v Morgan equity arose. There was no common intention that he should obtain an interest in the sites, and it was not unconscionable for the defendants to retain them. Proprietary estoppel and unjust enrichment also failed.
3. Commercial properties. Myers Lane had been introduced following the claimant’s negotiation of advantageous subject-to-contract terms. The Redhills Site was similarly introduced following negotiations by the claimant. The circumstances indicated that these properties were to be acquired for the joint benefit of the claimant and Willan Trading Ltd, with profits shared equally and without the funding condition applicable to the residential sites.
4. A Pallant v Morgan equity therefore arose. The claimant had conferred an advantage by passing on or introducing the negotiated opportunities, Willan Trading Ltd had at least ostensible authority, and it would be unconscionable for it to retain the net profits. The equity was to be satisfied by an account of 50% of the net profit made up to the properties’ transfer to Willan and Lund Holdings Ltd in December 2020.
5. The claim was dismissed in relation to Culgaith, Lazonby and Langwathby. It succeeded in relation to Myers Lane and the Redhills Site to the extent stated. An account or enquiry was directed.