Banner Homes Group Plc v Luff Development Ltd [2000] Ch. 372
Constructive Trust – Oral Agreement – Joint Venture – Equity
Facts
The defendants, Luff Development Ltd, acquired a site that would be suitable for developing property on. Before this acquisition, the defendants made an agreement with the complainants, Banner Homes Group Plc, that they could develop this site as a joint venture. While there were many conversations and proposals between the companies, no written agreement was concluded. However, the defendants changed their mind about the agreement they had made with the complainants, but did not tell them in case they made a rival offer before they acquired the site.
Issues
The trial judge had dismissed the constructive trust claim based on the fact that there was no signed and written agreement between the parties. Banner Homes Group Plc appealed this decision and the issue in the case was whether this agreement amounted to a constructive trust.
Decision/Outcome
The appeal was allowed and the constructive trust claim was successful. Under equity it would not be right for the defendants to be the sole beneficial owner for the joint venture. The fact that the Luff Development Ltd did not want to inform the complainants indicates a prior agreement. Lord Justice Chadwick affirmed Pallant v Morgan and explained the elements where equity would come into play; when there is a pre-acquisition agreement although not always contractually enforceable, the non-acquiring party has some interest in the property, the acquiring party has not informed the other beforehand or has not honoured the arrangement and that the prior understanding gave the acquiring party an advantage to the detriment of the other.
Updated 21 March 2026
This case summary remains accurate as a statement of the law as established in Banner Homes Group Plc v Luff Development Ltd [2000] Ch 372. The Pallant v Morgan equity, as clarified and affirmed by Chadwick LJ in this case, continues to be recognised in English law as a basis for imposing a constructive trust in pre-acquisition joint venture situations. Subsequent cases, including Crossco No 4 Unlimited v Jolan Ltd [2011] EWCA Civ 1619, have further considered and applied the Pallant v Morgan equity, with the Court of Appeal confirming its continued existence, though also emphasising the need to satisfy its conditions carefully. Readers should be aware that the courts have scrutinised the precise requirements of the equity in later authorities and have not always found it satisfied on the facts; the conditions set out by Chadwick LJ should therefore be understood as necessary rather than merely indicative. No statutory changes have affected the core principles described. The article is broadly reliable as a case note but students researching this area should consult subsequent case law to understand how the equity has been applied and refined.
