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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Banner Homes Holdings Ltd v Luff Developments Ltd & Anor [2000] EWCA Civ 3016 (30 March 2000)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2000/3016.html
Cite as: [2000] Ch 372, [2000] EWCA Civ 3016, [2000] 2 WLR 772
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IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM ORDER OF MR JUSTICE BLACKBURNE
Strand London WC2 |
||
B e f o r e :
LORD JUSTICE EVANS
LORD JUSTICE CHADWICK
____________________
| BANNER HOMES HOLDINGS LTD | ||
| (formerly BANNER HOMES GROUP Plc) | ||
| Appellant | ||
| - v - | ||
| LUFF DEVELOPMENTS LTD | ||
| STOWHELM LTD | ||
| Respondents |
____________________
Smith Bernal Reporting Limited, 180 Fleet Street,
London EC4A 2HD
Tel: 0171 421 4040
Official Shorthand Writers to the Court)
MR J BRISBY QC and MR P McGRATH and MR R MILLETT (Instructed by Leboeuf Lamb Greene of London) appeared on behalf of the Respondent
____________________
Crown Copyright ©
- LORD JUSTICE STUART SMITH: I will ask Lord Justice Chadwick to give the first judgment.
- LORD JUSTICE CHADWICK: In the final paragraph of the judgment delivered on 28th January 2000 I indicated that it was my view that the appropriate order on the present appeal was that sought in the notice of appeal; namely that the shares in Stowhelm are held, as to one half, upon trust for Banner. But I indicated, also, that I thought it right that the parties should have the opportunity to address further submissions to the Court on that question. We have now heard those further submissions.
- As I sought to show in the judgment of 28th January 2000, what I there described as the Pallant v Morgan equity is invoked where it would be inequitable to allow the defendant to treat as his own property acquired in furtherance of a prior arrangement or understanding that the claimant should have some interest in that property. In the present appeal, that condition would have been satisfied if the site had been acquired by Luff in its own name, or in the name of a nominee. The condition would, for example, have been satisfied if, when Stowhelm acquired the site in November 1995, it had done so as nominee or trustee for Luff. But, in relation to the site, that condition is not satisfied in the circumstances where Stowhelm acquired that property as its own asset. The reason is that it is not inequitable to allow Stowhelm to treat as its own property which, under the prior arrangement between Banner and Luff, it was always contemplated and intended that Stowhelm should acquire as its own asset. Further, in the circumstances that the site was not acquired by Luff, either as legal or as beneficial owner, it is impossible to treat Luff as trustee of the site for Banner.
- But the condition is satisfied in relation to Luff's acquisition, in July 1995, of the then issued shares in Stowhelm, and in relation to the issue to Luff (or to any nominee for Luff) of any further shares in Stowhelm. It was contemplated under the arrangement or understanding reached between Banner and Luff prior to the acquisition of those shares that shares in a company would be acquired for the purpose of the joint venture; that is to say, that the site itself would be acquired by a single venture company acquired for that purpose in which the shares would be held for Banner and Luff. The shares in Stowhelm were acquired by Luff in furtherance of that arrangement.
- In those circumstances it seems to me that the appropriate order is, indeed, to declare that the issue share capital of Stowhelm is held by Luff for itself and Banner in equal shares; and to grant consequential relief on that basis; that is to say, to treat the whole of the issued share capital of Stowhelm as an asset which is subject to a trust under which Luff and Banner are entitled in equal indivisible shares.
- In those circumstances it seems to me that the appropriate order is this:
- (1) That the application of Banner Homes Holdings Ltd, formerly Banner Homes Group Plc ("Banner"), the appellant, for permission to amend its notice of appeal so as to claim that the site is held upon constructive trust by Stowhelm Ltd ("Stowhelm") be dismissed.
- (2) That the appeal of Banner against the order of Mr Justice Blackburne, dated 1st July 1998, dismissing this action be allowed.
- To declare that all of the issued shares in Stowhelm are held by Luff Developments Ltd ("Luff") on trust for Banner and Luff in equal shares and that those shares are charged to Luff as security for the payment by Banner of one half of any moneys paid by Luff in respect of the acquisition of those shares.
- Further order (3) that the said trust be executed and carried into effect by the Court.
- (4) That the Court appoints receivers, naming them, of Baker Tilley, Chartered Accountants, as receivers and managers without security of all the issued share capital of Stowhelm with power to sell the shares in Stowhelm, to appoint and remove the directors of Stowhelm, to vote in favour of resolutions for the sale of the whole of the assets of Stowhelm and or for the winding up of Stowhelm.
- (5) Subject to further order the appointment of the receivers and managers shall take effect on 2nd May 2000.
- (6) Stowhelm, its directors, servants or agents or otherwise howsoever be restrained until further order except with the consent of the receivers from:
- (a) issuing any further shares in Stowhelm;
- (b) selling charging or otherwise disposing of the site;
- (c) dealing in any other way with the assets of Stowhelm.
- (7) Luff, by its directors, servants, agents or otherwise howsoever be restrained until further order -
- (a) from dealing with the shares in Stowhelm and,
- (b) from seeking to enforce or exercising any rights without the leave of the court under the legal charge made between Luff and Stowhelm dated 20th December 1999.
- (8) That there be liberty to all parties and to the receivers to apply to a judge of the Chancery Division for the purpose of carrying out and enforcing all of the above orders and for the purpose of giving directions to the receivers or enlarging or diminishing their powers.
- (9) Banner's appeal against the order dated 1st July 1998 directing an inquiry as to damages under the cross-undertaking given by banner to Mr Justice Lloyd on 23rd April 1997 ("the cross undertaking inquiry") be allowed and the order for the said inquiry be set aside.
- (10) Luff pay Banner's and Stowhelm's costs of the action and the appeal and 75% of Banner's and Stowhelm's costs of and occasioned by the cross undertaking inquiry, all such costs to be the subject of a detailed assessment.
- (11) Luff make interim payment to Banner's solicitors in respect of such costs in the sum of £500,000.
- (12) The defendants' application for permission to appeal to the House of Lords be refused.
- LORD JUSTICE EVANS: I agree.
- LORD JUSTICE STUART SMITH: I also agree.