The Court of Appeal today rejected Generator Developments’ claim against Lidl, in which it alleged that the supermarket chain exploited a joint venture agreement to secure a £6.8m site in Brentwood, Essex.
Following a trial at the High Court in 2016, High Court judge Nicolas Lavender QC backed the supermarket and dismissed Generator’s claims.
Now, in what he described as “a clear case”, Lord Justice Lewison has rejected Generator’s appeal, ruling: “In my judgment Generator’s claim cannot succeed for a number of cumulative reasons.”
Generator claimed that it and Lidl agreed a joint venture, under which the supermarket chain would rely on the developer’s expertise in obtaining planning permission for a mixed-use scheme on a site that was zoned for residential at Wates Way Industrial Estate on Ongar Road.
The agreement fell through in April 2014, a month after Lidl had completed the purchase of the site for £6.8m. Generator sued the supermarket alleging that it was entitled to a share of the land.
Generator’s case was based on the concept of equity named after the case of Pallant v Morgan [1953] Ch 43, which concerns joint ventures where two or more parties agree to buy land and then later exploit it.
If one of the parties buys the land in its own name, and later seeks to retain the land for its own benefit, the court may use the precedent to rule that the purchaser was holding the land on trust for the joint venture, entitling the other parties to a stake.
However, the deputy judge at the High Court ruled that the conditions for Pallant v Morgan equity had not been met.
Rejecting Generator’s appeal, Lord Justice Lewison said that this was “a case of commercial parties, advised by lawyers, working at arms’ length towards the conclusion of an agreement for a purely commercial enterprise the terms of which were never agreed”, adding: “Indeed, on many of the important terms the parties were far apart.”
As a result, he said there was no “common intention” to found a Pallant v Morgan trust.
The judge went on: “Second, the proposed ‘joint venture’ (if such it was) was expressly made ‘subject to contract’… it was always intended, right from the inception of discussions, that the parties’ respective rights and obligations would be regulated by written contracts.”
He said that Generator had known there was an ongoing risk that Lidl might do a deal with a different developer.
James Souter, partner at Charles Russell Speechlys said: “Reading a summary of the detailed negotiations between Generator, Lidl and the vendors it is difficult not to pause for a moment and wonder if the law should step in to assist.
“It was clear that Generator and Lidl were working together to buy the land in question and share in the spoils. However, the Court of Appeal found that their negotiations fell some way short of a concluded agreement.
“The decision won’t come as a surprise and might well lead to fewer cases of this nature being pursued in the future. There is a natural desire to see what is perceived as justice being done. However, when dealing with commercial parties the Court of Appeal has indicated that the courts will be reluctant to step in and help, save in the most extreme of cases.”
