London’s Court of Appeal today began to hear a long-running case that could have implications for property joint ventures.
Property development firm Generator Developments is suing Lidl, claiming the supermarket chain Lidl exploited a joint venture agreement to secure a £6.5m site in Brentwood, Essex.
Following a trial at the High Court in 2016, High Court judge Nicolas Lavendar QC backed the supermarket and rejected Generator’s claims. However, lawyers for the property development company are now attempting to convince a panel of three appeal judges that he erred.
The hearing started today and is scheduled to finish by the end of this week.
Generator’s High Court 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.
“This is the latest in a long line of cases where an aggrieved party asks the court to step in and protect them from the consequences of unconscionable behaviour by their former bedfellow,” James Souter, a partner at law firm Charles Russell Speechlys LLP, said.
“These cases are notoriously difficult to predict as they require forensic analysis of dealings between at least three different parties, often against a background of suggested foul play by one of the parties.
“The High Court decision simply re-stated the law as it stands and served as a reminder that when joint venture discussions go wrong, the court will only step in to help in very limited circumstances. It will be interesting to see what the Court of Appeal makes of this one.” Souter isn’t acting on the case.
In the High Court trial, Generator argued 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.
After the joint venture fell through in April 2014, a month after Lidl had completed the purchase of the site, Generator sued the supermarket alleging that it was entitled to a share of that land.
However, in the High Court judge ruled that the conditions for Pallant v Morgan equity had not been met.
“The central question is whether there was an arrangement or understanding that, if Lidl acquired the property, Generator would obtain an interest in it,” he said in his ruling. He found that there was no such understanding.
Generator Developments LLP v Lidl (UK) GMBH, (Court of Appeal) 21 February 2018
