Five housebuilders buying site for subsequent partition into plots for separate development with pre-emptive right should another plot owner wish to sell – No provision for multiple acceptances within prescribed 14-day time-limit – Defendant allegedly stealing march on plaintiff plot owners – Whether plot held on constructive trust for defendant and two later acceptors
In May 1988 the two plaintiff housebuilding companies and three others entered into an agreement whereby one would acquire a site near Leicester on trust, to partition all but a small area among the signatories, who would each take a pre-agreed plot at a proportional price. By clause 11 any signatory (or successor) wishing to dispose of his plot had to offer it in writing to “the others” whereupon “the receiving party”, on communicating acceptance within 14 days, would conclude a binding contract of purchase. The agreement did not provide for the eventuality of two or more acceptances within the 14 day period.
Some years after partition, one of the plots was bought by the defendant (McLean) and the other (the yellow land) by Ravenscroft Construction Ltd (Ravenscroft). On July 9 1997 Ravenscroft wrote to the other plot owners offering to sell the yellow land for £2.65m. That offer was promptly accepted by McLean, who had anticipated the situation and prepared itself accordingly. Some days later acceptances were received from the two plaintiffs. On August 7 1997 Ravenscroft conveyed the land to McLean. Aggrieved by these events the plaintiffs sued McLean, claiming, inter alia, a declaration that McLean held the yellow land on constructive trust for itself and the plaintiffs, such trust being allegedly based upon a breach of fiduciary duty arising from the joint venture character of the 1988 agreement.
Held Judgment was given for the defendant.
1. The lack of any contractual machinery for multiple acceptances, coupled with inconsistent use of the singular and plural, made it difficult to construe clause 11. However, that did not require the finding that three contracts had been made over the 14-day period in August 1997 as such an outcome would be repugnant to the underlying separate development purpose of the 1988 agreement, it being immaterial that the prescribed acceptance procedure ceased, as from September 27 1989, to be capable of creating a binding contract: see section 2 of the Law of Property (Miscellaneous Provisions Act) 1989 as judicially interpreted. Accordingly, neither McLean nor Ravenscroft had acted in breach of contract.
2. Excepting those areas retained for meeting planning authority requirements for access and open space, the signatories ceased to be joint venturers from the date of partition. The agreement clearly contemplated separate, and in some respects competitive, development of each plot. Consequently, there was no basis for a fiduciary relationship and, accordingly, no cause for branding the business acumen displayed by McLean as unconscionable or disproportionate. The court should be very reluctant to impose fiduciary duties on parties transacting at arm’s length: see Bristol and West Building Society v Mothew [1997] 2 WLR 436; Indata Equipment Supplies v ACL The Times 14 August 1997.
Alan Newman QC and Pascal Bates (instructed by Kingsford Stacey, London agents for Geoffrey Tew & Co, of Leicester) appeared for the plaintiffs; John Randall QC and Andrew Charman (instructed by Gateley Wareing, of Birmingham) appeared for the defendant.
