Development of Pallant v Morgan equity

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Introduction The constructive trust is one of equity’s responses to unconscionable conduct. It is an example of trusts that arise by the operation of law. Apart from this common basis, different categories of constructive trusts are examples of responses to different causative events imposed for different reasons. This reflects the inherent flexibility of equity’s jurisdiction as a court of conscience to grant relief to an innocent party whenever there is fraud or unconscionable conduct (Lonrho plc v. Fayed (No. 2) [1992] 1 W.L.R. 1., Millett J.). As a consequence the categories of constructive trusts have not been exhaustively defined. One possible classification requires examining established situations where a trust has been imposed as suggested by J E Penner in Law of trusts, 4th Edi, pp127, 130. So a broad category of trusts may be identified where an individual acquires for the first time an interest in another’s property because of his past dealing or relationship with the legal owner when it is unconscionable to allow the legal owner to deny the beneficial interest to him. Common intention constructive trusts and those that arise in the context of family home come within this category. This category includes constructive trusts arising under Pallant v Morgan equity which has been approvingly referred to by M P Thomson in his article in Conveyancer 2001 as commercial dimension of trusts developed in relation to the family homes . Pallant v Morgan equity In Banner Homes Group Ltd v Luff Development Ltd (No2) [2000] 2 All ER 117, CA, the dispute arose from a failed joint venture to acquire a development site. The site was acquired through a company owned by Luff following an understanding between the parties that once the agreement is concluded, the acquiring company would become jointly owned. Shortly after the acquisition, Luff development

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