Pallant v Morgan
Citations:  Ch 43.
The parties’ agents attended an auction for the sale of land. The agents agreed that the claimant’s agent would not bid on a particular piece of land. In return, the defendant’s agent would attempt to buy the land, and if successful they would divide it between themselves. They did not completely settle what the exact division would be.
The claimant’s agent refrained from bidding, and the defendant’s agent successfully bought the land. When the parties failed to agree on how to divide the land, the defendant decided to keep all of it. The claimant sued to enforce the agreement.
- Could the claimant insist that the defendant perform the agreement?
The High Court held in favour of the claimant. The agreement was too uncertain to be enforceable in contract law. However, it would be fraudulent for the defendant to go back on the agreement. On that basis, the defendant’s agent should be treated as having bid on behalf of both parties. The defendant therefore held the land on trust for himself and the claimant.
This Case is Authority For…
This case established the ‘Pallant v Morgan constructive trust‘. Later cases made clear the requirements for the trust. These are that:
- The parties agree that one will acquire property and share the equitable title with the non-acquiring party.
- The non-acquiring party disadvantages themselves or advantages the acquiring party in relation to the property in reliance on the agreement.
- It is unconscionable for the acquiring party to renege on the agreement.