Attempting to invoke the Pallant v Morgan equity to overcome lack of agency or partnership

In National Trust for Places of Historic Interest v Birden ([2009] EWHC 2023) N and B entered into a share farming agreement from 1995 to 2004. B was to farm N’s land and the profit was to be divided between them. The arrangement was entered into to avoid creating a tenancy. It was agreed that each party was carrying on its own business and that there was no agency or partnership. The judge was happy to accept that this reflected the true nature of the parties’ relationship. The agreement provided that any government subsidies paid would be shared between them. When the agreement ended B moved to another farm not owned by N. In the meantime, the nature of the subsidy paid to farmers changed as a result of EC legislation. B claimed the subsidy he was entitled to in respect of the new farm to which he had moved. His period of managing N’s farm was an important part of his entitlement to the claim in respect of the new farm (the claim was for subsidy for the period after the share farming agreement had ended). N made its own claim for subsidy for the same period (which began after the end of the share farming agreement) and B completed certain forms in an attempt to assist. The government refused to pay N since it did not meet the statutory criteria. N then asked B to hand over part of the payment that he had received on the basis that it was partly attributable to the time that he had spent farming on N’s farm. Thus, N argued, it fell within the requirement to share subsidies.

The court found that the payment was not caught by the subsidy-sharing clause in the agreement. N argued that the agreement showed that there was a common intention that such payments should be shared and that a common intention constructive trust (along the lines of the Pallant v Morgan equity as explained in Banner Homes) came into effect. This failed too. This was an attempt to argue that the share farming agreement amounted to a joint venture and the court found that there was no ‘joint venture’ (para. 157). There was nothing unconscionable about B’s retention of the entire amount of the subsidy he had received.

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