Neutral Citation Number:  [2006] EWHC 3160 (Ch)
Case No: HC05C02468
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date:  12th December 2006

Before :

THE HONOURABLE MR JUSTICE PUMFREY
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Between :

	STEVEN PAUL BEASANT	Claimant/
Part 20 Defendant	
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	(1)	LEXICON HOLDINGS LIMITED

(2) BRYAN MYER FUGLER	Defendant/
Part 20 Claimant

Defendant	

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Anthony Peto (instructed by Ross & Craig) for the Claimant
Jonathan Brock QC and Andrew Lenon (instructed by Fuglers) for the Defendants

Hearing dates: 21st – 25th July 2006
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Judgment

Mr Justice Pumfrey : 
Introduction
1.	This is an application by the defendants for summary judgment against the claimant (“Mr Beasant”), seeking declaratory relief to the effect that the claimant has not validly exercised an option contained in a written agreement, undated, between the claimant and the defendants in respect of property at Ansford Factory, Castle Cary, Somerset (“the Agreement”).  The first defendant, Lexicon Holdings Limited (“Lexicon”), is the registered proprietor of the property in question, which is registered under title number ST71293 (“the Property”).
2.	The declaration sought by the defendants is complementary to the relief sought by the claimant in these proceedings. They contend that the lack of an effective exercise of the option is so clear that final relief is appropriate at this stage.  It is necessary to describe the dispute between the parties in a little detail, since this application (and this action) represents a further stage in a continuing dispute arising out of the collapse of a property development venture carried on by Mr Beasant and the second defendant (“Mr Fugler”).
Background
3.	Mr Beasant is a builder and a property developer.  Mr Fugler is a solicitor, with access to sources of funding.  He also provided the necessary conveyancing and other legal services for the venture.  The venture was carried on through a number of corporate vehicles, which appear to have belonged to a company called Pegasus Executive Property Limited (“Pegasus”) and which may be referred to as the Pegasus Group of Companies.  Building works were carried out through a company called Chantry Property Developments Consultants Limited (“Chantry”).  
4.	In 1999, Mr Beasant found the Property.  It is a former factory site and is generally referred to as “BMI”.  Mr Fugler introduced Lexicon as a vehicle for this particular transaction.  Lexicon is a BVI company, and is beneficially owned by a Finnish acquaintance of Mr Fugler, Mr Jaakko Ilmari Juntti (“Mr Juntti”).  Mr Beasant said that the Property could be “enormously profitable” if suitable planning permission were granted for residential development.  On behalf of Chantry, he negotiated also for a site adjacent the Property called Ochil Tree Barn, Upper High Street, Castle Cary.  He took the view that Ochil Tree Barn would provide access to the Property, an access which would be a condition of residential planning consent.  
5.	The Property was purchased by Lexicon in about August 1999 for £1,294,769.03.  This price represented a substantial uplift on the value of the Property without planning permission for residential purposes.
6.	During 1999, Mr Fugler became increasingly dissatisfied with Mr Beasant’s financial control over the activities of Chantry and the Pegasus Group:  for some time before the events with which I am concerned, he had arranged for a part-time book-keeper, Mr Barry Cooper (“Mr Cooper”), to give part-time help to Mr Beasant and these companies.  By March 2000, the relationship between the two men had become very strained.  In June 2000, they entered into an agreement, called “Heads of Agreement”, which was intended to regulate their future relationship.  Clause 1 of this agreement puts Mr Cooper in charge of financial affairs and Clauses 2 and 3 deal with the position of certain specified projects.  Clauses 4, 5, 6, 7, 8 and 9 are concerned with the proceeds of those developments.  Clause 10 provides that Mr Beasant is to provide an estimate of necessary costs inter alia in respect of the project at Castle Cary and Clause 12 requires him to devote the whole of his time and attention to a number of projects including that one, the clause concluding “to progress the planning applications in respect of … [the Property] … as quickly as possible or otherwise to mark it and sell … [the Property] … in their present form”.  Clause 13 I do not need to refer to, but Clause 14 imposes an obligation on Mr Fugler as follows:
“Bryan undertakes to procure within the next few weeks the Joint Venture Agreement with Lexicon Limited (“Lexicon”) ….  The parties undertake to procure that Pegasus will enter into the Joint Venture Agreement with Lexicon ….  The Joint Venture Agreement shall be in the form attached”.
7.	As security for certain payments intended to be made to Mr Fugler and his wife, the agreement provides for a mortgage over certain properties to be granted in their favour.  As far as I am aware, no Joint Venture Agreement was annexed to the Heads of Agreement, and I can turn to the agreement with which I am concerned.  Although referred to by the defendants as an option agreement, the Agreement itself is entitled, at least on its back-sheet, as a Joint Venture Agreement.  There is reference, to which I shall come, to a joint venture in respect of the Property, but for reasons that I shall discuss below, that provision is intended to regulate the position if the option with which the Agreement is mainly concerned is not exercised.
8.	The sole recital is as follows:
“The parties have agreed to enter into this Agreements to regulate their respective liabilities and obligations with regard to the Property (as hereinafter defined) and the profit shares due to Mr Fugler and Mr Beasant arising out of their having introduced Lexicon to the Property.”
It is not necessary to refer to the definitions, but I note in passing that the definition of “the Property” is incomplete, although apparently sufficient to identify the Castle Cary land.  The option is granted by Clause 2:
“2.1	In consideration of the sum of £1 now paid by Mr Fugler and Mr Beasant to Lexicon (“the receipt of which Lexicon hereby acknowledges”) Lexicon hereby grants to Mr Fugler and Mr Beasant jointly and severally but subject to the provisions of Clause 2.2 an option to require Lexicon to sell the Property for an estate in fee simple in possession in consideration of the following payments:- 
2.1.1	such sum as shall equal the repayment of the Purchase Price together with interest on the Purchase Price until the Completion Date at the rate of one per cent (1%) above Barclays Bank Plc base rate from time to time
2.1.2	the sum of £300,000.
2.2	The Option granted pursuant to Clause 2.1 shall be exercisable at any time on or before 17th October 2000 by either Mr Fugler or Mr Beasant or Mr Fugler and Mr Beasant jointly (as the case may be) giving 30 days written notice to Lexicon and Lexicon shall sell and Mr Fugler and Mr Beasant shall purchase the Property for the said estate for the sums set out in Clause 2.1.  Provided always that either Mr Fugler or Mr Beasant may exercise the option subject to the following terms
2.2.1	on or before the exercise of the option either Mr Fugler or Mr Beasant (as the case may be) shall notify the other party of proof of funds;
2.2.2	within 7 days following such notification either Mr Fugler or Mr Beasant (as the case may be) shall notify the party intending to exercise the option that he wishes the option to be exercised jointly
  2.3	…
  2.4	The Standard Conditions of Sale (3rd Edition) shall apply to the option exercised hereunder so far as they are applicable to a sale by private treaty provided always that:-
2.4.1	no deposit is to be paid
2.4.2	Lexicon shall sell with full title guarantee
2.4.3	the Property shall be sold with vacant possession
2.4.4	the title of Lexicon to the Property has been deduced prior to the signing of this Agreement and Mr Fugler and Mr Beasant shall not be entitled to raise any requisition or an objection to it
2.4.5	in the event of both Mr Fugler and Mr Beasant exercising the option set out in this Clause then the Property shall be owned by them as tenants in common in direct equal shares or otherwise in the proportions of the consideration contributed by them.”
9.	Clause 3 deals with the obtaining of planning consent, which is the task of BMI Property Management Limited (“BMI”), the fourth party to the Agreement, and Clause 4 provides that BMI is to use its best endeavours within the period of the option to market the Property for sale with the objective of obtaining the best price for the Property as soon as the planning consent has been obtained, or earlier if the parties agree in writing and Lexicon undertakes by Clause 4 to cooperate with BMI in relation to the sale.
10.	The heading to Clause 5, “Payments Under Joint Venture”, is perhaps deprived of any assistance that it might have given to interpreting the Agreement by Clause 1.3, which provides that the headings of the Agreement are inserted for convenience only and shall not affect the construction thereof.  The clause itself provides:
“5.1	In consideration of the introduction of the Property by Mr Fugler and Mr Beasant to Lexicon it is agreed between them that in the event that the option granted pursuant to Clause 2.1 should not be exercised and Mr Fugler and Mr Beasant agree that the Property is sold within the period of the option granted pursuant to Clause [2.1] the Sale Proceeds shall be paid in the following priority:-
5.1.1	to pay the legal costs and disbursements …
5.1.2	to pay to Lexicon such sum as shall equal the repayment of the Purchase Price together with interest on the Purchase Price …
5.1.3	to pay the sum of £300,000 to Lexicon
5.1.4	to repay to BMI any sums that have been agreed to be paid by it in respect of obtaining the Planning Consent
and the balance (if any) shall be divided between the parties as to 50% to Mr Fugler … and 50% to Mr Beasant ….
 5.2	In the event that the amount of the Sale Proceeds whenever the Property is sold is insufficient to repay the sums referred to in Clause 5.1.1 to Clause 5.1.3 inclusive then Mr Fugler and Mr Beasant shall indemnify and hold harmless Lexicon against any losses damages costs and expenses and fees incurred or suffered by Lexicon in failing to recover the monies due in respect of the sums referred to in Clause 5.1.1 to Clause 5.1.3 inclusive provided always that this indemnity shall no longer apply after the expiry of twelve months after the date of the expiry of the Option.  …
 5.3	… 
 5.4	As security for the Option granted in Clause 2.1 and for the payments to Mr Fugler and Mr Beasant herewith they shall have the right to register a Caution or Charge over the Property preventing the transfer of the Property during the period of the Option without the written consent of Mr Fugler and Mr Beasant provided always that in the event that the Property is sold pursuant to Clause 5.1 Mr Fugler and Mr Beasant shall consent to the removal of the said Caution.”
11.	Finally, I should refer to Clause 7.3:
“The parties hereto mutually agree and confirm that no party shall in any way be constituted the agent of the other and that no party shall without the consent of the other party incur any expenditure in relation to the Property without the prior consent in writing of the other party (such consent not to be unreasonably withheld) and that the relationship of the parties hereunder shall be that of independent principals combining together in a joint venture for the purpose hereinbefore specified.  Each of the parties shall take such steps as for the time being lawfully lie within its power as may be necessary from time to time to obtain completion of the objects of the joint venture.”
12.	It seems that shortly after the signing of the Heads of Agreement Mr Beasant secretly transferred a sum of £147,677.71 from one of the Pegasus Group companies called Brocks Mount Limited to Chantry.  Brocks Mount took proceedings to recover that sum and was held by Ms Sonia Proudman QC, sitting as a deputy judge of this division, to be entitled to do so.  Mr Fugler had discovered the misappropriation shortly before 4th August 2000, and had written a strongly worded complaint to Mr Beasant.  Mr Beasant, who was obviously seriously short of funds, was at this time seeking to interest a building developer in the Property, with a view to exercising the option.  I can set out the next stage in the history in Mr Beasant’s own words:
“49.	In July, August and September I met the Managing Director (Rob Alford) and the Property Buyer (Steve Rossiter) of Prowting Homes South West Limited (“Prowting”) at their offices in Bridgewater and negotiated the sale of the Property to them.  Marketing and selling the Property was something I was obliged to use best endeavours to do under the terms of the 5th June 2000 agreement.  I also negotiated the build package with them on behalf of Chantry, as Chantry had offered to do the building works at the Property.  I was informed that Prowting had agreed to purchase the Property.  I was also informed that Prowting had reserved funding for this particular purchase and, as they were a well known company with substantial assets [.] I instructed my solicitors to begin the formalities with their solicitors.  I have been provided with a copy of this Profit & Loss Account and the Balance Sheet for Prowting for the year ending 28 February 2001 by my solicitors. … Prowting was clearly in a position to finance the purchase of the Property.
50.	I was advised that the solicitors for Prowting were Clarke Willmott & Clarke … and they wrote to my solicitors, Porter Dodson, on 13 September 2000 confirming that they had received instructions to act for Prowting and had “reserved funding to purchase the site at a price of £2,250,000”.  At the time, Prowting was a very substantial multi-million pound company and its solicitors are of impeccable reputation.  Such a solicitor’s letter was evidence enough that the funds to purchase were secured.”
13.	The day following the receipt of the letter from Clarke Willmott & Clarke, Mr Beasant wrote to Mr Fugler:
“I have not communicated with you since my fax dated 10 August but I confirm that I have attempted to fully co-operate as requested in your faxes of 10 and 11 August.  It is becoming increasingly difficult in fact almost impossible due to Barry Coopers actions.  I enclose a copy of a letter sent to Mr Cooper today.
However, I have been actively attempting to find interested parties in numerous sites and can confirm offers are being submitted to Barry Cooper direct from their appointed agents.
I believe these offers are for three sites and are unconditional.
One offer is for BMI – Castle Cary and I confirm that Solicitors have proof of funds and suggest we accept the offer (2 million pounds).
If you agree we need to instruct Lexicon to sell if not we will need to exercise option, clause 2.1.”
14.	On 15th September, Mr Beasant sent a letter by fax and by registered post to Lexicon, as follows:
“With regard to the above named property under JV agreement dated 5 June 2000 between Lexicon Holdings Limited, Bryan Myer Fugler, Steven Beasant and BMI Property Management Ltd, under clause ‘2.2. The Option’ the undersigned confirms 30 day written notice to Lexicon Holdings Ltd to sell said property for the sums set out in clause 2.1.”
15.	Mr Fugler also gave notice to Lexicon of his intention to exercise the option.  
16.	On 22nd September 2000 Mr Fugler’s firm of solicitors, Fuglers, acting on behalf of Pegasus, wrote to Mr Beasant in connection with Pegasus’s claims.  Fuglers asked (page 4 of their letter of 22nd September) as follows:
“In your letter dated 14 September 2000 you refer to two offers on BMI.  Please let us have the copies that were not enclosed together with evidence that the funds are available to proceed from each purchaser.  It seems clear to our client from your letter that you have funds available to purchase the BMI site.  By our clients calculations a sum of approximately £450,000 has been diverted away from our clients and surely the right thing to do will be to repay these monies forthwith.  We will be contacting you for recovery of these sums.”
Mr Beasant was notified by Lexicon’s Jersey solicitor that his purported exercise of the option was rejected and on 13th October he asked why, receiving the answer that he had not complied with the provisions of Clause 2.2.1 of the Agreement.  He did not give, and has not given, notice to complete, but on 10th February 2003 he registered a caution against the Property.  The application to vacate the caution was made on 30th June 2004, and the subsequent adjudication proceedings were slow, Mr Beasant finally being instructed to serve proceedings in the High Court by 2nd September 2005, a direction with which he complied on 12th September 2005.
17.	The defendants contend:
a)	compliance with the provisions of Clause 2.2 is a condition precedent to the exercise of the option under Clause 2.1 of the Agreement;
b)	it follows that, prior to the exercise of the option by Mr Beasant, Mr Beasant “shall notify [Mr Fugler] of proof of funds”.
18.	The defendants therefore contend that the letter of 14th September does not amount to “proof of funds” and so the condition precedent to the exercise of the option was not satisfied.  Relying on the principle that a condition precedent must be strictly complied with (see, for example, Finch v. Underwood [1876] 2 Ch. D. 310), the defendants submit that Mr Beasant was never entitled to exercise the option.
19.	Mr Beasant’s primary case is that the option was validly exercised, or, for the purposes of this application, that there is an issue to be tried as to whether the condition precedent was satisfied.  If this contention fails, the secondary contention is that the Agreement is in fact a joint venture agreement, designed to regulate the profit shares to which Mr Beasant and Mr Fugler were entitled as a result of introducing the Property to Lexicon, and that, prior to its being agreed, the relationship between the parties was “governed by Pallant v. Morgan and fiduciary/trust equitable obligations which entitled the parties not to be “cut out” of a share in the profits”, the option agreement being designed to give effect to those rights rather than to supplant them.  On this view of the proper approach to the Agreement, it is suggested that the option was properly exercised.
20.	The evidence in this case is extensive.  It is, so far as the second defendant is concerned, set out in two witness statements, the second of which is in reply to witness statements of Mr Beasant and his solicitor, Mr Ring.  Mr Juntti gives evidence on behalf of Lexicon.
21.	Mr Beasant’s evidence relating to the acquisition of the BMI site by Lexicon is directed to emphasising that a joint venture subsisted between what one could loosely call the Fugler interests and the Beasant interests.  It is clear that Mr Beasant negotiated on behalf of Lexicon for the purchase of the BMI land, and in his witness statement (paragraph 24) he says this:
“It was my understanding that Lexicon would only have been holding the Property on the basis of a loan.  It was only myself and Mr Fugler who wanted to buy and develop the Property.  I did not believe that Lexicon had any real interest in buying the Property, merely obtaining a return on the investment.  There was always the intention to give Pegasus the right to buy the Property back at a higher price as per the Reply to the Request for Further Information.  I believe it is extremely important to note, that at the time, Pegasus was seen to be the entity that would be purchasing the Property and that in fact it would be buying the Property “back”.”
22.	The consideration for the purchase ultimately came from Lexicon.  Mr Beasant accepts that by the beginning of 2000, the relationship between himself and Mr Fugler had seriously deteriorated.  That this is so is illustrated by a letter of 6th April 2000 from Mr Beasant to his solicitors, Porter Dodson, in which the draft agreement is discussed and Mr Beasant concludes:
“Finally I believe this may end up being a dispute therefore we need to arrange full position etc., as he will try every trick in the book to get his own way.”
Before the signing of the Joint Venture Agreement, there was extensive negotiation between Fuglers, acting on Mr Fugler’s behalf, and Porter Dodson.  The agreement with Lexicon is one of two (the other one concerning Erindale Finance Limited) and is part of a transaction which included the Heads of Agreement to which I have referred and a loan agreement.  Of the Joint Venture Agreement, Mr Beasant says this:
“It was only right at the end of the negotiations that Fuglers suggested to my solicitors that a provision relating to notice of funds be inserted in the Agreement. ... Mr Fugler was well aware of the potential profit for the Property, and that I was discussing a potential sale as well as a further joint venture to develop the Property with a well-established property developer.  One important area was to secure planning consent as this would instantly enhance the value of the Property and enable us to either borrow what we required for development from a bank or to sell at a higher price with the benefit of planning.  It would have been obvious to everyone, including Mr Fugler, that once the value of the Property had risen (whether by market rises, by planning permission or by the imminent prospect of securing planning permission) that the funds needed to purchase the Property from Lexicon upon exercising the option could be obtained by borrowing from banks on the security of the Property or by finding a buyer willing and able to purchase the Property at an enhanced price.  Therefore it must have been obvious that one of the possible sources of funds would be a substantial purchaser ready willing and able to purchase the Property as part of a “back to back” transaction.”
23.	I can take Mr Beasant’s contentions up in a witness statement of Mr Ring.  Mr Ring sets out in his witness statement a number of unpleaded contentions which may be summarised as follows.
a)	The intention from the outset was that Lexicon was the source of the financing and that the profits from the disposal of the Property would accrue on a 50/50 basis to Mr Fugler and Mr Beasant after repaying Lexicon for the purchase price plus an element of return on its investment.
b)	The one thing that none of the parties intended was that Lexicon would be permitted to retain the entire beneficial interest in the Property against the will of Mr Fugler or Mr Beasant and retain all the profit on its sale to the exclusion of Messrs Beasant and Fugler.
c)	The Property was introduced to Lexicon by the Fugler/Beasant joint venture on the basis that Lexicon would not be entitled to treat that Property entirely as its own beneficial asset.  The introduction was on the basis that Lexicon would be obliged to share the profits on disposal with Mr Fugler and Mr Beasant – either as individuals or through the medium of their joint venture vehicle, Pegasus.
d)	The Property was acquired by Lexicon on the basis that it or its proceeds of sale would be held on Pallant v. Morgan constructive trusts that recognised the interests of Mr Fugler and Mr Beasant.
24.	Mr Ring therefore contends that the overall structure of the Agreement was that Lexicon was given a “guarantee” that it would get its money back plus interest of 1% above Barclays base rate plus a fixed profit of £300,000 plus legal costs, and that either Mr Fugler and Mr Beasant could insist on Lexicon selling the Property, paying Lexicon its guaranteed return and then dividing the profits 50/50 (or sharing the losses), or they had a joint and several option to purchase the Property from Lexicon at the guaranteed sum.  He continues that the one thing that Lexicon was not supposed to be able to achieve was to obtain the security of a guaranteed return on its investment of about 25% to 30% and to deprive Mr Fugler and/or Mr Beasant of the entire Property at an enhanced value and keep all the profits for itself.
25.	It has to be remembered that this agreement was entered into against the background of a transaction in which Lexicon was not merely a secured lender, but was the owner of the Property – a fact no doubt explicable by the probable inability of Mr Fugler and Mr Beasant to pay any interest charges.  It follows, therefore, that Lexicon was carrying the risk that planning consent would not be obtained.  At the same time, the Joint Venture Agreement had been negotiated between the parties through their solicitors with the intention of structuring a deal relating to the BMI property alone.  Given the fact that both sides were professionally advised, that the Agreement is in writing and that the rights and obligations actually conferred by the terms of the option are quite different from the suggested rights and obligations which Mr Ring contends characterised the relationship between the parties, it seems to me to be impossible to suggest either that the express terms of the Agreement take effect subject to such obligations or, in the alternative, that the Agreement is to be construed in such a way as to have that effect.
26.	Pallant v. Morgan [1952] 1 Ch 43 is a case in which the parties were represented by their agents at an auction sale of a property which both wished to protect from development, so preserving the amenity of their respective holdings.  When the auction sale took place, the agents had been unable to agree the manner in which the property would, if purchased by one or other of them, be divided up, but it was plainly in the interests of both that only one should bid at the sale.  Mr Pallant’s agent did not bid at the sale.  Harman J. held that the proper inference from the facts was that Mr Morgan’s agent, when he bid for the property, was bidding on behalf of both, on an agreement that there should be an arrangement between the parties on the division of the lot if he were successful.  Recognising that the parties had failed to agree on a division, and that the court could not compel them to agree, Harman J. declared that the property was held by Mr Morgan on trust for himself and Mr Pallant jointly, and that “if they still failed to agree on a division the property must be resold, either party being at liberty to bid, and the proceeds of sale divided equally after paying to the defendant the £1,000 which he paid with interest at 4%”.  This case has been explained by Millett L.J. in Paragon Finance Plc v. D B Thakerar & Co [1999] 1 All ER 400, 408-409 as follows:
“ … the expressions ‘constructive trust’ and ‘constructive trustee’ have been used by equity lawyers to describe two entirely different situations.  The first covers those cases … where the defendant, though not expressly appointed as trustee, has assumed the duties of a trustee by a lawful transaction which was independent of and preceded the breach of trust and is not impeached by the plaintiff.  The second covers those cases where the trust obligation arises as a direct consequence of the unlawful transaction which is impeached by the plaintiff.  
A constructive trust arises by operation of law whenever the circumstances are such that it would be unconscionable for the owner of property (usually but not necessarily the legal estate) to assert his own beneficial interest in the property and deny the beneficial interest of another.  In the first class of case, however, the constructive trustee really is a trustee.  He does not receive the trust property in his own right but by a transaction by which both parties intend to create a trust from the outset and which is not impugned by the plaintiff.  His possession of the property is coloured from the first by the trust and confidence by means of which he obtained it, and his subsequent appropriation of the property to his own use is a breach of that trust.  Well known examples of such a constructive trust are McCormick v. Grogan (1869) LR 4 HL 82 (a case of a secret trust) and Rochefoucald v. Boustead [1897] 1 Ch 196 (where the defendant agreed to buy property for the plaintiff but the trust was imperfectly recorded).  Pallant v. Morgan [1953] Ch 43 (where the defendant sought to keep for himself property which the plaintiff trusted him to buy for both parties) is another.  In these cases the plaintiff does not impugn the transaction by which the defendant obtained control of the property.  He alleges that the circumstances in which the defendant obtained control make it unconscionable for him thereafter to assert a beneficial interest in the property.”
27.	As Chadwick L.J. points out in Banner Homes Group Plc v. Luff Developments Ltd [2000] Ch 372 at 384, relying on dicta of Robert Walker L.J. in Yaxley v. Gotts [2000] Ch 162, the principles identified by Millett L.J. have much in common with the underlying principles of proprietary estoppel.  He draws attention to the fact that in Lonrho Plc v. Fayed (No 2) [1992] 1 W.L.R. 1, 10, Millett J. said this of Pallant v. Morgan:
“The plaintiff’s claim rested on the fact that his agent had been kept out of the bidding by the arrangement which the defendant later repudiated.  Since it was too late to restore the plaintiff to his former position, the defendant was held to the arrangement he had made.”
28.	Chadwick L.J. refers also to two other analyses of Pallant v. Morgan:  that of Megarry J. in Holiday Inns Inc v. Broadhead 232 E.G. 951 and of Sir Nicolas Browne-Wilkinson V-C in Grant v. Edwards [1986] Ch 638, both suggesting that the Pallant v. Morgan equity had much in common with proprietary estoppel.  After an exhaustive review of the existing authorities, Chadwick L.J. draws the threads together in five detailed propositions:
“(1)	A Pallant v. Morgan equity may arise where the arrangement or understanding on which it is based precedes the acquisition of the relevant property by one party to that arrangement.  It is the pre-acquisition arrangement which colours the subsequent acquisition by the defendant and leads to his being treated as a trustee if he seeks to act inconsistently with it. Where the arrangement or understanding is reached in relation to property already owned by one of the parties, he may (if the arrangement is a sufficient certainty to be enforced specifically) thereby constitute himself trustee on the basis that “equity looks on that as done which ought to be done;” or an equity may arise under the principles developed in the proprietary estoppel cases.… 
  (2)	It is unnecessary that the arrangement or understanding should be contractually enforceable.  Indeed, if there is an agreement which is enforceable as a contract there is unlikely to be any need to invoke the Pallant v. Morgan equity;  equity can act through the remedy of specific performance and will recognise the existence of a corresponding trust.…
  (3)	It is necessary that the pre-acquisition arrangement or understanding should contemplate that one party (“the acquiring party”) will take steps to acquire the relevant property;  and that, if he does so, the other party (“the non-acquiring party”) will obtain some interest in that property.  Further, it is necessary that (whatever private reservations the acquiring party may have) he has not informed the non-acquiring party before the acquisition (or, perhaps more accurately, before it is too late for the parties to be restored to a position of no advantage/no detriment) that he no longer intends to honour the arrangement or understanding.
  (4)	It is necessary that, in reliance on the arrangement or understanding, the non-acquiring party should do (or omit to do) something which confers an advantage on the acquiring party in relation to the acquisition of the property;  or is detrimental to the ability of the non-acquiring party to acquire the property on equal terms.  It is the existence of the advantage to the one, or detriment to the other, gained or suffered as a consequence of the arrangement or understanding, which leads to the conclusion that it would be inequitable or unconscionable to allow the acquiring party to retain the property for himself, in a manner inconsistent with the arrangement or understanding which enabled him to acquire it.  Pallant v. Morgan [1953] Ch. 43 itself provides an illustration of this principle….
  (5)	That leads, I think, to the further conclusions:  (i) that although, in many cases, the advantage/detriment will be found in the agreement of the non-acquiring party to keep out of the market, that is not a necessary feature;  and (ii) that although there will usually be advantage to the one and correlative disadvantage to the other, the existence of both advantage and detriment is not essential – either will do.  What is essential is that the circumstances make it inequitable for the acquiring party to retain the property for himself in a manner inconsistent with the arrangement or understanding on which the non-acquiring party has acted.  Those circumstances may arise where the non-acquiring was never “in the market” for the whole of the property to be acquired;  but (on the faith of an arrangement or understanding that he shall have a part of that property) provides support in relation to the acquisition of the whole which is of advantage to the acquiring party.  They may arise where the assistance provided to the acquiring party (in pursuance of the arrangement or understanding) involves no detriment to the non-acquiring party;  or where the non-acquiring party acts to his detriment (in pursuance of the arrangement or understanding) without the acquiring party obtaining any advantage therefrom.”
29.	I am quite unable to identify in the evidence of Mr Ring and Mr Beasant any facts capable of giving rise to some equity preventing Lexicon from asserting, consistently with Clause 2 of the Joint Venture Agreement, that the option has not been effectively exercised and that Lexicon is accordingly the beneficial owner of the Property in accordance with the provisions of Clause 2.2.  It seems to me that the provisions of Clause 5 effectively negative any suggested “unfairness” in the operation of the Agreement.  Mr Ring contends, as I have indicated above, that it cannot have been in the parties’ contemplation that Lexicon should become beneficially entitled to the whole of the Property:  but Clause 5 regulates the manner in which any profits made by Lexicon should be treated and also (for what it is worth) the manner in which any loss should be treated as well.
30.	The suggested Pallant v. Morgan equity is not pleaded:  I have, however, treated it on the basis that the core of the allegation is that identified by Mr Ring, and it must in my judgment be rejected.  I can accordingly turn to the other matters which it is suggested render summary judgment inappropriate.
“Proof of Funds”
31.	The first question is whether Mr Beasant’s letter to Mr Fugler of 14th September 2002 amounts to “proof of funds” within the meaning of Clause 2 of the Joint Venture Agreement.  In context, I accept the defendants’ contention that Clause 2.2.1, which is expressed to be a proviso, imposes a condition precedent to the exercise of the option.  The requirement to notify the other party of proof of funds seems to me clearly to require the notification of some independent confirmation that funds to complete the transaction initiated by the exercise of the option are available.  An example would be a solicitor’s letter confirming that the solicitors hold the appropriate funds to the account of the transaction;  or perhaps a banker’s letter confirming that the funds are available to the party exercising the option.  One can readily understand that the exercise of the option might, in fact, be a component in a back-to-back transaction, and in such a case the proof of funds would be proof of funds available to the ultimate purchaser.  It was suggested that the purpose of the notification is to enable the other option-holder to satisfy himself that there are in truth funds available and so exercise his power under Clause 2.2.2 to require the option to be exercised jointly.  Whether that is right or not – and I think it may be – Clause 2.2.2 never operated, and accordingly the exercise of the option was from this perspective invalid.
32.	It is contended, however, (perhaps as a development of the Pallant v. Morgan contention) that Clause 2.2.1 should not be construed so as to deprive Mr Beasant of his putative 50% share in the profits to be derived from the development of the Property.  But this is precisely the effect of Clause 5 of the Agreement in the event that the Property is only sold outside the option period.  The structure of Clause 5 is no doubt to be understood in the sense that if the substantial benefits to be gained from the grant of the planning permission only accrue after the end of the option period, then Lexicon, which has borne the risk of the refusal of planning permission, should take the whole benefit arising from its grant;  and Mr Beasant and Mr Fugler should be placed in a position themselves to benefit only if they can themselves put up funds enabling them to exercise the option or arrange for a profitable sale (in the sense of Clause 5.2) before the expiry of the option period.
33.	In my judgment, Mr Beasant’s letter does not amount to “proof of funds”.  It was vigorously maintained by Mr Peto on behalf of Mr Beasant that it did indeed do so:  Clause 2.2.1 is silent as to the level of detail required in the proof of funds;  the solicitors in question are identified at the foot of the letter;  and so, on a proper construction of the letter, the solicitors are identified as the source of £2m.  In my judgment, this letter cannot be taken as “proof of funds” for the reasons alleged by Mr Peto.  I think that the whole purpose of the notification is to avoid the necessity for further enquiry, and Mr Beasant’s letter fails wholly to achieve this result.  But I must also consider the letter of 22nd September 2000 from Fuglers to Mr Beasant quoted above.  Mr Peto contends that this is tantamount to an admission that the letter was such a notification, or at least sufficiently informative to give Mr Fugler all the proof that he either needed or was entitled to.  In my judgment, that is not so.  The letter must be considered in its context, which is the allegation that Mr Beasant has appropriated sums of money to which Mr Fugler was entitled.  I view the letter as throwing no light on the content of the obligation placed upon Mr Beasant to show proof of funds as a condition precedent to the exercise of the option, and I do not see that it shows that the letter was an adequate notification for the purposes of the clause.
34.	Thus far, I have considered the merits of the dispute as being wholly in Mr Fugler’s favour.  But it is said that in any event this is a case where summary judgment should be refused because there is a compelling reason why the case should be disposed of at trial.  The compelling reason may, I think, be summarised by saying that Mr Beasant submits that there are too many loose ends in the defendants’ evidence and that in fact there has been a conspiracy between Mr Fugler and Mr Juntti of Lexicon to deprive Mr Beasant of his interest in the Property.  Whether or not this is so seems to me to throw no light on the correctness of granting summary judgment to vacate the caution presently registered by Mr Beasant against the Property.  It is accepted that Mr Beasant’s claim for breach of fiduciary duty against Mr Fugler cannot be disposed of on a summary basis.  The basis for the supposed collusion is that Mr Beasant was in fact entitled to a 50% share in the proceeds of the development of the Property even after the execution of the Joint Venture Agreement, but, for the reasons I have given, I consider this contention to be untenable.  A particular point is taken on the rejection of the exercise of the option:  the reason for its rejection was given to Mr Beasant too late for him to make good any deficiencies in the proof of funds.  But that is not, in my judgment, something for which the defendants must answer.  As it happens, Mr Beasant had already been told by his solicitor that he was not in a position to give proof of funds – Porter Dodson advised Mr Beasant in a letter of 15th September 2000 as follows:
“Clause 2.2.1 states that prior to exercising the Option notice must be given to Fuglers that you have the funds.  While there is an indication that you have a buyer to inject funds that is not the same thing, particularly as there is no binding contract.  Then clause 2.2.2 states that the seven days prior notice must be given before then any individual exercises the option on their own.  If then you cannot get Mr Fugler to agree to exercise the option there is a problem and he could look to block you.  There is the additional problem that you would be effectively contracting to acquire the site but without having secured the binding exchange with Prowting that means you would sell to them.  You only have 30 days from exercising the option to produce the balance of the purchase price.  This is clause 2.3.  At present we do not have the title or the ability to deal with the enquiries which any prudent purchaser would raise and it will take at least two weeks for them to put through the requisite searches.”
35.	Against this background, I do not see that there is any other compelling reason to have a trial of this action so far as it is concerned with the caution registered by Mr Beasant against the Property.  I am conscious that summary judgment should not be granted in cases where any prolonged analysis of the documents amounting to a “mini trial” is involved.  In this case, however, I can find no basis upon which such a case might be erected.  I conclude that it is clear that Lexicon is now the beneficial owner of the Property and that neither Mr Fugler nor Mr Beasant can exercise the option.  Mr Beasant’s purported exercise was, in my judgment, plainly invalid, and it follows that the defendants are entitled to a declaration that the caution should be vacated.  This application accordingly succeeds.