Pennington v Waine
A gift of shares was complete in equity, although the share transfer was never delivered to the donee or the company, because it would have been unconscionable for the donor to change her mind.
Facts
Ada Crampton wanted to give 400 shares in a family company to her nephew, Harold, and to make him a director. She signed a share transfer form and gave it to Mr Pennington, a partner in the company's accountants, who told Harold that she was transferring the shares to him and that he need take no action. Harold agreed to become a director, which required him to hold shares. Mr Pennington put the transfer in the company's file, but it was never delivered to Harold or registered. Ada died, and the question was whether the gift was complete.
Legal principle
The Court of Appeal held that Harold was entitled to the shares. Arden LJ said that, although delivery of the transfer would normally be needed for the gift to be complete under Re Rose, it was not needed here, because it would have been unconscionable for Ada to recall the gift after Harold had been told that the shares were his and he had agreed to become a director on that basis. Equity would treat the gift as complete. The decision has been criticised for introducing uncertainty into the rules on constitution.
Related cases on formalities and constitution of trusts
- Re Brooks' Settlement Trusts [1939] Ch 993
- Cannon v Hartley [1949] Ch 213
- Choithram (T) International SA v Pagarani [2001] 1 WLR 1
- Fletcher v Fletcher (1844) 4 Hare 67
- Grey v IRC [1960] AC 1
- Hodgson v Marks [1971] Ch 892
- King v Dubrey [2015] EWCA Civ 581, [2016] Ch 221
- Mascall v Mascall (1984) 50 P & CR 119
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