Constitution
Q1) Bob was the registered shareholder of 1,000 shares in Dryad Ltd, which is a private company. He
decided to give 200 shares to each of his twin nieces Helena and Sarah for their 25th birthday. He filled
out the share transfer forms, put them inside birthday cards, and posted them to his nieces, who received
them. Bob died two weeks later. His son Felix is entitled to his entire estate. Helena and Sarah did not
submit the share transfer forms to Dryad Ltd and so Bob is still listed in its shareholder register as the
shareholder of 1,000 shares. The form to transfer 200 shares to Helena was properly filled out by Bob and
was registrable. However, Bob forgot to sign the form to transfer 200 shares to Sarah and it is not
registrable. Advise Helena and Sarah. What difference, if any, would it make if Helena and Sarah were
appointed as the executrices of Bob’s estate?
Q2) Trebor is trustee of shares in Plonk Ltd and Broke Ltd, holding on trust for George. George wished to
give the shares in Plonk Ltd to Zupo and instructed Trebor to transfer title to the shares to Zupo. Trebor
signed the transfer form and handed the form to Zupo’s solicitor, Solo, along with the certificate of title to
the shares. George also tells Trebor to hold the shares in Broke Ltd on trust for Xerxes but a few days
later, George argues with Xerxes and instead agrees in writing to sell these shares to Yasmin. Before Solo
was able to register the shares in Plonk Ltd in Zupo’s name, George was killed in a car crash, leaving all
his property to Sylvia. It also emerges that George never transferred his interest in the shares in Broke Ltd
to Yasmin, and now Xerxes and Sylvia are claiming them. Advise Sylvia.
Summary of Facts:
We understand that G is a beneficiary of shares of PL and BL Ltd and has given certain instructions in
respect of such shares to his trustee “T” and our issue is to determine whether the instructions have
been fully implemented or not. We shall discuss each issue separately.
1) Plonk Ltd:
We note that the first instruction given by G to T is to transfer the absolute title of PL shares to Z.
We note that the instructions were given orally. The first issue is to determine if the oral instruction
can be considered as valid or not. In terms of Section 53(1)(c) of LPA 1925, a disposition of equitable
interest can only be valid if in writing. However, it was held in “Vanderwell” that there is no
disposition of equitable interest in an absolute transfer of title. Therefore, there is no requirement
of giving such instructions in writing. Hence, T is duty bound to follow the beneficiary’s instructions
and transferring title to Z. However, to transfer title of shares, the name of the shareholder has to
be updated in the shareholder’s registry through an application made to the company’s registrar.
However, before such application was made, G has died and the application for transfer of shares
was in the custody of Z’s solicitor. We note that as per the general rule, the legal title has not been
transferred and equity will not assist by creating a constructive as it does not assist volunteers or
perfects imperfect gifts (Richards v Delbridge) (Milory v Lord). However, reliance can be placed to
the exception created in “Re Rose” and affirmed in the cases of “Mascall v Mascall” and “Re Fry”.
Whereby, if the donor does everything in their power and gives all documents either to the
registrar, the done or their agents, then a constructive trust can be created. In our case, T has given
all the documents before the death of G to Z’s lawyer i.e. agent, therefore, as per “Re Rose”, a CT
will be created and Z will get the equitable title of shares and the gift will be perfected.
2) Broke Ltd:
We note that G has given oral instructions to T to vary his beneficial interest and hold it for X. As per
Section 53(1)(c), such instructions have to be given in writing for it to be valid. Therefore, X did not
get the equitable interest. However, G and Y have entered into an agreement to buy and sell the
equitable interest and although there is no formal transfer, as Y has given consideration, hence,
equity will assist and create a constructive trust. The equitable interest of BL shares will therefore
vest with Y.
T holding shares for George
G Wished to transfer it to Zupo
