Joint venture dispute and failure to register the shares

1. Joint Venture Dispute:

 1.1Contractual Obligation:

There was no binding contract between the parties in law but an oral agreement to develop the house as a joint venture. Agreement can be made either by words or in writing and so Wimpy are bound by that agreement[1].

 It is possible to enforce the joint venture agreement in equity either under the constructive trust or under the law of proprietary estoppel[2].

 1.2 Constructive Trust:

A constructive trust is invoked, as it would be unconscionable to allow Wimpy to exploit the property as its own, in a manner inconsistent with the agreement, which enabled them to acquire it, and deny the beneficial interest of Truly Smart Company[3].

 It is not necessary to have written declaration of trust within S 53 (1) of the Law of Property Act 1925 [4]. However,Truly Smart Company can establish an interest in the property under the principles elaborated in Pettitt v. Pettitt[5] and codified by the House of Lords in Lloyds Bank v. Rosset[6]: the company can rely on a constructive trust, as it is exempt from the requirement of writing by S 53 (2) of the LPA 1925[7].

 To give rise to a constructive trust it is necessary to establish either advantage to Wimpy or detriment to Truly Smart, but not both[8]. However,Truly Smart Company in reliance on the promise kept out of the bidding gave an advantage to Wimpy to obtain the property

for a lower price. On the other hand, Truly Smart Company lost the opportunity to acquire the property for themselves[9].

 1.3 Proprietary Estoppel:

It is clear that an estoppel could arise even though there was no intention to create binding obligations, as where the parties had attempted to negotiate a contract[10]. Furthermore, Lord Kingsdown in Ramsden v. Dyson[11] opined that the doctrine of estoppel could arise where there was a fostering of an expectation in the minds of the parties, which, once acted upon; it would be unconscionable to deny later. The concepts of constructive trust and proprietary estoppel have much in common in this area[12]. In respect of remedy, the proprietary estoppel is a more flexible doctrine[13].

  2.Failure to register the transfer shares:

 2.1 Share Transfer:

The shares should be passed to Reshida Timol despite her uncle’s shaky signature. As her uncle had done everything in his power to transfer his legal and equitable interest in the shares[14]. The transfer of legal title to shares in a private company was regarded as effective even though it was not completed by entry in the share register of the company[15].

 2.2 Share Registration:

The company cannot refuse to register the shares in her name due to shaky signature[16]. The basic position on share transfer is set out in Re Smith, Knight & Co, Weston’s Case[17]. However, the company might take a different view regarding the argument about business ethics with her uncle, and that he may have changed his mind prior to his death.  It is not possible by her uncle to renege on the transfer as he had done everything he had to do to transfer the shares[18].

 2.3 The Appointment of Executor:

Reshida may further claim shares, as she is one of the executors of her uncle’s will[19]. An imperfect gift might be perfected by the subsequent appointment of the donee to be the donor’s executor where the donor had an immediate intention to make an out-and-out gift, and that intention survived until the donor’s death[20].

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[1] See, Fifoot & Furmston’s, Cheshire, Law of Contract (1996), 13th edition,  p-28

[2] See, Sir Nicolas Browne-Wilkinson view in Grant v. Edwards (1986) Ch. 638 ; Robert Walker L.J. view in Yaxley v. Gotts (2000) Ch 162.

[3] See, Chattock v. Muller (1878) 8 Ch 177,  Pallant v. Morgan (1953) Ch 43; Lonrho Plc. v. Fayed  No-2 (1992) 1 W. L. R  1 ; Banner Homes Group PLC. v. Luff Development Ltd. (2000)  CA 372.

[4] See, Todd, Paul & Lowrie, Sarah, Textbook on Trusts (2000),  5th edition ,  p-150

[5] (1970) AC 777

[6] (1991) 1 AC 107

[7] See, Moffat, Graham, Trusts Law Text and Materials (1994), 2nd edition,  p-96

[8] Cited in Hudson, Alastair, Equity & Trusts (2002), 2nd edition,  p-469 ; Banner Homes Group PLC. v. Luff Development Ltd. (2000)  CA 372

[9] Cited in Penner J E , The Law of Trusts (2000), 2nd edition,  p-5.20 ; Pallant v. Morgan (1953) Ch 43

[10] See, JT Developments v. Quinn (1991) 62 P & CR 33.

[11] (1865) LR 1 HL 129,

[12] Cited by Millett L.J in Paragon Finance Plc v. D. B. Thakerar & Co (1999) 1 All E R 400

[13] Cited in Hudson, Alastair, Equity & Trusts (2002), 2nd edition,  p-469

[14] Re Rose. Rose and Others v. Inland Revenue Commissioners (1952) CA 1217

[15] Cited in Todd, Paul, Cases & Materials on Equity & Trusts (2000), 3rd edition,  p-67

[16] Cited in Farrar J.H & Hannigan B.M, Farrar’s Company law (1998), 4th edition, p-239

[17] (1868) 4 Ch App 20

[18] See, Hayton DJ, The Law of Equitable Remedies (2001), 11th edition, p-406 ; Mascall v. Mascall (1984) 49 P & C. R 119

[19] See, Strong v. Bird (1874) LR 18 EQ 315

[20] See, Re Freeland. Jackson v. Rodgers (1951) 1 Ch 111