Pennington v Waine

Ratio Decidendi

Facts

Ada Crampton wished to give 400 shares in a family company to her nephew Harold and to make him a director (which required him to hold shares). She signed a share transfer form and handed it to Mr Pennington, a partner in the company's auditors who acted as her agent; he placed it on the company's file, but it was never delivered to the company for registration, nor to Harold, before Ada died. Harold had, at Ada's request, signed a form consenting to act as a director. The question was whether the gift of the shares was complete.

Judgment Summary

The Court of Appeal held that the gift of the shares was effective in equity even though Ada had not, on a strict view, done everything in her power to transfer them (the transfer form had not been delivered to the company or to Harold). Arden LJ held that the rule in Re Rose is ultimately concerned with whether it would be unconscionable for the donor or their estate to resile from the gift, and that on these facts it would have been: Ada had made her intention to give the shares perfectly clear, had told Harold he was to have them, had set the transfer process in motion through her agent, and Harold had acted on the gift by agreeing to become a director. In those circumstances equity would not allow the donor to recall the gift, and the shares were held on trust for Harold. The decision is a controversial extension of Re Rose, criticised for introducing an uncertain 'unconscionability' test into the completeness of gifts, but it remains binding authority.

Key Quotes

Subsequent Treatment