Fanmailuk.com Ltd & Anor v Cooper & Ors

A resulting trust may arise over shares issued to individuals where, viewed in the context of the whole transaction, a company provided the real economic cost of their acquisition. A nominal personal liability to pay for unpaid shares does not necessarily determine beneficial ownership where it is de minimis compared with the formation costs borne by the company. The resulting-trust presumption is rebuttable and must be assessed alongside the objective intentions manifested by the parties’ words and conduct. Where a new company is established as an operating vehicle for a business opportunity developed and funded by an existing company, the surrounding arrangements may indicate that the existing company retains the beneficial ownership pending any agreed reallocation. A person may assume a de facto director’s role for particular decisions without being a de facto director generally.

The claim was a preliminary issue concerning the beneficial ownership of four shares in Dialtime Plus Ltd (“DPL”). The shares had been issued in the names of Paul Burtenshaw, Robert Cooper, Ahmed Zghari and a formation agent. Fanmailuk.com Ltd claimed that the shares were held on resulting trust for Fanmail.

The dispute arose from the development by Fanmail of a mobile-phone promotional technology, followed by the incorporation of DPL as an operating company for that business. The parties disputed who had developed the idea, whether DPL was intended to be independent of Fanmail, who had funded its formation, and what objective intention was to be attributed to the participants. The court also considered whether Robert Cooper was a de facto director of Fanmail.

1. Claim allowed. Fanmail was the beneficial owner of all four shares in DPL.
2. The shares were issued unpaid, so each registered holder assumed a personal liability to DPL for any call. However, the real cost of establishing DPL was the formation expense borne by Fanmail. The nominal £1 liability attached to each share was de minimis in the context of the whole transaction and did not determine beneficial ownership.
3. A rebuttable presumption therefore arose that the shares were held on resulting trust for Fanmail. The presumption and its possible rebuttal had to be assessed in the light of the transaction’s economic substance and the objective intentions manifested by the parties.
4. The objective evidence showed that the Dialtime idea had been developed through Fanmail’s personnel, consultants and resources. DPL was established as an operating vehicle within the business model previously used for another Fanmail idea. The initial share allocation was a temporary holding arrangement pending agreement on the ultimate allocation of shares to contributors and strategic partners. The evidence did not rebut the resulting-trust presumption.
5. The court rejected the contention that Robert Cooper had invented the Dialtime idea. His important contribution was commercial and relational, not inventive. The court also rejected the suggestion that the relevant intention was for the Fanmail shareholders, rather than Fanmail itself, to own the shares beneficially.
6. Robert Cooper was not generally a de facto director of Fanmail. However, he could assume a de facto director’s role, with fiduciary duties, in relation to particular decisions where he became directly involved in making them. That issue was not necessary to the conclusion on beneficial ownership.

First-instance decision. The judgment itself does not state any subsequent appellate history.