Hurndell v Hurndell & Ors

The claimant alleged he had been given 33,309,940 ordinary shares in Stanelco plc in December 1996 and that some 31,809,940 of those shares were subsequently taken from him by the first and fifth defendants. The central legal issue was whether the shares registered in the claimant's name were held by him beneficially or only as a nominee (and, relatedly, whether transfers and documents said to effect the disposals were authentic and properly authorised).

The judge proceeded by reference to objective contemporaneous documents, the parties' motives and the overall probabilities (following the approach in Ocean Frost). He made detailed credibility findings: in particular he rejected the claimant's account of the Metco transaction (finding the claimant and his principal supporter had given false accounts) and found that the claimant had deliberately lied about whether he met the Hoziers in St Tropez on 16 August 2001. The judge accepted Howard White's evidence that the shares had initially been parked in the claimant's name as nominee for Mr White to satisfy listing requirements and that, in 2001, Mr White intended to allow Barrie Hozier to have some 32 million of those shares while permitting the claimant to retain 1.5 million beneficially.

The court therefore concluded the claimant never held the disputed circa 32 million shares beneficially and dismissed the claim. The decision discusses listing rules (applied under section 142 of the Financial Services Act 1986) and the legal consequences of nominee registration, including the presumption of resulting trust where a beneficial gift or disposition is not shown.

Background and procedural posture

• This was a High Court (Chancery Division) trial of a claim by Mr William Hurndell that he was given 33,309,940 shares in Stanelco plc in December 1996 and that some 31,809,940 of those shares had been taken from him by the defendants, principally Mr Barrie Hozier and Mr David Hozier. The claimant sought compensation equal to the value of the disputed shares.
• The action followed an earlier trial (David Richards J) in which the claim was dismissed, and a Court of Appeal decision ([2009] EWCA Civ 67) which admitted fresh evidence and ordered a retrial of all issues; the retrial was before Morgan J.

Nature of the claim and relief sought

• The claimant alleged a gratuitous transfer in his favour in December 1996 and later unlawful disposals (stock transfers dated 14 February 2002) effected by the defendants; he sought damages or equivalent compensation for the lost shares.

Issues framed by the court

• Whether the shares registered in the claimant’s name were intended to be vested in him beneficially or held by him as nominee for Mr White;
• Whether the St Tropez note of 16 August 2001 and two blank stock transfer forms were genuine and/or were used to effect transfers;
• Whether the signatures on the stock transfer forms of 14 February 2002 were genuine and, if so, whether they were executed with the claimant’s informed consent;
• Credibility and reliability of key witnesses and the weight of contemporaneous documents (including company accounts and registration entries);
• Consequences for title and remedies if the claimant had only nominal title or if the transfers were invalid.

Court’s reasoning and findings

• The judge emphasised the primacy of contemporaneous documents and overall probabilities in resolving conflicts of fact (citing Ocean Frost). He tested witness accounts against objective records and motives.
• He rejected the claimant’s account of the Metco transaction, concluding the claimant and an important supporting witness had given deliberate false evidence about that transaction; that undermined their overall credibility.
• He accepted evidence (in particular Howard White’s) that the transfers and corporate steps in late 1996/early 1997 were intended to reduce the apparent shareholding of the two principal trustees to satisfy the Stock Exchange listing rules and that the shares registered in the claimant’s name were, at inception and until later events in 2001, intended to be held by him as nominee for Mr White (not beneficially for the claimant).
• He found the St Tropez note genuine and that the claimant signed it on 16 August 2001; he found that thereafter the claimant signed two blank stock transfer forms at or about the request of Mr Barrie Hozier and that those blanks were completed so as to transfer about 32 million shares to offshore companies and registered in February 2002.
• On the legal consequences the judge found no evidence of an earlier enforceable contract or donor intention to vest the beneficial interest in the claimant; accordingly the presumption of resulting trust was not displaced and the claimant never obtained beneficial title to the circa 32 million shares.

Outcome: the claim was dismissed for failure to establish beneficial ownership of the disputed shares; the claimant retained 1.5 million shares which he later sold.

The claim is dismissed. The judge found that the circa 33.3 million shares registered in the claimant’s name were placed there as nominee/share parking for the beneficial owner (Howard White) to comply with listing requirements; the claimant never acquired beneficial title to the approximately 32 million shares later transferred to Khaki and Finale. Key credibility findings (including deliberate falsehoods by the claimant on the Metco transaction and regarding the St Tropez events) and the contemporaneous company documents supported the defendants’ case, so the claimant’s claim for compensation failed.

First-instance trial before David Richards J (July 2007) — judgment dismissing the claim given 19 March 2008. Court of Appeal ([2009] EWCA Civ 67) allowed the claimant’s appeal in part, admitted new evidence concerning events of 16 August 2001 and ordered a full retrial of all issues. Retrial before Morgan J in October–November 2010 resulted in dismissal of the claim ([2010] EWHC 3340 (Ch)).