Jones & Anor v Hamilton

Where the parties’ agreement concerning company shares is oral and the documentary record is unreliable, the court must determine the parties’ true agreement from all reliable evidence. Documents created for financing arrangements may provide strong evidence of the agreed beneficial ownership, particularly where they are consistent with the surrounding commercial context. A party’s asserted allocation of shares will not be accepted merely because it appears in a company register or document if the evidence shows that the document is unreliable or misleading. Shareholdings transferred or held as security remain subject to the parties’ underlying agreement.

The claim concerned the beneficial ownership of shares in Solfado SA and Ministros Properties Ltd. Mr Jones sought declarations that he owned 80 per cent of the shares in each company, asserting that the shares secured guarantees he had given in connection with loans. Mr Hamilton contended that he owned 80 per cent of each company and that Mr Jones held only 20 per cent as security.

The issue was decided as a preliminary issue after a five-day trial. The parties’ alleged agreements were oral, there were no independent witnesses to them, and several corporate documents and signatures were found to be unreliable.

1. The court found that the parties’ true agreement concerning Solfado was reflected in the UBS loan documentation. Mr Hamilton beneficially owned 80 per cent of the shares, while Mr Jones held 20 per cent as security for his guarantee. The court rejected Mr Jones’s contention that his larger guarantee justified an 80 per cent shareholding.

2. The court reached the same conclusion concerning MPL. The true agreement was reflected in Mr Jones’s written instructions to Collas Crill, under which Mr Hamilton was to own 80 per cent and Mr Jones 20 per cent. The later company records showing the reverse allocation were unreliable and were consistent with an error by Collas Crill.

3. In assessing the oral agreements, the court attached limited weight to corporate documents which were knowingly prepared inaccurately, and to documents bearing electronically copied signatures. Mr Jones’s evidence was accepted only where supported by other reliable material. Mr Hamilton’s evidence was preferred where the accounts conflicted.

4. Mr Hamilton was therefore entitled to the declarations sought. The court did not determine wider disputes, including any profit-sharing arrangement, because they were outside the preliminary issue.

First-instance decision. The judgment does not state any prior appellate decision.