Gee v Gee & Anor

The claimant sought orders to enforce a prior judgment and order made by Birss J ([2018] EWHC 1393 (Ch)), specifically the transfer of 12,480 shares in John P Gee and Sons Ltd from the second defendant to the claimant. The second defendant had withheld executing the stock transfer pending the claimant signing forms to apply for holdover relief for capital gains tax under section 165 of the Taxation of Chargeable Gains Act 1992.

The court held that paragraph (3) of the earlier order requiring transfer of shares was not conditional upon paragraph (15)’s obligation to apply for holdover relief. The second defendant’s reliance on paragraph (15) did not justify withholding the executed stock transfer. The judge concluded the second defendant had neglected to comply with the order and, exercising the court’s powers under section 39 of the Senior Courts Act 1981, ordered delivery of a fully executed stock transfer within seven days and authorised a nominated person to execute the transfer if the second defendant failed to do so. The claimant was given liberty to apply for orders concerning the company books if registration proved problematic. Costs and consequential matters were reserved for later decision.

The claimant applied for orders to enforce an earlier proprietary estoppel judgment and consequential transfer order made by Birss J after trial in 2018. The orders of 14 February 2019 required, among other things, that the second defendant transfer 12,480 shares in the family trading company to the claimant and transfer a beneficial share in the family freehold. The earlier order also required the parties to make any necessary applications for holdover relief to minimise tax consequences.

Nature of the application: the claimant sought (a) an order that the second defendant execute a stock transfer for 12,480 shares to the claimant; (b) failing that, authorisation under section 39 of the Senior Courts Act 1981 for a named person to execute the transfer on the second defendant’s behalf; (c) delivery up of the company books or, failing that, authorisation to create a fresh register of members; and (d) costs.

Key factual background: following the substantive finding of proprietary estoppel in the claimant’s favour at trial, detailed orders were made allocating shares and beneficial interests. The second defendant accepted an obligation to transfer shares but, after exchanges about tax efficiency and holdover relief, withheld a signed stock transfer form on the basis that the claimant must first sign holdover relief forms to protect against capital gains tax exposure, particularly given changes in reporting obligations for residential property disposals from April 2020.

Issues framed: (i) whether the second defendant’s obligation to transfer shares under paragraph (3) was conditional on the claimant making an earlier application for holdover relief pursuant to paragraph (15); (ii) whether the second defendant’s withholding of the signed stock transfer form amounted to neglect or refusal to comply with the court’s order so as to justify an order under section 39 Senior Courts Act 1981; (iii) what orders, if any, should be made in relation to the company books and register; and (iv) costs.

Court’s reasoning and conclusions: the court interpreted the 14 February 2019 order as imposing unconditional obligations in paragraphs (3) and (5); there was no express condition making transfer contingent on the claimant’s prior execution of holdover relief forms. The court accepted that a holdover claim can only be finally made in relation to a completed transaction and that valuations of non-business assets depend on the date of disposal, but found these points did not render the share-transfer obligation conditional. The second defendant’s position therefore did not justify continued withholding of the executed stock transfer. The court found the jurisdictional threshold for section 39 was met by the neglect to comply and ordered delivery of a fully executed stock transfer within seven days; failing which Pamela Humphrey was authorised to execute the transfer under section 39. The judge declined any immediate order about the company books but granted liberty to apply and reserved costs and consequential matters for later determination.

The application was allowed. The court held that the order of 14 February 2019 required the second defendant to transfer 12,480 shares to the claimant unconditionally and that his withholding of a completed stock transfer form pending the claimant’s execution of holdover relief forms was not justified. The second defendant was ordered to deliver a fully executed stock transfer within seven days, and failing delivery Pamela Humphrey was authorised under section 39 of the Senior Courts Act 1981 to execute the stock transfer on his behalf. The claimant was given liberty to apply for orders about the company books if registration proved to be obstructed. Costs and other consequential matters were reserved for later decision.

Prior proceedings: judgment at trial before Birss J ([2018] EWHC 1393 (Ch)) in favour of the claimant. Further hearings on implementation followed and a final order was made on 14 February 2019. The defendants applied to the Court of Appeal for permission to appeal; permission was refused by Rose LJ on 24 May 2019. A subsequent application to reopen the appeal under CPR r 52.30 was refused by Rose LJ on 14 January 2020.