Moutreuil v Andreewitch & Anor

Where shares are registered in one person’s sole name, equity starts from the position that the legal owner is also the beneficial owner. The person alleging a different beneficial ownership bears the burden of proving it.

A transfer intended to vest both legal and beneficial ownership is effective according to that intention. A later document obtained through coercive pressure, and described at the time as having no legal effect, does not alter the ownership position. A purported registration of shares without a proper instrument of transfer is invalid.

The claimant sought declarations concerning her beneficial ownership of shares in Pier Investment Company Limited and the company’s property. She also made an alternative application under Schedule 1 to the Children Act 1989.

The claimant said that the defendant transferred the shares to her outright in 2000. The defendant contended that she held them only as his nominee or bare trustee. He relied on a document signed in February 2018 and on a purported transfer of the shares to their son in February 2019.

The central issues were whether the defendant had displaced the presumption that beneficial ownership followed legal title, whether the 2018 document had legal effect, and whether the later registration was valid.

1. Ownership and burden of proof. The defendant bore the burden of showing that the claimant’s beneficial ownership differed from her legal ownership. The starting point in sole legal ownership was sole beneficial ownership, applying Stack v Dowden [2007] UKHL 17 at [56].
2. 2000 transfer. On the facts, the parties understood and intended that the claimant should become the outright legal and beneficial owner of the shares. The defendant intended to divest himself of any beneficial interest so far as possible, because of concerns about creditors. The claimant purchased the shares for £5, and the defendant was estopped from denying that consideration, applying Prime Sight Ltd v Lavarello [2013] UKPC 22; [2014] AC 436.
3. 2018 document. The document entitled “Notes to Declaration of Trust” did not represent a binding alteration of ownership. It was signed after a sustained campaign of pressure and harassment. The defendant had represented that it had no legal value or effect, and the court rejected his account that the claimant had always been his nominee or bare trustee.
4. Alternative claims. It was unnecessary to determine the claimant’s proprietary-estoppel case. The judge stated that, if required, the defendant’s representations and the claimant’s detrimental reliance would have prevented him from denying her entire or substantial interest. A common-intention constructive-trust claim would have failed because there was no agreement, arrangement or understanding that the shares were to be shared beneficially.
5. Purported transfer to the son. The registration of the shares in the son’s name was invalid and ineffective because no proper instrument of transfer had been executed, contrary to sections 770 and 771 of the Companies Act 2006. The company was ordered to rectify the register and restore the claimant’s registration.
6. Orders. The claimant was declared the sole beneficial owner of all the shares. The Schedule 1 application was not determined because the ownership proceedings resolved the relevant issue.