Timothy Fulstow & Anor v Jeremy Francis

A contract requires agreement, an intention to create legal relations, consideration, and sufficiently certain and complete terms. Exploratory discussions and communications which record only part of a proposed wider transaction will not ordinarily constitute an offer capable of acceptance. The court assesses the parties’ objective intention in the context of all the evidence, including whether important terms remained to be agreed.

Where an alleged contractual interest belongs to a company, its shareholder or beneficial owner has no standing to sue in respect of that interest personally. A claim for additional shares based on fiduciary duties also fails where the alleged trustee made further capital investment and gave a substantial personal guarantee.

The claimants sought declarations that they beneficially owned 25% and 7% respectively of the ordinary shares in Capital Land (EDA) Swindon Ltd, following payments of £35,000 and £25,000 made on 30 November 2015. They also claimed corresponding B preferred ordinary shares and an order requiring transfer of the shares.

The defendant denied that binding agreements had been made. He contended that the discussions formed part of a wider, incomplete investment arrangement, that the claimants’ alleged interests belonged to Carina Ltd, and that further relief was barred by laches or affected by Capital Land’s articles. The central issue was whether the parties had concluded enforceable agreements requiring the transfer of shares.

1. The claim was dismissed. No declaration or share-transfer order was made.
2. Applying the contractual principles discussed in Blue v Ashley, an enforceable contract required agreement, an intention to create legal relations, consideration, and sufficiently certain and complete terms. The discussions at Home House on 27 November 2015 were exploratory. No legally binding relations were then created, and important aspects of the wider proposed arrangement remained unresolved.
3. The emails of 29 November 2015 were not clear and certain offers capable of acceptance by payment. They recorded only part of what was under discussion. Objectively, the parties were considering a wider arrangement involving assistance with later funding and other property projects. There was no common intention to create immediate binding legal relations.
4. The court accepted that £10,000 of the £35,000 payment was a short-term loan. The evidence did not establish that the remaining alleged share interest belonged to Mr Fulstow personally. The payment was made by Carina, and the documentary record consistently treated Carina as the investor. Even if a binding agreement had existed, it would have been with Carina, not Mr Fulstow. Mr Fulstow therefore lacked standing personally.
5. The alternative claim to B preferred shares also failed. Mr Francis had made substantial further financial investment and provided a substantial personal guarantee, so the factual basis for the alleged breach of fiduciary duty was absent.
6. The court recorded, but did not need finally to decide, findings relevant to laches. The claimants had delayed, and Mr Francis was in a materially worse position after further investment and development of the project.