Brennan and Alman v Morphett

This case concerned an appeal from the Supreme Court of Queensland regarding the sale of a mining area. The appellants, Brennan and Alman, were assignees of a one-fifteenth share in a mining claim originally held by one George Hart. The respondent, Morphett, had purchased the claim from Hart, with Hart retaining a one-fifteenth fully paid-up share. Morphett later made a declaration of trust, registered in the Warden's Register, stating he held this one-fifteenth interest in trust for Hart, including any company formed to work the claim. Subsequently, Hart sold portions of his retained interest to Alman and then Brennan. Morphett then sold the entire claim to a company for cash and shares. The appellants claimed entitlement to one-fifteenth of the total proceeds, arguing the declaration of trust secured them this proportion of the ultimate company shares, not just a proportion of what Morphett received.

The legal issues before the court were whether the declaration of trust was legally effective to grant the appellants a greater interest than a proportion of the proceeds received by the respondent, and whether the registration of the declaration created an estoppel preventing the respondent from denying the appellants' claimed entitlement. Specifically, the court had to determine if the declaration created a valid trust over future shares in a company not yet in existence, or if it constituted a binding contract for such a share, and if so, whether it was supported by consideration.

The High Court held that the declaration of trust was inoperative. It could not create a trust over shares in a company that might be formed in the future, as such property was not in existence at the time of the declaration. Furthermore, the court found no consideration to support the declaration as a contract. The registration of the declaration was also held not to operate as an estoppel, meaning the assignees of Hart could not be in a better position than Hart himself. Consequently, the appellants were only entitled to their proportionate share of the actual purchase money and shares received by the respondent from the sale of the claim.

The appeal was dismissed, affirming the judgment of Chubb J. in the Supreme Court of Queensland. The appellants were awarded their proportionate share of the money and shares brought into court by the respondent, which was less than they claimed.