ON APPEAL FROM THE SUPREME COURT OF Evidence-Presumptions-Advancement-Resulting trust-Allotment at direction of
father of shares in company to daughters-Subsequent handing by daughters of share certificates signed in blank to father-Intention of parties-Whether pre- sumption of advancement rebutted-Subsequent acts and declarations of parties- Admissibility.
A father allotted shares in a company which he controlled to the plaintiffs (his daughters by his first marriage) and their names were entered in the register of members; he then informed them of the fact and said there would be a dividend paid yearly when possible. At the same time he asked them to sign a number of documents which he said were for shares in the company and said that he would look after these for them. The documents were share certificates with transfers on the backs which the daughters signed in blank. He retained the certificates. The daughters received dividends proportionate to their number of shares whenever dividends were declared and when they were not the father made good the loss himself.
By his will the father bequeathed all his shares in the company to the defendants, who were his executors and trustees. They found the share certificates amongst his property in separate envelopes each bearing on the outside in the father's writing a statement indicating that the shares belonged to the respective daughters and each containing a document signed by the father stating that the shares belonged not to him but to the daughter named on the envelope. The defendants, who now controlled the company, filled in the blank transfers to themselves as transferees entitled thereto in equity and caused the shares to be transferred into their own names in the share register. They did not inform the plaintiffs of the discovery of the envelopes
or the transfer of the shares, and the plaintiffs first learned about the envelopes and their contents when they were disclosed on discovery. One of the defend- ants, the daughter by a second marriage, gave evidence that the father, who had allotted shares to and obtained signatures in blank from her in the same way, had made it clear to all his daughters that the shares were not really theirs at all, but her evidence was not believed by the trial judge. The plaintiffs brought an action for rectification of the share register of the com. pany.
Held, that the presumption of advancement in favour of the plaintiffs had not been rebutted and that they were entitled to the relief claimed.
The presumption of advancement can be rebutted or qualified by evidence manifesting a contrary intention, but apart from subsequent acts and declara. tions as against the parties doing or making them and the general circum. stances, the acts and declarations of the parties before or at the time of the purchase (in this case the acquisition of the shares by allotment) or so immedi- ately thereafter as to…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Charles Marshall Pty Ltd v Grimsley [1956] HCA 28
Case
[1956] HCA 28
Decision Date
CaseChat Overview and Summary
This case involved an appeal to the High Court of Australia from a decision of the Supreme Court of Victoria. The plaintiffs, Mrs. Grimsley and Mrs. Graham, daughters of the late Charles Marshall, sought rectification of the share register of Charles Marshall Pty Ltd. They claimed that shares allotted to them in 1924 had been wrongfully transferred to the defendants, who were the executors and trustees of Mr. Marshall's estate and beneficiaries under his will. The defendants asserted that the shares were held by the plaintiffs on trust for their father, Charles Marshall.
The central legal issues before the court were whether the presumption of advancement, which typically applies when a father provides property for his child, had been rebutted, and if so, whether the plaintiffs held the shares as trustees for their father. The court was required to consider the admissibility and weight of various acts and declarations by Charles Marshall, both at the time of the share allotment and subsequently, in determining the true intention of the parties.
The High Court affirmed the decision of the Supreme Court, holding that the presumption of advancement in favour of the plaintiffs had not been rebutted. The court reasoned that the initial allotment of shares to the daughters, coupled with their father's statements about the company structure and his intention to look after the shares for them, established a prima facie gift. While the signing of blank transfers and the retention of share certificates by the father were part of the transaction, they were not sufficient, on their own, to rebut the presumption of advancement. The court found that subsequent actions, such as the father's consistent payment of dividends to the daughters (or making good the shortfall himself) and the notations on the envelopes containing the share certificates indicating they belonged to the daughters, strongly supported the view that the shares were intended as a beneficial gift. Even if the father had reserved a power of revocation by having the blank transfers signed, this power was not exercised during his lifetime, and therefore, the beneficial interest remained with the daughters. The court found the evidence presented by the defendants to suggest a contrary intention to be inadmissible or unconvincing, particularly the testimony of one of the defendants, which was disbelieved by the trial judge.
Consequently, the High Court dismissed the appeal and ordered that the share register of Charles Marshall Pty Ltd be rectified to reinstate the plaintiffs as the holders of the shares, and that an account be taken of dividends declared since 1st July 1952, with the amounts found due to be paid to each plaintiff.