Adam made a written declaration of T of 50 S in a privately held company, with Calvin as sole Tee and Eve as sole B. Adam sent declaration to Calvin, along with a completed share X form and share certificates. Calvin put declaration, X form and certificates in a safety deposit box. Later, Eve orally agreed to sell her interest under T to Troy for £25,000. Troy then orally declared that he held any interest he received from Eve on T for Helen. Helen orally assigned her interest under this T to Sophie. Discuss. What difference, if any, would it make if S were in a public company?
This was a problem question on formalities. clearly no X of S from A to C, but arguably C would hold an interest under a CT under rule in Re Rose, which he would then hold on T for E. C would not drop out of picture so that A held directly on T for E because of Nelson v Greening & Sykes. There are no formalities required for E to make a con to sell her interest under sub-T to T, and because her interest is in S in a private company con will be specifically enforceable (because shares are unique unlike for a public traded company where the contract would not be specifically enforceable), meaning that a sub-sub-T in favour of T, Oughted v IRC notwithstanding. As to T's oral declaration of T in favour of H, this would not amount to a disposition of an EQ interest and so will be valid, despite s.53(1)(c): Nelson v Greening & Sykes. However, H's oral assignment to S will be void for failure to comply with s.53(1)(c). If S were in a public company, then E's con with T is not specifically enforceable, and there will be no CT for T.
Important decision in Nelson v Greening & Sykes, and many were unable to distinguish between an agreement to sell and performance of that agreement. Moreover, many candidates made mistake of thinking that s.53(1)(c) applies to a X of S (presumably because many of s.53(1)(c) cases concern S) and that therefore S passed to Calvin, thereby missing point of question. A simple reading of statute would have prevented such an error.