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Cite as: [1955] AC 431, [1954] UKHL 2

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JISCBAILII_CASE_TRUSTS

    Die Mercurii, 1° Decembris 1954

    Parliamentary Archives,
    HL/PO/JU/4/3/1027

    Viscount
    Simonds

    Lord

    Morion of
    Henryton

    Lord Reid

    Lord
    Tucker

    Lord

    Somervell
    of Harrow

    HOUSE OF LORDS

    SHEPHARD AND ANOTHER
    v.

    CARTWRIGHT AND OTHERS

    1st December, 1954.

    Viscount Simonds

    MY LORDS,

    This appeal raises questions in regard to the application of the equitable
    doctrine of advancement which I had regarded as well settled long ago.

    The following facts form the background of the case.

    On the 20th July, 1949, one Philip Edward Shephard died leaving a sub-
    stantial estate subject to the claims to which I presently refer. The Respon-
    dents. Joseph Osmond Cartwright and Hedley Spain Dunk and his son,
    the Appellant, Richard David Shephard, are the executors of his will which
    was made on the 4th December, 1946. In addition to Richard, who was
    born on the 2nd November, 1913, the deceased, as I will call him, had two
    other children, an elder son, the Respondent, Philip Edward Shephard,
    and a daughter, the Appellant, Winifred Maud Cartwright, who was born
    on the 25th October, 1906.

    In the year 1929 the deceased, who was then employed in an insurance
    brokerage business, engaged upon speculative building ventures in associa-
    tion with one Meyer, and for that purpose promoted six private companies
    and caused the following shares of £1 each, for which he had subscribed in
    cash, to be allotted to and registered in the names of himself, his wife and
    his three children whom I have named:

    The His
    Deceased Wife Philip Winifred Richard

    New Ideal Homesteads
    Limited 200 100 100 100

    Kent & Sussex Building
    Co. Limited 100 100 100 450

    Northend Machinery &
    Motor Services

    Limited 125 125 125 125

    Reliance Electrical Co.
    Limited 100 50

    N.I.H. Haulage Limited 100 150 100 150

    Mastercraft Homesteads
    Limited 100

    It has not been disputed that these shares were at that time of the value
    of £1 each or thereabouts. An equal number of shares of each company
    was registered in the names of the deceased's associate, Meyer, and members
    of his family. Neither of the Appellants, of whom Richard was then aged
    16 and Winifred 23, had any knowledge of this transaction. No evidence
    was given of the issue of any share certificates, but it seems reasonably
    certain that none were given to Richard or Winifred. Whether Philip had
    any is unknown. Strangely, he elected to give no evidence on this or any
    other matter.

    At the time of this transaction Richard and Winifred lived at home under
    their father's protection and, though it appears that relations between them
    and his wife, their stepmother, were somewhat strained, there is evidence
    that he recognised in full his paternal obligations, while they regarded him
    with more than usual filial reverence.

    2

    I think it well then to pause in this year 1929 and to ask what was the
    result in law or equity of the registration, in the names of his children,
    of shares for which he supplied the cash, and I pause in order to examine
    the law, because it appears to me that the only two facts which are at this
    stage relied on to rebut the presumption of advancement, viz.: that the
    children were ignorant and that certificates were not given to them, are of
    negligible value.

    My Lords, I do not distinguish between the purchase of shares and the
    acquisition of shares upon allotment, and I think that the law is clear that
    on the one hand where a man purchases shares and they are registered
    in the name of a stranger there is a resulting trust in favour of the pur-
    chaser ; on the other hand, if they are registered in the name of a child
    or one to whom the purchaser then stood in loco parentis, there is no such
    resulting trust but a presumption of advancement. Equally it is clear that
    the presumption may be rebutted but should not, as Lord Eldon said, give
    way to slight circumstances.

    It must then be asked by what evidence can the presumption be rebutted,
    and it would. I think, be very unfortunate if any doubt were cast (as I think
    it has been by certain passages in the judgments under review) upon the
    well settled law on this subject. It is. I think, correctly stated in substan-
    tially the same terms in every text book that I have consulted and supported
    by authority extending over a long period of time. I will take, as an example,
    a passage from Snell's Equity, 22nd Edition, at p. 122, which is as follows:

    " The acts and declarations of the parties before or at the time of
    " the purchase, or so immediately after it as to constitute a part of
    " the transaction, are admissible in evidence either for or against the
    " party who did the act or made the declaration ; subsequent acts and
    " declarations are only admissible as evidence against the party who
    " did or made them, and not in his favour."

    I do not think it necessary to review the numerous cases of high authority
    upon which this statement is founded. It is possible to find in some earlier
    judgments reference to " subsequent" events without the qualifications con-
    tained in the text-book statement: it may even be possible to wonder in some
    cases how in the narration of facts certain events were admitted to considera-
    tion. But the burden of authority in favour of the broad proposition as
    stated in the passage I have cited is overwhelming and should not be disturbed.

    But, though the applicable law is not in doubt, the application of it is not
    always easy. There must often be room for argument whether a subsequent
    act is part of the same transaction as the original purchase or transfer, and
    equally whether subsequent acts which it is sought to adduce in evidence
    ought to be regarded as admissions by the party so acting, and whether, if
    they are so admitted, further facts should be admitted by way of qualification
    of those admissions.

    Before, however, I ask whether evidence of any subsequent events is in
    this case admissible either because they formed part of the original trans-
    action or because they were in the nature of admissions, I must shortly
    examine an argument which has been pressed upon this appeal and appears
    to have carried particular weight with Romer, L.J. It is that an inference
    about the intention of the deceased at the time of the vesting of the relevant
    shares in the applicants can be drawn from his manner of dealing with other
    property which before or after the transaction in question he had transferred
    to one or other of his children. I cannot regard such evidence as admissible
    or, if admissible, as of any value. If the argument only means that such
    other transfers ought to be regarded as " part of the same transaction ", then
    it fails because it is altogether too artificial so to regard them. If, on the
    other hand, the argument is intended to introduce a new category of admis-
    sible evidence, viz. acts which, though not part of the same transaction, yet
    indicate a course of dealing, I must reject it on the ground that it cannot be
    supported by reason or authority. This form of evidence was expressly
    rejected by Lord Eldon in Murless v. Franklin, 1 Sw. 13 at p. 19, and I am
    not aware of any attempt having been again made to introduce it.

    3

    The first question, then, is whether any subsequent events are admissible
    as part of the original transaction to prove that the deceased had not in
    1929 the intention of advancement which the law presumes. My Lords, for
    nearly five years nothing happened which could by any means be regarded
    as throwing light upon his original intention, but an event did happen which
    would amply explain a change in that intention. For within a short time
    of their promotion the businesses of the six companies were prosperous
    beyond all expectation. In the year 1931 their combined profits were £57,780,
    in 1932 £128,525 and in 1933 £344,671. It is not surprising that in the light
    of this great success the deceased and his co-adventurer, Meyer, should form
    a public company to acquire all the shares of all the six companies. This
    they did. The Ideal Building and Land Development Company was formed
    to acquire the shares, and, the deceased having in the meantime procured
    the execution by the Appellants of two Powers of Attorney dated the 2nd
    May, 1934, authorising him to deal with their shares and any dividends
    thereon in the most general terms, an agreement was entered into between
    the new company and the several shareholders of the six private companies
    for the sale of all the shares for £700,000, of which £300,000 was to be
    satisfied in cash and £400,000 in shares of the new company. The Appellants
    signed this agreement and under it became entitled. Richard to
    £45.937 10s. od. in cash and £40,000 in shares, and Winifred to
    £26.737 10s. 0d. in cash and £40,000 in shares. It is an undisputed and
    from one point of view a material fact that the Appellants signed these
    documents at the request of the deceased without understanding what they
    were doing. The deceased received the cash consideration for the Appellants'
    shares in the old companies and he at various times sold, and received the
    proceeds of sale of, their shares in the new company. He subsequently placed
    to the credit of the Appellants respectively in separate deposit accounts with
    Barclays Bank Ltd. (after allowing for two payments which can be identified)
    the exact amount of the cash consideration for the old shares and round
    sums in each case equivalent with trifling differences to the proceeds of sale
    of the new shares. At some date, which is uncertain, as the document is
    undated, but fell between the 16th May and the 5th September, 1934, the
    deceased obtained the Appellants' signatures to documents authorising him
    to withdraw moneys from their deposit accounts. Of the contents of these
    documents also the Appellants were ignorant. But the deceased, without
    their knowledge, acted upon them and drew on the accounts, which were
    by the end of the year 1936 exhausted. It is not disputed that some part
    of the sums so withdrawn was paid to or otherwise dealt with for the benefit
    of the Appellants respectively, but a large part remains unaccounted for.
    Hence this suit, in which in effect the Appellants claim an account of the
    proceeds of their original shares and other appropriate relief.

    I have omitted to state one fact subsequent to the original transaction
    which, whether or not it is to be regarded as part of it and admissible in
    evidence under that head, is clearly admissible as an admission by the deceased
    against interest. Shortly before the completion of the agreement with the new
    company and no doubt as part of the arrangement, one of the old companies,
    New Ideal Homesteads Ltd., declared and paid a dividend of £25 12s. 0d.
    per share. The deceased, acting presumably under the Power of Attorney to
    which I have referred, received the dividend attributable to the Appellants'
    shares and, though retaining it for his own use, instructed the Respondent
    Dunk, an accountant who acted for the deceased in the preparation of his
    income tax returns, that the dividend was the income of the Appellants. It
    was so treated by Dunk, whose integrity has not been challenged. Similar
    information and instructions were given by the deceased to Dunk in regard
    to the sums placed to the deposit account of the Appellants with Barclays
    Bank Ltd. and to the untaxed interest payable in respect of those sums, and
    were acted on by him.

    I turn then again to ask how these facts which I have briefly narrated
    can be adduced in evidence by the deceased or his estate. And I think it
    convenient at this stage to refer to a matter in which, with great respect, I
    think the learned Master of the Rolls fell into an error, and moreover into an

    4

    error which largely influenced him in the conclusion to which he came. For
    he treated the Appellants' claim merely as a claim against a dead man's
    estate, and therefore (as he says and reiterates) as a claim in which a heavy
    onus lay on the claimants. But that is not, in my opinion, the way in which
    the claim should be regarded. It starts with the fact that in 1929 certain
    shares were placed by their father in the names of the Appellants, and, that
    fact being admitted or proved, a presumption at once arises which it is for the
    Respondents to rebut. They as executors are in no stronger position than
    their testator would be in if he were alive.

    My Lords, at the outset of this Opinion I said that there must often be
    room for argument whether subsequent events can be regarded as forming
    part of the original transaction so as to be admissible evidence of intention,
    and in this case it has certainly been vigorously argued that they can. But,
    though I know of no universal criterion by which a link can for this purpose
    be established between one event and another, here I see insuperable difficulty
    in finding any link at all. The time factor alone of nearly five years is almost
    decisive, but, apart from that, the events of 1934 and 1935, whether taken
    singly or in their sum. appear to me to be wholly independent of the original
    transaction. It is in fact fair to say that, so far from flowing naturally
    and inevitably from it. they probably never would have happened but for
    the phenomenal success of the enterprise. Nor can I give any weight to
    the argument much pressed upon us that the deceased was an honourable
    man and therefore could not have acted as he did, if he had in 1929 intended
    to give the shares outright to his children. I assume that he was an honour-
    able man as well in the directions in regard to income tax that he gave
    to Mr. Dunk as otherwise, but I think that he may well have deemed it
    consistent with honourable conduct and with paternal benevolence to take
    back part of what he had given when the magnitude of the gift so far sur-
    passed his expectation.

    If, then, these events cannot be admitted in evidence as part of the original
    transaction, can they be admitted to rebut the presumption on the ground
    that they are admissions by the Appellants against interest? I conceive it
    possible, and this view is supported by authority, that there might be such
    a course of conduct by a child after a presumed advancement as to constitute
    an admission by him of his parent's original intention, though such evidence
    should be regarded jealously. But it appears to me to be an indispen-
    sable condition of such conduct being admissible that it should be per-
    formed with knowledge of the material facts. In the present case the
    undisputed fact that the Appellants under their father's guidance did what
    they were told without enquiry or knowledge precludes the admission in
    evidence of their conduct and, if it were admitted, would deprive it of all
    probative value. It is otherwise, however, with the conduct of the deceased.
    I have already made it clear that the Respondents have failed to discharge
    the burden which rests on them of rebutting the presumption of advance-
    ment. The Appellants, therefore, in my opinion, need no reinforcement
    from subsequent events. But, since inevitably in a complex case like this,
    either upon the footing of being examined de bene esse or because they
    have been admitted for some other purpose than the proof of intention, all
    the facts relevant or irrelevant have been reviewed, I do not hesitate to say
    that the only conclusion which I can form about the deceased's original
    intention is that he meant the provision he then made for his children to
    be for their permanent advancement. He may well have changed his mind
    at a later date, but it was too late. He may have thought that,
    having made an absolute gift, he could yet revoke it. This is something that
    no one will ever know. The presumption which the law makes is not to be
    thus rebutted. If it were my duty to speculate upon these matters, my final
    question would be why the deceased should have put these several parcels
    of shares in six different companies into the names of his wife and three
    children unless he meant to make provision for them, and since learned
    Counsel have not been able to suggest any, much less any plausible, reason
    why he should have done so, I shall conclude that the intention which the law

    5

    imputes to him was in fact his intention. The reasoning which made so strong
    an appeal to Mellish, L.J., in Fowkes v. Pascoe, 10 Ch. App. 343 has in
    this case also particular weight.

    In my opinion, then, this appeal succeeds on the main question that has
    been argued before us. But two further points were urged upon which I
    must say a few words. It was contended by Counsel for the Respondents
    that, as the Appellants did not know that the shares had been registered in
    their names, there could have been no gift of the shares to them, since there
    cannot be a gift without acceptance by the donee, and the well known case of
    Cochrane v. Moore, 25 Q.B.D., 57 was cited to support this contention. My
    Lords, I have some difficulty in understanding the application of Cochrane v.
    Moore
    to the present case. There the law was expounded with a wealth of
    learning how a gift of a chattel can be lawfully made. Here the legal estate
    in the shares was vested in the Appellants in the only way in which it could
    be vested, and the only question is whether the beneficial interest attended the
    legal interest by virtue of the equitable doctrine of advancement or whether
    there was a resulting trust. That is the question which I have tried to answer.

    Lastly, the Respondents raised the plea of the Limitation Act, 1939. To
    this, I think, a complete and satisfactory answer is given in the judgment
    of Denning. L.J., which upon this part of the case I respectfully adopt.
    It was conceded by the Respondent, that the deceased received the con-
    sideration in cash and shares for the Appellants' shares, as trustee for them,
    and it is clear that he could not discharge himself of that trust by purporting
    to act in some other capacity in a manner and in circumstances unknown to
    them.

    I move accordingly that this appeal be allowed and that the following
    order be made: —

    (I) That the Order of the Court of Appeal of the 1st July. 1953, be set
    aside :

    (II) That Harman, J.s. Order of the 19th February, 1953, be varied as
    follows: -

    (i) By declaring (in lieu of the declaration on Inquiry No. 5 ordered
    by Order dated 12th January. 1953) that all the shares in the companies
    there mentioned, registered in the respective names of the Appellants,
    were advancements to them respectively, so as to constitute each the
    sole beneficial owner thereof, and that their respective claims against
    the estate of the Testator based upon such beneficial ownership are not
    barred by laches or acquiescence, or by the Limitation Acts, 1623 or
    1939.

    (ii) By striking out the declarations on Inquiries Nos. 7 and 10
    (ordered by the said Order dated 12th January, 1953).

    (iii) By declaring that the Accounts and Inquiries Nos. 6, 7. 9, 10
    and II set out in the Order of Harman, J. dated 12th January, 1953,
    should be taken and made upon the basis of declaration II (i) above.

    The Respondents Joseph Osmond Cartwright and Hedley Spain Dunk will
    retain their costs as between Solicitor and client out of the estate of the
    deceased in due course of administration. The Appellants will be paid
    their costs of this appeal and in the Court of Appeal out of the estate
    as between party and party. The Respondent, Philip Edward Shephard will
    bear his own costs of this appeal and in the Court of Appeal.

    Lord Morton of Henryton

    MY LORDS,

    I entirely agree with the Opinion which has just been delivered by my
    noble and learned friend, Viscount Simonds, but as we are differing from
    the Court of Appeal and from Harman, J. I shall add a few words on

    6

    the question whether it is possible to find a " half-way house " between the
    view which my noble and learned friend has just expressed and the view
    that each of the Appellants was a bare trustee for the deceased.

    I shall first take the case of the Appellant Richard David Shephard. In
    1929, when Richard became the registered owner of shares in private com-
    panies promoted by his father and Meyer, he must have taken those shares
    either as beneficial owner or as a trustee. I see no third possibility which
    would be recognised by English law. If, however, the presumption of an
    advancement is rebutted, the evidence may establish either (a) that he took
    them as a bare trustee for his father, or (b) that he took them upon certain
    other defined trusts.

    My Lords. I find the latter alternative quite impossible in the present
    case, even if all the events set out in the Judgment of the Master of the
    Rolls are admitted in evidence. I cannot believe that Richard's father
    would select him. at the age of 16. to hold several separate blocks of shares
    as a trustee with duties to discharge and trusts to carry out. Further, it is
    clear that no trusts were communicated to Richard when the shares were
    taken up in his name or at any later date. Finally, even if these two
    obstacles could be surmounted. I should find it hard to formulate any trusts
    which explained the subsequent acts and words of the father in regard to
    these shares.

    For these reasons. I think there is no " half-way house", in Richard's
    case, and I think that these reasons apply equally to his sister, for although
    she was 23 years old in 1929 she would seem to have been quite inexperienced
    in business matters.

    I have made these observations because the Master of the Rolls and
    Romer. L.J. found a " half-way house ", and I feel that, out of respect for
    them. I ought to explain briefly why I cannot enter it with them. I add
    that the case of Devoy v. Devoy, 3 Smale & Gilffard p. 403. on which they
    relied, does not, in my opinion, afford an instance of a " half-way house ".
    To quote the language of the report—

    "The bill stated that on the 14th July, 1848, the Plaintiff transferred
    " the sum of £200 Three and a Quarter per Cent. Annuities (since
    " converted into New Three per Cent. Annuities) into the joint names
    " of himself, his wife, and his daughter Amelia Jane Devoy (in which
    " names the stock was now standing), but the transfer note was signed
    " by the Plaintiff alone. At the date of effecting such transfer the
    " Plaintiff, who was a fellowship porter, was in easy circumstances, and
    " his motive for so doing was that he might not be induced to have
    " recourse to such stock except his necessities should compel him so to
    " do, but the stock should remain as a provision for the future.

    " The Plaintiff, as the bill alleged, never intended to give the said
    " stock to his wife or daughter, or to both jointly, or to the survivor
    " of them, or to the survivor of the three persons into whose names
    " the transfer was made, or any part thereof, or to declare any trust
    " of the same or of any part thereof, or to place it beyond his own control.
    " and did not know that the effect of transferring such stock into the
    " said names would be to prevent him from availing himself of the said
    " stock in case of need, and had he known that such would have been
    " the effect he would not have made such transfer. No trust was ever
    " declared of the said stock ; but the Plaintiff regularly received the
    " dividends thereof, and applied the same to his own use."

    The Plaintiff, having sustained injuries which prevented him from following
    his calling as a fellowship porter, applied to the bank to transfer the stock
    into his name or to permit him to sell the same, but met with a refusal.

    Thus, my Lords, the allegation was, in effect, that the Plaintiff always
    intended to retain the beneficial interest in the stock, but to remove, to some
    extent, the temptation to have recourse to it unless he should be forced to

    7

    do so by necessity. The Vice-Chancellor's decision was in the following
    terms: —

    " Declare that the infant defendant is a trustee for the father, and
    " the order will be in the form prescribed by the Trustee Relief
    " (Extension) Act." "

    The wife was also a Defendant, but it seems likely that her name was
    omitted from the decree because she was willing to join in a transfer.
    Whatever the explanation may be for the omission of her name, it would
    seem clear that the learned Vice-Chancellor accepted the Plaintiff's conten-
    tion that he was the sole beneficial owner. In his judgment, however, the
    following sentence occurs: —

    " Here the evidence shows that the father intended to confer only a
    " qualified interest and not to make an absolute gift."

    My Lords, I confess I am unable to understand what was the " qualified
    " interest" which the learned Vice-Chancellor had in mind. It may be that
    he was referring only to the legal estate, for neither the evidence nor the
    decision contains the slightest indication that any other interest was intended
    to be conferred either on the wife or on the daughter. I regard the case of
    Devov v. Devoy as being simply a case in which the presumption of advance-
    ment was rebutted and the Court was satisfied that the persons in whose
    names the investment stood were bare trustees for the Plaintiff.

    I agree with the order proposed.

    Lord Reid

    MY LORDS,

    I agree and, even if all the evidence in this case is taken into consideration,
    I am of opinion that the Appellants must still succeed. I take first the
    other transactions which are said to show a course of conduct. The argu-
    ment for the Respondents is that in these cases the father put the titles
    to various properties in his children's names intending to retain for himself
    the beneficial interest and therefore it can be more readily established
    that he intended to retain the beneficial interest in the shares in question
    in this case. But the basis of that argument is that he in fact retained
    the beneficial interest in the other properties and that has not been proved.
    The first instance is a business of insurance broking, R. D. and P. E.
    Shephard, which the father started about 1916, the only registered partners
    being the two Appellants, who were then only ten and three years old.
    No doubt he had a reason for using their names, because the terms of his
    employment with an insurance company forbade him to carry on such a
    business; but for a time at least he caused the profits of this business
    to be returned for income tax purposes as income of the Appellants. The
    circumstances of this case are so special that I could draw no inference
    from them.

    Then the father acquired two businesses, one of which was carried on
    in the name of the Appellant Mrs. Cartwright and the other in the name
    of the other Appellant. Neither Appellant was told of this, but, again,
    the results of these businesses were shown in the children's income tax
    returns by the father's direction. Here there were losses, and those losses
    were ultimately paid out of the price which the father received for the
    shares in the names of the children with which this case is concerned.

    The father also took the titles of a number of houses in the children's
    names. The children were told of this at later dates and it is admitted that
    these were gifts, but it was argued that where in contrast the children
    were not told no gift was intended. I am not sure whether it was main-
    tained that the father intended to retain the beneficial interest in each case
    until he told the children, but there is nothing to support that view.

    8

    The true position of the three businesses to which I referred is far from
    clear, and even if it were clearer there are obvious differences between
    fully paid shares registered in the children's names and businesses carried
    on by the father under their names. This seems to me to be a very good
    example of the wisdom of the rule which excludes such evidence.

    I turn to the shares with which this case is concerned. In 1929 the
    father and one Meyer, an undischarged bankrupt, promoted six private com-
    panies to be used in the business of speculative building. In aggregate
    the father registered 725 £1 shares in his own name, 100 in the name of
    his wife, 425 in the name of his daughter Winifred <now Mrs. Cartwright),
    875 in the name of the Appellant Richard, and 375 in the name of another
    son Philip, making 2,500 in all. We do not know whether the wife or
    Philip was told about this, but the Appellants were not told. There is no
    contemporary evidence of any kind to show what the father's intention
    was with regard to the shares registered in the Appellants' names, and no
    dividend was declared until 1934. A substantial dividend was then declared,
    and the father instructed his accountant to show the dividend on the
    shares in the Appellants' names as belonging to them and as their income.
    But they did not receive the income. There is no evidence to prove or suggest
    that the father was at any stage causing false returns to be made or trying
    to defraud the Revenue.

    The Respondents rely on the father's actions in 1934 and subsequent
    years in selling the shares and disposing of the proceeds. It appears that
    he was in the habit of getting his children to sign numerous documents
    without telling them anything about the nature of the documents, and the
    Appellants were quite willing to do this. The companies were controlled
    by the father and Meyer and in 1934 they agreed to sell all the shares
    for a very large sum : the consideration received for the 2.500 shares in
    the names of the father and his family was £145,000 in cash and a large
    number of shares in the purchasing company. The agreement to sell bears
    the Appellants' signatures, but they were never told what they were signing
    and did not even know that they were shareholders. The father first put
    the whole price into the bank in his own name, but after a short time
    opened deposit accounts in (he names of each of the Appellants and paid
    into each account the share of the £145,000 appropriate to the number of
    shares registered in each of the Appellants' names less comparatively small
    sums which appear at least in one case to have been used to pay losses
    in businesses carried on in the children's names. The father also paid
    into these accounts sums received when shares in the new company allotted
    to the Appellants were sold by him. He obtained the Appellants' signatures
    to documents authorising him to draw on these accounts—again without
    telling them what these documents were. Ultimately he used most of
    the money in these accounts for his own purposes: but he put about £40,000
    in the name of each of the Appellants and admittedly these sums belonged
    to the Appellants.

    Such in outline are the facts on which the Respondents rely. The
    Appellants agree that their father was an honourable man, and the
    Respondents say that no honourable man would have done this if he had
    originally intended the children to be the beneficial owners of the shares
    which he registered in their names in 1929. At first sight that seems a
    formidable argument, but on examination I do not find it at all convincing.

    The father was not a lawyer. He may quite well have thought that as he
    had never told the Appellants anything, he was entitled -morally or perhaps
    legally—to take back what he had given: and he may have thought that
    £40,000 for each of them was a very good substitute for what he had first given
    -shares of a nominal value of a few hundred pounds. He may have intended
    to make gifts reserving a power to revoke them, or he may have thought
    that it was unnecessary to trouble about the legal position because he
    believed that his children would sign anything he put before them and he
    could thus make any changes which he thought desirable. But I find it
    very difficult to suppose that he never intended the children to be the owners

    9

    of the shares. I cannot imagine any reason why he should put the shares
    in his children's names unless he intended at least that if he died before
    making any alteration the shares should belong to them and not to his
    estate. Certainly there is nothing in the evidence which is in the least
    inconsistent with such an intention.

    It is for the Respondents to displace the presumption that in registering
    the shares in the Appellants' names he intended to make them beneficial
    owners. Unless his statement to the Revenue that the dividends belonged
    to them and were part of their incomes was fraudulent he must have intended
    that they should have some beneficial rights, and in my judgment the
    most that could be inferred in the Respondents' favour is that he thought
    he was morally entitled to do what he did. Whether he thought he had
    reserved a power to take back the shares, or relied on his children being
    willing to sign without explanation any documents necessary to enable him
    to deal with the shares or their proceeds in any way he thought fair is a
    question which on the evidence cannot be answered. So it appears to me
    that on the facts of this case the Respondents are not at all prejudiced
    by the operation of rules of law which exclude much of the evidence.


    Viscount Simonds

    MY LORDS,

    My noble and learned friend, Lord Tucker, who is unable to be present,
    asks me to say that he agrees with the Opinion I have delivered, for the
    reasons and conclusions I have come to
    .

    Lord Somervell of Harrow

    MY LORDS,

    I agree.

    (30568) Wt. 8070-68 J3 12/54 D.L./PA/19


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