Hunter v Moss
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE DILLON,LORD JUSTICE MANN,LORD JUSTICE HIRST,Order |
| Judgment Date | 14 January 1994 |
| Judgment citation (vLex) | [1993] EWCA Civ J1221-12 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | No CHANF 92/1464/B |
| Date | 14 January 1994 |
[1993] EWCA Civ J1221-12
Appeal of Defendant from Order of Mr Rimer QC (Sitting as Deputy Judge of the High Court)
Before: Lord Justice Dillon Lord Justice Mann and Lord Justice Hirst
No CHANF 92/1464/B
THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
MR MICHAEL HARTMAN (Instructed by Nabarro Nathanson, London) appeared on behalf of the Appellant.
MR EDWARD DAVIDSON (Instructed by Hewitson Becke & Shaw, Cambridge) appeared on behalf of the Respondent.
(As Approved)
Tuesday, 21st December, 1993
This is an appeal by the defendant in this action Mr Robert Joseph Moss against the order made by the learned judge Mr Colin Rimer QC sitting as a Deputy Judge of the High Court in the Chancery Division. The learned judge, in fact, delivered two judgments after the trial of the action. The first was judgment delivered on Friday, 16th October 1992 by way of reserved judgment after a trial which had taken place between 2nd and the 7th October. In that judgment the learned judge, as he said at the beginning of the second judgment, found as a fact that in the course of a conversation between the Plaintiff Mr David Morris Hunter and the Defendant/Appellant Mr Moss in early September 1986 Mr Moss declared himself to be a trustee for Mr Hunter of 5% of the issued share capital of a company called Moss Electrical Company Limited which has been referred to in the judgments and the other documents as MEL. Having reached that conclusion, by his order made on that date the learned judge declared that Mr Moss had held fifty shares out of the total of one-thousand issued shares in MEL on an express oral trust for Mr Hunter and that such shares were converted into the equivalent proportion of the consideration received by Mr Moss upon the sale of the entire share capital of MEL to a company called Bennett & Fountain Group plc.
The learned judge further ordered that Mr Hunter was entitled to 5% of the consideration which Mr Moss had received from Bennett & Fountain plc amounting in total to a judgment sum of £112,723.70 including interest. So there was to be judgment for that sum with costs.
The first issue that arises on this appeal is that the conclusion that Mr Moss had declared himself a trustee for Mr Hunter of fifty shares in MEL, being 5% of the share capital of that company, is challenged. Apart from that, however, after the learned judge had pronounced his order on 16th October 1992, and before his order was drawn up, he was invited by Mr Hartman of counsel, for Mr Moss, to withdraw his order and reach a different conclusion on a point of law which had not been argued in the trial prior to 16th October 1992. The position is that Mr Clark of counsel had appeared for Mr Moss at the trial. Mr Hartman who appears on this appeal only came on the scene after the trial and he made this application on which the learned judge gave a further judgment on 20th November 1992 rejecting the application. The point taken by Mr Hartman in this, as it were, second bite at the cherry was that as there was no identification of the fifty shares in MEL out of the total of one-thousand issued shares in MEL there was no sufficient certainty as to what the trust property was to be and, therefore, any attempt by Mr Moss to declare a trust was ineffective in law for want of sufficient certainty as to the trust property. That is the second point that is taken on this appeal.
Thirdly, a further point is taken as to the calculation of the compensation resulting in the sum of £112,723.70 which the learned judge awarded by his order. It is said that that resulted from a wrong turn take by everyone —and, in particular, by Mr Clark, the counsel then acting for Mr Moss —at the end of the hearing before the learned judge reserved to give his judgment of 16th October.
I should come first to the history of the matter which I take, gratefully, from the chronology provided by Mr Hartman. MEL seems to have been incorporated in 1962. Its business was that of a wholesaler in industrial electrical equipment, trading from an address in East London. It had one class of shares only —one thousand ordinary shares —and by 1983 four-hundred-and-ninety of these were held by Mr Moss the Appellant. Four-hundred-and-ten were held by his father Mr Max Moss and one-hundred by his mother. In late 1983 Mr Hunter attended for interview. In January 1984 he commenced employment with MEL. On 12th July 1985 he was appointed finance director of MEL.
At that time the managing director of MEL was a Mr Ravinder Sood. In the course of 1984 fifty ordinary shares in MEL were sold to Mr Sood to give him a shareholding of 5% in MEL. In fact, it seems that these shares came from the shareholding of Mr Max Moss, Mr Moss's father. What was done was that —as the value of the shares at that stage was not as high as it subsequently, for a time at any rate, became —there was a bonus provided for Mr Sood which enabled him to purchase the fifty shares. In September 1985 Mr Max Moss died and the balance of his shares in MEL were transferred to Mr Moss.
In June 1986 Mr Moss stated an intention to give Mr Hunter fifty ordinary shares in MEL. The obvious object of that was to put Mr Hunter in the same position as Mr Sood. But it seems that the value of the shares was thought to have risen somewhat and also there was a fear of what the fiscal consequences might be particularly, perhaps, as at that time there were proposals by a company called Bennett & Fountain Group plc, which I think I have mentioned, to buy the share capital of MEL. One of the problems was whether there would be a capital gains tax liability on Mr Moss; another may have been whether there might be an income tax liability on Mr Hunter. At any rate, Mr Moss stated his intention to give Mr Hunter fifty shares and then attempts were made to work out a scheme by which those shares would be transferred to Mr Hunter without attracting any tax consequences. That scheme, however, proved abortive and in a discussion with Mr Moss in early September 1986 the learned judge held that a trust was declared.
Following that, on the 30th September 1986 the agreement proposed for the sale of the share capital to Bennett & Fountain was signed and completed fairly soon thereafter. I will go into the details of the transfer later.
In 1988 and in 1989 there were dividends paid on the Bennett & Fountain shares and there was also a Rights Issue. In 1989 Mr Moss paid Mr Hunter the net dividends on what was thought to be the appropriate proportion attributable to Mr Hunter's 5% in MEL of the Bennett & Fountain shares which had been issued to Mr Moss. Unfortunately, thereafter the parties fell out and the writ in this action was issued on 17th July 1990.
So far as the first point is concerned, whether there was a firm declaration of trust, the learned judge has set out his findings of fact very carefully in his October judgment. There were various assertions in evidence by Mr Hunter which were denied by Mr Moss. The learned judge has preferred the evidence of Mr Hunter to that of Mr Moss. Mr Hartman does not seek to go behind the judge's preference for Mr Hunter's evidence, but he says that, even on the learned judge's findings of fact in favour of Mr Hunter, the requisite degree of certainty of intention to declare an immediate trust cannot be inferred. The learned judge at page 15 of his judgment sets out part of his summary of Mr Hunter's evidence. He says at 15B:
"Mr Hunter's evidence is that, by about early September 1986, the … scheme …"
that was being considered with another company for getting around the fiscal problem,
… was abandoned."
The learned judge goes on:
"Instead, the parties reverted to the original arrangement which had been proposed at the meeting of 22nd June 1986 …"
and the parties include Bennett & Fountain,
"under which B & F would pay £3 million in cash and shares for MEL. So far as his 5% in MEL is concerned, Mr Hunter says that, at about this time Mr Moss told him that, despite all efforts, a solution could not be found to what was regarded as being a problem with regard to it and it was getting in the way of the proposed sale. Mr Hunter says …"
the judge continues,
"… that, during that conversation, Mr Moss asked him if he would mind if he, Mr Moss, held on to Mr Hunter's shares for him until a solution was found and that, in the meantime, he would ensure that Mr Hunter received all the dividends that he was entitled to. Mr Hunter is unsure whether Mr Moss said in terms that he would, in the meantime, hold the shares "in trust" for him, but he says that that is the sense of what Mr Moss said to him. In summary …"
says the judge,
"… he said that Mr Moss made clear to him that, pending the finding of a solution to the perceived difficulties, he would hold 5% of MEL's issued shares for Mr Hunter and would account to him for all dividends due in respect of such holding."
That, at 15F-G, is the crucial finding. It is also picked up at various other places in the judgment. At 36D-E the learned judge says:
"I have found that, shortly afterwards (in about early September 1986), Mr Moss had a conversation with Mr Hunter in which he said words whose substantive sense was that he would henceforth hold 5% of the MEL shares either for, or in trust for, Mr Hunter, and that he would pay him the dividends due in respect of such holding."
The judge said at page 37B-C:
"… I find that, as from that conversation in early September 1986, Mr Moss held 5% of MEL's issued shares (i.e. 50 shares) on trust for Mr Hunter. Even if he did not in terms use...
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