EQUITY LAW

Equity Law

Nature of Case

Pennington v Waine [2002] EWCA Civ 227 is a case of English trust law. This case is related to the constructive trusts. The Pennington v Waine case is related to few very considerable issues regarding the rule in “Re Rose”. This case presents an updated background for us to restate number of issues. The rule of Re Rose mitigates the common rule that any gift, that does not pass in common law for need of formalities, would not take any impact in equity. The basic nature of this case is related to the role that trust mechanism plays.

Facts

In Pennington v Waine case, Ada Crampton was a director of Crampton Bros (Coopers) Ltd and was the major shareholder. In the year 1998, on 30th September, Ada Crampton met one of the auditors of the organization, Mr Pennington, and articulated her plan to transfer 400 shares to Harold Crampton- her nephew. In addition to this, Ada carried out proper transfer of share, from which Ada gave share to Mr. Pennington. After that, Ada Crampton informed Harold abou his plan of transferring some shares to him, and also that she wanted Harold to appoint as director. These two intentions of Mr Pennington were connected because it is a general rule that the director must have at least a single share in the organization. At that time, Harold was the secretary of the organization, still he had no shares. On the 15th October, Harold was told by Mr.Pennington that he had been made the director of organization; accordingly Harold signed Form 288A in which he gave his consent. In addition, Mr Pennington informed Harold that he was asked by Ada to give him the effect of Conv. 367, for the transfer of shares and that Harold did not need to be concerned about this. However, in reality, nothing was carried out by Mr. Pennington to execute the procedure required for the transfer of shares, he just passed the form of executed share transfer form to a colleague in order get the form filed. The major concerns prior to the Court of Appeal were: at which position in the chronology this took place, whether equitable label to the shares executed to Harold before death of Harold. For various reasons, Lordship agreed that equitable label has executed to Harold and discharged the appeal.

Clarke L.JJ, Schiemann and Arden, all apprehended that equitable label would execute in case where the transferor would not have done each and every thing that is needed for secure transfer if it turned out to be unconscionable for the individual to change his mind about the decision of transfer. It was found that this took place when Harold agreed to be the director of organization. This also presented an alternate ration analysis in a way that by these actions Mr. Pennington and Ada indirectly agreed to play the role of agents of Harold, for the purpose of fulfilling the requirements, Harold agreed to be dependent ...