Constructive trusts | Principles.tax

- Constructive trust in favour of purchaser of £1 share, even though £1 not paid

"It is elementary that on a purchase of the nature of the purchase of the share here in question, no matter into whose name the transfer is taken, the beneficial ownership of the share vests in the person who advances the purchase money. This has been the law ever since, at the latest, Dyer v Dyer (1788) 2 Cox Eq Cas 92, 30 ER 42. This leaves only the possible interest of Mr Wydra himself. I think that one must regard his completion of the stock transfer form as an offer to sell the share, either to Mr Porter or, conceivably (since there is no knowing at what stage Mr Porter's name was introduced into the document), to anybody who was willing to pay the £1. That offer was accepted by Mr Porter presenting the transfer for registration, if not before. Accordingly, there is a contract in existence between Mr Wydra and Mr Porter under which Mr Wydra agreed to sell the share to Mr Porter for £1, doubtless on the understanding that the £1 would be paid within a reasonable time. It was not: and so far as the evidence goes it never has been. This would, I think, possibly enable Mr Wydra to have the whole transaction set aside on the ground of total failure of consideration so far as he is concerned. But he has not chosen to take that course, and that being so it appears to me that all he has at the moment—and in any event this is subject to the provisions of the Limitation Act 1980—are rights under the contract of sale." (Irving v. tesco Stores (Holdings) Ltd [1982] STC 881 at 905, Walton J)