Robert Cooper & ORS v Fanmailuk.com Ltd (2009)
On the evidence, a judge had been entitled to declare that a company was the beneficial owner of the four issued shares in a second company where it had established that it had been the common intention of all the parties involved that those shares were to be held on a resulting trust for it.
The appellant (C) appealed against a decision ((2008) EWHC 131 (Ch)) that four issued shares in a company (D) were held on trust for the first respondent company (F) and that F was, therefore, the beneficial owner of the shares. F had been formed to develop a marketing idea, namely the use of email contact with football fans in connection with marketing football clubs and sport generally. F maintained that D had been set up at F's expense to develop a new idea (the Dialtime idea), which involved using mobile phone credits in promotional campaigns. Four individuals (B, Z, C and another) were registered as the holders of one share each in D. B, Z and C were also shareholders in F. Z was the director and chief executive officer of F. According to F, the new idea involved customers taking benefit in the form of mobile phone credits that could be redeemed by the customer sending an SMS code by phone to F or to the mobile phone company. C claimed that he was the inventor of the Dialtime concept. B supported F's claim to be beneficially entitled to all the four shares. The judge disbelieved C's evidence relating to the Dialtime idea. He held that the common intention was that the shares in D should be held in such a way as to allow D to be treated as part of F's association of companies and in such a way as to allow for the Dialtime idea, which D was to develop and exploit, to be presented to investors as one of F's business opportunities. The judge held that that intention was reinforced by the presumption that a resulting trust arose by virtue of the use of F's assets to set up D. C argued that there may have been two Dialtime ideas: the "mobile phone free credits" idea and the "data processing systems for checkouts" idea, the relevant one being the latter. C submitted that the judge ought to have found that the Dialtime idea was a data processing idea, which was proposed by him and was in due course the subject of a patent application as his invention. C also submitted that there was contrary evidence in relation to the judge's findings on collective common intention.
(1) The judge had correctly identified the "mobile phone free credit" idea as the Dialtime idea that mattered for the purpose of determining the beneficial share ownership question. He clearly appreciated that, in the context of ascertaining the objective collective intention relating to beneficial ownership of the shares, the identity of the inventor of the Dialtime idea was a relevant factor. He dealt with the origins of the Dialtime idea very fully in his review of the conflicting evidence and had given detailed reasons for rejecting C's evidence and for finding that Z was the inventor of the Dialtime idea. The patent applied for, which had never been granted, was not referred to, or regarded as, the Dialtime idea, either at the time, or in the evidence at trial. (2) On the evidence of the surrounding circumstances, the judge was entitled to reach the conclusion that he did on collective common intention. The evidence showed that (a) D was established by F as a company though which to trade; (b) the Dialtime idea was derived from ongoing work by Z for F in respect of the marketing ideas it was developing; (c) the Dialtime idea was not treated as an item distinct from the rest of the business ideas and concepts belonging to F; (d) the patent application was taken in F's name; (e) it would have been a breach of fiduciary duty for F's directors to set up a company in which they had a beneficial interest in order to exploit F's ideas, business opportunities and intellectual property. (3) In deciding the beneficial ownership of the shares, the judge was entitled to take into account all the circumstances surrounding the formation of D and to conclude that they pointed to a resulting trust for F. That conclusion was not rebutted by any evidence. Also, the judge was entitled to rely on F's use of the scratch X model as supporting F's case on beneficial ownership. The evidence, including the evidence of C, showed that C was aware that F's scratch X concept was to be exploited through a separate company funded by F. (4) There were no grounds for interfering with the judge's findings of dishonesty on the part of C. They were findings of fact made without any misdirection as to law or approach, and after hearing the evidence of C and the other witnesses. (5) The judge had given a fully reasoned, detailed and careful judgment and he had made findings of fact which he was entitled to make on the basis of the available documentary and oral evidence.