“Equity can perfect imperfect share gifts when unconscionable to withdraw”
The Court of Appeal held that equity would perfect the imperfect gift as it would be unconscionable to allow Ada's estate to resile from the gift.
Ada Crampton wished to give 400 shares in a private company to her nephew Harold and signed a share transfer form, which she delivered to Mr Pennington, a partner in the company's auditors. He told Harold the shares were his and that no further action was needed. Ada died before the transfer was registered with the company.
Whether an imperfect gift of shares could be perfected in equity despite non-compliance with the formal requirements for share transfer under the Stock Transfer Act 1963.
The court rested its decision on unconscionability, with Arden LJ relying on Lord Browne-Wilkinson's dictum in Choithram that although equity will not aid a volunteer, it will not strive officiously to defeat a gift, and holding that there can be no comprehensive list of factors which makes it unconscionable for the donor to change his or her mind. Since Ada had done everything she intended to do and her agent had assured Harold the gift was complete, it would be unconscionable to allow the technicality of non-registration to defeat the gift.
This case represents a significant departure from the strict rule in Milroy v Lord, allowing equity to intervene more readily to perfect imperfect gifts where unconscionability is established.
The ratio establishes that equity will perfect an imperfect gift when it would be unconscionable for the donor to recall it, even if legal formalities remain incomplete.
The Court of Appeal decided that an imperfect gift of shares was effective because the donor had done all she intended and the donee was told the gift was complete, making recall unconscionable.
It controversially expanded the circumstances when equity will perfect imperfect gifts, moving beyond traditional formality requirements to prevent unconscionable conduct, though creating some legal uncertainty.
The court suggested that the unconscionability principle might apply more broadly to perfect imperfect gifts in other contexts where donors have done all they subjectively intended to do.
OSCOLA Citation
Pennington v Waine [2002] EWCA Civ 227, [2002] 1 WLR 2075
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[2026] EWHC 426 (Ch)
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