Cadbury Schweppes Plc & Anor v Halifax Share Dealing Ltd & Anor

Cadbury Schweppes Plc & Anor v Halifax Share Dealing Ltd & Anor

The stockbrokers, having relied in good faith and to their detriment on the companies' share certificates naming the fraudsters as shareholders, are entitled to assert an estoppel by representation against the companies. The companies are thereby precluded from denying the truth of their own certificates in these proceedings and cannot prove that the reinstated shareholders were the true owners at the material time. As a result, the claim for indemnity against the stockbrokers fails.

Parties
Claimant: Cadbury Schweppes plc; Claimant: Unilever plc; Defendant and Part 20 Claimant: Halifax Share Dealing Ltd; Part 20 Defendant: Lloyds TSB Bank plc
Jurisdiction
England and Wales
Judgment Date
23 May 2006
Procedural Posture
Civil / Judgment After Trial on Agreed Facts and Application for Strike Out/summary Judgment
Outcome
Claim dismissed
Legal Topics
Implied Indemnity, Estoppel by Representation, Share Certificates, Fraudulent Share Transfers, Agency, Contribution Between Tortfeasors
Company Law Equity and Trusts Implied Indemnity Estoppel by Representation Share Certificates Fraudulent Share Transfers Agency Contribution Between Tortfeasors

Case Brief

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Parties

Cadbury Schweppes plc

Claimant

Unilever plc

Claimant

Halifax Share Dealing Ltd

Defendant and Part 20 Claimant

Lloyds TSB Bank plc

Part 20 Defendant

Procedural Posture

Civil / Judgment After Trial on Agreed Facts and Application for Strike Out/summary Judgment

Legal Issues

  1. 1 Whether the stockbrokers are liable to indemnify the companies for losses caused by fraudulent share transfers under the implied indemnity principle
  2. 2 Whether the companies are estopped from denying the truth of their own share certificates issued to fraudsters and relied upon by the stockbrokers
  3. 3 Whether the stockbrokers, as agents of the fraudsters, can rely on estoppel to defeat the companies' claim for indemnity

Ratio Decidendi

The stockbrokers, having relied in good faith and to their detriment on the companies' share certificates naming the fraudsters as shareholders, are entitled to assert an estoppel by representation against the companies. The companies are thereby precluded from denying the truth of their own certificates in these proceedings and cannot prove that the reinstated shareholders were the true owners at the material time. As a result, the claim for indemnity against the stockbrokers fails.

Court Disposition

Claim dismissed

Orders

  • The claimants' action is dismissed.
  • The registrars' application for strike-out is dismissed.