A stock-broker who innocently requested the registration of a transfer supported by a duplicate share certificate was obliged to indemnify the company registrar for his loss even though the fraud had been made possible by duplicate share issue.
Tuckey J: ‘The certificate named the true owner of the shares, Mr AF Moore. The fact that Mr Moore did not live at 4 Furness Road did not alter the truth of this statement. The certificate did represent that Mr Moore lived at that address, but there is no evidence that the brokers relied on the address as such. The certificate did not represent that the person in possession of it was Mr Moore. The brokers relied on the fact that the fraudster said that he was Mr Moore. For these reasons I do not think that [Counsel for the stockbroker] can point to any representation in the certificate upon which the brokers relied which might found an estoppel. But even if he could, all the cases in which the company was held to be estopped involved a bona fide purchaser for value of the shares in question. Here [Counsel’s] submission involves saying that the estoppel arises in favour of the fraudster who transferred the shares. That is not the law. If the estoppel cannot avail the fraudster, it cannot avail his agents, the brokers, either.’
Judges:
Tuckey J
Citations:
Times 12-Mar-1998, [1998] 2 BCLC 429
Jurisdiction:
England and Wales
Cited by:
Cited – Cadbury Schweppes Plc and Another v Halifax Share Dealing Ltd and Another ChD 23-May-2006
Fraudsters had successfully contrived to sell shares of others, by re-registering the shares to new addresses and requesting new certificates. The question was which of the company, the company registrars and the stockbrokers should bear the loss. . .
Lists of cited by and citing cases may be incomplete.
Torts – Other
Updated: 28 April 2022; Ref: scu.88886