Case No: A2/2009/1007; A2/2009/0992
Neutral Citation Number: [2010] EWCA Civ 159
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(Mr Robin Knowles CBE QC, sitting as a Deputy High Court Judge) 
No 1198 of 2005 
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 05/03/2010
Before :

LORD JUSTICE DYSON
LORD JUSTICE MAURICE KAY 
and
LORD JUSTICE RIMER 
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Between :

	(1)	GISELLE ZEITAL
(2)	KIM ZEITAL	Appellants	
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	(1) DAVID NORMAN KAYE AND OTHERS	Respondents	
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(Transcript of the Handed Down Judgment of
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Mr Michael H. Lee (appearing pro bono, through Rose Mary Kogut Memorial Free Legal Clinic) for the Appellants, Giselle and Kim Zeital
Mr Brad Pomfret (instructed by Turner Parkinson LLP) for the First Respondent (David Kaye)
Mr Nathan Banks (instructed by Azzopardi & Co) for the Second, Third and Fourth Respondent, (Kingstars Ltd, Dalmar Properties (2004) Ltd, and Stefka Appostolova)
Hearing date: 27 November 2009
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Judgment
Lord Justice Rimer : 
Introduction
1.	The appellants are Giselle Zeital and her daughter Kim (‘the Zeitals’). Mrs Zeital is the widow of Raymond Zeital (‘Raymond’), who died intestate on 9 February 2004. Kim is one of their two daughters. The other is Natasha. The Zeitals are the administratrices and, together with Natasha, the sole beneficiaries of Raymond’s estate. Mrs Zeital and Raymond separated some 20 years before Raymond’s death. Following the separation, Raymond formed a relationship with Stefka Appostolova (‘Stefka’). 
2.	In 1988 Raymond incorporated Dalmar Properties Limited (‘Dalmar’). Dalmar has had quite a history, including most importantly the acquisition by it of a flat at No 2, 30 Gruneisen Road, Barnet (‘the flat’). In September 2004 Dalmar purportedly entered into members’ voluntary liquidation. Its assets include the net proceeds of sale of the flat. This litigation is in substance, if not in form, about those proceeds.
3.	In form the dispute is as to the beneficial ownership of Dalmar’s two issued shares. The Zeitals claimed that Raymond owned them beneficially at his death and that his beneficial interest formed part of his estate. Stefka, however, claimed that Raymond gave her the shares during his lifetime so that at his death she was their beneficial owner. The ownership of the shares provides the key to the unlocking of the proceeds of sale.
4.	In order to have that and other issues resolved, Dalmar’s liquidator, David Kaye, sought the court’s directions. The issue as to the ownership of the shares was tried over some nine days before Mr Robin Knowles CBE QC, sitting as a Deputy High Court Judge in the Chancery Division. He delivered his reserved judgment on 30 June 2008. Arguments on costs followed on 11 July 2008, when the judge made his order. A question was then promptly raised as to its proposed form, resulting in a further judgment of 4 November 2008 which was followed on the same day by the perfecting of the order of 11 July 2008 in its original proposed form. 
5.	The order reflected the judge’s finding that both shares in Dalmar belonged beneficially to Stefka at Raymond’s death; and it declared that the Zeitals had no beneficial or legal interest in Dalmar, meaning that they had no such interest in either share. By their appeal, the Zeitals challenge the judge’s decision as to one of the shares: they say that the alleged gift of it to Stefka was imperfect and so failed. They do not question his decision as to the other share.
6.	There was a further hearing before the judge on 3 February 2009, at which he was invited to vary his costs orders of 11 July 2008. The judge ruled on that application on 24 April 2009. As the order of 11 July 2008 had been perfected on 4 November 2008, there is a question, to which I shall return, as to whether the judge had jurisdiction to entertain that application. 
7.	The Zeitals’ notice of appeal against the order of 11 July 2008 was filed on some uncertain date after the order of 24 April 2009. It was therefore well out of time, which was one of the reasons why on 22 July 2009, on the papers, Arden LJ refused permission to appeal. The permission application was renewed before Mummery LJ at an oral hearing on 6 August 2009. In the light of the unusual procedural history that followed the order of 11 July 2008, and recognising that the Zeitals had an arguable point, Mummery LJ gave them permission to appeal and extended their time for doing so.
8.	The Zeitals appeared in person before the judge. Before us, they have had the advantage of representation by Mr Michael Lee, who has appeared pro bono and for whose efforts they will be justly grateful. I would also express the court’s gratitude to Mr Lee. Mr Nathan Banks represented Stefka as well as two companies she owns and controls, as he did below. His three clients are respondents to the appeal. The companies are Kingstars Limited (‘Kingstars’) and Dalmar (2004) Limited (‘Dalmar 2004’), which claim to be the current owners of the two shares. Mr Kaye, the liquidator of Dalmar, is also a respondent. Mr Brad Pomfret represented him, as he did below. He played a neutral role at the hearing before us.
9.	Mr Banks’ three clients also have a cross-appeal in respect of the judge’s order of 24 April 2009, for which Arden LJ gave permission on 22 July 2009. I will deal first with the appeal and then with the cross-appeal.
The facts
10.	I take these from the judge’s judgment, as supplemented by the documents. 
11.	Raymond was an accountant in private practice. He practised under the name of Raymond Zeital & Co. He conducted his financial and business affairs in a private and secretive way. He viewed the use of limited liability companies as a means of assisting such conduct. He incorporated many companies and used them for buying properties. 
12.	Dalmar was one such company. It was incorporated on 25 November 1988 by formation agents acting on Raymond’s instructions. Its principal object in its Memorandum of Association was property acquisition. The incorporation documents refer to its initial director as being Shahab Rafatjoo, and it was suggested at the trial that that was an alias for Raymond (Mrs Zeital had asserted this in paragraph 20 of her affidavit of 22 March 2005). The judge found that to be entirely possible, as there was evidence of instances when Raymond had used an alias. The secretary was a Mr Michael Michael. The two subscriber shares were Dalmar’s only issued shares and were issued to Mr Ashok Kumar and Mrs Kamlesh Kumar, the formation agents. Each signed an undated blank stock transfer form in relation to the share he/she held, leaving blank the transferee boxes. Those forms came into Raymond’s possession.
13.	The purchase of the flat was in 1989 and was completed by a transfer to Dalmar on 21 August 1989, the transfer showing the price as £99,750. The purchase was financed in part by a loan of £46,500 from Northern Rock plc, secured by a registered charge. Mr Rafatjoo was therein named as a surety and its execution was witnessed by Dr Carla, an associate of Raymond. The judge found that the balance of the purchase price probably came from the proceeds of other properties held by Raymond or his companies.  
14.	During its early years Dalmar made annual returns to the Registrar of Companies. They recorded that Mr and Mrs Kumar remained the registered members, Mr Rafatjoo the sole director and Mr Michael the secretary. On 6 October 1998, however, the Registrar published in the London Gazette a notice of Dalmar’s imminent striking off from the register and consequential dissolution, both of which happened. I presume the Registrar was exercising the jurisdiction under section 652 of the Companies Act 1985 (the Act in force at all times material to the issues in this case). 
15.	The flat had in the meantime been let, as it continued to be after Dalmar’s dissolution. A January 2004 tenancy agreement identified the landlord as Cannon Reid & Co, which the judge found to be a name used by Raymond (he also had a company with a similar name).
16.	Raymond died intestate on 9 February 2004, leaving the Zeitals and Natasha as his sole beneficiaries. 
17.	On 30 July 2004 Stefka purported to appoint herself as a director of Dalmar and completed a Form 288A. She was not apparently concerned that Dalmar’s dissolution nearly six years earlier presented a problem in the way of such an appointment. On the same day, she issued a claim form in the Companies Court for the restoration of Dalmar to the register. I presume that her application was made under section 653 of the 1985 Act. Such an application can be made by, amongst others, ‘any member’ aggrieved by the striking off. Stefka’s witness statement in support, made on 27 July 2004, asserted that: 
‘I am and was at the date when [Dalmar] was struck off by the Register [sic] of Companies as hereinafter mentioned the owner of 1 share, as is evidenced by Exhibit B, which is a copy of the Stock Transfer Form in my favour’. 
I would, for my part, raise a question whether she was in fact a ‘member’ since the evidence suggests that she was not registered in Dalmar’s share register, which appears to have been lost, whereas such registration is ordinarily a condition of ‘membership’ (section 22(2) of the 1985 Act). Having raised the question, I express no view as to its answer: the question is not only not before us, it remains to be tried in this litigation.
18.	On 11 August 2008 Stefka signed a form 288B recording that Mr Rafatjoo had on that day ceased to be a director of the still defunct Dalmar. She presumably then regarded herself as Dalmar’s sole director. 
19.	On 2 September 2004 Mr Registrar Jaques made an order restoring Dalmar to the register. It recited that Stefka had applied for the order as ‘a member’ of Dalmar and recorded her undertaking that, immediately upon restoration, she would ‘take all necessary steps for procuring that [Dalmar] be placed in voluntary liquidation’. 
20.	On 6 September 2004 Stefka, purportedly as Dalmar’s sole director, made a declaration of solvency in relation to Dalmar, a necessary preliminary to a members’ voluntary liquidation. On the same day she purportedly completed, dated and signed a stock transfer form relating to the share originally issued to Mr Kumar, one of the two subscribers. The relevant security was described in it as a ‘subscriber’s share’. Stefka named herself as its ‘registered holder’ (which, for reasons given, it would appear she was not) and the transferee as Kingstars. On 7 September 2004 Stefka purportedly completed – by adding in Dalmar 2004 as the transferee – and dated the blank stock transfer form in relation to the other subscriber’s share, the one originally issued to Mrs Kumar and which Mrs Kumar had signed in blank in 1988. 
21.	On 10 September 2004 an extraordinary general meeting of Dalmar was purportedly held, at which three resolutions were passed. First, as a special resolution, that Dalmar ‘be wound up voluntarily’. Second, as an ordinary resolution, that Mr Kaye be appointed liquidator for the purpose of such winding up. Third, as an extraordinary resolution, that the liquidator be authorised to divide Dalmar’s assets among the members. Special resolutions are those passed at a general meeting of which not less than 21 days’ notice, specifying the intention to propose the resolution as a special resolution, has been duly given (section 378(2) of the 1985 Act). That was not done in this case, although I infer that Stefka, who signed the resolution as chairman of the meeting, may have assumed that her two companies were between them its sole shareholders and so could waive the notice requirements (section 378(3)). The resolution gives no indication of who (apart from Stefka) was present at the meeting (and the likelihood of there having in fact been a meeting is perhaps remote). The quorum for a valid general meeting of Dalmar was two persons entitled to vote, each being a member or a proxy for such or an authorised representative of a corporation (regulation 40 of Table A). Mr Kaye, the named liquidator, learnt on 13 September 2004 about the recent events affecting Dalmar, when Azzopardi & Co (solicitors for Stefka, Kingstars and Dalmar 2004) sent him the documents. 
22.	On 27 September 2004 Northern Rock, as chargee of the flat, appointed joint receivers under the Law of Property Act 1925. 
23.	At about this time, the Zeitals concluded that Stefka was, as they characterised it, ‘stealing’ Dalmar and they moved into the flat. Their occupation frustrated the efforts of the liquidator and the receivers to sell the flat. It was, however, sold at auction by Northern Rock, with completion on 22 June 2005. The net proceeds of £81,958.90 (after paying Northern Rock’s debt and the sale costs) were remitted to Mr Kaye as liquidator. They were and remain held by him as an asset of Dalmar. 
24.	The Zeitals obtained a grant of letters of administration of Raymond’s estate on 22 June 2006. The grant recorded that Raymond’s gross estate did not exceed £240,000 and that his net estate did not exceed £176,000.
25.	Shortly before then, on 17 May 2006, Mr Kaye issued proceedings in the Companies Court under section 112 of the Insolvency Act 1986. The dispute as to the ownership of the Dalmar shares had erupted and he wanted it resolved. He joined as respondents Kingstars, Dalmar 2004, Stefka and Mrs Zeital, adding Kim on 20 February 2007. 
26.	On 9 May 2007 His Honour Judge Pelling QC, sitting as a judge of the High Court, directed the trial of preliminary issues. We are only concerned with the first, which was whether Dalmar was: 
‘… legally and/or beneficially owned by [Raymond] at his death or … was legally and/or beneficially owned by [Stefka] at [his] death and currently legally and beneficially owned by [Kingstars and Dalmar 2004].’
Kingstars and Dalmar 2004 could only make good their claimed title if Stefka had owned the shares at Raymond’s death. The issue was as to whether she did. Its resolution would, it was considered, enable the determination of other issues directed by Judge Pelling, which related to (i) the entitlement of Kingstars and Dalmar 2004 to appoint Mr Kaye as liquidator, and (ii) whether Stefka had the authority and/or standing to apply to restore Dalmar to the register. The target of the litigation is the net proceeds of the flat. The deputy judge pointed out, however, that the costs of this litigation have so mounted as to make the parties’ differences now as much about costs as their claims to the shares; and Mr Kaye is keeping under review the question whether Dalmar may have to go into insolvent liquidation. 
The judge’s findings in relation to the two shares
27.	The judge pointed out that Dalmar’s share register was not produced in evidence and said that it was not even certain that one had ever existed. I have related that Dalmar’s two shares were originally issued to the two subscribers, Mr and Mrs Kumar, with each having one share (it may be immaterial that Mr Kumar later changed his name to Bhardwaj); and that the Kumars each signed undated and blank stock transfer forms in respect of the shares respectively held by them and provided them to Raymond: they were blank in the sense that the identity of the transferee was left to be completed. There is no dispute that each of the Kumars held his/her share as a nominee or trustee for Raymond. He was their beneficial owner. There is also no dispute that each of the Kumars was and remained the legal owner of his/her share.
28.	The judge dealt first with ‘the first share’, that originally held by Mr Kumar. He explained the commercial background to Raymond’s decision in the summer of 1997 to transfer it to Stefka. He found that by about October 1997, Raymond had completed the stock transfer form originally signed by Mr Kumar by naming Stefka as the transferee and dating it 27 October 1997. He also found that Raymond gave that form to Stefka in about August 2003. He held that the effect of that transaction was to transfer the beneficial interest in the first share to Stefka. That is the share referred to in her witness statement of 27 July 2004, which she later purported to transfer to Kingstars. There is no appeal against the judge’s decision in respect of that share.
29.	The judge turned to the second share. This was the subscriber share originally issued to Mrs Kumar. He found that in about August 2003, as well as handing Stefka the completed stock transfer form in respect of the first share, Raymond also handed her the stock transfer form relating to the second share, namely the one that Mrs Kumar had signed, undated, in blank in 1988. Raymond handed it to Stefka in its original state, without either adding her name as transferee or dating it. He also gave her a booklet about how to restore a struck off company to the register.
30.	Stefka’s claim that Raymond made a gift to her of the second share in August 2003 appears to have been something of a late afterthought, her case in respect of it being made for the first time in the witness box at the trial. Her claim to the second share had hitherto been founded on a different argument. Her witness statement of 27 July 2004 for the purposes of the restoration application described her as holding just one share in Dalmar (a reference to the first share), and in paragraph 5 of her witness statement of 7 June 2006 she said this:
‘[Dalmar] was dissolved in about 1998 but was reinstated in 2004 and on 6 September 2004 I transferred my share in [it] to [Kingstars]. On 7 September 2004 I caused the other share in [Dalmar] to be transferred to [Dalmar 2004].’ (Emphasis added)
Those words were obviously carefully chosen and apparently disclaimed any recognition by Stefka that she owned or had a beneficial interest in the second share. Her language reflected no more than a belief that she was entitled to deal with it, upon which she expanded, if only slightly, in paragraph 7, where she said:
‘He handed me 2 signed share transfer forms, the one mentioned above with my name on it and another in the name of Kamlesh Kumari Kumar and signed by him [I think that should be ‘her’] but the date and name of transferee left open which I later used to transfer to [Dalmar 2004].’
31.	By the time she came to give evidence at the trial, however, Stefka’s case in relation to the second share had developed and was that when Raymond gave her the stock transfer form in relation to it, he added words to the effect that this was his way of making her ‘more responsible for Dalmar and managing the flat’ and that it was up to her as to what she would do with the shares. The judge recognised that evidence as self-serving and as adding materially to the case made in her witness statement. He nevertheless accepted it as truthful. She also explained the purported onward transfer of this share to Dalmar 2004 on 7 September 2004 by completing the stock transfer form. The factual circumstances relating to that operation gave rise to questions that the judge said deserved to be taken very seriously but having considered them he upheld the validity of that onward transfer. His conclusion on the evidence was that it was ‘[Raymond’s] intention that [Stefka] enjoy the share beneficially from the point at which he gave her the share transfer form (then undated).’ I have mentioned the absence of the production in evidence of Dalmar’s share register. The judge also said that there was no evidence that the share transfers were ever entered in any such register, if it did exist.
32.	The judge’s overall conclusion was therefore that at the date of Raymond’s death: (i) Dalmar was legally, but not beneficially, owned by Mr and Mrs Kumar; (ii) it followed that Dalmar was not then owned legally by Raymond; (iii) nor did he own it beneficially, since it was then owned beneficially by Stefka. The current position was that Dalmar was owned beneficially by Kingstars and Dalmar 2004. It follows on the judge’s findings that the Kumars remain the legal owners of Dalmar’s two issued shares.
The appeal
33.	The appellants do not dispute the judge’s findings in relation to Raymond’s donative intent with regard to the second share. Their submission is that Raymond’s method of purportedly transferring that share to Stefka fell so far short of the formalities required for a transfer of a share that the gift failed as an imperfect one. 
34.	In my judgment that submission is correct. I consider, with respect, that the judge was wrong to find that Raymond’s actions of August 2003 operated to transfer the beneficial interest in the second share to Stefka. Such interest remained in Raymond. My reasons are these.
35.	It is common ground that immediately before the handing of the stock transfer form to Stefka in August 2003 Mrs Kumar was the legal owner of the second share and Raymond was its beneficial owner. Raymond had, therefore, no more than an equitable interest in the share. Accepting that his actions and words of August 2003 evinced a donative intent in respect of the second share, he could on one view do no more than transfer or assign that equitable interest. Moreover, it is no part of Mr Banks’ argument for Stefka that Raymond did transfer to Stefka more than that equitable interest. 
36.	There are, however, difficulties in the way of the case that he did transfer that interest to her. Subject to Mr Banks’ point based on the authorities to which I come below, so far as I am aware the only way in which he could do so was by (i) declaring himself a trustee for Stefka of his equitable interest, thus creating a sub-trust; (ii) assigning his interest to her by ‘writing signed by [him], or by his agent thereunto lawfully authorised in writing …’ so as to comply with section 53(1)(c) of the Law of Property Act 1925; or (iii) making a like written assignment of his interest to a trustee for Stefka.
37.	He did none of these things. He did not purport to declare a trust (which, had he wanted to, he could have done orally). Nor did he effect a written assignment either to Stefka or to a trustee for her. I would not regard the stock transfer form signed by Mrs Kumar as constituting such an assignment. That was a document she had signed for the purpose of enabling a future transfer of the legal title to the second share. It did not purport to assign Raymond’s equitable interest in the share. Even if, however, such a construction of it is possible, I am unaware of any evidence to the effect that she was Raymond’s agent for such purpose or that she had been ‘thereunto lawfully authorised in writing’ for the purposes of section 53(1)(c). It follows in my view that Raymond’s actions of August 2003 were ineffective to divest him of his equitable interest in the second share. 
38.	Mr Banks sought to meet this point in two ways. First, he invoked the principle reflected in cases such as In re Rose, Midland Bank Executor and Trustee Company Limited v. Rose [1949] Ch 78 (Jenkins J); In re Rose, Rose v. Inland Revenue Commissioners [1952] 1 Ch 499, Court of Appeal; and, more recently, Pennington and another v. Waine and others [2002] EWCA Civ 227; [2002] 1 WLR 2075, Court of Appeal. I do not, however, regard those cases as providing the help that Stefka claims to derive from them. 
39.	The cases all concerned the question of whether the legal owner of shares had made a valid gift of them. They related to companies, like Dalmar, whose shares were required to be issued in certificated form. To become a member of such a company, the ordinary requirements are that the member must agree to become such and have his name entered on the shareholder register. A member will also have a share certificate evidencing his membership. In order for such a member to transfer his shares to another, he must ordinarily complete and sign a stock transfer form and deliver it to the transferee together with the relative share certificate. The transferee will require both documents in order to apply to be registered as a member in place of the transferor. He will become such a member upon being registered in the share register. 
40.	In broad terms, what the two Rose cases decided was that once the legal owner of shares hands to his donee a properly completed share transfer form relating to such shares and the relative share certificate, he will thereby have done all within his own power to transfer the shares to the donee. The donee will only become their legal owner upon being later registered as a member, a matter commonly outside the donor’s control; and until such registration, the donor will remain the legal owner. But once the donor has done all in his own power to transfer the shares, he will be regarded as holding the legal title to them upon trust for the donee, who will thereupon become their beneficial owner. The relevant passages in the two Rose cases (the identity of name is a coincidence) are at [1949] Ch 78, at 88 to 90, per Jenkins J; and [1952] 1 Ch 499, 511 to 513, per Sir Raymond Evershed MR; and 516 to 519, per Jenkins LJ. In the Pennington case (which raised special facts relating to the delivery of the stock transfer form not in point in this case) the gift of the beneficial interest was regarded as complete even though no share certificate was handed over, a point to which I infer the court was sensitive. But Arden LJ explained in paragraph [5] that ‘[n]othing turns on the absence of the share certificates as Ada’s [the donor’s] share certificates were held by the company.’ The point Arden LJ was implicitly making was, I consider, that in those particular circumstances no question arose on the donor’s omission to deliver the certificates to the donee. The court in Pennington did not speak with one voice as to why the appeal in that case should be dismissed, but the majority comprised Arden and Schiemann LJJ.
41.	There are some fairly obvious factual differences between the circumstances of the Rose cases and those of this one (quite apart from the major one that Dalmar did not exist at the material time, although we had no submission to the effect that its consequence was that what happened in August 2003 was writ in water and signified nothing). One difference is that, unlike the Rose donors, Raymond was not the legal owner of the second share: that was Mrs Kumar. The legal and beneficial ownership was therefore split between Mrs Kumar and Raymond. But we had no argument to the effect that that placed any additional difficulty in Stefka’s path insofar as she was relying on these authorities. Another difference is that Raymond neither completed the transfer form in favour of Stefka, nor dated it. The inference is that he was authorising her to complete and date it. That might perhaps raise a question as to whether Mrs Kumar had authorised anyone other than Raymond to do so. Again, however, we had no argument on that.
42.	I will assume, therefore, that as part of the process of transferring the second share to Stefka, it was sufficient as regards the formalities concerning the stock transfer form for Raymond simply to hand it to Stefka in its original state. The principle of the Rose cases, however, requires that Raymond should have done all within his power to procure the transfer of the share to Stefka. If he duly did that, so that all that remained (subject to restoring Dalmar) was for her to apply to be registered as its legal owner, it may well follow, and I will assume, that pending such registration, Mrs Kumar, as the legal owner, would hold the share upon trust for Stefka, who would thereupon become its beneficial owner.
43.	In my view, however, the problem with this argument is that Raymond did not do all in his power to transfer the second share to Stefka. To become registered as a member, Stefka also needed the share certificate in respect of that share. The evidence was that its whereabouts were unknown. If it was lost, it was open to Mrs Kumar, as the legal owner, to procure the creation of a duplicate; and Raymond could have asked her to do so. He might perhaps first have had to procure Dalmar’s restoration, but as the beneficial owner of the second share he could have asked Mrs Kumar to lend him her name for that purpose, upon giving her appropriate indemnities as to costs. But Stefka herself would not, I consider, have had any right to obtain a duplicate. Company registrars or secretaries do not ordinarily provide duplicates for lost shares to putative transferees so as to enable them to apply to be registered as members: they require such a transferee already to have a share certificate as part of his title to a claim to be registered. Raymond had not therefore equipped Stefka with the title documentation that she needed in order to be registered as a member of Dalmar, whereas he could have done. Unlike the donors in the Rose cases he had not, therefore, done all in his own power to transfer to her, or to procure the transfer to her, of the second share. For this further reason, his actions of August 2003 did not constitute her the beneficial owner of that share.      
44.	Mr Banks’ second responsive argument was unsupported by evidence, was not the subject of any finding by the judge and was not raised in a respondents’ notice. It was that Stefka had changed her position to her detriment in reliance on Raymond’s actions of August 2003 with regard to the second share, with the consequence that Raymond should be regarded as having at some point become a constructive trustee of the second share. That was to tread the path that is now well trodden by those presented with a section 53(1)(c) problem (see section 53(2)). Mr Banks relied on the fact that Stefka incurred expense in applying for the restoration of Dalmar to the register and had guaranteed all Mr Kaye’s costs as Dalmar’s liquidator. 
45.	I have difficulty in seeing how those considerations turned Raymond into a constructive trustee for Stefka of the second share. The basis on which she applied for the restoration of the company was her claimed ownership merely of the first share; and I have explained how it was only when giving evidence at the trial that Stefka advanced the claim that she had also been given the second share. The inference is thus that it was only very late in the day that the ‘gift’ claim occurred to her and so it is also difficult to see how she had earlier changed her position in reliance on a belief that Raymond had made such a gift. If, however, there is anything in the ‘change of position’ point, I regard it as one that required a factual investigation at the trial, whereas I understand that there was none: and, in the circumstances that this part of Stefka’s case emerged so late, that is perhaps not surprising. I propose to say no more about this part of Mr Banks’ argument than that I regard it as one that, for the reasons given at the beginning of this paragraph, is not open to Stefka in this court. 
46.	For these reasons, I consider that the judge was wrong to declare that the Zeitals have no beneficial interest Dalmar. He should have held that any purported gift by Raymond to Stefka of the second share, or of his beneficial interest in it, failed as having been imperfect; and he should have declared that the Zeitals are entitled, as administratrices of Raymond’s estate, to that beneficial interest. He should not have declared that Dalmar 2004 was to be treated as a member of Dalmar for the purposes of the latter’s liquidation. I would allow the appeal. 
The cross appeal
47.	If my Lords agree that the appeal is to be allowed, I understand the parties to recognise that the judge’s costs order will have to be re-considered. On the premise that the appeal would fail, Stefka, Kingstars and Dalmar 2004 have a cross-appeal against part of his costs order. We heard argument on it and, although it may perhaps now be unnecessary, I will deal with it. 
48.	By paragraphs (5) and 6) of his order of 11 July 2008, the judge provided as follows:
‘(5) The costs of the application dated 17th May 2006, including the trial of preliminary issues, of [Kingstars, Dalmar 2004 and Stefka] shall be paid:
(a) insofar as those costs were incurred on or before 20th February 2007, by [Mrs Zeital] personally; and
(b) insofar as those costs were incurred after 20th February 2007, by [the Zeitals] in their capacity as administratrixes of the estate of [Raymond]
and in each case such costs shall be subject to detailed assessment on the standard basis.’
(6) The [liquidator’s] reasonable legal costs incurred by him on the application dated 17th May 2006, including the trial of the preliminary issues, shall be in the liquidation. Insofar as the Company’s estate is insufficient, after payment of all other expenses in the liquidation and the [liquidator’s] remuneration, to satisfy those costs, then [and the order then continued in the same terms as those of paragraphs (5)(a) and (b) above]’. 
49.	The order the judge pronounced on 11 July 2008 was not drawn up immediately but there is no dispute that the quoted words accurately reflect the form of order that he pronounced and they were of course eventually included in the order as perfected. Paragraphs (5)(b) and (6)(b) are, I consider, expressed in an unconventional form, but I read them as conveying that the relevant costs were to be raised and paid out of Raymond’s estate in due course of administration. If his estate proved to be insufficient to pay them, there would be a shortfall in recovery. The order relieved the Zeitals, as administratrices, from any personal liability for it. 
50.	Mr Pomfret, counsel for the liquidator, had the carriage of the order and he apparently also had an early concern about paragraph (6)(b). He sent an email to the judge shortly after the hearing of 11 July 2008 suggesting that the paragraph ought to have made the Zeitals personally liable for the relevant costs, adding that he had spoken to Mr Banks who agreed with the point being made (his focus being in relation to the equivalent provision in paragraph (5)(b)). There was no hearing at which the point was further argued, but the judge dealt with it by a supplemental written judgment that he delivered on 4 November 2008. In paragraph [6] he pointed out that he had not received any representations from the Zeitals on the point and an inference from the judgment is that he assumed that they had not been given notice of it. 
51.	By that judgment the judge recorded that the transcript of the argument on 11 July 2008 showed unambiguously that the form of paragraphs 5(b) and (6)(b) reflected exactly what Mr Banks and Mr Pomfret had asked for. He also gave his reasons for remaining of the view that it was the appropriate order to make He then said that, as the Zeitals had not been given the opportunity to defend their corner on the point, he was not going to change his order. He concluded his judgment thus:
‘14. In these circumstances the Order will be framed in accordance with the argument that took place on 11 July, and thus will simply provide that the costs after 20 February 2007 are payable by [the Zeitals] in their capacity as administratrixes. I make clear that I intend, in the particular circumstances of this case, that this wording should at this stage limit the costs recovery to the assets of the estate of [Raymond], or (to put it another way) should at this stage not permit recovery beyond the assets of that estate.
15. The liquidator and [Mr Banks’ clients] will however have liberty to apply to argue that, if the assets of the estate do prove insufficient, the costs should be then be [sic] met by [the Zeitals] personally. That application must be on proper notice to [the Zeitals]. I am entirely happy that it should be listed before me.’
52.	The order of 11 July 2008 was then perfected, paragraphs (5) and (6) being as earlier quoted and paragraph (12) providing ‘That there be permission to apply’. There was no express permission to apply to argue for a variation of paragraphs (5) and/or (6). 
53.	On 22 December 2008 Mr Banks’ clients issued an application notice to have the order of 11 July 2008 varied so as to provide for the Zeitals to be personally liable for their costs: recovery was not to be limited to the assets in Raymond’s estate. The application notice also sought a variation of another provision of the order of 11 July 2008. The application was stated to be made pursuant to the paragraph (12) ‘permission to apply’. 
54.	That application was argued on 3 February 2009. The outcome was that by his reserved judgment on 25 April 2009 the judge effectively re-confirmed his order, by making another order (which was dated 24 April 2009) in a different form but spelling out expressly that the relevant costs recovery was limited to the assets in Raymond’s estate and that the Zeitals were not personally liable for them. The cross-appeal is against that order of 24 April 2009.
55.	The first point is whether the judge had any jurisdiction to entertain the application of 22 December 2008. I accept of course that in his judgment of 4 November 2008 he permitted such an application. What then happened, however, was that his order of 11 July 2008 was perfected but included no express reference to the right to make such an application. It merely included a general ‘permission to apply’, a modern equivalent of the traditional ‘liberty to apply’. It is, I believe, clear that a general ‘liberty to apply’ in a final order such as that dated 11 July 2008 is not a liberty to apply to re-argue issues that have ostensibly been finally decided and covered by the order. If a party is dissatisfied with, and wishes to challenge, any such part of such an order, the only route ordinarily available to him is to appeal. The purpose of a general ‘liberty to apply’ is to provide expressly that which is probably anyway implicit, namely that insofar as any aspect of the order needs working out, or requires further directions of the court, there is a liberty to seek it or them. Many provisions in orders emerging from the Chancery Division require such working out or directions. But paragraphs (5) and (6) of the order of 11 July 2008 did not. 
56.	With respect to the judge, who plainly dealt with this difficult litigation with the greatest care and conscientiousness, I regard his disposition of Mr Pomfret’s email application to him as having been unsatisfactory. He had finally ruled on the form of the order on 11 July 2008 in the presence of all parties. His judgment of 4 November 2008, his further judgment of 25 April 2009 and the argument before us all revealed that there is no dispute that paragraphs 5(b) and 6(b) in that order reflected precisely what Mr Banks and Mr Pomfret had asked for on 11 July 2008. Both counsel then, in effect, sought a recalling of those paragraphs, an application which the judge decided he should not rule upon save after the benefit of contrary argument from the Zeitals. The outcome was the perfecting of the order of 11 July 2008 as I have described; but also the purported giving by the judge to four out of the six parties permission to apply for a variation of it adverse to the unrepresented two. 
57.	I have seen no order reflecting the giving of such permission. On the face of it, such permission was inconsistent with the perfected order of 11 July 2008, which gave no such right. In my view the judge ought, having received Mr Pomfret’s email application, either to have (i) directed an oral hearing at which all parties could make representations on the invitation to the judge to recall paragraphs 5(b) and 6(b), or (ii) refused the application and directed the drawing up of the order in its original form. Instead, by his supplemental judgment of 4 November 2008, he in effect combined both courses.   
58.	In these somewhat unusual circumstances, I do not consider that the judge should have entertained the application of 22 December 2009 at all. It was not permitted by the order of 11 July 2008 as perfected and his role in the case had come to an end. Nor can it be said that the July 2008 order, as perfected, was in a form other than the judge intended. In failing to include any express right to make the type of application that was issued on 22 December 2008, it did not reflect any ‘slip’. In particular, the Zeitals had not agreed to the type of liberty to apply to which the judge referred in paragraph 15 of his supplemental judgment of 4 November 2008. They knew nothing about it; and I do not understand the judge to have intended such a liberty to be included in the order as drawn. By paragraph 15 the judge was purporting to give an ex parte permission to Mr Pomfret’s and Mr Banks’ clients to make an application to vary his (about to be) perfected order of 11 July 2008. That was to purport to permit the impossible. In my judgment, for the judge to have adopted that course was wrong. Whilst I can well understand why, when they did make such an application, the judge entertained it, I consider that he should not have done so.
59.	It follows that I consider that strictly the judge’s order of 24 April 2009 was made without jurisdiction. As it is an order of the High Court and has not been set aside, it no doubt takes effect according to its terms and must be respected as such; and Arden LJ of course gave permission to appeal against it. It is, however, unnecessary to dwell on the procedure further because the net result is that, albeit in different language, the order of 24 April 2009 made the same order as did paragraphs (5) and (6) of the order of 11 July 2008. We can, therefore, treat the cross-appeal as levelled against the former order, which for reasons given, I would regard as a more satisfactory basis on which this court should approach it.
60.	With that somewhat lengthy prelude, I can express rather more shortly why I would regard the appeal as without substance. As I have said, it is clear that paragraph (5)(b) of the order of 11 July 2008 was exactly what Mr Banks was asking for. It may be, as Mr Banks candidly accepted, that he did not fully understand the effect of what he was asking for. But he can hardly complain in this court that, now that he does, he might have asked for a different order. Mr Banks submitted that the judge had no jurisdiction to make an order in the terms of paragraph (5)(b). Whilst, for reasons I will explain, I regard it as an unconventional order for the judge to have made, I would not accept that he did not have jurisdiction to make it.
61.	Courts do of course have a familiar discretion to order the costs of one or more parties to be paid out of a fund or an estate. The typical case in which such orders may be made is that in which, putting it generally (and with no attempt to put it exhaustively), the litigation is about the fund or estate in question and concerns claims to it. The present case is, however, not remotely akin to such cases. The litigation did not concern competing claims to interests in Raymond’s estate. It was hostile litigation (at least as between the Zeitals and Mr Banks’ clients) as to the ownership of shares in Dalmar and the fact that the Zeitals were advancing their own claim to such shares as administratrices of Raymond’s estate is, as regards costs, neither here nor there. Trustees and personal representatives will often find themselves involved in litigation in their capacities as such. But they also run the risk that, if it goes against them, they will be exposed to an unlimited personal liability for costs. They will not, by reason of their status, enjoy any special costs protection as against the successful parties. In particular, their liability to them for costs will not be limited to the assets in their estates. 
62.	In some cases trustees and personal representatives will have a personal interest in the litigation (the Zeitals did in this case, because a successful claim to the shares will benefit Raymond’s estate of which they are beneficiaries). In other cases they will have no personal interest in it, but will only consider the pursuit or defence of a claim by reference to what is in the interests of their beneficiaries. It is obvious that in the latter type of case, they will usually only be prepared to incur the costs risks of such litigation if they first have a solid indemnity as to costs from the estate and/or the beneficiaries. If that is something that can be agreed with the beneficiaries, well and good. In cases where it cannot, the course that is open to them is to seek the court’s directions as to whether to sue or defend; and, if the court gives leave, the ordinary consequence is that they will be entitled to an indemnity out of the estate for any personal costs liability with which they find themselves visited (In re Beddoe, Downes v. Cottam [1893] 1 Ch 593). 
63.	In the present case the Zeitals and Natasha could probably have agreed the matter of an indemnity so that no Beddoe application would have been necessary. Whether, however, Raymond’s estate would have been good for it is another matter. On any footing the picture seems uncertain. Mr Lee told us, for example, that one of the assets of the estate is an interest in a struck-off Liberian company. But, if any indemnity from the estate was likely to be insufficient, it would have been for the Zeitals to form a view as to whether or not they wanted to incur the risks involved in the litigation. It was not, I consider, for the judge to give them the protection he did in the way he did. If his objective was to lessen their personal liability, there were more conventional ways of doing so. 
64.	Having said all that, I make clear that the judge’s judgments show that he was familiar with the basic principles to which I have referred. He nevertheless decided, for reasons he explained, that the fair order to make was the one he made. I do not question his jurisdiction to make the order he did, although I do question whether it was the correct way to achieve the fair decision as regards costs that he plainly wanted to achieve. As, however, I consider that he had jurisdiction to make the order he did, and as Mr Banks asked him to make it, I would not be prepared to entertain Mr Banks’ application to this court to reconsider its merits. I would dismiss the cross appeal.
Disposition
65.	I would allow the appeal and dismiss the cross-appeal.
Lord Justice Maurice Kay :
66.	I agree.
Lord Justice Dyson :
67.	I also agree.