Balkis Consolidated Co Ltd v Tomkinson

• Balkis Consolidated Co issued share certificates stating that certain persons held specified shares.
• Tomkinson purchased shares relying on the certificate.
• The company later claimed the certificate was issued by mistake: the named persons did not actually hold those shares.

1. Whether a company is estopped from denying the statements in a share certificate against a person who relied on it in good faith.

• The House of Lords held that the company is estopped from denying the truth of matters stated in a share certificate issued by it, as against any person who acted on the faith of that certificate and paid value. The company must either recognise the purchaser's title or compensate for the loss caused by reliance on the certificate.

A share certificate creates an estoppel against the company. The company cannot deny its own document against bona fide third parties. If the certificate is wrong (clerical error), the company bears the loss, not the innocent buyer. The certificate is prima facie evidence (S.46(2)) but creates estoppel when relied upon by third parties. Exception: forged certificates create no estoppel (forgery is a nullity).