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Garton argues
that if the rule in Re Rose were to be based upon the doctrine of
unconscionability, the risk of abusing the doctrine to evade a refusal by the
company directors to refuse to register the transfer could be resolved. This
could happen if unconscionability were to encompass factors other than ‘simply
the conscience of the transferor’1, by reforming the doctrine
to place a requirement upon the transferee to show that there are no ‘countervailing
considerations’ which would render unconscionable the perfection of the gift in
equity. These considerations would then consider any facts which imply that it
is not in the bona fide best interests of the company that the transferee
becomes owner of the shares either at law or in equity. This approach finds
support in other areas of equity such as in equitable estoppel. Garton draws an
analogy between both doctrines which seems relevant here in relation to trusts
arising out of a contract for the sale of land. The general principle is that
equitable title passes once the contract is created and the seller of land will
hold the title to the land on trust for the purchaser. Where the contract
cannot be specifically enforced, title will not pass and no trust will arise.

Perhaps then, it seems fair that equity should refuse to perfect a share
transfer where it would hinder the company director’s discretion to refuse to
recognize the transfer, just as it refuses to recognize that title to land has
passed if it would prejudice the rights of a third party.

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