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Lionel raised an interesting question regarding enrichment by increase in the value of corporate shares. If the plaintiff had a proprietary claim to assets owned by the corp and those assets were sold, the plaintiff might try to follow those assets into the hands of the buyer (subject to the defence of BFPV) or trace their value into the proceeds of sale received by the corp. Where all the corp's assets are being sold, the transaction might well take place as a sale of the shares in the corp for taxation or other reasons. In that case, the plaintiff's claim to the corp's assets would be undisturbed by the change of shareholders (who may have made some arrangement among themselves concerning the corp's liabilities).

In either situation, could the plaintiff trace the value of the assets into the hands of the shareholders (as either the sale proceeds of or dividends from the shares)? Could the shareholders claim to be BFPsV? If so, notice might be easily proved in cases of closely held corps or subsidiary corps with a common board. Do company law principles provide any help? Dividends might be recoverable if distributed unlawfully (and directors might be liable for making the distribution), but what about the sale of shares?

Robert Chambers
University of Melbourne Law School