Facts: In order to avoid compulsory acquisition of the company (Homestake Gold of Australia), there was a contractual scheme to transfer shares to minors residing in Australia, UK and NZ. Contracts/deeds were entered into between Mr Thompson (a lawyer for Peninsula Gold) and the parents/guardians of minors, which allowed Mr Thompson to put the shares in the company in the names of the minors and also transfer them to other third parties. (More specifically, he can procure the shares to be transferred from the minor to any other person; the minor is exposed to no liabilities; the full economic interest in the shares and the power to control voting and disposal of the shares rests with Mr Thompson rather than the minor). Note: minors never had to pay purchase considerations (Clause 2 of the Deed)
Issue: Whether the minor has capacity to sign the contract and hold shares. Incidental question: Which law governs the capacity of minors to own shares?
Held (regarding which law): The proper law of the contract should be applied (here, it was also the law of the forum) to determine the issue of capacity. The court followed and applied Charron. Whether persons who were minors had contractual capacity to be transferees of shares in a gold mining company had to be determined by reference to the objective proper law of the contract. It was held that NSW law was the objective proper law of the contract, and therefore NSW law governed the contractual capacity for minors.
Held (regarding contractual capacity): Applying the proper law (NSW law), the parents or guardians could not bind the minors to these contracts.
Ratio: Contractual capacity is to be governed by the objective proper law of the contract.