Grey v IRC
An oral direction by a beneficiary to his trustees to hold his equitable interest on trust for others is a disposition of an equitable interest that must be in writing.
Facts
Mr Hunter transferred shares to trustees as nominees for himself. He then orally directed the trustees to hold the shares on trust for his grandchildren, under existing settlements. Later, the trustees executed deeds confirming that they held the shares on those trusts. Stamp duty was payable on written instruments transferring property. The Inland Revenue argued that the deeds were the dispositions, so stamp duty was payable on them.
Legal principle
The House of Lords held that the oral direction was a disposition of an equitable interest, so it was void under section 53(1)(c) of the Law of Property Act 1925, which requires dispositions of equitable interests to be in writing. The disposition was therefore made by the later written deeds, which were liable to stamp duty. Lord Radcliffe said that the word disposition should be given its ordinary meaning, and that a direction to trustees to hold an equitable interest on trust for others was a disposition of that interest.
Related cases on formalities and constitution of trusts
- Re Brooks' Settlement Trusts [1939] Ch 993
- Cannon v Hartley [1949] Ch 213
- Choithram (T) International SA v Pagarani [2001] 1 WLR 1
- Fletcher v Fletcher (1844) 4 Hare 67
- Hodgson v Marks [1971] Ch 892
- King v Dubrey [2015] EWCA Civ 581, [2016] Ch 221
- Mascall v Mascall (1984) 50 P & CR 119
- Milroy v Lord (1862) 4 De GF & J 264
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