Neville v Wilson
An oral agreement between the beneficial owners of shares to divide them between themselves gave rise to a constructive trust, so no writing was needed.
Facts
The shareholders of a family company, Universal Engineering, held shares in another company, Flint, through a nominee. They orally agreed to liquidate Universal informally and to divide the equitable interest in the Flint shares between themselves in proportion to their shareholdings. The question later arose whether this agreement was void under section 53(1)(c) of the Law of Property Act 1925, because it was not in writing.
Legal principle
The Court of Appeal held that the agreement was effective. Nourse LJ said that each shareholder's agreement to assign his equitable interest in the shares, which was specifically enforceable, gave rise to an implied or constructive trust in favour of the others, so section 53(2) of the 1925 Act applied and no writing was needed. The court followed Lord Radcliffe's dissenting reasoning in Oughtred v IRC on this point.
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
- Grey v IRC [1960] AC 1
- Hodgson v Marks [1971] Ch 892
- King v Dubrey [2015] EWCA Civ 581, [2016] Ch 221
- Mascall v Mascall (1984) 50 P & CR 119
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