Grey v Inland Revenue Comrs

Under section 53(1)(c) of the Law of Property Act 1925, an oral direction which diverts a subsisting equitable interest from its owner to new beneficial owners is a disposition. It must therefore be in writing and signed by the disponor or an authorised agent.

The word disposition bears its natural meaning. It is not confined to grants and assignments by the earlier wording of the Statute of Frauds. Although the 1925 Act consolidated legislation, it carried forward amendments made in 1924. Those amendments prevent the earlier statutory language from restricting section 53(1)(c).

Mr Hunter transferred shares to the appellants as his nominees. He later gave oral and irrevocable directions that the shares should be divided into six parcels and held on the trusts of six existing family settlements. The parties subsequently executed six deeds recording those directions and declaring that the trustees had held the shares on the relevant trusts from the date of the oral directions.

The issue was whether the oral directions effectively disposed of Mr Hunter’s subsisting equitable interest. If they did, the deeds were not chargeable with ad valorem stamp duty. If they did not, the deeds were chargeable. Upjohn J held the directions effective. The Court of Appeal, by a majority, reached the opposite conclusion.

Decision

1. The House unanimously dismissed the appeal with costs. Viscount Simonds gave the leading speech, with which Lord Reid expressly agreed. Lord Radcliffe gave a concurring speech, and Lords Cohen and Keith of Avonholm agreed.

2. Viscount Simonds held that Mr Hunter’s oral directions were dispositions of a subsisting equitable interest within section 53(1)(c) of the Law of Property Act 1925. Their effect was to divert the beneficial interest in the shares from Mr Hunter to the beneficiaries of the settlements. The word disposition therefore bore its ordinary meaning and was not confined to a formal grant or assignment. As the directions were oral, they were ineffective under the statutory writing requirement.

3. The House rejected the argument that the 1925 Act was a pure consolidating statute whose wording had to be read as equivalent to section 9 of the Statute of Frauds. Viscount Simonds accepted the ordinary presumption concerning consolidating legislation, referring to Gilbert v Gilbert and Boucher [1928] P. 1. However, the 1925 Act carried forward amendments made by the Law of Property (Amendment) Act 1924, including paragraph 15 of its Third Schedule. Those amendments had changed the relevant statutory provisions before their consolidation in 1925.

4. Lord Radcliffe likewise held that the 1924 amendments broke any direct link between section 53(1)(c) and the former language of section 9 of the Statute of Frauds. The instruments were consequently chargeable with ad valorem duty under section 13 of the Stamp Act 1891.

• House of Lords: Dismissed the trustees’ appeal, affirming that the instruments were chargeable with ad valorem duty: [1960] AC 1.

• Court of Appeal: Morris and Ormerod LJJ held that the instruments were chargeable. Lord Evershed MR dissented.

• High Court: Upjohn J had held to the contrary.