Grey, Oughtred and Vandervell—A Contextual Reappraisal
| Published date | 01 July 1984 |
| Author | Brian Green |
| DOI | http://doi.org/10.1111/j.1468-2230.1984.tb01658.x |
| Date | 01 July 1984 |
THE
MODERN
LAW
REVIEW
Volume
47
July
1984
No.
4
GREY, OUGHTRED AND VANDERVELL-A
CONTEXTUAL REAPPRAISAL
SECTION
53(l)(c)
of the Law of Property Act
1925
enacts that a
disposition of a subsisting “equitable interest or trust’’ must be made
in writing if it is to be effective.* It is a provision of considerable
practical importance in all fields where the division between legal
and equitable property rights is adopted, from the commercial arena
to the family home. There have, been four seminal cases on the
ambit of paragraph
(c),
each of them difficult, and yet this area has
attracted minimal academic attention, either in the United Kingdom
or in Commonwealth countries where parallel provisions apply.
It
is
a common complaint among academic lawyers, though not among
successful litigants, that judges confine their attention to adjudicating
upon the specific facts
of
the cases before them, and aften fail to
perceive the wider implications of their particular determinations.
Nowhere is this tendency more apparent than in the cases to which
this article is directly addressed-where first taxation and then a
family squabble provide the occasions for dispute, and section
53(l)(c)
is the field upon which the disputants collide. Those
embroiled in fighting and deciding those cases were not concerned
to rovide an answer to the question: “What is the ambit
of
section
53&)(c)?”
This article attempts to do
so.
In this writer’s view, to
wholly understand the section
53(l)(c)
cases, it is first necessary to
examine precisely what was at issue in them. Hence the contextual
element of this article-principally, but not exclusively, fiscal. The
main concern of the article is, however, reappraisal-having clarified
the issues, to critically dismantle the internal reasoning of the cases
to assess their impact on section
53(
l)(c),
to highlight inconsistencies
between them, and then to build on such authority as one can
deduce to suggest a uniform and coherent picture of the transactions
which are caught by that paragraph.
INTRODUCTION
In addressing itself to subsisting equitable interests, section
53\1)(c)
took up the mantle of section
9
of the Statute of Frauds
1677,
and
I
s.S3(l)(c):
‘‘a disposition of an equitable interest
or
trust subsisting at the time
of
the
disposition, must be in writing signed by the person disposing
of
the same,
or
by his agent
thereunto lawfully authorised in writing
or
by will.”
s.9:
“And be it further enacted, that all grants and assignments
of
any trust
or
confidence shall likewise be in writing, signed by the party granting
or
assigning the same,
or
by such last will
or
devise, or else shall likewise be utterly void and
of
none effect.”
385
386
THE
MODERN
LAW
REVIEW
[Vd.
47
like that provision was designed (i) to prevent hidden oral transac-
tions in equitable interests in fraud
of
those truly entitled and (ii) to
enable trustees to know where the equitable interests behind their
trusts reside at any particular time.3 The reference to “trust” in
section
53(
l)(c)
is anachronistic, and was seemingly simply intended
by the draftsman as an alternative rendering
of
the term “equitable
interest” which precedes it. In the present context, the employment
of
the word “trust”-although establishing a certain continuity with
section
9
which had referred, even more obtusely, solely to “trust
or
confidence,” and although echoed by the odd nineteenth-century
authority4-is both archaic and misleading; and is best, as it generally
is, ignored. The notion
of
disposing of a “trust” could,
of
course,
have been taken to refer to the conduct
of
a retiring trustee in
parting with the trust property to his successor in the event of the
trust continuing, or to (or at the direction
of)
those absolutely
beneficially entitled in the event of the trust’s termination: but it
simply never has been.
Section
9
of the
1677
Act, being concerned solely with “grants
and assignments’’
of
subsisting equitable rights, and hence exclusively
with dispositions by equitable proprietors themselves, fell squarely
within the twin policy objectives noted above. By replacing the
words “grants and assignments” with the single word “disposition,”
the draftsman (as
9
matter
of
language at least) potentially extended
the requirement
of
writing to transactions effected by persons other
than the equitable owner for the time being,
e.g.
to trustees
exercising a power
of
revocation and new appointment: a case clearly
outside the twin policy objectives in that (i) if the consent of the
person entitled in equity pending the revocation and new appoint-
ment is (as is usually the case) irrelevant to the trustees exercising
their power, divestment
of
his previously subsisting interest behind
his back cannot be a cause
for
concern and (ii) since it is the trustees
who will be exercising the power it can hardly be said that writing
is necessary to enable them (at least
so
long as they are viewed as
a single and continuing body
of
persons) to ascertain to whom their
fiduciary duties are owed.
A
principal reason for singling out subsisting equitable interests
for protection is because evidence
of
their movement will often be
the only indicator
of
where a particular right resides at any given
time. There is no documentary paper title, nor generally
is
there
physical possession5: two indicia which facilitate the identification
of
a legal proprietor. In general there is only an invisible entitlement
tq certain rights perceived by courts
of
equity behind the veil
of
legal title.
Those with interests in equity will commonly enjoy the valuable
rights-“the beneficial interest”-in the property over which their
Isolated by Lord Upjohn
in
Vundervell
v.
I.R.C.
[1967] 2 A.C. 291, 311B-D.
‘
See,
e.g.
Lord Langdale
M.R.
in
Rycroff
v.
Chrisrey
(1840)
3 Beav. 238,241.
Although there may be,
e.g.
where the life tenant
of
certain property is given a right
to
occupy
it.
July 19841
GREY,
OUGHTRED
AND
VANDERVELL
387
equitable interests subsist. Indeed, it is this valuable aspect which
makes the protection of equitable interests a matter of pressing
importance: without the annexation of beneficial rights equitable
interests and legal property rights are of equally little significance.
This is an important point since, although where an equitable interest
is first carved out
of
a legal estate the beneficial interest will have
followed that equitable right, as transactions behind the legal title
become more complex and equitable interests behind sub-trusts
proliferate, one will commonly be dealing with subsisting equitable
interests from which the beneficial interest has been detached,
beneficial entitlement having followed subsidiary equitable rights.6
Section 53(l)(c) draws no distinction between dealings with equitable
interests carrying beneficial rights and dealings with equitable inter-
ests shorn of beneficial rights: between valuable and valueless
equitable interests. All fall equally within its ambit. On the other
hand, it is said that a declaration of trust over a subsisting equitable
interest, involving the carving out of a subsidiary equitable interest
with beneficial entitlement annexed thereto, is not within section
53(l)(c) since it merely entails a disposition of beneficial interest,
and not of the subsisting equitable interest itself which continues to
exist in its original proprietor despite the declaration having taken
place.
If
this is right-and the point is discussed in detail below'-
then section 53(l)(c) is seen to operate in a somewhat arbitrary
fashion: permitting the oral declaration of trust which shifts the
valuable beneficial rights out of a subsisting equitable interest
,
but
requiring written assignment if at a later stage the declarant decides
to part with the valueless equitabie interest retained by him.
It seems to have been generally assumed in each of the four cases
to which this article is directly addressed, that section 53(l)(c)
applies equally to equitable interests in personalty as to equitable
interests in realty.* Academic opinion on the question of whether
section 9 of the
1677
Act extended to personalty was di~ided,~
although there is evidence of a judicial willingness to assume the
extension justified, at least in the absence of argument on the point."
It is, however, a peculiar feature of
Grey, Oughtred
and the two
Vunderveff
cases, that at
no
stage does it appear that section
205(1)(x) of the Law of Property Act 1925 was ever cited to the
An example may help to make this clear. If, at the outset, L. is absolute legal owner
of
certain property and absolutely beneficially entitled to it, and then
L.
declares himself
trustee
of
the property for A. for life remainder to
B.,
the beneficial interest in the property
will become distributed between A. and
B.
in proportions reflective of the actuarial values
of
their equitable interests. If
B.
then assigns his remainder interest to
T.
as trustee for his
grandchildren:
T.
will hold the original equitable interest, but the beneficial interest
will
have been extracted from it and invested in the grandchildren's equitable interests behind
the new trust.
'
See text following note
47
at "Declarations
of
Trust
. .
.
and 'Dropping Out
of
the
Picture.'
"
*
Cf.
Lord.Upjohn in
Vandervell
v.
I.R.C.
[1967]
2
A.C.
291,
310
F-G,
and also
Wilberforce Q.C. in argument, particularly as reported before the Court
of
Appeal, in
Grey
v.
I.R.C.
I19581
Ch.
690, 694; [1960]
A.C.
1,
9.
Maitland: for. Lewin and Scott: against.
lo
See,
e.g.
Page-Wood V.-C. in
Jerdein
v.
Bright
(1861)
2
J.
&
H.
325, 330-331.
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