Formalities cases

Vandervell v Inland Revenue Commissioners

Facts

Vandervell orally directed his bank to transfer shares in Vandervell Products Ltd to the Royal College of Surgeons, with an option to repurchase held on trust by Vandervell Trustees Ltd. Vandervell failed to specify who should benefit under the option trust, leaving the beneficial interest undetermined.

Judgment & reasoning

House of Lords held Vandervell had effectively divested his legal title in the shares, satisfying s.53(1)(c) LPA 1925 for the disposition. However, because the beneficial interest under the option was unspecified, a resulting trust arose back to Vandervell, making him liable for surtax.

Key principle

1.⁠ ⁠

Where legal and equitable title move simultaneously, there is no separately subsisting equitable interest being disposed of, therefore s 53(1)(c) is not triggered.

Exam takeaway

Trigger: a transferor purports to divest all interest but leaves the beneficial interest under an ancillary arrangement unspecified. Use Vandervell to argue a resulting trust arises back to the transferor, and to distinguish when s.53(1)(c) writing requirements do and do not apply.

Hudson v Hathway

Facts

Unmarried cohabitants jointly owned a house. The man sent emails acknowledging the woman's sole beneficial interest after separation, without any signed written document.

Judgment & reasoning

Court of Appeal held the emails sufficed to declare or confirm a constructive trust of the beneficial interest in favour of the woman. The s.53(1)(c) LPA 1925 met by the signed writing

The "signed" requirement has a condition. Deliberately subscribing one's name to an email amounts to a signature — but the key word is deliberately. Adding your name at the end authenticates the document and confirms it comes from you. This is equally true where the name is automatically generated by the email software — but not every email will qualify; not all of the emails in the chain were signed — some were subscribed with a first name, some with a full name, some without a name at all. Only the signed ones counted.

Frenkel v LA Micro

Facts LA Micro Group Inc (Inc) held a 51% beneficial interest in shares in LA Micro Group (UK) Ltd. In 2010, following a falling out, Inc orally agreed to give up its beneficial interest to the legal owners of the shares, Mr Bell and Mr Lyampert. No written document was signed. Ross Martin

Issue Did the lack of signed writing invalidate the transfer under s 53(1)(c) LPA 1925?

Held The failure to comply with the requirement for signed writing under s 53(1)(c) did not prevent the 2010 agreement from taking effect. The oral agreement gave rise to a vendor-purchaser constructive trust, and s 53(2) provides that the writing requirement does not affect the operation of a constructive trust. Supreme Court of the United Kingdom

Key principle Where an oral agreement to transfer a beneficial interest would be specifically enforceable by equity, a vendor-purchaser constructive trust arises automatically — and that constructive trust falls within the s 53(2) exemption, meaning no written formality is needed.

Exam takeaway Trigger when a beneficial interest is transferred orally with no written document and s 53(1)(c) is raised as a bar. The answer is: if equity would specifically enforce the agreement, a constructive trust arises and s 53(2) saves it.

National Iranian Oil Company & Anor v Crescent Gas Corporation Ltd

CA considered whether a contractual arrangement over gas assets constituted a "disposition" of a subsisting equitable interest under s 53(1)(c). Held the key distinction is between disposing of an existing equitable interest (needs writing) and creating a new one (does not). The nature of the transaction determines which side of the line it falls. Takeaway: always analyse whether the transaction disposes of an existing equitable interest or creates a fresh one — only the former triggers s 53(1)(c).

Was there already an equitable interest in existence before this transaction? If yes, and this transaction transfers or redirects that interest to someone else, that's a disposition — needs writing under s 53(1)(c).

Or did this transaction bring a brand new equitable interest into existence? If yes, that's a creation — s 53(1)(c) doesn't apply at all.

Rochefoucauld v Boustead

Boustead bought mortgaged estates agreeing to hold on trust for Rochefoucauld; no written declaration. He then denied the trust, relying on the absence of writing. CA held equity will not allow statute to be used as an instrument of fraud — where a party procures a conveyance by agreeing to hold on trust and then resiles, a constructive trust is imposed. Takeaway: the fraud principle — statute cannot be used as a shield where the defendant induced reliance on an oral trust. Constructive trust arises; s 53(2) exempts it from formalities.

Grey v IRC

Grey orally directed his nominees (who already held shares on bare trust for him) to hold on trust for his grandchildren's settlements, then later confirmed in writing. IRC argued stamp duty was payable on a "disposition." HL held the oral direction was itself the disposition under s 53(1)(c) — it was therefore void for want of writing, making the subsequent written memorandum the operative disposition, attracting stamp duty. Takeaway: the core s 53(1)(c) authority — an oral direction to trustees to hold on new trusts = a disposition of a subsisting equitable interest, must be in signed writing.

Re Vandervell's Trusts (No 2)

After Vandervell's death, the trustee company exercised the option and bought back shares using the children's settlement fund. CA held a new trust arose by operation of law in favour of the children — the resulting trust for Vandervell's estate was thereby extinguished. No written disposition was needed because the new trust arose under s 53(2) by operation of law, not by disposition. Takeaway: Where a trust arises by operation of law — whether resulting or constructive — it is exempt from the writing requirements in s 53(1)(c) via s 53(2), and conduct plus payment of consideration can be enough to displace a prior resulting trust.

When V gave the shares to RCS, he arranged for Ts to be given the option to buy back the shares at a fixed price. However, when V set up this option, he did not specify who it was being held for. Court said because it’s not specificed, it results back to him. After V died, T bought back the shares using the childnren’s funds and the court said, because you used the children’s funds to do so, a trust is created for the children over the shares, and V’s resulting trust is extinguished

Oughtred v IRC

Mother and son orally agreed to swap their interests in settled shares, then later signed stock transfer forms to move the legal title. IRC claimed stamp duty was owed on the forms.

The mother argued the oral agreement had already transferred the equitable interest via a constructive trust, so the forms were just tidying up legal title — nothing left to attract stamp duty. HL majority rejected this and held the written transfer forms were the operative disposition, so stamp duty was payable.

stamp duty attaches to documents that transfer stuff, and she was arguing that this wasn't transfering anything because of the vpct, the equitable interest alreadt transferred

The sequence she was arguing:

1. Oral agreement made → VPCT arises instantly → equitable interest transfers to her at that point

2. Written stock transfer forms signed later → nothing left to transfer → just bare legal title tidying, no value → no stamp duty

The HL majority said: no, step 2 is still an operative transfer, stamp duty bites on it.

The normal VPCT logic is: equity treats as done that which ought to be done. The moment a specifically enforceable contract is made, equity treats the equitable interest as already transferred. Legal title transfer is just the formal completion of what equity already regards as done.

But in Oughtred the HL majority effectively refused to follow that logic to its conclusion — they treated the written transfer as still operative and meaningful enough to attract stamp duty, rather than saying "the equitable interest already moved, the written transfer is just bare legal title tidying."

The reason this feels uncomfortable is that it's inconsistent with the normal VPCT principle. If equity genuinely treats the equitable interest as transferred at the point of contract, the written transfer should be a formality with nothing substantive left to transfer.

The honest answer to why Oughtred went the other way is probably pragmatic — if the constructive trust argument had succeeded, it would have been a straightforward tax avoidance device.

Basically, the courts were just trying to avoid someone from using equity unconsionably, courts have discretion

Taylor v Taylor

Key principle: An oral declaration of trust of land can be made first and evidenced in writing later — the trust is enforceable from the original declaration. Alternatively a common intention constructive trust arising from the circumstances requires no writing at all under s 53(2).

Exam takeaway: This is actually an s 53(1)(b) case — declarations of trust of land — not s 53(1)(c). And the trust was upheld, not defeated.

Ong v Ping

Property purchased in Madam Lim's name; her children/grandchildren alleged an express trust. She had sent a signed trust deed to her solicitor, but Schedule 1 — meant to identify the settled property — was left blank, so on its face the deed declared trusts over nothing. Maitlandchambers

The CA upheld the trust. It held two things:

1. An express oral declaration was not necessary — conduct and surrounding circumstances could suffice to show a valid declaration had been made. A reasonable person reading the correspondence would have no difficulty concluding Madam Lim intended the house to be the trust asset. Maitlandchambers

2. Section 53(1)(b) LPA 1925 is a rule of evidence, not form — the trust does not need to be declared by a deed alone. A later letter Madam Lim wrote indicating she wished to cancel the trust — which specifically linked the trust to the house — provided sufficient written manifestation and proof for s 53(1)(b) purposes. LawprofThe Legal 500

Takeaway: s 53(1)(b) is satisfied by any signed writing that manifests and proves the trust — it need not be a formal deed, and documents can be read together. This actually sits alongside Hudson v Hathway (where emails sufficed) rather than contrasting with it — both cases show courts taking a flexible, evidence-focused approach to the writing requirement.

Grainge v Wilberforce

A beneficiary orally directed the trustee to hold trust property on trust for a third party. Court held this was a disposition of the equitable interest requiring compliance with the statutory writing requirement (then the Statute of Frauds, equivalent to s 53(1)(c)). Oral direction was ineffective. Takeaway: early authority supporting Grey v IRC — directing a trustee to hold on new trusts = disposition of the equitable interest, needs writing.

Akers v Samba Financial Group

Shares registered in Saudi Arabia (no trust concept under Saudi law) were purportedly transferred on trust. UKSC held the equitable interest was governed by English law regardless of where legal title was registered; Saudi transfer of legal title did not effect a disposition of the equitable interest for English law purposes, and s 53(1)(c) was in principle engaged. Takeaway: conflict of laws — equitable interests travel with English law even when legal title is in a foreign jurisdiction. Important for multi-jurisdictional trust problems for trusts established in the UK

The governing law of the trust determines the nature of the equitable interest — not the lex situs (where the assets are physically located).

Khan v Mahmood

Equity will perfect an imperfect gift where it would be unconscionable for the donor to resile from it

Blackwell v Blackwell

Testator left a legacy on the face of his will "for purposes communicated to them," having told the trustees before execution that income was to go to his mistress and illegitimate son. HL held half-secret trusts are valid.

The HL in Blackwell said equity operates on a different basis entirely. It is not enforcing the oral communication as a testamentary disposition — it is acting in personam on the conscience of the trustee. The trustee accepted the obligation before the will was executed. If the trustee were then allowed to take the property beneficially and ignore that obligation, they would be acting unconscionably — essentially committing a fraud on the testator who only left them the property on the faith of that promise.

Takeaway: half-secret trusts valid if: (1) communication before or at execution; (2) acceptance by trustee; (3) certain terms. The Wills Act is satisfied by the will itself — equity acts in personam on the conscience separately.