Formalities

THE FUNCTION OF FORMALITIES 127
4
Formalities and the Perpetuity
Rules
The general rule is that, once the three certainties are present and legal title to the trust prop- 4.01
erty is vested in the trustee, there is nothing more demanded of the settlor. By way of exceptions
to this rule, however, Parliament has decreed that certain types of disposition require additional
formalities before they can become effective. The most usual insistence is that the transaction
either be in writing or, at the least, be evidenced (i.e. recorded) in writing and that such writing
be signed. All testamentary dispositions (i.e. dispositions by will) are regulated by s.9 of the Wills
Act 1837 (as amended)1 whereas inter vivos trusts (i.e. lifetime trusts) are governed by s.53 of
the Law of Property Act 1925. These statutory formalities as they apply to lifetime trusts will be
considered in detail. The latter part of the chapter, however, will serve as an introduction to the
arid and complex perpetuity rules relating to vesting, inalienability and accumulation of income.
The Function of Formalities

There are three broad and interconnected functions which are said to underlie the requirement 4.02
for added formalities2:
■ The evidentiary function. The clearest justification for legal formality is to provide docu-
mentary evidence of the existence and terms of the transaction. As such, it offers some
1 Testamentary trusts are considered in Ch.5.

2 See generally, L.L. Fuller, “Consideration and Form” (1941) 41 Colom. L. Rev. 799.
HALEY BOOK FINAL.indb 127 18/08/2017 09:49

128 FORMALITIES AND THE PERPETUITY RULES
protection against fraud, undue influence and other types of wrongdoing. Formalities
also provide a provable record of transactions and, in particular, lead a paper trail to
the individual who currently holds the equitable interest under the trust. This is valua-
ble because equitable interests are intangible (i.e. without physical form) and, thereby,
difficult to keep track of. Documentation also helps to establish the obligations of the
trustee/executor so that the risk of an inadvertent breach of trust is minimised.
■ The cautionary function. This operates to focus the mind of the settlor/testator and
to offer a “cooling off” period until the formalities have been attended to. As property
rights are often valuable rights, they are not expected to be created or disposed of
casually, secretly or informally.
■ The channelling function. The presence of authenticated writing relieves the court of
the need to enquire whether a legal transaction was intended and, if so, to explore its
nature. Fuller explains that, “form offers a legal framework into which the party may
fit his actions . . . it offers channels for the legally effective expression of intention”.3
This provides administrative assistance in that the court has some document to look
at to divine the settlor/testator’s true intentions. In this way, the court does not have to
rely solely upon the (often unreliable) testimony and (often incomplete) recollections
of witnesses and, thereby, this may avoid costly controversy.
The disadvantage of formalities

4.03 The major problem with formalities is that, if they are not complied with, the genuine inten-
tions of a settlor can be frustrated. For example, the settlor may in the clearest terms declare
a trust of land, but fail to adhere to the necessary formalities in providing signed written evi-
dence of the terms of the trust. In this situation, the general rule is that the trust will then be
unenforceable and the informal disposition rendered of no effect. For example, this may mean
that land intended for Jordan will remain in the settlor’s estate and, on the settlor’s death, pass
by will or on intestacy to Adrienne as residual legatee or next of kin. Hence, it may generate an
unintended outcome that runs contrary both to the wishes of the settlor and, in our example,
the expectations of Jordan. Gulliver and Tilson describe this as, “enthroning formality over
frustrated intent”.4 Nevertheless, it is for the legislature to draw a balance between these
conflicting interests and for the judiciary to ensure that the balance is maintained. As Gardner
puts it:
“Deciding whether to require formality involves assessing the advan-

tages and disadvantages either way, and comparing them, to see
3 L.L. Fuller, “Consideration and Form” (1941) 41 Colom. L. Rev. 799, 801.
4 A.G. Gulliver and C.J. Tilson, “Classification of Gratuitous Transfers” (1941) 51 Yale L.J. 1, 3.

LIFETIME TRUSTS OF LAND 129
where the greater benefit lies. So, for example, in having the rule
that any attempt to dispose of property on death other than by using
the ordained formalities is a nullity, the law takes it that the balance
lies in favour of such insistence; that the potential ineffectiveness of
attempted informal dispositions is an acceptable price to pay for the
advantages of minimising uncertainty”.5
Lifetime Trusts of Land

Inter vivos trusts of land are subject to the additional formalities prescribed in s.53(1)(b) 4.04
of the Law of Property Act 1925. This provides that, “a declaration of trust respecting any
land or any interest therein must be manifested and proved by some writing signed by
some person who is able to declare such a trust or by his will”. These extra requirements
are imposed because of both the value of land and the highly technical rules that attend
its transfer. The settlor is saved, as Hayton puts it, “from the perils of oral evidence being
(mis)used to deprive him of his land”.6 Hence, land is traditionally treated differently to
other types of property. In contrast, no additional formalities are necessary to create an inter
vivos trust of personalty.7 Gardner argues that the singling out of trusts of land in this way
is justifiable:
“Trusts of land are particularly likely to be made formally in practice.

People making dispositions of land are especially likely to perceive
that they are doing something important, and will almost certainly
use professional advisers, who will always want to put important
matters down on paper. So, as with wills, the danger of a require-
ment of formality frustrating settlors’ intentions is slight, allowing
the balance of advantage to come down in favour of its imposition”.8
Section 53(1)(b) applies to a declaration of a trust of land regardless of whether the title is
freehold or leasehold and whether the land is registered or unregistered. The section will catch
a trust of land even if the land is situated outside the jurisdiction of the domestic courts. For
5 S. Gardner, An Introduction to the Law of Trusts (Oxford: Oxford University Press, 2003), p.82.
6 Hayton, The Law of Trusts, p.130.
7 See Paul v Constance [1977] 1 All E.R. 195. As Parker and Mellows observe, p.109: “It is indeed rather surprising
that a declaration of trust requires the appropriate writing even if it relates to as little as a square foot of land
while a declaration of trust of millions of pounds worth of cash or investments does not; however, that is what
the statutory provisions provide”.
8 S. Gardner, An Introduction to the Law of Trusts (2003), pp.84–85.

these purposes, land is widely defined as embracing mines, minerals, buildings and incorporeal
hereditaments (e.g. easements and profits).9 It is to be appreciated, however, that s.53(1)(b)
does not require that the trust of land be created in writing. Instead, it demands that such
trusts merely be evidenced in writing. This requires a documentary memorandum of the exist-
ence of the trust, the trust property10 and the beneficiaries of the trust.11 There is no require-
ment for a deed or for the signature to be witnessed.12
4.05 The consequence of a failure to adhere to s.53(1)(b) is that, although the trust of land
remains valid, the trust is rendered unenforceable by the beneficiary.13 This distinction can
assume significance where the timing of the creation of the trust is important. For example, in
Gardner v Rowe14 the settlor orally declared certain trusts of land. Subsequently, he became
bankrupt and only then did he decide to commit the terms of the trust to writing. Although the
creditors laid claim to the trust property, the court held that the trusts had been validly created
and, due to the presence of writing, were now enforceable by the beneficiaries. If, of course,
the settlor had declined to provide signed documentary evidence of the trust then the credi-
tors could have claimed the land. As shown in Ch.3, however, this general rule might give way
where the beneficiary can establish, for example, an estoppel interest15 (see 3.34) or, following
the dubious reasoning in Pennington v Waine,16 demonstrate that it would be unconscionable
for the settlor to renege on the arrangement (see 3.13).
There must be writing and this includes typing, printing, lithography, photography and
other modes of representing or reproducing words in a visible form.17 This definition is wide
enough to embrace the modern manifestations of writing found in telex, fax and email. The
writing may well come into existence contemporaneously with the declaration of the trust.
This is not, however, a necessary requirement. The documentary evidence can be created
either before18 or, as demonstrated in Gardner v Rowe, after the trust has been declared.
Nevertheless, and regardless of when it is brought into being, the writing must recite all the
terms of the trust. As Deputy Judge Simon Picken QC explained in Close Invoice Finance Ltd
v Abaowa, “it seems obvious to me that it is wrong to seek to divorce the question of proof
from the issue of what s.53(1)(b) requires; as I see it, the two are essentially the same and it is
not accurate to characterise the latter as being merely a matter of form”.19 There a document
9 Section 205(1)(ix) of the Law of Property Act 1925.

10 In Ong v Ping [2015] EWHC 1742 (Ch), the trust property (a house) was not identified in the signed document,
but was disclosed in a subsequent letter. It was held that when reading the documents together all the
necessary terms were set out in writing.
11 Smith v Matthews (1891) 3 De. G.F. & J. 139.
12 Close Invoice Finance Ltd v Abaowa [2010] EWHC 1920 (QB).
13 Spencer v Strickland [2009] EWHC 3033 (Ch).
14 (1828) 5 Russ 258 which was decided in relation to s.7 of the Statute of Frauds 1677 (the precursor of s.53(1)(b)).
15 Gledhill’s Trustee v Gledhill [2011] B.P.I.R. 918.
16 [2002] 4 All E.R. 215.
17 Interpretation Act 1978 Sch.1.
18 Kaki v Kaki [2015] EWHC 3692 (Ch).
19 [2010] EWHC 1920 (QB) at [87].

created 13 years after the purported declaration of trust and in the course of the dispute con-
cerning the very issue to which it related, did not satisfy s.53(1)(b).20
As there is no prescribed form for this writing to adopt, it can be pieced together from more
than one document.21 It may, for example, take the form of correspondence, documents used
in court proceedings22 or a will (valid or otherwise). Indeed, although unlikely, the terms of the
trust could even be scrawled on the back of a cigarette packet or beer mat. Understandably,
and as demonstrated in Close Invoice Finance Ltd v Abaowa,23 the document must, however,
be genuine. In Random House UK Ltd v Allason, it was claimed that the original document had
been lost and a copy was adduced in evidence.24 David Richards J considered the so-called
secondary evidence rule and concluded that the trustees must satisfy the court that the origi-
nal document existed or had existed, that it had been lost or destroyed and that a reasonable
explanation of this had been given. Here, however, the evidence showed that there had never
been a genuine declaration of trust.
The writing must, moreover, be “signed”. It is not, however, relevant that the signatory 4.06
did not analyse the precise wording of the document signed.25 Traditionally, the courts
have adopted a liberal approach as to what amounts to a signature,26 but in recent years
there has been a tightening up of this requirement. The old cases are, therefore, no sure
guide to future decisions.27 Nevertheless, there remain certain conditions that need to be
satisfied:
■ there must be some physical manifestation on the document that is intended to iden-
tify the declarant. This will entail the presence of the declarant’s mark whether repre-
sented by a cross, full signature or initials. The mark can be handwritten, typed, made
by a rubber stamp, or, when the law permits, an electronic signature;
■ the declarant’s cipher may be placed anywhere on the document provided that it
is designed to authenticate and to adopt the document. In Firstpost Homes Ltd v
Johnson, for example, the typed insertion of a party’s name at the top of a letter as
addressee was woefully insufficient to amount to a signature. In Simpson v Simpson,28
20 In Ong v Ping [2015] EWHC 1742 (Ch), the letter could still provide the missing term although it stated that Ms
Lim would like to cancel the trust. This letter recognised that the trust existed at the date of the letter and prior
to the proposed cancellation.
21 See Sandhar v Sandhar & Kang Ltd [2008] EWCA Civ 238. This is provided that the document can be clearly
connected with, and is referred to in, the document that is signed: Forster v Hale (1798) 3 Ves. Jr. 696.
22 See Wright v Wright [2010] EWHC 1808 (Ch) where a party’s affidavit supplied the necessary signed evidence.
23 [2010] EWHC 1920 (QB).
24 [2008] EWHC 2854 (Ch).
25 Rollerteam Ltd v Riley [2015] EWHC 1545Ch (upheld on appeal [2016] EWCA Civ 1291).
26 See further, C.T. Emery, “Statute of Frauds: The Authenticated Signature Fiction—An Illogical Distinction”
(1975) 39 Conv. 336.
27 See Firstpost Homes Ltd v Johnson [1995] 4 All E.R. 355, where Balcombe LJ admitted (at 363) that, “there was
every reason for consigning the old law to the limbo where it clearly belongs”.
28 [2005] EWHC 2098 (Ch).

the writing relied upon to evidence an oral trust was signed by a person with severe
dyslexia. It was argued before the High Court that, because of this disability, he
could not be taken to have agreed the contents of the documents. The court was
unimpressed and concluded that the dyslexic party would have had the documents
explained to him at the time of his signature. In order to escape the effect of signing
the document, he would have to show that the content was untrue and that he was
improperly persuaded to add his signature. Hence, even though the signatory cannot
read or understand the documents without assistance, they remain sufficient evidence
of the oral trust; and
■ the signature of the individual able to declare the trust is necessary. In relation to a
company, however, the document must be signed “by” the company and not merely
signed “on behalf of” the company. As recognised by Lloyd LJ in Hilmi & Associates Ltd
v 20 Pembridge Villas Freehold Ltd:
“In relation to a corporate entity which cannot itself hold a pen

and apply it to a piece of paper, this may seem a somewhat
metaphysical inquiry. But it is one which the law requires to be
considered, on occasion, although perhaps only very rarely”.29
■ Section 44 of the Companies Act 2006 concerns the execution of documents by a

company and allows for more informal methods than the affixing of the company’s
common seal. It provides that a document may be effectively signed by two author-
ised signatories (i.e. directors and company secretary) or by the attested signature
of a director. This process is deemed to have the same effect as if the document was
executed under the common seal of the company.30
The signature envisaged will usually be that of the settlor. It has, however, been argued that,
if legal title to the property has already been transferred, it is the owner of the equitable
interest who must sign and not the original settlor.31 If the trustee were given the mandate
to declare new trusts, in that scenario it would appear that the trustee’s signature would be
required. There is no express mention made in s.53(1)(b) of the ability of an agent to sign
the document. This limitation exists, presumably, because the written evidence of a trust of
land can emerge informally and unintentionally and, hence, requires the declarant’s direct
involvement.
29 [2010] 1 W.L.R. 2750 at 2755.

30 Redcard Ltd v Williams [2011] EWCA Civ 466.
31 T. Youdan, “Formalities for Trusts of Land, and the Doctrine in Rouchefoucald v Bousted” (1984) 43 C.L.J. 306.
See Taylor vTaylor [2017] EWHC 1080 (Ch).

Section 53(2): An exception

As Gray and Gray comment: 4.07
“However compelling the policy motivation behind the statutory

requirement of written evidence of an express trust of land, there are
nevertheless certain circumstances where even this potent rationale
is displaced by concerns ranking higher in the scale of values which
animate equitable jurisdiction”.32
Such an exception is expressly catered for in s.53(2) which states that the formalities pre-
scribed elsewhere in s.53 as to writing apply only to express trusts and do not extend to result-
ing, implied33 or constructive trusts. The latter types of trust are usually informal and may
never have been contemplated by the parties. Such implied trusts exist to achieve fairness and
to prevent unconscionable outcomes. They concern, as Glidewell LJ explained in Ivin v Blake:
“a transaction between the trustee and the cestui que trust in con-

nection with the acquisition by the trustee of a legal estate in land,
whenever the trustee has so conducted himself that it would be
inequitable to allow him to deny to the cestui que trust a beneficial
interest in the land acquired, and he will be held so to have con-
ducted himself if by his words or conduct he has induced the cestui
que trust to act to his own detriment in the reasonable belief that by
so acting he was acquiring a beneficial interest in the land”.34
Hence, to require formalities for the creation of such trusts would undermine the reason for
their very existence. Consequently, it is possible for what is originally an unenforceable express
trust of land to adopt the guise of an enforceable resulting or constructive trust on the same
terms.35 Of course, if there is no writing and no resulting or constructive trust then the trust will
remain unenforceable.36
This possibility was demonstrated in Hodgson v Marks,37 where a widow was influenced by
her lodger to transfer the title to her house into his name on the basis that this would prevent
his eviction following her death. The lodger later sold the house to a third party. The Court of
Appeal decided that the lodger had held the house on resulting trust for the widow and, as
32 Gray and Gray, Elements of Land Law, p.830. See also J.D. Feltham, “Informal Trusts and Third Parties” [1987]
Conv. 246.
33 It is, however, unclear whether there is a class of “implied trust” that is totally distinct from the resulting or
constructive trust.
34 (1994) 67 P. & C.R. 263 at 269.
35 See Simpson v Simpson [2005] EWHC 2098 (Ch).
36 Al-Khayat v Al-Khayat [2005] EWHC 3465 (Ch).
37 [1971] Ch. 892.

this implied trust fell outside s.53(1)(b), it was enforceable against the third party. Sometimes
the court will imply a constructive trust from the facts to take an otherwise unenforceable
transaction outside the ambit of the formalities. In Bannister v Bannister,38 two cottages were
conveyed to a trustee on the basis that the beneficiary would be allowed to live in one of them
for the rest of her life. The court would not allow the trustee to rely upon an absence of writing
in these circumstances and invoked a constructive trust.
4.08 A similar outcome was achieved in Rouchefoucald v Bousted39 which also concerned an
oral trust of land that was, at face value, unenforceable. The claimant had, however, relied
detrimentally on the strength of this otherwise unenforceable bargain. The court concluded
that not to enforce the claimant’s rights would amount to a fraud. As Lindley LJ explained, “it
is a fraud on the part of the person to whom land is conveyed as trustee, and who knows that
it was so conveyed, to deny the trust and claim the land himself”.40 Accordingly, as the maxim
of equity is that a “statute cannot be used as an instrument of fraud” the need for formal-
ity was, thereby, sidestepped.41 The Court of Appeal, however, spoke in terms of the express
trust remaining valid because of the maxim and did not contemplate any new constructive
trust arising. Nevertheless, the better view is that the court will, in such cases, be enforcing
a constructive trust and not the original express trust.42 At the least, this disregard of s.53 is
expressly condoned in the 1925 Act itself. As whichever route is adopted the outcome remains
the same, it appears that nothing much turns upon the correctness of this classification.43
A major area for the operation of resulting and constructive trusts concerns informal
arrangements relating to the family home. This is discussed in detail in Ch.11. For example,
where the title to, say, a house is registered in the name of one partner only, but the other
has contributed 20 per cent towards the purchase price, traditionally a resulting trust would
arise without any need for formality. The beneficial interest under this resulting trust will be
throughout fixed at 20 per cent of the value of the property and that, of course, is itself likely to
fluctuate over future years. If the legal owner later allows the other, say, to finance repairs or to
give up work to look after their children, a constructive trust may then arise which will subsume
the original resulting trust. The attraction of this alternative mechanism is that the assessment
of entitlement is not driven solely by monetary contributions towards the acquisition of the
property and can reflect what the court deems to be fair and reasonable over the whole course
of dealings between the parties.44
38 [1948] 2 All E.R. 133.

39 [1897] 1 Ch. 197.
40 [1897] 1 Ch. 197 at 206. Note that these cases concern a constructive trust imposed on the transferee in favour
of the transferor because of the terms on which the property was acquired.
41 See also, Lyus v Prowsa Developments [1982] 1 W.L.R. 1044, where land was sold on the express, oral
understanding that it would be subject to the rights of a third party. The third party acquired enforceable rights
under a constructive trust because it would otherwise entail that statute (there the Land Registration Act 1925)
was being employed as an engine of fraud.
42 See Millett LJ in Banner Homes Group Plc v Luff Developments Ltd [2000] 2 W.L.R. 772 at 780.
43 See Neale v Willis (1968) 19 P. & C.R. 836; Simpson v Simpson [2005] EWHC 2098 (Ch).
44 See Oxley v Hiscock (2004) 3 All E.R. 703; Curley v Parkes [2004] EWCA Civ. 1515.

DEALING WITH AN EXISTING TRUST INTEREST 135
Dealing with an Existing Trust Interest

Section 53(1)(c) of the Law of Property Act 1925 provides that “a disposition of an equitable 4.09
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”. This is a far from straightforward provision and, as Nolan laments, “Every year, those who
teach the law of trusts face a dry and difficult task: explaining the formalities which govern the
creation and disposition of equitable interests”.45
Several initial observations about this provision may be made:
■ a failure to comply with s.53(1)(c) makes the transfer entirely void46;
■ section 53(1)(c) applies to all property, that is, personal property as well as land;
■ the formalities do not apply to resulting or constructive trusts: s.53(2). In Neville v

Wilson,47 a dispute arose between the shareholders of a small company as to a series of
informal agreements and whether two directors had effectively disposed of their equi-
table interest in shares of a parent company. Each agreement was oral and the issue, of
course, became whether the agreements were rendered ineffectual by s.53(1)(c). It was
successfully contended that the effect of each individual agreement was to constitute
the two directors as constructive trustees for the other shareholders so that the writing
requirement was dispensed with by virtue of s.53(2) (which exempts such implied trusts
from the formal requirements). Nourse LJ could see no reason why s.53(2) should not
extend to these constructive trusts.48 Such a trust would, therefore, prevent a party who
has legal title from benefiting wrongfully from the transaction.49 The onus, of course,
lies with the claimant to demonstrate the existence of an implied trust50;
■ for the purposes of writing, two documents can be read together in order to satisfy
s.53(1)(c). By way of illustration, in Re Danish Bacon Co Ltd Staff Pension Fund Trust51
an employee nominated his wife to receive benefits under a pension scheme should he
45 R.C. Nolan, “Vandervell v IRC: A Case of Overreaching” [2002] C.L.J. 169.

46 Parliament has exempted a limited number of transactions from s.53(1)(c): for example, the Financial Collateral
Arrangements (No.2) Regulations 2003 (SI 2003/3226) which operate in relation to financial collateral
arrangements (which include repurchase agreements).
47 [1997] Ch. 144.
48 Hence, it need not be in writing: Singh v Anand [2007] EWHC 3346 (Ch); Rashid v Ayub (2001) 81 P. & C.R.
D17.
49 Hniazdzilau v Vajgel [2016] EWHC 15 (Ch). There a company was acquired by Mr Vajgel with money provided by
the claimant, Mr Hniazdzilau. It was held that, despite an absence of writing, the company was held on trust for
the claimant.
50 Arif v Anwar [2013] EWHC 624 (Fam).
51 [1971] 1 All E.R. 486.

die before he was entitled. He signed the approved form. Later the employee changed
the identity of the nominated beneficiary by amending the original form and sending
an explanatory letter to the trustee of the pension fund. The issue arose as to whether
this was a valid nomination. It was held that the alteration was effective. Although
doubtful as to whether the nomination was an assignment of a subsisting equitable
interest within s.53(1)(c), Megarry J held that, even if it was, the two documents (i.e.
the form and the letter) were sufficiently interconnected that they could together
constitute the necessary writing. The document(s) must, however, purport to be an
immediate assignment of the equitable interest.52 In Young v Dawson,53 an argument
that a signed witness statement sufficed to satisfy s.53(1)(c) was rejected as it spoke in
the past tense (“I have relinquished my status as a secured creditor”). The act to which
it referred had taken place before the making of the statement;
■ where an assignee of an equitable interest is to hold in a fiduciary capacity, there is no

need for the writing to contain all the terms of the trust. In Re Tyler,54 Miss Tyler appointed
King and Green the executors under her will. Shortly afterwards, she gave £1,500 to
King. As she did not intend King to have beneficial ownership of the money, and had
given no directions as to its application, this gave rise to a resulting trust in her favour.
Subsequently, she wrote to King instructing him to use the money for Green as she had
previously directed. Although the letter did not contain every detail of the assignment,
the letter amounted to a valid disposition of her equitable interest. As Penncycuick J
observed, “There is nothing in s.53 which requires that, where the assignee is to hold in
a fiduciary capacity, the writing shall comprise the particulars of the trust”;55 and
■ in contrast with s.53(1)(b), the signature of an agent will suffice for the purposes of s.53(1)
(c). This reflects the fact that express written assignments are unlikely to occur inad-
vertently. The agent must, however, be authorised in writing to sign the document.56
Disposition of a subsisting equitable interest?

4.10 It is crucial to understand that s.53(1)(c) applies only after a trust has been created. It has no
relevance whatsoever to the original creation of the trust under which the equitable interest
arises.57 This entails that, if both legal and equitable titles are vested in the same person, the
52 Zeital v Kaye [2010] EWCA Civ 159. There a signed stock transfer form enabling a future transfer of the legal title
to a share, which did not purport to assign the equitable interest, did not constitute a written assignment for the
purposes of s.53(1)(c).
53 [2012] EWHC 196 (Ch),
54 [1967] 1 W.L.R. 1269.
55 [1967] 1 W.L.R. 1269 at 1275.
56 See Zeital v Kaye [2010] EWCA Civ 159.
57 Drakeford v Cotton [2012] 3 All E.R. 1138.

DEALING WITH AN EXISTING TRUST INTEREST 137
law does not regard the equitable title as having an existence distinct from the legal title.58 Put
in other terms, s.53(1)(c) can apply only where the legal and equitable interests in the property
are already divorced.59 Accordingly, the formalities are designed to bite on the transfer of an
equitable interest by a beneficiary to someone else, or the direction of a beneficiary to the trus-
tee to hold the trust property on behalf of another.
It is the disposition (i.e. the transfer itself) of the equitable interest that must be in
documentary form.60 Hence, it is not enough that the transfer is merely evidenced in writ-
ing. Similarly, there can be no scope for any subsequent written ratification of the disposi-
tion. Unfortunately, it is not always clear whether a transaction amounts to a declaration
of trust (outside s.53(1)(c)) or is, instead, the disposition of an equitable interest (within
s.53(1)(c)). The cases, moreover, appear inconsistent and illogical. As Nolan put it, “sadly,
common-sense and s.53(1)(c) share only a nodding acquaintance”.61 Indeed, Green criticises
the judiciary for confining their attention to adjudicating the facts as appear before them
and this entails that judges, “often fail to perceive the wider implications of their particular
determinations”.62 Many of the decisions concern tax avoidance cases and involve the body
formerly known as the Inland Revenue (now HM Revenue & Customs) as a major player in
the litigation. As dispositions must be in writing and writing attracts stamp duty, the Inland
Revenue tends to argue for a disposition rather than a declaration. This is because stamp
duty is charged on an instrument rather than on the transaction itself. In Bishop Square
Ltd v IRC,63 for example, the Inland Revenue sought stamp duty of £372,230 whereas the
taxpayer claimed that only nominal duty was payable (a mere 50 pence).64 The outcome
(which favoured the Inland Revenue) turned upon an oral transfer being invalid under
s.53(1)(c). Similarly, in the Vandervell cases (see below), it was in the interest of the Inland
Revenue to establish that an oral disposition had been ineffective due to an absence of
writing.
Section 53(1)(c) does not apply to the outright disclaimer of an equitable interest by a 4.11
beneficiary. This is demonstrated in Re Paradise Motor Co Ltd,65 where a stepfather gave
an equitable interest in certain shares to his stepson. When the stepson discovered this,
he made it clear he did not want them. Subsequently, the stepson changed his mind and
argued that his disclaimer was ineffective because it was not in writing to comply with
58 See Commissioner of Stamp Duties (Queensland) v Livingstone [1965] A.C. 694 PC.
59 See Kinane v Mackie-Conteh [2005] EWCA Civ 45, where Arden and Neuberger LJJ held that s.53(1)(c) did not
apply when the legal and equitable estates had not been divided prior to the disposition.
60 In Chandler v Clark [2002] EWCA Civ 1249, it was emphasised that the disposition needs to be unconditional
and in final form.
61 R.C. Nolan, “Vandervell v IRC: A Case of Overreaching” [2002] C.L.J. 169, 176.
62 B. Green, “Grey, Oughtred and Vandervell—A Contextual Reappraisal” (1984) 47 M.L.R. 385, 395.
63 (1999) 78 P. & C.R. 169.
64 Although less eye-catching, in Henty & Constable (Brewers) Ltd v Inland Revenue Commissioners [1961] 1 W.L.R.
1018 duty was originally assessed on a conveyance on sale of land at £985, but the High Court held that it was
instead a transfer of shares and carried duty at 10 shillings (i.e. 50 new pence).
65 [1968] 1 W.L.R. 1125.

s.53(1)(c). The court rejected this reasoning and held that the disclaimer had been effective
and stripped him of any rights he might otherwise have had in relation to the shares.66
It also appears from the views expressed by Megarry J in Re Danish Bacon Company Staff
Pension Fund (see 4.09) that the nomination of a person to receive payment under a
pension scheme is not captured by s.53(1)(c). It is unlikely that the nomination could be
regarded as a disposition because it is revocable and transfers nothing at the time it is
made. Similarly, in Gold v Hill67 the holder of the life policy orally directed the nominated
beneficiary of the policy that, in the event of the policyholder’s death, the nominated
beneficiary should hold the policy for the benefit of the deceased’s family. As nothing was
transferred until the death of the policyholder, this was not regarded as an assignment
of the existing equitable interest. In Young v Dawson,68 Mr Young applied to participate
in the prescribed part of realised assets available for the benefit of the unsecured credi-
tors of JT Frith Limited. To do so it was necessary for him to prove that he had effectively
surrendered his security in respect of the debts owed to him. The issue was whether he
could effect such a surrender by omitting to disclose those interests in the submission of
his proof of debt. The High Court felt that he could do this without complying with s.53(1)
(c).69
In circumstances where an equitable owner declares a sub-trust of his own entire equi-
table interest, it appears that the application of s.53(1)(c) turns upon whether the equitable
owner has active duties to perform (e.g. the exercise of discretion on the creation of a discre-
tionary sub-trust). If there are active duties to perform, or only part of the equitable interest is
the subject of the sub-trust, it should be treated as a valid declaration and outside the reach
of the formalities.70 It is to be regarded as a new trust and not merely the transfer of an exist-
ing equitable interest. If, however, there are no active duties to perform (i.e. it is a passive or
bare sub-trust), the beneficiary will drop from the picture and be regarded as merely having
assigned his equitable interest.71 Hence, the disposition will be invalid unless it satisfies the
requirements of s.53(1)(c). Not everyone, however, is happy with this line of reasoning. Green
describes it has involving a “somewhat inelegant distinction” and argues that it is a dis-
tinction not truly justified on the authorities.72 Nevertheless, it still reflects the conventional
wisdom.
66 Once the equitable interest is accepted, however, there can be no informal disclaimer: Hameed v Qayyum
[2008] EWHC 2274 (Ch).
67 [1999] 1 F.L.R. 54.
68 [2012] EWHC 196 (Ch).
69 This was because of r.4.96 of the Insolvency Rules 1986, which provides that, if the creditor states that he has
no security, he loses the right to rely on his security and is to be treated as an unsecured creditor, subject only to
the court’s power to grant relief.
70 Grainge v Wilberforce (1889) 5 T.L.R. 436.
71 See Re Lashmar [1891] 1 Ch. 258.
72 (1984) 47 M.L.R. 385, 397. In Singh v Anand [2007] EWHC 3346 (Ch) at [144], Judge Norris QC refused “to enter
upon this controversy”.

SECTION 53(1)(C): FOUR SEMINAL CASES 139
Section 53(1)(c): Four Seminal Cases

Case 1: Grey v IRC
In Grey v IRC,73 the issue was whether a direction by a settlor to his existing trustees to hold 4.12
shares on trust for a third party fell within s.53(1)(c). In this case, Mr Hunter created six set-
tlements in favour of his grandchildren. Some years later, he transferred legal title in 18,000
shares in Sun Engraving Co Ltd to his trustees (one of whom was Mr Grey) to hold on an
express, bare trust for himself. Shortly afterwards, Mr Hunter orally and irrevocably directed
his trustees to hold those shares on trust in six parcels for new beneficiaries (his grandchil-
dren). The same trustees were the trustees of the grandchildren’s pre-existing settlements. Mr
Hunter attempted to do everything orally so as to escape liability to ad valorem stamp duty.
Some five weeks later, the trustees executed six documents confirming that they now held the
shares on trust for the grandchildren. There was no doubting that the new trusts were valid.
The real issue, however, was when the equitable interest in the shares passed: was it on the oral
direction or subsequently on the trustees’ written confirmation?
The House of Lords had to consider what amounted to a “disposition” for the purposes of
s.53(1)(c). The initial stumbling block concerned the forerunner of this provision as contained
in s.9 of the Statute of Frauds 1677. It was argued by the trustees that the Law of Property Act
1925 was merely a consolidating Act and, as such, did not amend the earlier legislation. As s.9
dealt only with “grants and assignments”, it was contended that s.53(1)(c) must be similarly
limited in scope. It followed that, as the creation of a trust was outside s.9,74 the present trans-
action must fall outside s.53(1)(c) because it was neither a grant nor an assignment and was,
instead, the declaration of an entirely new trust. This argument was destined to fail.
Although only by way of obiter, Lord Radcliffe was of the opinion that, even if the restricted
meaning was adopted, Mr Hunter’s direction would still amount to an assignment:
“Something had to happen to that equitable interest in order to dis-

place it in favour of the new interests created by the direction: and it
would be at any rate logical to treat the direction as being an assign-
ment of the subsisting interest . . .”.75
Both Viscount Simonds and Lord Radcliffe noted that there were substantial differences in lan- 4.13
guage and subject matter between the two statutory provisions and that there had been inter-
ceding legislation in the form of s.3 of the Law of Property (Amendment) Act 1924. Lord Radcliffe
emphasised that the 1924 Act had made alterations to the Statute of Frauds and it was these
amended provisions that were consolidated in the 1925 Act. These changes were too overt to be
ignored and there was no direct link between the two provisions. Lord Radcliffe concluded that
73 [1960] A.C. 1.
74 M’Fadden v Jenkyns (1842) 1 Hare 458.
75 [1960] A.C. 1 at 16.

the meaning of “disposition” was not to be limited or controlled by the old Act and claimed that,
“It is impossible to regard s.53 . . . as a consolidating enactment in this sense . . .”.76
With that argument out of the way, Viscount Simonds felt that the term “disposition” had
to be given its ordinary meaning and concluded that, “It cannot, I think, be denied that the
direction given by Mr Hunter, whereby the beneficial interest in the shares theretofore vested
in him became vested in another or others, is a disposition”.77 Similarly, Lord Radcliffe held no
doubts that this was a disposition for the purposes of s.53(1)(c) stating, “Whether we describe
what happened in technical or in more general terms the full equitable interest in the 18,000
shares concerned, which at the time was his, was (subject to any statutory invalidity) diverted
by his direction from his ownership into the beneficial ownership of the various equitable
owners, present and future, entitled under his six existing settlements”.78 Accordingly, the
nomination of the new beneficiaries was a disposition of Mr Hunter’s equitable interest for the
purposes of s.53(1)(c). Mr Hunter had held a subsisting equitable interest at the outset and
claimed no longer to hold such an interest. Commonsense dictated, therefore, that there had
been a purported disposition of that interest. As the oral direction could not achieve this trans-
fer, the documents executed by the trustees operated to effect the disposition. Stamp duty
was, therefore, payable on those documents.
Case 2: Oughtred v IRC

4.14 In Oughtred v IRC,79 the House of Lords had to consider whether a formal transfer of shares
following an oral agreement amounted to an assignment for the purposes of s.53(1)(c). The
trustees held 200,000 shares in William Jackson & Son Ltd (a private company) for the benefit
of Mrs Oughtred for life with remainder absolute to her son, Peter. Between mother and son,
they owned the whole equitable interest in those shares. In return for 72,700 of his mother’s
own shares in the same company, Peter made an oral contract to transfer his trust interest in
remainder to her. Her life interest under the trust would, thereby, become an absolute interest.
Following the oral agreement, the mother transferred her shares to Peter. On the same day,
two documents were executed. First, a deed of release between the trustees, the mother and
Peter, was executed which recited that his shares were now to be held on trust absolutely for
the mother. Secondly, and in order to ensure that she was the registered owner of them, the
trust shares were transferred to the mother by deed made between her and the trustees. The
consideration was expressed to be 10 shillings.
The Inland Revenue claimed ad valorem duty of £663 on the document of transfer,
claiming that it was a conveyance on sale that transferred Peter’s reversionary interest in
76 [1960] A.C. 1 at 17.

77 [1960] A.C. 1 at 12, 13.
78 [1960] A.C. 1 at 15.
79 [1960] A.C. 206; see also the similar case of Bishop Square Ltd v Commissioners of Inland Revenue (1999) 78 P. &
C.R. 169.

the 200,000 shares. The mother contended that she fell outside the catchment of s.53(1)(c)
because a contract of this sort was not a disposition of an equitable interest. It was, she argued,
not a complete disposition of Peter’s reversionary interest and was instead the creation of a
new equitable interest. In addition, and by virtue of the doctrine of conversion that operates
on a specifically enforceable contract, she argued that a constructive sub-trust had arisen
under which the equitable interest had already passed to her.80 This reflects the maxim that
“equity looks on that as done that which ought to be done”.81 It is to be appreciated, however,
that a contract for the sale of shares in a publicly quoted company will not usually be specifi-
cally enforceable. Damages will generally be an adequate remedy.82 The position is, however,
different where the shares are in a private unquoted company. In such a case, the contract is
specifically enforceable.83 Accordingly, the mother claimed that, following the oral contract,
the son was no longer the beneficial owner of the shares. All that the later transfer conveyed
was the legal title to the shares. Her case was, therefore, that the disposition of the equitable
interest fell within the exception in s.53(2) because of the constructive sub-trust attendant to
the contract.
The majority of the House of Lords rejected the mother’s appeal and held that the docu- 4.15
mentary transfer was assessable under the Stamp Act 1891 to stamp duty. The majority held
that, even if the oral agreement passed some equitable interest to the mother, the later trans-
fer was a conveyance on sale.84 Lord Denning took the view that, “stripped of all trimmings”
the case was simple.85 He had no doubt that this was a transfer such as to attract stamp duty.
Although it was the trustees and not Peter who transferred the shares to the mother:
“It is clear to me that, by the transfer so made by his authority, she

acquired his reversionary interest as effectively as if he had conveyed
it directly to her. And that is quite enough to attract stamp duty . . .
the instrument is the means by which the parties choose to imple-
ment the bargain they have made”.86
80 See Lysaght v Edwards (1876) 2 Ch. D. 499 (the entry into a contract to sell land passing an equitable interest
from vendor to purchaser). As Sir George Jessel MR explained (at 506), “the moment you have a valid
contract for sale the vendor becomes in equity a trustee for the purchaser of the estate sold, and the beneficial
ownership passes to the purchaser, the vendor having a right to the purchase-money . . .”.
81 See Walsh v Lonsdale (1882) 21 Ch. D. 9.
82 An exception to this is where the shares cannot be acquired readily in the open market: Duncuft v Albrecht (1841)
12 Sim. 189.
83 See Mills v Sportsdirect.com Retail Ltd [2010] EWHC 1072 (Ch). Lewison J assumed (but did not decide) that the
same principles applied in the case of shares traded electronically through CREST.
84 Cf. Henty & Constable (Brewers) Ltd v Inland Revenue Commissioners [1961] 1 W.L.R. 1018, where the transaction
was not categorised as a conveyance on sale and Oughtred was distinguished accordingly. It was, as Buckley J
concluded at 1029, “a conveyance made in consequence of the sale, but not as part of the sale”.
85 [1960] A.C. 206 at 232. Of these s.53(1)(c) cases, M.P. Thompson, (“Mere Formalities” [1996] Conv. 366, 369)
describes Oughtred as being, “traditionally the hardest to explain ...”.
86 [1960] A.C. 206 at 233.

The release dealt with the equitable interest and the transfer dealt with the legal title to the
shares. It did not matter that the transaction was designed to wind up the existence of the trust.
As to the constructive trust argument, Lord Denning said little, but did comment that:
“I do not think the oral agreement was effective to transfer Peter’s

reversionary interest to his mother . . . s.53(1)(c) of the Law of Property
Act, 1925, clearly made writing necessary to effect a transfer: and
s.53(2) does not do away with that necessity”.87
Lord Radcliffe, however, thought that s.53(2) did apply and Lords Keith and Jenkins expressed
no view either way. This lack of a majority view enabled Nourse LJ in Neville v Wilson88 to depart
from Lord Denning’s view and to apply the statutory exemption to an equitable interest aris-
ing under a specifically enforceable contract.89 He felt that to deny the application of s.53(2)
would be to restrict the effect of the general words employed therein without justification and
to signal problems for the future.90
4.16 Lord Jenkins (with whom Lord Keith agreed) took the view that, even if the oral contract did
give rise to a constructive trust, the disputed transfer still operated as a transfer of the shares
to the mother. He explained:
“This interest under the contract is no doubt a proprietary interest

of a sort . . . But its existence has never (so far as I know) been held
to prevent a subsequent transfer, in performance of the contract, of
the property contracted to be sold from constituting for stamp duty
purposes a transfer on sale of the property in question”.91
Lord Jenkins emphasised that the contract did not pass the full equitable interest in the shares:
“In truth, the title secured by the purchaser by means of an actual

transfer is different in kind from, and may well be far superior to, the
87 [1960] A.C. 206 at 233.

88 [1997] Ch. 144. It is what M.P. Thompson (“Mere Formalities” [1996] Conv. 366, 371) calls “another example of
the difficulties that the doctrine of conversion can create when one is considering the position of the parties
under an uncompleted contract of sale”.
89 This was an approach followed also by the High Court in Singh v Anand [2007] EWHC 3346 (Ch) where the
principle expressed in the dissenting opinion of Lord Radcliffe in Oughtred was thought to be the correct
interpretation. As Judge Norris QC concluded at [144], “as soon as the promise to transfer the equitable interest is
made for consideration there arises a constructive trust which . . . renders compliance with s.53(1)(c) unnecessary”.
90 See also, Chinn v Collins [1981] A.C. 533. P. Milne, “Oughtred revisited” (1997) 113 L.Q.R. 213, however, argues
that the decision in Neville is unclear as to whether the original equitable interest is completely wiped out once
the consideration has been paid or, instead, some equitable interest is retained by the original equitable owner.
91 [1960] A.C. 206 at 240. The vendor has been described as, “a trustee in a qualified sense only” (per Cotton LJ in
Rayner v Preston (1881) 18 Ch. D. 1 at 6) and “a quasi trustee” (per Lord Greene MR in Cumberland Consolidated
Holdings Ltd v Ireland [1946] K.B. 264 at 269).

special form of proprietary interest which equity confers on a pur-

chaser in anticipation of such transfer”.92
In this scenario, the equitable interest that exists in the purchaser until the contract is performed
is of an interim and incomplete nature. This potential vulnerability is what Lord Jenkins was refer-
ring to and he was responding to an argument put forward by counsel as to what would happen
if the contract was not performed. Lord Jenkins was accepting that, if the contract was rescinded
or specific performance for some reason ceased to be available (e.g. the son sold his reversionary
interest to a bona fide purchaser), the constructive trust would be discharged. It could not be said
that the mother ever had the entire equitable interest until the transfer of the legal title to her.
Battersby, however, argues that this approach is true when the property being purchased
(as in Oughtred) includes the legal title, “but is not true where the property is a mere equitable
interest”.93 This argument enjoys some appeal. It is obvious that a contract to purchase the
legal estate in property will, pending completion of the transaction, only pass an equitable inter-
est in that property. Full legal and beneficial title cannot, of course, pass by virtue of the doctrine
of conversion. As Millett LJ explained in Bishop Square Ltd v Commissioners of Inland Revenue:
“A transfer to a purchaser of the legal estate in property contracted

to be sold is nevertheless a ‘conveyance on sale’, notwithstanding
that the beneficial interest in the property has already passed to the
transferee under a preceding contract for sale and even though the
whole of the purchase consideration has been paid to the transferor
before the transfer . . .”.94
Hence, in Oughtred the majority of the House of Lords were correct in the conclusion that
the full equitable title was transferred only in writing, which was then subject to stamp duty.
If, however, the contract involves the transfer of the equitable interest only (i.e. it is not 4.17
to be followed by the transfer of the legal estate), different considerations should, arguably,
apply. There appears no reason why such a contract should not pass the full equitable title to
the purchaser. If so, the equitable interest will transfer under the contract without the need for
any written transfer. The vehicle of the constructive trust will, following the approach adopted
by the Court of Appeal in Neville v Wilson, ensure that s.53(1)(c) is entirely bypassed.95
The minority of the House of Lords, namely Lord Radcliffe and Lord Cohen dissented from
the majority thinking. Lord Radcliffe accepted that the whole point of the appeal was whether
it was open to the court to deduce from the documentation that Mrs Oughtred’s title to Peter’s
92 [1960] A.C. 206 at 240; see also Lord Walker in Jerome v Kelly [2004] 1 W.L.R. 1409 who (at [32]) spoke of the
provisional nature of this trust.
93 G. Battersby, “Formalities for the Disposition of Equitable Interests under a Trust” [1979] Conv. 17, 27.
94 (1999) 78 P. & C.R. 169 at 173.
95 This view enjoys some currency: see Singh v Anand [2007] EWHC 3346 (Ch); Rashid v Ayub (2001) 81 P. & C.R.
D17.

reversionary interest rested upon anything more than an oral agreement. He concluded, “my
opinion is that such a deduction is not open to a court of law. The materials that would support it
are simply not there”.96 On the oral contract, Peter created an equitable interest in his reversion
in favour of his mother. He then became a constructive trustee for her of that interest and, having
regard to s.53(2), the absence of writing did not prevent that trusteeship arising. In the words of
Lord Radcliffe, “She was the effective owner of all outstanding equitable interests”.97 As to the
transfer of legal title in the shares to the mother, this followed on the heels of the release which
wound up the trust. Lord Radcliffe reasoned that the release acquitted the trustees from their
duties. They were called on to transfer legal title only to the mother. He explained:
“this transfer cannot be treated as a conveyance of the son’s equita-

ble reversion at all. The trustees had not got it: he never transferred
or released it to them: how could they convey it?”98
The other dissentient, Lord Cohen, adopted a similar approach. Although the mother ended up
as the absolute owner of the shares, as Lord Radcliffe emphasised:
“that is description, not analysis. The question that is relevant . . .

is how she came to occupy that position; a position which, under
English law, could be reached by more than one road”.99
Case 3: Vandervell v IRC

4.18 In Vandervell v IRC,100 the House of Lords had to decide whether a direction by a settlor to
his existing trustees to transfer legal and beneficial title to trust property to a third party was
within s.53(1)(c). The National Provincial Bank held 100,000 shares in Vandervell Products
Ltd on bare trust for Mr Vandervell. In 1958, he directed the Bank to transfer the shares to the
Royal College of Surgeons to finance (at the expense of £150,000) a chair in pharmacology.
The money was to be derived from the dividends paid on these shares. It was decided that the
shares should not be given outright to the College and that an option to repurchase them for
£5,000 should be granted to Vandervell Trustees Ltd. It was not, therefore, an unconditional
transfer. Lord Reid took the overview that:
“this case provides yet another illustration of the folly of enter-

ing into an important transaction of an unusual character without
96 [1960] A.C. 206 at 227.

97 [1960] A.C. 206 at 228.
98 [1960] A.C. 206 at 228.
99 [1960] A.C. 206 at 228.
100 [1967] 2 A.C. 291.

first obtaining expert advice regarding tax liabilities which it may

create”.101
The Inland Revenue mounted two alternative arguments. First, it was argued that the transfer
of the shares was caught by s.53(1)(c). This argument was destined to fail. Secondly, the option
to repurchase entailed that Mr Vandervell retained some equitable interest in the shares. This
argument proved to be more fruitful for the Inland Revenue.
◗ Was the transfer caught by s.53(1)(c)?

The Inland Revenue argued that there was no written disposition necessary to satisfy s.53(1) 4.19
(c) and, accordingly, Mr Vandervell had failed to dispose of his equitable interest in the shares
and was liable to pay surtax on the dividends paid under those shares. The contention failed
because, on the facts, the legal and equitable title to the shares had moved within the same
transaction. This was beyond the mischief of the provision which was to prevent hidden oral
transactions and fraud which would, in turn, make it difficult for the trustees to ascertain who
the true beneficiary is. It is interesting to consider how each of the Law Lords reasoned this
outcome. Unfortunately, as Nolan points out, the decision is, “far from easy to understand” and
“equally difficult to justify as a matter of legal principle”.102
Lord Upjohn took the view that:
“when the beneficial owner owns the whole beneficial estate and is
in the position to give directions to his bare trustee with regard to the
legal as well as the equitable estate there can be no possible ground
for invoking the section where the beneficial owner wants to deal
with the legal estate as well as the equitable estate”.103
Lord Upjohn emphasised that, “the section is, in my opinion, directed to cases where deal-
ings with the equitable estate are divorced from the legal estate . . .”.104 Lord Reid agreed that
the first argument of the Inland Revenue was unsound, but did not take the matter further.105
Lord Donovan put forward the view that: 4.20
“If, owning the entire estate, legal and beneficial, in a piece of

property, and desiring to transfer that entire interest to another, I
do so by means of a disposition which ex facie deals only with the
101 [1967] 2 A.C. 291 at 305.

102 R.C. Nolan, “Vandervell v IRC: A Case of Overreaching” [2002] C.L.J. 169, 169.
103 [1967] 2 A.C. 291 at 311.
104 [1967] 2 A.C. 291 at 312; see Soomro v Khuhawar [2015] 30 January unreported (HC).
105 [1967] 2 A.C. 291 at 307.

legal estate, it would be ridiculous to argue that s.53(1)(c) has not

been complied with, and that therefore the legal estate alone has
passed”.106
It did not matter that here the legal and equitable interest in the shares was in separate owner-
ship. Mr Vandervell had the legal competence to direct his trustees to transfer both legal and
equitable title to the College and when the trustees did so they disposed of the entire estate
in the shares.
Lord Wilberforce acknowledged that s.53(1)(c), “is certainly not easy to apply to the varied
transactions in equitable interests that now occur”, but concluded, “However, in this case no
problem arises”.107 Mr Vandervell was the absolute master of the shares and could easily have
made himself the sole legal and equitable owner of the shares.108 Instead, he made a gift of
them to the College. As Lord Wilberforce explained:
“The case should then be regarded as one in which the appellant

himself has, with the intention to make a gift, put the College in a
position to become the legal owner of the shares, which the College
in fact became”.109
No separate transfer of the equitable interest was, therefore, necessary.

4.21 Following this unanimous conclusion of the House of Lords in Vandervell, it is relevant to
revisit both Grey v IRC and Oughtred v IRC. It is seductive to argue that in Grey, although the
identities of the trustees were unchanged, legal title was subsequently held by them in a dif-
ferent capacity (i.e. as trustees for the grandchildren instead of as trustees for Mr Hunter). If
this equation is correct, should this not be treated the same as the directions in Vandervell? It
would then follow that, because of this perceived movement of equitable and legal title, if Grey
came before the courts today it would be held that s.53(1)(c) does not apply. This argument is,
however, specious. It is clear from the speeches of the Law Lords in Vandervell that what was
envisaged was the transfer to one entity of the entire estate in the property. In this light, the
transfer of the legal estate subsumes and carries in its wake the equitable estate. There is no
separate disposition of a subsisting equitable interest. There is not a shred of support therein
for the contention that the legal and equitable titles could remain distinct once the transaction
is completed. Similarly, it would have been insufficient for Mr Hunter to direct his trustees to
transfer legal title to new trustees and transfer equitable title to his grandchildren. Although
there is a clear movement of both within the same transaction, the two species of title are
106 [1967] 2 A.C. 291 at 317.

107 [1967] 2 A.C. 291 at 329.
108 Under the rule in Saunders v Vautier (1841) 49 E.R. 282 collectively the beneficiaries can call for legal title and
put an end to the trust. There is nothing to stop a new trust being declared and this would clearly be outside the
scope of s.53(1)(c).
109 [1967] 2 A.C. 291 at 330.

treated differently and distinctly. This must amount to a disposition of an equitable interest
for the purposes of s.53(1)(c). If it were otherwise, it would drive the proverbial coach and four
through the provision. Accordingly, the outcome would, it is submitted, have been very differ-
ent had Mr Vandervell attempted to move legal title one way and equitable title another.
In Oughtred v IRC, it would now appear possible (in the post-Vandervell era) for the mother
and son to have sidestepped s.53(1)(c) altogether by orally directing the trustees to transfer
both legal and equitable title to Mrs Oughtred. As legal and equitable title would then move at
the same time to the same person, this would surely be a scenario where there would be noth-
ing to which the provision could apply. Of course, the transfer of legal title to the shares would
need to be effected by the completion of a share transfer form.
Nolan argues that the decision in Vandervell v IRC is best considered from the perspective
of “overreaching”, that is, the gift of the shares overreached Vandervell’s equitable interest in
them and, as a result, the Royal College acquired the shares free of that interest.110 This is so
even though the trustee received nothing in return for the shares.111 Nolan concludes that, “if
Vandervell is correctly understood as a case of overreaching, then law relating to overreaching
can be used to determine what happens in various circumstances when a nominee, acting on
instructions from his beneficiary, deals with an asset he holds for that beneficiary”.112 Although
the concept of overreaching was not considered by the House of Lords, Nolan’s alternative take
(be it right or be it wrong) is convincingly argued and offers an attractive spin on the decision
in Vandervell.
◗ What of the option to purchase?

By a majority decision, Mr Vandervell lost the appeal on the second ground advanced by the 4.22
Inland Revenue. This alternative argument was that Mr Vandervell had failed to divest himself
completely of his equitable interest in the shares because of the option retained to repurchase
them.113 For these purposes, Mr Vandervell and not the College must be regarded as the real
grantor of the option. Although the legal title to the option was validly vested in Vandervell
110 R.C. Nolan, “Vandervell v IRC: A Case of Overreaching” [2002] C.L.J. 169. As the author observes, p.175,
“It is clear that an overreaching conveyance by trustees does not amount to a disposition within s. 53(1)
(c) of the Law of Property Act 1925: such a conveyance is a disposition of legal title, free of an equitable
interest”.
111 As R.C. Nolan explains [2002] C.L.J. 169, 175, “gratuitous overreaching is not as unusual as might be thought.
It often happens when trustees exercise a power of theirs to pay or transfer trust assets to someone who is
not absolutely entitled to that property. Such ‘powers to advance capital’ or ‘powers of advancement’ are
commonplace in settlements. . .”.
112 R.C. Nolan [2002] C.L.J. 169, 170.
113 This prompted Megarry J to observe in Re Vandervell (No.2) [1974] 1 All E.R. 47 at 55 that, “the consequences of
granting the option had proved lamentable to all save the Inland Revenue. It was the option which had, I am
told, prevented the College from recovering the income tax on the dividends which had constituted the gift, and
it was the option which resulted in Mr Vandervell having to pay surtax on dividends that had never been his in
any real sense of the word”.

Trustees Ltd, no mention whatsoever was made of where the equitable title in the option was
to lie. The option deed was too short and too simple. This omission ensured that the title to the
option was held on resulting trust for Mr Vandervell. He was, therefore, liable to pay surtax on
the dividends. The majority of the Law Lords reasoned as follows.
Lord Upjohn (with whom Lord Pearce agreed) acknowledged that the law relating to
resulting trusts was not in doubt, but admitted that, “The difficulty, and it is very great, lies in
the application of those well-settled principles to the facts of the case”.114 Lord Upjohn out-
lined the basic principles to be applied:
“Where A transfers, or directs a trustee for him to transfer, the legal

estate in property to B otherwise than for valuable consideration it
is a question of the intention of A in making the transfer whether B
was to take beneficially or on trust and, if the latter, on what trusts.
If, as a matter of construction of the document transferring the legal
estate, it is possible to discern A’s intentions, that is an end of the
matter . . . But, if, as in this case . . . the document is silent, then
there is said to arise a resulting trust in favour of A”.115
In Lord Upjohn’s eyes, Mr Vandervell had subjectively intended to give away all his benefi-
cial interest in the shares, but had failed to do so because he retained the equitable interest
in the option to repurchase them. It followed that, “If the beneficial interest was in A and he
fails to give it away effectively to another . . . it must remain in him”.116 The trustee company,
therefore, held the option on trust for Mr Vandervell until either he or the trustee company (as
it was empowered to do) declared new trusts.
4.23 Lord Wilberforce admitted that whether or not a resulting trust arose in favour of Mr
Vandervell hinged upon the interpretation placed on the facts as found. He had no difficulty
in concluding as fact that Mr Vandervell had, “failed to bring about the total divestiture”
of his interest in the shares.117 As there had been a failure securely to place the beneficial
interest in the option elsewhere, Lord Wilberforce concluded that, “the equitable or benefi-
cial interest cannot remain in the air: the consequence in law must be that it remains with
the settlor”.118 The trustee company necessarily held legal title on resulting trust for Mr
Vandervell.
Lords Reid and Donovan (the minority voices on this point) both felt that there had been
an outright grant of the option to the trustee company and that the company owned the
option absolutely. Although Lord Reid agreed that, “the beneficial interest must belong to
or be held for somebody: so if it was not to belong to the donee or to be held by him in trust
114 [1967] 2 A.C. 291 at 312.

115 [1967] 2 A.C. 291 at 312.
116 [1967] 2 A.C. 291 at 313.
117 [1967] 2 A.C. 291 at 324.
118 [1967] 2 A.C. 291 at 329.

for somebody it must remain with the donor”,119 on an examination of the transaction he
concluded that the trustee company took an absolute right to the option. He could see noth-
ing on which the inference of a resulting trust could be based. Lord Donovan advanced the
view that the onus of proof lay with the Inland Revenue to establish a resulting trust of the
option and that it had failed to discharge this burden. In any event, there was no hint of any
trust evident on the face of the option deed and the language employed was of an absolute
grant. There were also compelling fiscal reasons why Mr Vandervell would want the trustee
company to hold the option absolutely. In these circumstances, Lord Donovan observed, “it is
clear that one must walk a little warily upon the path leading to a resulting trust”.120 Looking
at the situation objectively, he concluded that there was no scope for a resulting trust. As he
explained, “There was no reason why the option should be held on trust for the appellant
either expressly or by implication. On the contrary there were weighty reasons why it should
not”.121
Case 4: Re Vandervell Trusts (No.2)122

To continue the Vandervell saga, Mr Vandervell finally wanted to rid himself entirely of any 4.24
interest that he had in the shares. In 1961, he instructed his trustees to exercise the option given
to them and orally directed them to hold the shares so repurchased on trust for his children.
The trustees used £5,000 from a trust fund already established to benefit Mr Vandervell’s
children. Subsequently, the dividends of those shares were transferred to the children’s trust
fund. In 1965, and to resolve any doubts, Mr Vandervell executed a deed of release by which he
transferred to Vandervell Trustees Ltd his equitable interest in the shares, expressly declaring
that the shares were to be held on trust for his children. Mr Vandervell died in 1967 and made
no further provision for his children in the belief that they were well provided for under the
trust. Later that year, the Inland Revenue claimed tax from his executors on the dividends that
had been paid between 1962 and 1965 (£769,580 net). The Inland Revenue asserted that Mr
Vandervell had not disposed of his equitable interest in the shares until the execution of the
deed of release. The executors commenced proceedings against Vandervell Trustees Ltd (the
trustees of the children’s settlement), claiming that the estate was entitled to the dividends
paid (prior to 1965) to the trustee company, less the £5,000 paid on the exercise of the option
by the trustee company. The Inland Revenue was not, however, allowed to join in the litiga-
tion.122 The executors succeeded at first instance before Megarry J, but an appeal from this
decision was unanimously upheld in the Court of Appeal.
119 [1967] 2 A.C. 291 at 307, 308.

120 [1967] 2 A.C. 291 at 322.
121 [1967] 2 A.C. 291 at 323.
122 As Megarry J put it in the High Court [1974] 1 All E.R. 47 at 55, “the Inland Revenue is awaiting the outcome of
this case in the wings rather than being on the stage”.

◗ The reasoning of Megarry J

4.25 Megarry J considered the option to purchase the shares and concluded that, “it would be
quite unreal to say that in substance it was the college that provided the option; it was
Mr Vandervell”.123 The option was, moreover, clearly held on automatic resulting trust for
Mr Vandervell. As Megarry J argued, “What a man fails effectively to dispose of remains auto-
matically vested in him . . .”.124 It could not be said that the option was held on trust for the
children’s settlement. Megarry J acknowledged that Mr Vandervell had wanted to rid himself of
the shares and did not wish to retain any interest under the option. He continued:
“Yet I cannot see how an intention not to get the shares back can
negative a resulting trust . . . I do not see how the donor’s intention
not to have the beneficial interest can prevail when the resulting
trust is automatic”.125
He next considered the effect of the children’s £5,000 used to exercise the option and explained:
“That issue is, in essence, whether trustees who hold an option on

trust for X will hold the shares obtained by exercising that option
on trust for Y merely because they used Y’s money in exercising the
option. Authority apart, my answer would be an unhesitating No.
The option belongs to X beneficially, and the money merely exercises
rights that belong to X. Let the shares be worth £50,000, so that an
option to purchase those shares for £5,000 is worth £45,000, and
it will at once be seen what a monstrous result would be produced
by allowing trustees to divert from their beneficiary X the benefits of
what they hold on trust for him merely because they used Y’s money
instead of X’s”.126
In his opinion, the children had, instead, what is known as a “lien” (a charge) over the shares for
the repayment of £5,000 plus interest, adding, “This in effect will restore the status quo ante
as regards this payment”.127
Megarry J then turned his attention to the issue of estoppel. It was claimed by the trustee
company that Mr Vandervell knew that the exercise of the option was to be financed out of
the funds of the children’s settlement, intending and agreeing that the shares should become
part of that settlement. The trustee company did this in reliance on Mr Vandervell’s agreement
123 [1974] 1 All E.R. 47 at 61.

124 [1974] 1 All E.R. 47 at 64.
125 [1974] 1 All E.R. 47 at 72.
126 [1974] 1 All E.R. 47 at 72.
127 [1974] 1 All E.R. 47 at 73.

and, therefore, he (and, thereby, his estate) was estopped from asserting any claim to the
shares. Megarry J was unimpressed with this argument. At the time the option was exercised,
Mr Vandervell had not known that he was the beneficial owner of it. There could be no estoppel
claim made out as:
“There is nothing inequitable in a man who has no knowledge that

an option is his standing by while the option is exercised for the ben-
efit of a settlement which he has some grounds for believing to be
entitled to the option”.128
The final aspect of Megarry J’s judgment concerned the now outmoded presumption of 4.26
advancement. The trustee company submitted that the payment of the dividends over to the
children’s settlement gave rise to the presumption of a gift and prevented Mr Vandervell and
his estate from claiming them back. Megarry J was again unimpressed:
“The dividends came from the . . . Company and not from Mr

Vandervell; there could therefore be no advancement, for the . . .
Company was neither the father of Mr Vandervell’s children nor
stood in loco parentis to them”.129
◗ The divination of a new trust

The reasoning of Megarry J was not to be followed by the Court of Appeal. Lord Denning 4.27
MR recognised that, when the option was exercised, the trustee company became the legal
owner of the shares and held those shares on trust. Seizing upon Lord Upjohn’s acceptance
that the trust interest remained with Mr Vandervell until new trusts were declared by himself
or the trustee company, Lord Denning regarded the children as the beneficiaries under a new
trust declared by the trustee. He explained:
“This was a different kind of property altogether . . . On this occasion

a valid trust was created at the time of the transfer. It was manifested
in clear and unmistakable fashion. It was precisely defined. The
shares were to be held on the trusts of the children’s settlement”.130
As the option rights had disappeared when the option was exercised, it was open for Mr
Vandervell to direct the trustees to hold the property on new trusts without having to comply
with s.53(1)(c).
128 [1974] 1 All E.R. 47 at 75.

129 [1974] 1 All E.R. 47 at 75.
130 [1974] Ch. 269 at 319.

The evidence of the intention to create a new trust was, in Lord Denning’s view, indisput-
able. The key indicators of this intention were several-fold. First, that the trustee company
had used the children’s money to acquire the shares. Lord Denning noted that this would be a
breach of trust unless it was intended that the shares were added to the children’s settlement.
Secondly, the trustee company had written to the Inland Revenue declaring that the shares
were held by it on trust for the children. Thirdly, all the dividends subsequently received by the
trustee company were paid into the children’s settlement and treated as part of those funds.
This was all done with the full assent of Mr Vandervell. In these circumstances Lord Denning
concluded that, “Such being the intention, clear and manifest, at the time when the shares
were conveyed to the trustee company, it is sufficient to create a trust”.131 It is, however, unclear
how the trustee company could have declared a trust when it already believed that it was a
trustee of the shares. There was not, as Harris points out, “a conscious dispositive animus of
any kind”.132 The payment from the children’s settlement, moreover, need not be decisive as
the general rule (demonstrated by Megarry J in the High Court) is that he who merely pays will
not own. In addition, it could be argued that both the notification to the Inland Revenue and
the payment of dividends merely represented what the trustees thought the position was and
should not be regarded as declarative of a trust. These actions could have been made under
a mistake and, as Megarry J again demonstrated in the High Court, to yearn is not to transfer.
Stephenson LJ admitted that he was treading, what was for him, a “dark and unfamiliar
path”,133 but was content to uphold the appeal, “as it seems to me to be in accordance with
the justice and reality of the case”.134 Lawton LJ took the view that the children were the ben-
eficiaries of a new trust which arose from the fact that their money had been used to exercise
the option. He concluded:
“It follows that once the transfer of the shares had been registered
the beneficial interest in them was held by the trustee company on
trusts of the children’s settlement so that no declaration of trust was
necessary”.135
◗ So what about s.53(1)(c)?

4.28 Not surprisingly, it was submitted that, despite this intention, there could be no trust because
Mr Vandervell did not (until the deed of release) comply with s.53(1)(c) and could not, therefore,
dispose of his subsisting equitable interest under the resulting trust. Lord Denning could not
accept this approach:
131 [1974] Ch. 269 at 320.

132 J.W. Harris, “The Case of the Slippery Equity” [1985] 38 M.L.R. 557, 559.
133 [1974] Ch. 269 at 322.
134 [1974] Ch. 269 at 323.
135 [1974] Ch. 269 at 325.

“There is a complete fallacy in that argument. A resulting trust for

the settlor is born and dies without any writing at all. It comes into
existence whenever there is a gap in the beneficial ownership. It
ceases to exist whenever that gap is filled by someone becoming
beneficially entitled. As soon as the gap is filled by the creation or
declaration of a valid trust, the resulting trust comes to an end. In
this case, before the option was exercised, there was a gap in ben-
eficial ownership. So there was a resulting trust for Mr Vandervell.
But as soon as the option was exercised and the shares registered in
the trustees’ name, there was created a valid trust of the shares in
favour of the children’s settlement. Not being a trust of land, it could
be created without writing”.136
The central notion, therefore, was that Mr Vandervell had not disposed of his equitable inter-
est in 1961 (i.e. on the exercise of the option). As Lord Denning made clear, “All that happened
was that his resulting trust came to an end—because there was created a new valid trust of
the shares for the children’s settlement”.137 Lawton LJ adopted a similar stance and reasoned
that:
“The exercise of the option and the transfer of the shares to the
trustee company necessarily put an end to the resulting trust of the
option. There could not be a resulting trust of a chose in action which
was no more”.138
Accordingly, neither the extinction of the resulting trust of the option nor the declaration of the
new trust fell within the scope of s.53(1)(c). The conclusion that the termination of a resulting
trust falls entirely outside the formality provisions is convenient. Although s.53(2) expressly
exempts only the “creation” and “operation” of resulting trusts, the gloss applied by the Court
of Appeal means that it also encompasses termination. Harris makes the astute observation
that the case is authority for the following and novel proposition:
“No disposition of an equitable interest needs to be in writing if

the interest subsisted only by virtue of a resulting, implied or con-
structive trust, provided that the disposition brings the trust to an
end. This would mean that someone in the position of the settlor
in Grey’s case could avoid the necessity for writing by transferring
assets to persons named as trustees, avoiding declaring any trusts
136 [1974] Ch. 269 at 320.

137 [1974] Ch. 269 at 320.
138 [1974] Ch. 269 at 320.

and relying on an automatic resulting trust to leave the beneficial

interest in him; thereafter, he could make oral declarations shifting
the beneficial interest”.139
◗ The role of estoppel

4.29 Lord Denning consolidated his decision by adding that, even if Mr Vandervell had retained a
post-option equitable interest in the shares, he would have been estopped from asserting a
claim against his children. Lord Denning explained:
“Just see what happened. He himself arranged for the option to

be exercised. He himself agreed to the shares being transferred to
the trustee company. He himself procured his products company
to declare dividends on the shares and to pay them to the trustee
company for the benefit of the children. Thenceforward the trustee
company invested the money and treated it as part of the children’s
settlement. If he himself had lived, and not died, he could not have
claimed it back. He could not be heard to say that he did not intend
the children’s trust to have it. Even a court of equity would not allow
him to do anything so inequitable and unjust. Now that he has died,
his executors are in no better position”.140
Put simply, Lord Denning concluded that Mr Vandervell’s conduct was such that it would be
inequitable for him to be able to rely upon his strict legal rights under the resulting trust. The
children had acted to their detriment by sourcing the purchase money for the shares. Lawton
LJ agreed that Mr Vandervell (and now his executors) would be estopped from denying the
existence of a beneficial interest for the children.
A further example is Singh v Anand141 where an estoppel arose following a promise that
the representee would acquire a 33 per cent interest in a company. To the knowledge of the
existing beneficial owner, the representee acted to his detriment on the strength of that rep-
resentation. Although he received some payment, it did not fully compensate him for the work
done. The court concluded that, despite an absence of signed writing, the representee ought
to have had what he was promised.
There are, however, two problems with this approach on the facts of Vandervell. First,
when enforcing an estoppel claim the court must afford the “minimum equity” necessary to
redress the unconscionable treatment of the claimant.142 As regards the equity afforded to the
139 [1985] 38 M.L.R. 557, 561.

140 [1974] Ch. 269 at 321.
141 [2007] EWHC 3346 (Ch).
142 See Crabb v Arun DC [1976] Ch. 179.

children, it is clearly over-generous. The payment of £5,000 as detriment is clearly dispropor-

tionate to the eventual benefit of the substantial dividends produced from the shares. By any
lights, this is not representative of the “minimum equity” yardstick usually employed in the
valuation of the claimant’s interest under an estoppel.
Secondly, it is difficult to see what detriment (other than the payment of £5,000 which
could easily be refunded) the children had suffered as a result of the representation that they
were the beneficial owners of the shares. Indeed, Green argues that the only person who acted
to his substantial detriment was Mr Vandervell himself. He had made his will on the basis that
his children were otherwise provided for. This mistaken belief, it is contended, could justify an
estoppel being raised against Mr Vandervell’s executors. As Green admits, however, this would
make Mr Vandervell, “the only person in English law ever to have stood in the shoes of both
‘estopped’ and ‘estopper’ at one and the same time”.143
◗ Is Re Vandervell (No.2) correctly decided?

The decision of the appellate court in Re Vandervell (No.2) has been heavily criticised. For 4.30
example, Battersby states that the decision of the Court of Appeal is, “unsatisfactory and
should be approached with caution by trust lawyers and tax planners”.144 It is, indeed, difficult
on the facts to find that there was a genuine declaration of trust by the company who already
thought that it was a trustee. It is also difficult to understand why, as there was a resulting
trust of the option, there was not also a resulting trust of the shares that resulted from the
exercise of the option. The practical consequence was that the beneficial interest passed from
Mr Vandervell to his children under their settlements. This, however, appears very much like
a disposition. Perhaps a major clue is to be found from the consideration by Lord Denning of
what can be called the “hard cases” point. He commented:
“Every unjust decision is a reproach to the law or to the judge who

administers it. If the law should be in danger of doing injustice, then
equity should be called in to remedy it. Equity was introduced to
mitigate the rigour of the law. But in the present case it has been
prayed in aid to do injustice on a large scale—to defeat the inten-
tions of a dead man—to deprive his children of the benefits he pro-
vided for them—and to expose his estate to the payment of tax of
over £600,000. I am glad that we can overcome this most unjust
result”.145
143 B. Green (1984) 47 M.L.R. 385, 420.

144 G. Battersby [1979] Conv. 17, 36.
145 [1974] Ch. 269 at 322. Care must be taken to ensure that s.53(1)(c) is not itself used as an instrument of fraud:
Singh v Anand [2007] EWHC 3346 (Ch).

The Court of Appeal, therefore, felt that it would be unfair to both Mr Vandervell and his chil-
dren not to uphold the trust. As a result, the Inland Revenue withdrew its tax assessment for
the period up to 1965. Any other outcome, as Gardner concludes:
“would clearly have been unmeritorious in its disjuncture with the

true nature and import of the circumstances. The fact that such
distorted reasoning was required to circumvent s.53(1)(c) and to
produce a more appropriate result confirms the sense that the law
would do better without the section”.146
The problem, of course, is that this form of intuitive justice introduces uncertainty to the law
and provides a dubious precedent for future cases. As Clarke comments of the Vandervell
saga, “Charles Dickens would perhaps make a second Bleak House from it, but who, apart from
the lawyers or the Revenue, really benefits from all this”.147
Section 53(1)(c): A Synopsis

4.31 The operation of s.53(1)(c) is undeniably complex and defies ready understanding. It is, there-
fore, convenient to rehearse the key points concerning its application.
■ It is the transfer/disposition of an existing equitable interest under a trust that must be

in signed writing.
■ The transfer of the beneficial interest of one beneficiary to another requires writing
(Grey v IRC; Oughtred v IRC). This is so whether the transfer takes the form of an assign-
ment or a direction to trustees.
■ Section 53(1)(c) does not apply when the entire legal and equitable interest in the
property passes to a single entity (Vandervell v IRC). It is a dubious proposition to sug-
gest that the section similarly does not apply where legal title moves one way and
equitable title another in the same transaction.
■ The provision does not apply to a disclaimer of an equitable interest. Hence, an

attempted gift is ineffective if the donee disclaims before he has accepted it: Re
Paradise Motor Co.148
146 S. Gardner, An Introduction to the Law of Trusts (2003), p.99.

147 P.J. Clarke, “Mr Vandervell Again” [1974] Conv. 405, 413.
148 [1968] 1 W.L.R. 1125.

THE RULES AGAINST PERPETUITY 157
■ If a sub-trust is created under which the beneficiary retains some function and, thereby,
does not dispose of the entire beneficial interest, the traditional understanding is that
this sub-trust is beyond the reach of s.53(1)(c). If the sub-trust involves a complete
disposal of the beneficial interest, however, it is thought that this requires a written
transfer.149
■ It was recognised in Re Vandervell (No.2) that the interest under a resulting trust can
be disposed of without the need for writing. Similarly, in Levi v Levi it was held that
the relinquishment of an interest under a constructive trust did not have to be in
writing.150
■ It was also recognised in Re Vandervell (No.2) that, even though it is not specifically
identified as an exception in s.53(2), an estoppel can circumvent the need for writing.
■ As regards a contract to transfer both legal and equitable title in, say, land or shares
in a private company, the constructive trust that arises does not pass the full beneficial
interest to the purchaser (Oughtred v IRC; Bishop Square Ltd v Commissioners of Inland
Revenue). If it is only the equitable interest that is to be transferred, however, the con-
structive trust will operate outside the parameters of s.53(1)(c) (Neville v Wilson).
■ The operation of s.53(1)(c) can be excluded by Parliament as it does, for exam-

ple, in relation to financial collateral arrangements151 and to dispositions of units
in unit trust schemes, so as to make transfers of such units possible by electronic
communication.152
The Rules Against Perpetuity

An express trust that satisfies the requirements as to certainty, constitution and, when nec- 4.32
essary, formality will, as a general rule, be valid. By way of an exception there exist the rules
against perpetuity. These rules impose temporal limitations on trusts and operate to restrict
the duration that property can be tied up by the settlor.153 The rules are based on notions of
149 Grainge v Wilberforce (1889) 5 T.L.R. 436.

150 [2008] 2 P. & C.R. D1.
151 The Financial Collateral Arrangements (No.2) Regulations 2003 (SI 2003/3226); see Mills v Sportsdirect.com
Retail Ltd [2010] EWHC 1072 (Ch).
152 The Unit Trusts (Electronic Communications) Order 2009 (SI 2009/555).
153 The rules, as P. Mathews, “The comparative importance of the Rule in Saunders v Vautier” (2006) 122 L.Q.R.

public policy that property, particularly land, should not be rendered inalienable for an indefi-
nite period. To allow such sterilisation would prove economically and socially undesirable. As
Emery asks, “why should the dead rather than the living prescribe indefinitely who should be
entitled to the use and enjoyment of property (the dead hand argument)?”154 Accordingly, the
law has, through the rules against perpetuity, achieved a compromise between settlor’s wish-
ing to restrict the use of property usually with a dead hand (i.e. from the grave) and the ability
of future beneficiaries to dispose of the property free from any restraints imposed. This com-
promise recognises that one person’s freedom may well amount to another person’s restric-
tion. As Gardner explains:
“a settlor cannot legally provide for assets to remain subject to a

trust for longer than legal policy will tolerate: there comes a point
at which they must return into absolute ownership, and hence full
marketability”.155
The law has, therefore, confined such settlements within narrow limits and invalidates
them when they attempt to extend too far into the future.
Perpetuity has, at common law, traditionally been a major cause of trust failure. As will
become clear, however, as regards dispositions occurring after the coming into force of the
Perpetuities and Accumulations Acts 1964 and 2009, markedly fewer now fall foul of the per-
petuity rules. There are three distinct rules, each of which will be considered in turn:
■ the rule against remoteness of future vesting, which deals with future gifts and focuses
upon how long the property can lie dormant before having to vest in a donee. Put
simply, this is to do with the commencement of future interests and relates solely to
what may be described as “people trusts”;
■ the rule against inalienability (sometimes referred to as the rule against perpetual
purpose trusts), which deals with how long property can be rendered unmarketable
by the donor. As this rule concerns “purpose trusts”, the rule against inalienability and
the rule against remoteness of vesting operate in mutually exclusive spheres; and
■ the rule against accumulations, which concerns how long the donor can insist that
income be added to the capital and, for that period, effectively put income beyond the
reach of the donee.
266 puts it, 278, “compromise between allowing land to be tied up forever, and not allowing it to be tied up at
all”.
154 C. Emery, “Do we need a Rule Against Perpetuities?” (1994) 57 M.L.R. 602, 603. For a useful snapshot of the
development of the rules against perpetuity and accumulation, see P. Matthews, “The comparative importance
of the rule in Saunders v Vautier” (2006) 122 L.Q.R. 266, 276–285.
155 S. Gardner, An Introduction to the Law of Trusts (2003), p.42.

REMOTENESS OF VESTING 159
Remoteness of Vesting
The rule against remoteness of vesting strikes at trust provisions that attempt to sterilise capi- 4.33
tal (whether real or personal) either indefinitely or for a long period of time. The rule operates
by, as Emery explains, “limiting the period of time for which the identity of persons uncondi-
tionally entitled to property in trust funds is permitted by law to be unascertainable”.156 All
future gifts of property must occur behind a trust whether that trust is testamentary or inter
vivos, private or charitable or fixed or discretionary. The rule applies also to powers of appoint-
ment. The rule against remoteness of vesting does not, however, have application to uncondi-
tional gifts that vest immediately. The rule is to do with interests that are contingent and not
with those that are vested.
The rule against remoteness of vesting demands that the intended recipient must acquire
his interest in the property (i.e. it must vest in interest) within a finite time frame. It is, there-
fore, aimed at future gifts that are subject to a condition or contingency that may or may not
eventually be satisfied. For example, the donor might make a conditional or contingent gift
under which the identity of the beneficiary will be unknown for years to come (e.g. a gift to my
first descendant who qualifies as a barrister). Until a descendant qualifies as a barrister, the
property will be tied up (i.e. it cannot be sold or otherwise disposed of). As it is possible that
not one of the descendants ever becomes a barrister, it would be absurd if the property was
frozen for hundreds of years awaiting the mere possibility that one of them might one day
qualify. The requirement that the gift must vest (i.e. take effect) within the perpetuity period is,
therefore, designed to avoid property being tied up longer than a prescribed time. It ensures
that the identity of any potential claimant will be ascertained within the permitted perpetuity
time frame.
As will become clear, the applicable perpetuity period may differ according to whether the 4.34
gift is governed by the common law perpetuity rules or, being made after 15 July 1964 and before
6 April 2010 is governed by the Perpetuities and Accumulations Act 1964. If the gift is made on
or after 6 April 2010, then it is subject to the refashioned rules set out in the Perpetuities and
Accumulations Act 2009. Accordingly, there are three codes that may apply according to the
date that the gift was created. As the Law Commission put it, “The existence of three distinct sets
of rules is far from ideal, but it is preferable to the alternatives of no reform at all or retrospective
reform”.157 Under either code, if the gift does not vest within the chosen period it is void.
A vested interest?
It is necessary that the property must “vest” within the perpetuity period. Remoteness of vest- 4.35
ing is not concerned with the time that property may be kept once it has vested in the recipient.
156 (1994) 57 M.L.R. 602, 602.

157 The Rules against Perpetuities and Excessive Accumulations (1998) Law Com. No.251, para.1.20.

The example provided by Parker and Mellows is of when “an outright gift is made to a limited
company so that the gift vests in the company immediately, that company may hold the prop-
erty for more than a thousand years without ever infringing the rule against remoteness”.158
It is, therefore, crucial to understand what is meant by an interest having “vested” for these
purposes. The requirement is that the property “vest in interest” within the perpetuity period.
The time that it “vests in possession” is irrelevant.
Vesting in interest occurs when a prior interest is all that stands between the interest
holder and full enjoyment of the property. For example, consider a trust of property “to Jordan
for life with remainder to Adrienne”. Jordan’s prior life interest is one vested both in interest
and in possession (i.e. he has the right to the present enjoyment and use of the property). While
Jordan remains in the land of the living, Adrienne’s interest is one vested in interest, but not
vested in possession (i.e. she does not have a present right to the use and enjoyment of the
property). Both Jordan and Adrienne and their respective interests are ascertained and there
are no conditions to be satisfied.
4.36 In contrast, if the trust had been “to Jordan for life with remainder to Adrienne provided
that she qualifies as a barrister”, different considerations then apply to Adrienne. Her interest is
now merely a contingent interest and does not become vested in any sense until the condition
is fulfilled (i.e. until she qualifies as a barrister). It is with this type of contingent interest the rule
against remoteness of vesting is concerned.
The common law perpetuity period

4.37 At common law, every gift of property must vest in its intended recipient within the dura-
tion of a finite period of 21 years or specified life or lives in being (i.e. a life or lives existing
at the date the gift is made) plus 21 years. Put in a different way, the perpetuity period can
extend 21 years beyond the death of the relevant life(s) in being. A life in being may include
an embryonic child (en ventre sa mere) if this is relevant. For example, if the lives in being
are expressed to be “my children” this will include a child who at the time of the gift is
merely an embryo. It is not, however, possible to nominate, say, a tortoise or a tree as the
life in being. The basic idea was to allow a testator to make provision for his future grand-
children in a way that the property would vest when those grandchildren reached the age
of 21. Hayton and Mitchell provide a useful example of a testator who leaves his estate on
trust for his widow for life, remainder to his only son for life with remainder to such of his
grandchildren who attain 21 years of age.159 As the authors demonstrate, these trusts are
valid:
■ the widow has a life interest that is a present right of present enjoyment (i.e. it is vested
in both interest and possession);
158 Parker and Mellows, p.257.

159 Hayton and Mitchell, p.301.

■ the son also has a vested interest in that it is a present right, but of future enjoyment
(i.e. it is not yet vested in possession); and
■ the grandchildren under 21 years of age merely have a contingent interest and not a
present right (i.e. they have a contingent right to future enjoyment and have no right
vested in interest). As the contingent right must necessarily vest in the grandchildren
within 21 years of the death of the specified lives in being (the widow and the son) the
perpetuity rule is satisfied.160
In principle, the donor can expressly select any living person or persons as the chosen
yardstick.161 For example, the trust for grandchildren might nominate the lives in being as
the settlor’s children (i.e. the parents of the intended beneficiaries). As shown above, this
would ensure that all grandchildren who achieve 21 years will do so within the perpetuity
period. Nevertheless, it became common practice to adopt what is termed a “royal lives
clause”. This election entails that the perpetuity period is keyed in to the lifetime of mem-
bers of the Royal Family.162 By way of illustration, the perpetuity period could at common
law expire 21 years after the death of the last survivor of all the lineal descendants of Queen
Elizabeth II alive at the date of the gift. The Royal Family would, thereby, constitute the lives
in being.
If no life in being is expressly selected, a life in being might be chosen implicitly. For exam-
ple, “to the first child of Jordan to attain the age of 21 years” would be valid because it is unde-
niably certain that Jordan’s first child will attain the required age within 21 years of the death of
Jordan. Jordan would be the measuring life in being.
The wait and see rule

At common law, the vaguest possibility (however ludicrous) that the gift might not vest within 4.38
the permitted period was enough to invalidate it ab initio. For example, in Re Dawson the pos-
sibility of a 60-year-old woman giving birth was factored in to the equation and rendered the
trust void.163 This was clearly an unsatisfactory state of affairs and entailed that, as Parker and
Mellows put it, “common sense has gone straight out of the window and Alice has walked in
the front door”.164 As regards the earlier example concerning the first descendant to qualify as
160 If the testator had, instead, sought to benefit his grandchildren who reached the age of 22 years, this would
have been invalid as running contrary to the common law rule against remoteness of vesting.
161 In Re Moore [1901] 1 Ch. 936, however, the settlor selected a perpetuity period as “21 years from the death of
the last survivor of all persons who shall be living at my death”. This failed for uncertainty because it would be
impossible to say when the last person had died.
162 See Re Villar [1928] Ch. 471.
163 (1888) 39 Ch. D. 155. A similar absence of reality was present in Re Gaite [1949] 1 All E.R. 459, where the court
based its calculation on the basis that a girl below the age of five years could give birth.
164 Parker and Mellows, p.256.

a barrister, the gift would be void at common law because it is a possibility that it might not
vest within the perpetuity period.
The Perpetuities and Accumulation Act 1964, however, counters the problem of the gift
being invalidated at common law by the merest possibility of it failing to vest within the per-
petuity period. Section 3 introduces what is styled a “wait and see” approach and this ensures
that, if the gift eventually vests within the perpetuity period, it will be upheld. If it transpires
that, at the end of the period, the gift has not vested then (and only then) will it become void.
The wait and see approach, therefore, focuses upon actual events and not abstract possibili-
ties. For example, a trust to benefit my first grandchild will be rendered void only if and when
no grandchild emerges within the relevant perpetuity period.
4.39 The wait and see rule, however, only applies to dispositions made after 15 July 1964. The
provision, moreover, embodies a major complication. It operates fully only to save gifts that
would otherwise be void at common law when the perpetuity period is geared to the “statutory
lives in being” listed in s.3(5). If there is no statutory life in being (e.g. a legacy by will to the first
person who journeys to the centre of the earth, or where a royal lives clause is employed in a
will), the perpetuity period for the wait and see provisions is 21 years.165
Section 4 of the 1964 Act contains a series of other gift-saving provisions, including the so-
called “class-closing rule”. This allows a gift to be upheld by the exclusion of a beneficiary whose
inclusion would otherwise invalidate the gift. This imposes a cut-off point at the end of the perpe-
tuity period that maintains the validity of the gift and closes the class of beneficiaries at that point.
◗ Statutory lives in being for the wait and see provisions

4.40 For the purposes of the wait and see rule (and only for this rule), the 1964 Act defines the lives
in being. These statutory lives in being are not identical to their common law counterparts.
This means that if the interest would be void at common law on the basis that it might vest
outside the perpetuity period, the interest will not be void until it is established that it will vest
outside the perpetuity period as measured by the statutory lives in being. Section 3(5) provides
that, for the purposes of the wait and see provision, only the following who are living and ascer-
tainable can be the life or lives in being:
■ as regards a lifetime gift, the grantor (s.3(5)(a));
■ in the case of a gift to a class, a beneficiary or potential beneficiary (s.3(5)(b)(i));
■ the person upon whom any power, option or other right is conferred (s.3(5)(b)(v)); and
■ any person on the failure or determination of whose prior interest the disposition is to
take effect. For example, “to my wife for life with the remainder to be divided between
165 Perpetuities and Accumulation Act 1964 s.3(4)(b).

my nephews who marry”. The life in being may be the person having that prior interest,
i.e. the wife (s.3(5)(d)).166
The 1964 Act

The Perpetuities and Accumulations Act 1964 retains the common law method of stating a 4.41
perpetuity period with reference to a life or lives in being. It is possible, therefore, that a “royal
lives clause” could still be used. Nevertheless, the most attractive feature of the 1964 Act is that
it offered an alternative and more practical method of specifying the perpetuity period that is to
operate. Section 1 offered the donor the straightforward option of stipulating a fixed period not
exceeding 80 years within which the gift must vest in interest. Although the maximum period
might be selected, it could manufacture a perpetuity period shorter than that available under
common law. The benefit of simplicity outweighs this potential disadvantage. At least, it will
be known in advance precisely when the trust will end.
It is hard to escape the conclusion that Parliament should have seized this opportunity to
jettison entirely the common law rules. There is no doubt that, in maintaining a dual system,
Parliament promoted what might be regarded as unnecessary complexity in an already dif-
ficult area of the law.
The 2009 Act

The Perpetuities and Accumulations Act 2009 adds a third level to the perpetuity rules. It is 4.42
to be recalled that the 2009 Act applies only to trusts and wills created on or after 6 April
2010 and is, therefore, not retrospective in effect. The legislation represents an attempt to
modernise this aspect of the law and to bring it more into line with offshore jurisdictions. It was
introduced following the deliberations of the Law Commission167 and was designed to tackle
the following problems:
■ the conceptual difficulties arising from the inconsistency between the definitions of
the common law lives in being and their statutory counterparts;
■ the fact that the default position of a 21-year perpetuity period was too short to reflect
what the parties would have actually intended, particularly so in the commercial
arena;
166 Further provisions apply to powers of appointment and discretionary trusts. In short, the Perpetuities and
Accumulation Act 1964 ss.3(3) and 15(2) ensure that these remain valid to the extent that the trustees exercise
their power or discretion within the statutory perpetuity period.
167 See The Law of Trusts: The Rules against Perpetuities and Excessive Accumulations (1993) Consultation Paper
No.133 and the Final Report, The Rules against Perpetuities and Excessive Accumulations (1998) Law Com. No.251.

■ the unfairness of the present rules in circumstances, say, where a provision in a will is
void for offending the perpetuity rules as to vesting. The failure would entail that the
property would pass instead to the residuary estate and to someone who is unlikely
to be the person who was to have benefited under the invalid disposition. In other
words, the rules are capable of producing a result that the testator simply did not
intend;
■ the potential that the rules constituted a trap for the unwary settlor and generated
increased legal costs for those sufficiently knowledgeable to ensure compliance with
them; and
■ the fact that the rules were out of step with contemporary attitudes to property
ownership.
4.43 The 2009 Act retains the rule against remoteness of future vesting, but makes it more straight-
forward and easier to understand and operate. Section 5 provides that (as regards wills and
trusts created on or after 6 April 2010)168 the perpetuity period is 125 years. This period applies
whether or not the instrument specifies a different perpetuity period.169 It jettisons entirely the
notion of a “life in being”. This simplification will reduce difficulties faced by trustees in admin-
istering trust property subject to different perpetuity periods. The rule is now limited to future
estates and interests in property that are held on trust.170
The “wait and see” rule is maintained by s.7 with the result that interests are treated as
being valid until it is clear that they cannot vest within the perpetuity period. As with its prede-
cessor, the 2009 Act also provides in s.8 for the exclusion of certain beneficiaries from a class
of beneficiaries whose inclusion would cause an interest or estate to become void for remote-
ness. This class-closing rule allows a gift to be saved by the exclusion of a beneficiary whose
inclusion would invalidate a gift.
There is, however, a retrospective facility offered by s.12 and this enables the trustees of
existing trusts to opt for a perpetuity period of 100 years. This fiduciary power arises only when
the existing perpetuity period is based on a specified life or lives in being and in circumstances
where it is difficult or not reasonably practicable to ascertain whether or not the lives have
ended. In such cases, the trust will be treated as if this had been the perpetuity period since the
trust was established.171
168 Testamentary dispositions take effect at the date of death: Perpetuities and Accumulations Act 2009
s.20(6).
169 As regards trusts created prior to 6 April 2010, an application to vary the perpetuity period to 125 years can be
made under the Variation of Trusts Act 1958: A v B [2016] EWHC 340 (Ch); Allfrey v Allfrey [2015] EWHC 1717
(Ch).
170 The rule no longer applies to commercial interests such as future easements, options and rights of preemption:
see Cosmichome Ltd v Southampton City Council [2013] 1 W.L.R. 2436. Charitable trusts and pension schemes
are exempted by s.2.
171 This will not affect the accumulation period of the trust.

THE RULE AGAINST INALIENABILITY 165
The Rule Against Inalienability

The second rule (sometimes described as a rule against excessive duration or perpetual trusts) 4.44
is that trust property shall not be subject to limitations that effectively render it inalienable.
The driving force underlying the rule against inalienability is economic-based and reflects the
policy that property, particularly land, should not be tied up indefinitely.172 As Emery com-
ments, “The dead hand argument is another public interest argument based ultimately on the
proposition that the deployment of the nation’s wealth should not be entirely governed by the
wishes and designs of the dead”.173
The Perpetuities and Accumulations Acts of 1964 and 2009 have no effect on the rule
against inalienability.174 Accordingly, the common law period of a specified life or lives in
being plus 21 years operates as the relevant perpetuity period. If no life is chosen, the perpetu-
ity period will then be 21 years. No election for an 80-year fixed period is, therefore, possible.
Similarly, there is no wait and see rule to be applied. Hence, such purpose trusts will be void
unless it is certain from the outset that persons will become absolutely entitled to the property
by the end of the perpetuity period.
The rule is directed against non-charitable purpose trusts.175 As discussed in Ch.6, the 4.45
general rule is that a private purpose trust will be void for want of a beneficiary. There exist,
however, anomalous exceptions, which relate to, for example, the maintenance of tombs
and monuments and horses and hounds. Hence, the settlor may attempt to set up a fund
to maintain his own gravestone by directing his trustee to invest £10,000 and to use the
interest obtained solely for this maintenance work. In this example, the settlor is attempting
to keep the capital sum (£10,000) locked up permanently and well beyond the perpetuity
period. The trust would, therefore, clearly offend the rule against inalienability. The need for
a specific rule to cater for these admittedly rare circumstances is promoted by Hayton and
Mitchell:
“Such a rule was necessary because purposes unlike individuals

can last forever and because a rule against remoteness of vesting is
inappropriate when interests cannot vest in purposes as opposed to
persons”.176
172 See generally, I. Dawson, “The Rule Against Inalienability—A Rule Without a Purpose” (2006) 26 L.S. 414.
173 C. Emery, “Do we need a Rule Against Perpetuities?” (1994) 57 M.L.R. 602, 604.
174 Section 15(4) of the Perpetuities and Accumulation Act 1964; s.18 of the Perpetuities and Accumulations Act
2009.
175 Note that charities and most pension funds are exempted from the operation of the rule against
inalienability.
176 Hayton and Mitchell, p.303.

The Rule Against Excessive Accumulations

4.46 The underlying idea of the rule against accumulations is that it is to sidestep any require-
ment that income be added to capital (i.e. accumulated) for a period exceeding the perpetuity
period. The ambition is to prevent the property (this time income) from being tied up indefi-
nitely and to tackle what may be described as posthumous avarice.177 This rule is again based
upon the broad policy edict that property must not be rendered inalienable. The rule applies
both to charitable and private trusts.
At common law, and in the same way as with the rules against remoteness of vesting and
against inalienability, this rule was keyed in to the perpetuity period of a life or lives in being
plus 21 years. The 80-year term offered by the 1964 Act does not extend to accumulations. As
a result of creative drafting of settlements, it became apparent to Parliament that the common
law rule alone was insufficient to prevent excessive accumulations.178
4.47 Since the Accumulations Act 1800, Parliament has imposed additional restrictions. Their
present incarnation is to be found within s.164 of the Law of Property Act 1925 and s.13 of the
Perpetuities and Accumulations Act 1964. These provisions add a gloss to the common law
and permit accumulation only for the restricted periods allowed therein. The settlor must
expressly or impliedly choose one of the following periods for the duration of the accumulation:
■ the life of the grantor or settlor;
■ 21 years from the death of the grantor, settlor or testator;
■ the minority of any person(s) alive (or en ventre sa mere) at the death of the grantor,
settlor or testator;
■ the minority of any person(s) who would, if of full age, be entitled to the income to be
accumulated;
■ 21 years from the making of an inter vivos disposition;
■ the minority of any person(s) in being at the date of making the inter vivos settlement.
Effect of excessive accumulation

4.48 In circumstances where an excessive accumulation has been directed, the outcome varies
according to whether the direction violates the common law perpetuity period or one of the
177 See Re Earl of Berkeley [1968] Ch. 744.

178 This realisation emerged from the decision in Thellusson v Woodford (1798) 4 Ves. Jun. 227, where the income
was accumulated for almost 80 years and yet remained valid.

GUIDE TO FURTHER READING 167
six statutory periods. A direction that contravenes the common law perpetuity period will
be totally void and no income can be accumulated.179 A direction that satisfies the common
law, but exceeds the statutory time frame, will be valid until the lapse of the statutory period.
Beyond this cut-off point, the income must be distributed.180 For example, a direction to accu-
mulate for the life of a member of the Royal Family, while effective at common law, is not one
of the listed statutory periods and, therefore, the direction will be valid for 21 years.181
Accumulations and the 2009 Act

There is no doubt that the rule against accumulations is overly complex, uncertain and 4.49
inconsistent. Unsurprisingly, therefore, major change was promoted in the Perpetuities and
Accumulations Act 2009. Although not prospective in application, s.13 abolishes the rule
against excessive accumulations for all non-charitable trusts created on or after 6 April 2010.
A clause limiting accumulations need not now be included in the trust instrument. As regards
charitable trusts, two accumulation periods are now available under s.14. The choice is nar-
rowed to 21 years or the life of the settlor. This reflects the view that there is no longer a solid
policy basis for restricting a settlor’s ability to direct or allow for the accumulation of income,
except in the case of charitable trusts. In relation to the latter, there is a public interest in limit-
ing the time for accumulations and facilitating the spending of income for the public benefit.
Guide to Further Reading
G. Battersby, “Formalities for the Disposition of Equitable Interests under a Trust” [1979] Conv. 17.
P.J. Clarke, “Mr Vandervell Again” [1974] Conv. 405.
C. Emery, “Do we Need a Rule Against Perpetuities?” (1994) 57 M.L.R. 602.
B. Green, “Grey, Oughtred and Vandervell—A Contextual Reappraisal” (1984) 47 M.L.R. 385.
J.W. Harris, “The Case of the Slippery Equity” (1985) 38 M.L.R. 557.
R.C. Nolan, “Vandervell v IRC: A Case of Overreaching” [2002] C.L.J. 169.
S.M. Spencer, “Of Concurring Beneficiaries and Transferring Trustees” [1967] Conv. 175.
179 Curtis v Lukin (1842) 5 Beav. 147.

180 Re Watt’s WT [1936] 2 All E.R. 1555.
181 Longden v Simson (1806) 12 Ves. 295.

Formalities

Uploaded by

Copyright:

Available Formats

Formalities

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Formalities

Uploaded by

Copyright:

Available Formats

THE FUNCTION OF FORMALITIES 127

The Function of Formalities

1 Testamentary trusts are considered in Ch.5.

HALEY BOOK FINAL.indb 127 18/08/2017 09:49

The disadvantage of formalities

“Deciding whether to require formality involves assessing the advan-

HALEY BOOK FINAL.indb 128 18/08/2017 09:49

Lifetime Trusts of Land

“Trusts of land are particularly likely to be made formally in practice.

HALEY BOOK FINAL.indb 129 18/08/2017 09:49

9 Section 205(1)(ix) of the Law of Property Act 1925.

HALEY BOOK FINAL.indb 130 18/08/2017 09:49

HALEY BOOK FINAL.indb 131 18/08/2017 09:49

“In relation to a corporate entity which cannot itself hold a pen

■ Section 44 of the Companies Act 2006 concerns the execution of documents by a

29 [2010] 1 W.L.R. 2750 at 2755.

HALEY BOOK FINAL.indb 132 18/08/2017 09:49

Section 53(2): An exception

“However compelling the policy motivation behind the statutory

“a transaction between the trustee and the cestui que trust in con-

HALEY BOOK FINAL.indb 133 18/08/2017 09:49

38 [1948] 2 All E.R. 133.

HALEY BOOK FINAL.indb 134 18/08/2017 09:49

Dealing with an Existing Trust Interest

■ a failure to comply with s.53(1)(c) makes the transfer entirely void46;

■ the formalities do not apply to resulting or constructive trusts: s.53(2). In Neville v

45 R.C. Nolan, “Vandervell v IRC: A Case of Overreaching” [2002] C.L.J. 169.

HALEY BOOK FINAL.indb 135 18/08/2017 09:49

■ where an assignee of an equitable interest is to hold in a fiduciary capacity, there is no

Disposition of a subsisting equitable interest?

HALEY BOOK FINAL.indb 136 18/08/2017 09:49

HALEY BOOK FINAL.indb 137 18/08/2017 09:49

HALEY BOOK FINAL.indb 138 18/08/2017 09:49

Section 53(1)(c): Four Seminal Cases

“Something had to happen to that equitable interest in order to dis-

HALEY BOOK FINAL.indb 139 18/08/2017 09:49

Case 2: Oughtred v IRC

76 [1960] A.C. 1 at 17.

HALEY BOOK FINAL.indb 140 18/08/2017 09:49

“It is clear to me that, by the transfer so made by his authority, she

HALEY BOOK FINAL.indb 141 18/08/2017 09:49

“I do not think the oral agreement was effective to transfer Peter’s

“This interest under the contract is no doubt a proprietary interest

“In truth, the title secured by the purchaser by means of an actual

87 [1960] A.C. 206 at 233.

HALEY BOOK FINAL.indb 142 18/08/2017 09:49

special form of proprietary interest which equity confers on a pur-

“A transfer to a purchaser of the legal estate in property contracted

HALEY BOOK FINAL.indb 143 18/08/2017 09:49

“this transfer cannot be treated as a conveyance of the son’s equita-

“that is description, not analysis. The question that is relevant . . .

Case 3: Vandervell v IRC

“this case provides yet another illustration of the folly of enter-

96 [1960] A.C. 206 at 227.

HALEY BOOK FINAL.indb 144 18/08/2017 09:49

first obtaining expert advice regarding tax liabilities which it may

◗ Was the transfer caught by s.53(1)(c)?

“If, owning the entire estate, legal and beneficial, in a piece of

101 [1967] 2 A.C. 291 at 305.

HALEY BOOK FINAL.indb 145 18/08/2017 09:49