Grey & Anor (Hunter's Nominees) v Inland Revenue Commissioners

Factual and Procedural Background

The Appellants are trustees of six family settlements created by a Settlor between 1949 and 1950. On 1 February 1955 the Settlor transferred 18,000 ordinary shares in Company A to the Appellants to hold as his nominees. At a meeting on 18 February 1955 the Settlor orally and irrevocably directed the Appellants to divide the shares into six parcels of 3,000 and hold each parcel upon the trusts of the six pre-existing settlements, thereby excluding himself from all further benefit. On 25 March 1955 the Appellants and the Settlor executed six deeds of declaration of trust reciting the oral directions and acknowledging that the shares had been held on the settlement trusts since 18 February 1955.

The Appellants presented the six instruments for adjudication of stamp duty under section 13 of the Stamp Act 1891. If the oral directions were legally effective, the instruments would merely record an existing trust and attract fixed duty; if ineffective, the deeds themselves would effect a transfer of equitable interests and attract ad valorem duty. Upjohn J. held the directions effective and no ad valorem duty payable. The Court of Appeal (Morris and Ormerod L.JJ. with Judge Evershed M.R. dissenting) reversed him. The Appellants appealed to the House of Lords.

Legal Issues Presented

1. Whether the Settlor’s oral directions to the trustees on 18 February 1955 constituted a “disposition of an equitable interest or trust subsisting at the time of the disposition” within section 53(1)(c) of the Law of Property Act 1925.
2. If so, whether the absence of written, signed formality rendered the oral directions ineffective, thereby making the subsequent written instruments chargeable with ad valorem stamp duty.

Arguments of the Parties

Appellants' Arguments

• Section 53(1)(c) is a consolidation of section 9 of the Statute of Frauds; therefore “disposition” should be read narrowly as the equivalent of “grants and assignments.”
• A direction by a beneficiary to trustees to hold property upon new trusts is a declaration of trust, not a grant or assignment, and historically required no writing when involving personalty.
• Accordingly the Settlor’s oral directions were valid, so the deeds merely confirmed existing trusts and should not attract ad valorem duty.

Respondent's Arguments

• The ordinary, natural meaning of “disposition” includes any act whereby a beneficial interest is transferred, encompassing the Settlor’s oral directions.
• The Law of Property Act 1925 was not a pure consolidating statute; its wording—introduced through the amending Act 1924—was intended to broaden the scope of transactions requiring writing.
• Because the oral directions were ineffective for want of written formality, the deeds themselves effected the transfer of equitable interests and are subject to ad valorem duty.

Table of Precedents Cited

Court's Reasoning and Analysis

All members of the appellate committee agreed that the Settlor’s oral directions, if effective, transferred his entire beneficial interest in the shares to the settlement beneficiaries. Judge Simonds, delivering the leading opinion, reasoned as follows:

• “Disposition” in section 53(1)(c) should bear its ordinary meaning, namely any act divesting a person of an existing equitable interest.
• Although the Law of Property Act 1925 is formally a consolidating statute, it consolidated earlier Acts of 1922 and 1924 that themselves introduced substantial amendments. Consequently, traditional canons applicable to straightforward consolidation cannot confine the statutory language.
• The legislative history—particularly paragraph 15 of Part II of the Third Schedule to the 1924 Act—shows deliberate replacement of “grants and assignments” with the broader term “disposition.”
• Therefore, the Settlor’s oral directions were dispositions caught by section 53(1)(c) and required written, signed formality. Their absence rendered the directions void.
• Because the equitable interests were not validly transferred on 18 February 1955, the six deeds executed on 25 March 1955 effected the transfers and are chargeable with ad valorem stamp duty.

Judges Radcliffe, Cohen, Reid, and Keith each concurred, Judge Radcliffe adding that even under the Statute of Frauds the directions might have been viewed as assignments, but the point was academic given the 1925 formulation.

Holding and Implications

APPEAL DISMISSED WITH COSTS.

The House of Lords affirmed the Court of Appeal’s majority decision. Practically, the deeds in question attract ad valorem stamp duty, increasing the fiscal liability of the Appellants. The judgment clarifies that “disposition” in section 53(1)(c) of the Law of Property Act 1925 has a broad meaning, requiring written formality for oral transfers of equitable interests in personalty as well as land. No new precedent was set, but existing statutory interpretation has been authoritatively confirmed.