Assignments and Dispositions

Prof Cameron Stewart

 Assignment
• Assignment means to transfer property rights
• Can the property rights be assigned eg are
there rules against assignment?
• Is the property legal property or equitable
property?
• Is the transfer a legal assignment or an
equitable assignment?
• Is the transfer for consideration or voluntary?
 Assignments at law
• Old system title – deeds, registration – s 38
(deeds for people); s 51A(execution of deed
by a corporation)
• Torrens title – registration, indefeasibility
• Goods – gifts, sale of goods
 Assignments at law
• Debts and other choses in action
• In Lampet’s case (1612) 77 ER 994 at 997, Lord Coke
said that ‘the great wisdom and policy of the sages and
founders of our law, have provided, that no possibility,
right, title, nor thing in action, who shall be granted or
assigned to strangers, for that would be the occasion of
multiplying of contentions and suits, of great
oppression of the people, and chiefly of terre-tenants,
and the subversion of the due and equal execution of
justice’.
• Equity always allowed them to be assigned
• By the 19th century the law was changed to allow
assignment
 Section 12 of the Conveyancing Act stipulates:
Any absolute assignment by writing under the hand of the assignor (not
purporting to be by way of charge only) of any debt or other legal chose in
action, of which express notice in writing has been given to the debtor,
trustee, or other person from whom the assignor would have been entitled
to receive or claim such debt or chose in action, shall be, and be deemed to
have been effectual in law (subject to all equities which would have been
entitled to priority over the right of the assignee if this Act had not passed)
to pass and transfer the legal right to such debt or chose in action from the
date of such notice, and all legal and other remedies for the same, and the
power to give a good discharge for the same without the concurrence of the
assignor: Provided always that if the debtor, trustee, or other person liable
in respect of such debt or chose in action has had notice that such
assignment is disputed by the assignor or anyone claiming under the
assignor, or of any other opposing or conflicting claims to such debt or
chose in action, the debtor, trustee or other person liable shall be entitled, if
he or she thinks fit, to call upon the several persons making claim thereto to
interplead concerning the same, or he or she may, if he or she thinks fit, pay
the same into court under and in conformity with the provisions of the Acts
for the relief of trustees.
 Section 12
1.There must be a clear intention to assign
rather than a mere authorisation that the
debtor or other person pay another: Norman
v FCT
 Section 12
2. The assignment must be absolute and not by way of
charge. The basic reason why the assignment must
be absolute is to ensure that the debtor or other
person is protected in that at all times he or she
knows to whom payment must be made.
Furthermore, the requirement that the assignment
must be absolute enables the assignee to sue on the
debt or chose in action in his or her name because
an absolute assignment means that the assignor no
longer has any interest at all in the debt or chose in
action.
 Section 12
In Durham Bros v Robertson [1898] 1 QB 765
there was an assignment of a book debt which
was expressed to endure until money lent by
the assignee to the assignor was repaid.

Not an absolute assignment because it was

conditional upon repayment
 Section 12
Part of a debt or chose in action cannot be
assigned pursuant to s 12. This is because the
assignor still has an interest in the debt or
chose in action and thus must be joined in any
proceedings instituted against the debtor by
the assignee. A part of a debt of chose in
action can only be assigned in equity
 Section 12
3. The assignment must be in writing signed by the
assignor William Brandt’s Sons & Co v Dunlop Rubber
Company Limited
4. Express notice in writing must be given to the debtor
by either the assignor or assignee. There are no
formal requirements as to the notice and it need not
even state the date of the assignment. The
importance of the notice is that the debtor be
advised as to whom he or she must pay.
Constructive notice is NOT sufficient: Consolidated
Trust Co Ltd v Naylor (1936) 55 CLR 423 at 438-9
 Things Section 12 can’t do
1. Future choses in action
2. Change priorities - An assignment under s 12 is subject to
equities having priority over the rights of the assignee
3. Assign choses regulated by other pieces of legislation:
Patents Act 1990 (Cth) s 14; Copyright Act 1968 (Cth) ss
196–197; Trade Marks Act 1995 (Cth) ss 106–111; Life
Insurance Act 1999 (Cth) ss 200–203; Marine Insurance Act
1909 (Cth) ss 56–57
3. Assign equitable interests????? Eg a right of partnership?
 Everett v Commissioner of Taxation
(1980) 143 CLR 440
• The assignment of part of a partnership
• Obiter comment – what if it had been an absolute assignment? It
could be assigned . At at CLR 447
• [T]hough the interest of a partner is an equitable interest, it may be
assigned under s 12 of the Conveyancing Act 1919 (NSW), as
amended … The interest, being a chose in action, falls within the
expression ‘debt or other legal thing in action’ because the section,
in providing that notice shall be given to a trustee ‘as a person liable
in respect of such debt or other legal chose in action’, appears to
contemplate the assignment by a beneficiary of an equitable chose
in action against a trustee. There would be no point in referring to a
trustee if the section made provision only for the assignment by
strangers to the trust of debts owing by, and choses against,
persons who happen to be trustees. The expression ‘legal chose in
action’ may be read as ‘lawfully assignable chose in action’.
 Equitable assignments
• Equitable assignments exists for:
– Future property
– Equitable assignment of legal property for
consideration
– Voluntary equitable assignment of legal property
that is assignable at law
– Voluntary equitable assignment of legal property
that is not assignable at law
– Equitable assignment of equitable property
 Intention is the key
• In all cases, for an assignment to be effective
in equity, the assignor must display an
intention to assign. The assignor must show
that he or she is parting with dominion over
the property. No particular form of words is
necessary to establish consent.
 Burridge v MPH Soccer Management
Ltd [2011] EWCA Civ 835
• The Court of Appeal had to determine whether
the following words amount to an intention to
assign:
• ‘The fee due to [Harrison] is to be sent to the
Football Association for onward transmission to
the agent … [at] Lloyds TSB…Sort code 30-93-71
… account number…03717572 MPH Soccer
Management Ltd’.
• The court unanimously held that there was an
intention to assign the fee.
 Comptroller of Stamps (Victoria) v Howard-Smith
(1936) 54 CLR 614
• Howard-Smith was the residuary beneficiary under his deceased
wife’s estate.
• He wrote a letter to the executor and trustee of the will, who held a
power of attorney from him, requesting that certain payments be
made to named individuals from his interest as residuary
beneficiary. The payments were made.
• The Comptroller of Stamps in Victoria assessed the letter to be
dutiable, claiming that stamp duty was payable under the Stamps
Act 1928 (Vic). The Supreme Court of Victoria found the gift was
not liable for stamp duty. The Comptroller of Stamps appealed to
the High Court.
• Issue: was Howard-Smith’s letter was an assignment of property
and therefore liable for stamp duty or merely an authorisation
having no dispositive effect with no liability for stamp duty?
 Comptroller of Stamps (Victoria) v Howard-Smith
(1936) 54 CLR 614

• The High Court (Starke, Dixon and McTiernan

JJ) unanimously dismissed the Comptroller of
Stamps’ appeal and affirmed the lower court
decision that Howard-Smith’s letter did not
operate as an equitable assignment. It was
merely an authorisation with no dispositive
effect.
 Comptroller of Stamps (Victoria) v Howard-Smith
(1936) 54 CLR 614
• Starke J: A man may voluntarily dispose of his equitable estates or
interests if he choose to do so. No [620] particular form of words is
required for the purpose, but he must make clear his intention that he
divests himself of the property and gives it over to another, or that he
creates a trust in the property in favour of another. A mere mandate from
a principal to his agent gives no right or interest in the subject of the
mandate. Now, all we have to go on in this case is the letter from H B
Howard-Smith to the executor of the will of his wife and his own attorney.
It simply ‘requests’ the executor and attorney to pay certain amounts out
of his residuary interest. It is left to the discretion of the executor and
attorney whether the payment shall be in shares or in money. And, so far
as appears from the facts stated in the case, the document, when
executed, was not communicated to the persons or institutions named as
the recipients of Howard-Smith’s bounty. The absence of communication
suggests that the appropriation was not irrevocable. The document, it
appears to me, operates as an authority to the executor and attorney to
make the payments mentioned, and is not a transfer or assignment of any
interest to the persons or institutions named, nor the creation of any trust
in their favour.
 Assignments of future property in
equity
• The assignment of future property
• The rule in Holroyd v Marshall (1862) 10 HLC
191 at 211; (1862) 11 ER 999 at 1007
• Valuable consideration
• Is the property present or future property?
 Norman v Federal Commissioner of
Taxation
• Voluntary deed between a husband and wife
whereby the husband purported to assign to
the wife two items of property. First, there
was interest on a loan, which the borrower
was entitled to repay to the assignor at any
time and without notice. Second, there were
dividends on certain shares owned by the
assignor.
• Tax Com argues that voluntary hence
ineffective
 Norman v Federal Commissioner of
Taxation

• IS it the right to receive money

(present property) or the money
itself (future property)?
 Norman v Federal Commissioner of
Taxation

• In relation to the dividends, the High Court

(Dixon CJ, McTiernan, Windeyer, Menzies and
Owen JJ) unanimously held that the assignment
was not effective because it involved future
property for which the assignee did not provide
valuable consideration. A bare majority (Dixon
CJ, Menzies and Owen JJ; McTiernan and
Windeyer JJ dissenting) came to the same
conclusion in relation to the interest on the
loan.
 Shepherd v Commissioner of Taxation
• Inventor was entitled to royalties in relation to the
manufacture of castors.
• By a voluntary deed he assigned ‘all [his] right title and
interest in and to an amount equal to ninety per
centum of the income which may accrue during a
period of three years … from [the] royalties’..
• Tax Com says ineffective because its future property
• The majority of the High Court (Barwick CJ and Kitto J;
Owen J dissenting) held in favour of Shepherd on the
basis that the voluntary deed of assignment was an
effective assignment of presently existing property.
 Future or Present?
• Everett v Commissioner of Taxation (1980) 143
CLR 440; 28 ALR 179 a taxpayer purported to
assign a fraction of his share in a partnership
together with the right to receive a
corresponding share of partnership profits.
The majority of the High Court of Australia
held that the assignment involved present
property.
 Future or Present?
• In Booth v Federal Commissioner of Taxation
(1987) 164 CLR 159; 76 ALR 375 the High
Court of Australia ruled that the assignment
by a landlord of a percentage of the right to
receive rent payable in respect of particular
premises involved present property, holding
that the assignment was analogous to the
facts of Shepherd and not Norman
 Description of the property
• For a valid assignment of future property the
property must be described with sufficient
particularity to permit its identification when
it comes into existence or into the possession
of the assignor.
• Tailby v Official Receiver (1888) 13 App Cas
523
Assignment of future property and specific
performance
• This passage in Holroyd suggests that the
assignment is not valid if, as at the date upon
which the subject matter of the assignment
comes into the hands of the assignor, the
court would decline an order for specific
performance of the contract to assign.
Assignment of future property and specific
performance
• If A, for valuable consideration agrees to assign
future property to B, and consideration has been
paid or executed by B, when A acquires property that
falls within the description of that which A agreed to
assign, equity determines that the property vests in B
as soon as it is acquired by A and can be identified.
There is no need for any further assurance by A or
action to be taken by B
• Equity looks on that as done which ought to be done
 Nature of the assignee’s right
• What is the nature of the assignee’s
right?
• If debt or similar to debt, if the
assignor goes bankrupt and then
discharged the debt is discharged?
 Re Lind [1915] 2 Ch 345
• Lind had an expectancy under his mother’s will. Prior to her
death he borrowed from two separate sources (Norwich
Union and Arnold), in each case assigning the expectancy
as security for the loan.
• Lind was then declared bankrupt, from which he was
subsequently discharged.
• He then borrowed money from a third source (Industrials
Finance Syndicate) and again assigned his expectancy as
security for the loan.
• His mother then died.
• Did the third assignee’s interest in the property inherited by
Lind pursuant to his mother’s will have priority over the
interests of the first two assignees?
 Re Lind [1915] 2 Ch 345
• The Court of Appeal (Swinfen Eady, Phillimore and Bankes LJJ)
unanimously ruled in favour of the first two assignees. The Court
found that the first two assignments survived Lind’s bankruptcy.
• All three judges rejected the notion that the rights of an assignee of
future property rested purely in contract. Rather, there was a higher
right. The crucial factor establishing this higher right was the fact
that an assignee of future property obtains an equitable interest in
the property immediately and automatically upon the property
coming into existence or into the possession of the assignor.
• This attribute of the assignment of future property meant that the
rights of the assignee were sufficiently proprietary in nature to
attract the rules relating to priorities between competing interests
in the property that was the subject of the assignment.
• If the rights of the first two assignees had been merely contractual
they would have been completely discharged by Lind’s bankruptcy
and no priorities issue would have arisen with the third assignee.
 Re Lind [1915] 2 Ch 345
• The practical implication of Re Lind is that an
assignee of an expectancy taken as security
for a loan has the right not to prove his or her
debt in the assignor’s subsequent bankruptcy,
and can simply rely on the security, in much
the same way as an ordinary secured creditor
can do upon the bankruptcy of a debtor
The equitable assignment of legal property
for consideration

• If no requirement for writing then an

assignment of legal property for consideration
takes effect immediately the consideration is
paid or executed
• If there is a requirement for writing then
doctrine of part performance may save an oral
agreement
The equitable assignment of legal property
for consideration
• In Everett v Commissioner of Taxation, at CLR
450; ALR 185, the majority of the High Court
of Australia said:

• [A]n equitable assignment of, or a contract to

assign, present property for value takes effect
immediately and passes the beneficial interest
to the assignee.
The voluntary assignment of legal property
assignable at law
• Milroy v Lord (1862) 4 De G F & J 264 at 274;
(1862) 45 ER 1185 at 1189
• The first limb of Milroy v Lord: do everything
necessary to be done: Corin v Patton (1990) 169
CLR 540

• The second limb of Milroy v Lord: assignor has

done all that is necessary to be done to render
the assignment binding on the assignor Costin v
Costin (1995) NSW Conv R 55-811
 Corin v Patton (1990) 169 CLR 540
• Mr and Mrs Patton owned land as joint tenants.
• Mrs Patton was terminally ill and, on the assumption
that she would die before her husband, the land would
have passed to her husband automatically upon her
death in accordance with the principle of survivorship
• She did not want this to happen so she executed three
documents – a transfer to her property of her share, a
trust and will were she left her estate to the children
• The transfer had not been registered
• Had she done everything necessary to be done?
• No – she did not authorise the bank to uplift the CT to
Corin for the purpose of registering the transfer
Costin v Costin (1997) NSW Conv R 55–
811
• Costin snr makes an initial attempt to sever a joint tenancy in relation to
Torrens title land by an assignment of his interest to his son.
• Costin snr handed over an appropriate transfer document as well as giving
written instructions to the solicitors who held the certificate of title to
release it to the assignee.
• The solicitors refused to do so because they believed that they needed the
authority of both the joint tenants to release the certificate of title to the
assignee.
• Costin snr later changed his mind and assigned his interest to a second son
and the second son was duly registered as co-owner of the property.
• The first son argued that there had been an effective equitable assignment
to him and that the second son held the interest in the property on trust
for the first son.
• The court held the assignment to the first son was ineffective.
The voluntary assignment of legal property
not assignable at law
• If the legal property cannot be assigned at law
the assignment will be effective in equity if the
assignor has manifested an intention to make
an immediate and irrevocable transfer :
Norman v FCT
• The principles set out in Milroy v Lord do not
apply. Nor is consideration required
• Arguably the only example of such property is
part of a debt or chose in action
 The equitable assignment of equitable
property
• The assignment of equitable property can only
be achieved in equity. Because equitable
property is not recognised at common law it
cannot be the subject of a legal assignment.
For a voluntary assignment of equitable
property the assignment must be absolute.
Apart from any statutory requirement of
writing (see below), all that is necessary for a
valid equitable assignment is ‘a clear
expression of an intention to make an
immediate disposition’
 Problem
• Monica, aged 27, and Chandler, aged 26, were
married five years ago. Three years ago they
purchased, as joint tenants, a house under
Torrens title. About a year ago their marriage
began to break down. They decided to keep
up the pretence of being married because a
divorce would have damaged their respective
careers. Six months ago Monica was
diagnosed as having breast cancer.
• One week ago Monica met with her brother
Ross and told him that she wanted him to
have her interest in the house she had
purchased with Chandler. To effectuate this
gift she handed Ross a duly executed
Memorandum of Transfer transferring her
interest in the house to Ross, together with a
letter addressed to Ally, the solicitor in whose
office the certificate of title was held. The
letter directed Ally to release the title deed to
Ross.
• The next day Ross went to Ally’s office to collect the
title deed but Ally refused to release it to Ross on the
ground that she could not do so without also having
a direction to that effect from Chandler. Ross left
Ally’s office without the certificate of title. Before
anything else was done in relation to this matter
Monica was killed in a car accident.
• Ross seeks your advice as to whether he is entitled to
Monica’s interest in the house.
 Answer
• The issue raised by this problem is whether the transaction
between Monica and Ross amounted to an effective equitable
assignment of the property to Ross. If it did the assignment
would have severed the joint tenancy between Monica and
Chandler with the result that Chandler would not have
inherited Monica’s interest in the property on her death
pursuant to the principle of survivorship. At her death Monica
would have held her interest in the property as trustee for
Ross. If the transaction was not an effective equitable
assignment of the property, Monica would have died holding
her interest in the property as joint tenant with Chandler who
would inherit her interest pursuant to the principle of
survivorship.
 Answer
• Given that Monica sought to assign her legal interest
in the property to Ross for no consideration, the
question of whether it was assigned in equity invokes
the principles in Milroy v Lord (1862) 4 De G F & J
264 at 274; (1862) 45 ER 1185 at 1189 where it was
held that such an assignment would be valid in
equity only if Monica had done all that was
necessary to be done in order to render the
assignment binding upon her: see [4.6.7]. It should
be noted that there has been no legal assignment of
the property because the transfer document has not
been registered: see [4.3.4].
 Answer
• On the basis of the High Court decision in Corin v
Patton (1990) 169 CLR 540; 92 ALR 1, or in
Queensland pursuant to s 200 of the Property Law
Act 1974 (Qld), the principles in Milroy v Lord mean
that Monica would have assigned her interest in the
property to Ross if (i) she had performed those acts
towards a legal assignment of the property which she
and she alone could perform and (ii) whether the gift
to Ross was beyond recall by Monica: see [4.6.9]–
[4.6.12]. Monica’s actions satisfy the first of these
requirements
 Answer
• However, Ally’s refusal to hand over the title deed to
Ross without Chandler’s consent means that the gift
to Ross was not beyond Monica’s recall. In Costin v
Costin (1995) NSW Conv R 55–811 the New South
Wales Court of Appeal held that a refusal by a
solicitor such as Ally to hand over the title deed
meant that an assignment such as Monica’s would be
ineffective in equity :see [4.6.13].. On the basis of
this decision Monica would not have assigned her
interest in the land to Ross with the result that
Chandler inherits the property pursuant to the
principle of survivorship.
Equitable assignment of equitable property

• The assignment of equitable property can only be

achieved in equity. Because equitable property is not
recognised at common law it cannot be the subject
of a legal assignment. For a voluntary assignment of
equitable property the assignment must be absolute.
Apart from any statutory requirement of writing, all
that is necessary for a valid equitable assignment is ‘a
clear expression of an intention to make an
immediate disposition’: Norman at CLR 30; ALR 149,
per Windeyer
 Section 23C of the Conveyancing Act
23C Instruments required to be in writing
(1) Subject to the provisions of this Act with respect to the creation of
interests in land by parol:
(a) no interest in land can be created or disposed of except by writing signed
by the person creating or conveying the same, or by the person’s agent
thereunto lawfully authorised in writing, or by will, or by operation of law,
(b) 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 trust or by the person’s will,
(c) a disposition of an equitable interest or trust subsisting at the time of the
disposition, must be in writing signed by the person disposing of the same
or by the person’s will, or by the person’s agent thereunto lawfully
authorised in writing.
(2) This section does not affect the creation or operation of resulting, implied,
or constructive trusts.
 Section 23C of the Conveyancing Act
The writing requirements within s 23C(1) can be
satisfied by more than one document
provided they are obviously interconnected:
Australia and New Zealand Banking Group Ltd
v Widin (1990) 102 ALR 289 at 297–300 per
Hill J.
Section 23C of the Conveyancing Act
Section 23C(1)(b) merely requires evidence in
writing in relation to a declaration of trust of
land.
However, the disposition or creation of an
interest pursuant to s 23C(1)(a) must itself be
in writing.
In all Australian jurisdictions except
Queensland, the disposition of a subsisting
interest pursuant to s 23C(1)(c) or its
equivalents must also be in writing.
Section 23C of the Conveyancing Act
Section 23C(1)(a) and s 23C(1)(b) apply to the
creation or disposition of interests, whereas s
23C(1)(c) only applies to the disposition of
subsisting interests.
Section 23C of the Conveyancing Act
Section 23C(1)(a) applies to the disposition of
legal and equitable interests in land

Section 23C(1)(a) and s 23C(1)(b) apply only to

land, whereas it has been held that, despite
the references to land in the opening sentence
of the section, s 23C(1)(c) applies to interests
in land and personalty
Equitable assignment of equitable interest

• 23C(1)(c) requires assignments of subsisting

equitable interests to be in writing.
• It does not apply if the assignor has both the
legal and equitable interest in the property.
This is a consequence of the decision in
Commissioner of Stamp Duties (Queensland) v
Livingston [1965] AC 694
Equitable assignment of equitable interests

• Nor does s 23C(1)(c) apply when where an

absolute owner of property disposes of an
equitable interest in that property, the
equitable interest is created by the
disposition. A similar line of reasoning applies
to the equitable assignment of a legal interest
in property. Here the assignee’s interest is a
newly created one and not the assignment of
a subsisting equitable interest.
 Disposition by way of a direction by a
beneficiary to a trustee
• Direction to hold property on trust for a third
party
• What if a beneficiary instructed his or her
trustee to hold the equitable interest in the
trust on trust for someone else?
• What would be required for this interest to
pass?
 Grey v Inland Revenue Commissioners
[1960] AC 1
• Hunter was the beneficiary under a bare trust of 18,000
shares. Grey was the trustee.
• On 18 February 1955 Hunter orally and irrevocably directed
Grey to hold those shares on various trusts for Hunter’s
grandchildren.
• One week later Hunter executed various declarations of trust
confirming the effect of the oral direction given to Grey.
• Was to oral directive effective to pass the interest?
• If it was then stamp duty was only payable on a nominal basis
on the confirming declarations
• The House of Lords ruled against Grey and found that the oral
directions were ineffective. This was the disposition of a
subsisting equitable interest and needed to be in writing
• Ad valorem stamp duty had to be paid on the written
declarations of trust.
 Vandervell v Inland Revenue
Commissioners [1967] 2 AC 291
• A bank was a bare trustee of shares for Vandervell.
Vandervell orally directed the bank to transfer the
shares to the Royal College of Surgeons. His intention
was that the college acquire both the legal and
equitable interests in the shares.
• Vandervell was assessed as liable for a surtax on the
shares pursuant to relevant income tax legislation, on
the basis that his oral direction to the bank did not
result in a disposition of the shares to the college.
• If the oral direction was an effective disposition of
the shares to the college, Vandervell was not liable
for the surtax.
 Disposition by way of a direction by a
beneficiary to a trustee
• The House of Lords unanimously ruled in favour of Vandervell,
holding that his direction to the trustee was not a disposition within
the parameters of s23C(1)(c).

• On the issue of Vandervell’s oral direction the House found that it

was effective and did not have to be in writing.

• Grey v IRC was distinguishable from the present case because in

that case the transaction was one that dealt only with the
subsisting equitable interest, whereas in the present case the
transaction involved dealing with both the legal and equitable
interests. It was not the disposition of a subsisting equitable
interest

• Neither were S 23C(1)(a) or (b) relevant because the interests were

personalty
 What if the assignor dies before the
direction is carried out?
• In Vandervell v IRC, at AC 330; All ER 18, Lord
Wilberforce said that, if Vandervell had died
before his direction to the trustee had been
carried out, the gift would nevertheless have
been valid on the basis that Vandervell had
done everything within his power to transfer
the property to the college
 Parker & Parker v Ledsham [1988]
WAR 32
• Prior to death a testatrix gave trustees a
written direction to pay money from her
deceased husband’s estate to named persons
• She died before the money was paid.
• Rowland J held that in such circumstances the
direction to the trustee would be revoked by
the death of the person making the direction.
 Disposition by way of a contract to assign
an equitable interest
• Do contracts for valuable consideration to assign an equitable
interest in property have to be in writing?
• There is divided opinion
• On one view a contract for valuable consideration to assign an
equitable interest in property would be a ‘disposition’ within
the meaning of the legislation, and would therefore have to
be in writing.
• On another view s 23C(2) effectively dispenses with the
requirement of writing in the context of the creation of,
constructive trusts.
• It is a well-settled principle of law that a contract for valuable
consideration to assign property of any kind gives rise to a
constructive trust whereby the vendor is a constructive
trustee of the property for the purchaser eg the rule in
Lysaght v Edwards
 Oughtred v Inland Revenue
Commissioners [1960] AC 206
• Mrs Oughtred held a beneficial life estate in certain
shares.
• Her son Peter held the equitable reversionary
interest in those shares.
• Mrs Oughtred also owned absolutely a number of
other shares in the same company.
• By an oral agreement of 18 June 1956 Mrs Oughtred
and her son agreed that on 26 June 1956 she would
transfer to him the shares in the company that she
owned absolutely and in return Peter would
surrender to her his equitable reversionary interest
in the shares in which Mrs Oughtred had an
equitable life estate, thereby making her the
absolute beneficial owner of those shares
 Disposition by way of a contract to assign
an equitable interest
• On 26 June 1956 three documents were executed to effectuate the
oral agreement of 18 June 1956.
• The first document was a deed of release which noted that the shares
formerly held by trustees on trust for Mrs Oughtred for life with an
equitable reversionary interest to Peter, were now held on trust for
Mrs Oughtred absolutely and that it was intended to transfer legal title
to her whereupon the trustees would be released from their
trusteeship.
• The second document transferred, for nominal consideration, the
shares formerly owned absolutely by Mrs Oughtred to Peter.
• The third document was a transfer, for nominal consideration, of the
legal title from the trustees to Mrs Oughtred in relation to the shares
referred to in the first document.
• The third document was assessed by the taxing authorities as liable for
the payment of ad valorem stamp duty on the basis that the earlier
oral contract was ineffectual in transferring Peter’s equitable
reversionary interest to Mrs Oughtred
 Disposition by way of a contract to assign
an equitable interest
• A bare majority in the House of Lords found in favour of the taxing
authorities.
• Lord Jenkins (Lord Keith concurring) opined that, even if the earlier oral
agreement created a constructive trust, the later transfer to Mrs Oughtred
from the trustees would have conferred upon her rights superior to those
gained on the creation of the constructive trust. In such circumstances the
transfer would be dutiable at ad valorem rates under the stamp duty
legislation
• Lord Denning also was of the view that the oral agreement was ineffective
to dispose of Peter’s equitable reversionary interest because of the
requirement of writing in s23C(1)(c). In his Lordship’s view s 23C(2) did not
do away with that requirement.
• Lord Radcliffe for the minority, accepted the view that the oral agreement
of 18 June 1956 gave rise to a constructive trust and that the disposition
was effected by the oral agreement. In such a situation s 23C(2) dispensed
with the need for writing. The transfer from the trustees to Mrs Oughtred
of 26 June 1956 did not dispose of Peter’s reversionary interest and
accordingly was only liable to nominal stamp duty
 Disposition by way of a contract to assign
an equitable interest
• In Neville v Wilson [1997] Ch 144 the
Court of Appeal in England, when
confronted with this diversity of opinion
in Oughtred v IRC, unanimously endorsed
Lord Radcliffe’s view that a constructive
trust had effective transferred the
interest orally.
Disposition of an equitable interest by way
of declaration of trust
• A disposition includes a declaration of trust for
the purposes of s 23C(1)(c)
 Question
• Mrs Dole was the absolute beneficial owner of 10,000 shares
in Macquarie Mines Ltd (MML). The registered holder as
trustee of the shares was MML’s bank and it was obliged to
transfer the legal title to the shares to Mrs Dole at any time if
called upon to do so by Mrs Dole. One week ago Mrs Dole
called the manager of the bank and said to him: ‘I want my
son Bob to have my shares in MML. Please transfer them to
him’. The manager replied: ‘Very well’. Two days later, and
before any steps were taken by the bank manager to carry out
Mrs Dole’s instructions, Mrs Dole died. In her will she left her
entire estate to her husband Eric.
• Eric seeks your advice as to who is entitled to the shares in
MML.
 Answer
• The issue is whether Mrs Dole’s oral direction to the trustee disposes of
the property to Bob or is the direction a disposition of a subsisting
equitable interest caught by the writing requirement in s. 23C(1)(c) of the
Conveyancing Act.
• Because the property is personalty there is no question of s. 23 (1)(a) or s.
23C(1)(b) applying as they are confined to land.
• Section 23C(1)(c) does apply to both interests in land and personalty.
• Whether Mrs Dole's direction is within s. 23C(1)(c) depends upon a
consideration of Vandervell v IRC which held that it doesn’t on these facts.
• Even though Mrs Dole is getting rid of her equitable interest s 23C(1)(c)
does not apply because Mrs Dole intends to and has the power to deal
with both the legal and equitable interests in the shares. Thus, the oral
direction is effective to pass the equitable interest to Bob. At her death
Mrs Dole has no interest in the shares and Eric does not inherit any
interest in them upon her death.