Skip to content


Grey and Another Vs. Commissioners of Inland Revenue - Court Judgment

LegalCrystal Citation
CourtHouse of Lords
Decided On
Case NumberNo.
Judge
AppellantGrey and Another
RespondentCommissioners of Inland Revenue
Excerpt:
.....moreover, there is warrant for saying that a direction to his trustee by the equitable owner of trust property prescribing new trusts of that property was a declaration of trust. but it does not necessarily follow from that that such a direction, if the effect of it was to determine completely or pro tanto the subsisting equitable interest of the maker of the direction, was not also a grant or assignment for the purposes of section 9 and therefore required writing for its validity. something had to happen to that equitable interest in order to displace 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 assignment of the subsisting interest to the new beneficiary or beneficiaries or, in other cases, a.....
Judgment:

Viscount Simonds

My lords.

This appeal raises a question upon which there has been a difference of opinion in the Courts below. It is whether certain instruments which were presented for adjudication to stamp duty under section 13 of the Stamp Act, 1891, are or are not chargeable with ad valorem duty. The Court of Appeal (Morris and Ormerod, L.J.J., Lord Evershed, M.R. dissenting) held that they are so chargeable. Upjohn, J. had decided to the contrary.

The facts as stated in the Case Stated by the Commissioners of Inland Revenue may be summarised as follows: —

1. The Appellants are trustees of six settlements each of which was made between a Mr. Hunter as settlor of the one part and the Appellants as trustees of the other part. Four of these settlements were respectively dated the 22nd July, 1949, and a fifth was dated the 9th August, 1949, and each settlement directed the Appellants to stand possessed of the property comprised therein upon the trusts thereby declared for the benefit of a named grandchild of Mr. Hunter and such other trusts as therein appearing. All the said five settlements are in similar form. The sixth settlement was dated the 1st May, 1950, and the Appellants were thereby directed to stand possessed of the property comprised therein upon the 'trusts thereby declared for the benefit of 'the then existing and future grandchildren therein specified of Mr. Hunter.

2. By an instrument of transfer dated the 1st February, 1955, Mr. Hunter transferred to the Appellants 18,000 ordinary shares of £1 each in Sun Engraving Company Limited (hereinafter called "the Company”) to be held by the Appellants as nominees for and to the order of Mr. Hunter.

3. At a meeting held on the 18th February, 1955, at the offices of the Company at which there were present Mr. Hunter and the Appellants and Mr. Graham Wyatt Williams, solicitor, Mr. Hunter orally and irrevocably directed the Appellants to divide the said 18,000 shares in the Company into six equal parcels of 3,000 shares each and to hold one of such parcels upon the trusts and with and subject to the powers and provisions respectively declared and contained in each of the said six settlements to the intent that such directions should result in the entire exclusion of Mr. Hunter from all further right, title and benefit to or in the said shares or any of them and the income thereof.

4. By six deeds of declaration of trust each dated the 25th March, 1955, and executed by the Appellants and Mr. Hunter after reciting in each such deed that the Appellants were the holders of 3,000 ordinary shares in the Company and that on the 18th February, 1955, Mr. Hunter orally and irrevocably directed the Appellants to hold the said shares upon the trusts and subject to the powers and provisions in such one of the said settlements as was therein mentioned and that the Appellants had thereupon assented to and accepted the trusts reposed in them by the said direction and that the giving of the said direction on the said 18th February, 1955, and in manner aforesaid and the nature thereof were testified by the execution by Mr. Hunter of that deed it was witnessed and the Appellants thereby acknowledged and declared (in each of the said deeds) that they had been since 18th February, 1955, and were then holding 3,000 shares therein mentioned and the income thereof upon such trusts and with and subject to such powers and provisions as were in the relevant settlement declared and contained concerning the Trust Fund as therein defined to the intent that the said shares should since the said 18th February, 1955, form an addition to and be one fund with the said Trust Fund for all purposes.

These facts give rise to the plain question whether the oral directions given by Mr. Hunter, which are recited in each of the instruments, were effective or were, having regard to section 53 (1) (c) of the Law of Property Act, 1925, wholly ineffective. In the former event the instruments would not, and in the latter would, be chargeable with ad valorem duty.

Section 53 (1) (c) of the Act is as follows: —

Subject to the provisions hereinafter contained with respect to the creation of interests in land by parol— .... (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 toy his agent thereunto lawfully authorised in writing or by will.

Briefly, then, were the several oral directions given by Mr. Hunter dispositions by him of the equitable interest in the shares held by the Appellants as nominees for him?

If the word "disposition" is given its natural meaning, it cannot, I think, be denied that a 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. But it is contended by the Appellants that the word "disposition" is to be given a narrower meaning and (so far as relates to inter vivos transactions) be read as if it were synonymous with "grants and assignments" and that, given this meaning, it does not cover such a direction as was given in this case. As I am clearly of the opinion, which I understand to be shared by your Lordships, that there is no justification for giving the word "disposition" a narrower meaning than it ordinarily bears, it will be unnecessary to discuss the interesting problem that would otherwise arise. It was for this reason that your Lordships did not think it necessary to hear learned counsel for the Appellants in reply on this part of the case.

My Lords, the argument for narrowing the meaning of "disposition" was that the Law of Property Act, 1925, was a consolidating Act, that among the Acts which it consolidated was the Statute of Frauds (29 Car. 2 c. 3) section 9, that that section enacted that " all grants and assignments of any "trust or confidence shall likewise be in writing, signed by the party granting" or assigning the same, or by such last will or devise, or else shall likewise "be utterly void and of none effect", and that therefore the word "disposition" in section 53 (1) (c) of the 1925 Act is to be given the same meaning as would be given to " grants and assignments" in section 9 of the Statute of Frauds.

My Lords, the principles applicable to the construction of a consolidating Act are not in doubt. The presumption is that such an Act is not intended to alter the law, but this prima facie view must yield to plain words to the contrary, see Gilbert v. Gilbert and Boucher [1928] P. 1 per Scrutton, L.J. at p. 8. If the Law of Property Act, 1925, was a typical consolidating Act, the question would be whether the alteration from "grants and assignments "to" disposition "changed tine law by enlarging the area of void transactions —a question that might not be easy to answer. But the Act of 1925 cannot be thus regarded. It was, it is true, a consolidating Act, but it was, with a number of other Acts, the culmination of a body of legislation by which a large part of the law of real and personal estate was profoundly altered. The story opens with the Law of Property Act, 1922, the title of which begins with the words: An Act to assimilate and amend the law of Real "and Personal Estate". It in fact effected comprehensive changes in the law. Section 191 (2) enacted that it should come into operation on the 1st January, 1925. But it did not, and was never intended to, come into operation at all. In 1924 a second Act was passed. It was entitled: "An Act to amend the Law of Property Act, 1922, and the enactments" thereby affected, and to facilitate the consolidation of the law relating to "conveyancing and property", and other matters. This Act, which was the result of a prolonged examination of the Law of Property Act, 1922, by a committee presided over by the late Lord Romer, paved the way for the 1925 Act. It was, as has already appeared, an Act amending an Act which had itself radically changed the law. Section 3 is for our present purpose the only relevant section. It provided that "The amendments and" provisions, for facilitating the consolidation of the statute law relating "to conveyancing and property, contained in the Third Schedule to this Act, "shall have effect." This Schedule was in two parts, the first part being entitled " Amendments " and the second part " Provisions Facilitating Consolidation of the Law of Property and Conveyancing". The fifteenth paragraph of the second part is, so far as is material, as follows: —

"15. Sections one to (three and seven to nine of the Statute of Frauds "shall take effect as if inserted in the principal Act and be read as follows -

There then follow the provisions which are exactly reproduced in section 53 of the 1925 Act. It was provided by section 12 (3) that the Act should come into operation on the 1st January, 1926. In the meantime the Law of Property Act, 1925, was drafted embodying the alterations in the law relating to conveyancing and property made by the Acts of 1922 and 1924. It repealed the third section and the third Schedule of the 1924 Act and itself came into force on the 1st January, 1926. I have only dealt in rough outline with the complicated scheme of legislation which transformed the law of real and personal property. But I have said enough to show that the Act of 1925, though in a sense a consolidating Act, in fact consolidated Acts which themselves were amending Acts. While, therefore, as Lord Romer (then Lord Justice Romer) indicated in In re Turner's Will Trusts, District Bank, Limited v. Turner [1937] Ch. 15 at p. 26 in the comparable case of the Trustee Act, 1925, it is incredible that the Legislature intended in the 1925 Act to make further and radical changes in the law as enacted in the preceding Acts, the question is what changes had been effected in those Acts. And since they purported to be and were amending Acts, there is no principle of construction which should impose upon them an interpretation appropriate to a consolidating Act. They must, and therefore so must the 1925 Act, be construed so as to give each word the meaning proper to it in its context. So construed the word "disposition" in section 53 (1) (c) has the natural meaning which I attributed to it at the opening of this Opinion. I have not, my Lords, forgotten the contention that, as the relevant provision substituting what became section 53 of the 1925 Act for certain sections of the Statute of Frauds are to be found in Part II of the Third Schedule to 'the 1924 Act, whereas Part I was headed " Amendments," the provisions in Part II ought not to be read as amending the existing statutory law if any other reasonable interpretation is possible. But I cannot give any weight to this argument, for the most cursory glance reveals that the provisions in Part II, even those in paragraph 15 itself, contain what are undeniably amendments of the law. Accordingly I cannot allow this argument to prevail and must read section 53 of the Act of 1925 as I read paragraph 15 of the Third Schedule to the Act of 1924 in the sense which I have already indicated.

I think it right to add that the argument for the Crown which has brought me to this conclusion does not appear to have been put before Mr. Justice Upjohn or the Court of Appeal.

The appeal must, in my opinion, be dismissed with costs.

My noble and learned friend, Lord Reid, who is unable to be here today, has intimated to me that he agrees with this Opinion.

Lord Radcliffe

MY LORDS,

If there is nothing more in this appeal than the short question whether the oral direction that Mr. Hunter gave to his trustees on the 18th February, 1955, amounted in any ordinary sense of the words to a disposition of an equitable interest or trust subsisting at the time of the disposition, I do not feel any doubt as to my answer. I think that it did. Whether we describe what happened in technical or in more general terms the full equitable interest in the 18,000 shares concerned, which at that time was his, was (subject to any statutory invalidity) diverted by his direction from his owner-ship into the beneficial ownership of the various equitable owners, present and future, entitled under his six existing settlements.

But that is not the question which has led to difference of opinion in the Courts below. Where opinions have differed is on the point whether his direction was a "disposition" within the meaning of section 53 (1) (c) of the Law of Property Act, 1925, the argument for giving it a more restricted meaning in that context being that section 53 is to be construed as no more than a consolidation of three sections of the Statute of Frauds, sections 3, 7 and 9. So treated disposition, it is said, is merely the equivalent of the former words of section 9, grants and assignments, except that testamentary disposition has to be covered as well, and a direction to a trustee by the equitable owner of the property prescribing new trusts upon which it is to be held is a declaration of trust but not a grant or assignment. The argument concludes, therefore, that neither before 1st January, 1926, nor since did such a direction require to be in writing signed by the disponor or his agent in order to be effective.

In my opinion it is a very nice question whether a parol declaration of trust of this kind was or was not within the mischief of section 9 of the Statute of Frauds. The point has never, I believe, been decided and perhaps it never will be. Certainly it was 'long established as law that while a declaration of trust respecting land or any interest therein required writing to be effective, a declaration of trust respecting personality did not. Moreover, there is warrant for saying that a direction to his trustee by the equitable owner of trust property prescribing new trusts of that property was a declaration of trust. But it does not necessarily follow from that that such a direction, if the effect of it was to determine completely or pro tanto the subsisting equitable interest of the maker of the direction, was not also a grant or assignment for the purposes of section 9 and therefore required writing for its validity. Something had to happen to that equitable interest in order to displace 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 assignment of the subsisting interest to the new beneficiary or beneficiaries or, in other cases, a release or surrender of it to the trustee.

I do not think, however, that that question has to be answered for the purposes of this appeal. It can only be relevant if section 53 (1) of the Law of Property Act, 1925, is treated as a true consolidation of the three sections of the Statute of Frauds concerned and as governed, therefore, by the general principle, with which I am entirely in agreement, that a consolidating Act is not to be read as effecting changes in the existing law unless the words it employs are too clear in their effect to admit of any other construction. If there is anything in the judgments of the majority of the Court of Appeal which is inconsistent with this principle I must express my disagreement with them. But in my opinion it is impossible to regard section 53 of the Law of Property Act, 1925, as a consolidating enactment in this sense. It if here that the premises upon which Upjohn, J. and the Master of the Rolls founded their conclusions are, I believe, unsound.

The Law of Property Act, 1925, itself was no doubt strictly a consolidating statute. But what it consolidated was not merely the Law of Property Act, 1922, a statute which had itself effected massive changes in the law relating to real property and conveyancing, but also the later Law of Property (Amendment) Act, 1924. The Statute of Frauds sections had not been touched by the Act of 1922: but they were in effect repealed and re-enacted in altered form by the operation of section 3 of the 1924 Act and the provisions of the Third Schedule to that Act. The Schedule is divided into two Parts, the contents of Part I being described simply as "Amendments" and the contents of Part II being headed by the description "Provisions Facilitating" Consolidation . . . ". I suppose that the authors of the 1924 Act understood what was the significance of the division of the Third Schedule into these two Parts under their different headings. I cannot say that I do. Each Part, when examined, is seen to contain numerous amendments of various previous statutes relating to real property and conveyancing, apart from the 1922 Act itself, and in this sort of matter I cannot see how one can satisfactorily measure the degrees of substance involved in the various changes. The point is that they were avowedly changes. If is paragraph 15 of Part II of the Third Schedule which deals with the Statute of Frauds: and though the introductory words do seem to suggest that the sections concerned are only being re-enacted in different words, it is apparent, when they are read through, that this is not so and that alterations of more or less moment are in fact being made. This new wording is what is carried into section 53 of the 1925 Act.

For these 'reasons I think that (there is no direct link between section 53 (1) (c) of the 1925 Act and section 9 of the Statute of Frauds. The link was broken by the changes introduced by the amending Act of 1924, and it was those changes, not the original statute, that section 53 must be taken as consolidating. If so, it is inadmissible Do allow the construction of the word disposition in the new Act to be limited or controlled by any meaning attributed to the words " grant" or "assignment" in section 9 of the old Act.

I agree that the appeal should be dismissed

Lord Cohen

MY LORDS,

I also agree.

Lord Keith of Avonholm

MY LORDS,

I agree.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //