Grey v Inland Revenue Commissioners [1960] AC 1 (HL)

Facts

  • Mr. Hunter established six settlements for his grandchildren and later transferred shares to trustees to hold on trust for himself.
  • He orally instructed the trustees to hold the shares on the trusts of the six settlements previously set up.
  • Following the oral instruction, formal documents were executed to confirm the transfer, creating a written record of what had initially been done orally.
  • The Inland Revenue Commissioners (IRC) contended that the oral instruction constituted a disposition of an equitable interest which was invalid due to the lack of writing at the time of the instruction and argued a taxable event had occurred.
  • Mr. Hunter argued that no disposition had occurred until the written confirmations, which happened after the oral instructions.

Issues

  1. Whether an oral instruction by a beneficiary to trustees, directing a change in the beneficial ownership of trust property, constitutes a "disposition" within the meaning of Section 53(1)(c) of the Law of Property Act 1925.
  2. Whether such a disposition requires compliance with the statutory requirement for writing and signature.
  3. Whether subsequent written confirmation can validate a prior oral disposition for the purposes of the statutory formalities and tax implications.

Decision

  • The House of Lords held that the oral direction by Mr. Hunter was a disposition within the meaning of s53(1)(c) Law of Property Act 1925.
  • The court determined that "disposition" should be given its plain, ordinary meaning, referring to any transaction by which a person with a beneficial interest ceases to have that interest.
  • It was confirmed that the oral instruction constituted a change in beneficial ownership and thus a disposition, requiring compliance with the statutory requirement for writing.
  • The subsequent documentation could not validate a prior, ineffective oral disposition, so the statutory requirement for writing was not satisfied at the time of the oral instruction.

Legal Principles

  • "Disposition" under s53(1)(c) Law of Property Act 1925 encompasses any transfer where a beneficiary gives up their interest, not limited narrowly to grants or assignments.
  • A disposition of a subsisting equitable interest must be in writing and signed by the relevant person or their agent.
  • Oral instructions to change beneficial ownership are ineffective where writing is required by statute.
  • Written confirmation after an oral disposition does not retrospectively validate the original transfer.

Conclusion

The House of Lords established that an oral direction instructing trustees to alter beneficial ownership is a "disposition" of an existing equitable interest, requiring strict formalities of writing and signature under s53(1)(c) of the Law of Property Act 1925, reinforcing the importance of documented evidence in trust and property law transactions.

The answers, solutions, explanations, and written content provided on this page represent PastPaperHero's interpretation of academic material and potential responses to given questions. These are not guaranteed to be the only correct or definitive answers or explanations. Alternative valid responses, interpretations, or approaches may exist. If you believe any content is incorrect, outdated, or could be improved, please get in touch with us and we will review and make necessary amendments if we deem it appropriate. As per our terms and conditions, PastPaperHero shall not be held liable or responsible for any consequences arising. This includes, but is not limited to, incorrect answers in assignments, exams, or any form of testing administered by educational institutions or examination boards, as well as any misunderstandings or misapplications of concepts explained in our written content. Users are responsible for verifying that the methods, procedures, and explanations presented align with those taught in their respective educational settings and with current academic standards. While we strive to provide high-quality, accurate, and up-to-date content, PastPaperHero does not guarantee the completeness or accuracy of our written explanations, nor any specific outcomes in academic understanding or testing, whether formal or informal.
No resources available.

Job & Test Prep on a Budget

Compare PastPaperHero's subscription offering to the wider market

PastPaperHero
Monthly Plan
$10
Assessment Day
One-time Fee
$20-39
Job Test Prep
One-time Fee
$90-350

Note the above prices are approximate and based on prices listed on the respective websites as of May 2025. Prices may vary based on location, currency exchange rates, and other factors.

Get unlimited access to thousands of practice questions, flashcards, and detailed explanations. Save over 90% compared to one-time courses while maintaining the flexibility to learn at your own pace.

All-in-one Learning Platform

Everything you need to master your assessments and job tests in one place

  • Comprehensive Content

    Access thousands of fully explained questions and cases across multiple subjects

  • Visual Learning

    Understand complex concepts with intuitive diagrams and flowcharts

  • Focused Practice

    Prepare for assessments with targeted practice materials and expert guidance

  • Personalized Learning

    Track your progress and focus on areas where you need improvement

  • Affordable Access

    Get quality educational resources at a fraction of traditional costs

Tell Us What You Think

Help us improve our resources by sharing your experience

Pleased to share that I have successfully passed the SQE1 exam on 1st attempt. With SQE2 exempted, I’m now one step closer to getting enrolled as a Solicitor of England and Wales! Would like to thank my seniors, colleagues, mentors and friends for all the support during this grueling journey. This is one of the most difficult bar exams in the world to undertake, especially alongside a full time job! So happy to help out any aspirant who may be reading this message! I had prepared from the University of Law SQE Manuals and the AI powered MCQ bank from PastPaperHero.

Saptarshi Chatterjee

Saptarshi Chatterjee

Senior Associate at Trilegal