## 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.


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