Neville v Wilson [1997] Ch 144

Facts

• Shareholders in a company orally agreed to divide the shares among themselves.
• The agreement was not documented in writing.
• A dispute arose as to whether this oral agreement constituted a valid disposition of equitable interests under section 53(1)(c) of the Law of Property Act 1925, which generally requires such dispositions to be in writing.
• The parties’ actions demonstrated their intention to carry out the division of shares in accordance with the oral agreement.
• The case centered on whether the informal arrangement was enforceable despite the statutory formalities.

Issues

1. Whether the oral agreement among shareholders constituted a valid disposition of equitable interests under section 53(1)(c) of the Law of Property Act 1925.
2. Whether a constructive trust could arise from the shareholders’ informal, unwritten agreement.
3. Whether proprietary estoppel could apply to enforce the oral arrangement in the absence of written documentation.
4. Whether equitable remedies could circumvent the formal requirements for disposition of equitable interests.

Decision

• The Court of Appeal held that the oral agreement did not require compliance with section 53(1)(c) because a constructive trust arose by operation of law.
• The creation of a constructive trust was based on the parties’ intentions and conduct, making it unconscionable to deny the existence of a beneficial interest.
• Proprietary estoppel was applicable; parties who acted in reliance on the agreement could enforce it, as it would be unconscionable to renege.
• The informal arrangement was upheld as enforceable through equitable remedies, even though it did not meet the statutory requirement for written disposition.

Legal Principles

• Section 53(1)(c) of the Law of Property Act 1925 mandates that dispositions of equitable interests be in writing, but this does not apply to constructive trusts that arise by operation of law.
• A constructive trust can be established where parties’ conduct and intentions demonstrate a clear equitable obligation, even absent written documentation.
• Proprietary estoppel prevents a party from denying a property interest when another has relied on a representation or promise to their detriment.
• Equitable remedies ensure that statutory formalities do not result in unconscionable outcomes when there is sufficient evidence of intention and reliance.

Conclusion

The decision in Neville v Wilson [1997] Ch 144 confirms that informal oral agreements between parties can give rise to constructive trusts and proprietary estoppel, allowing for the enforcement of equitable interests even where statutory writing requirements are not met, provided there is clear evidence of intention and reliance.