Transfer of a Subsisting Equitable Interest S53(1)(c) :

S53(1)(c) LPA 1925: disposition of an equitable interest or trust subsisting at the same time of the disposition must be in writing signed by the person disposing of the same or by his agent.
ie. transfer of a subsisting equitable interest must be in writing signed by transferor or their agent.

Grey v IRC: Grey wanted to benefit his grandchildren with shares, he created a trust under which he was a beneficiary. Later, Grey orally directed that his trustees hold his beneficial interest on trust for his grandchildren. The oral direction was held to be a disposition within s53(1)(c) LPA 1925. Disposition= beneficial interest in himself becoming invested in others.

Re Danish Bacon Company: settlor changed the beneficiary under a pension scheme by letter. However, he did not sign the letter himself. Although there could not be a beneficiary under a pension scheme fund, it was held that, the original writing and the amended writing can be read together. Under s53(1)(c) formalities can be satisfied by connecting a number of documents.

Vandervell v IRC: Vandervell transferred his equitable and legal title of shares in a company through a bare trust in the bank to the Royal College for Surgeons meaning he would not get taxed. However, because he retained the option to repurchase the shares, he was held to still have an equitable interest in the shares. s53 does not impose formality requirements upon the transfer of legal title but there must be some form of writing for a gift to be enforced if equitable title is to be transferred, which was not done.

Vandervell Trusts (no2): Vandervell transferred his shares over to a trust company and instructed the tax company to repurchase shares in his company. The court ruled that his equitable interest in the shares had disappeared because he had failed to identify to the company whom would become the new beneficiary leaving an "equitable void". Held, resulting trusts arise in two situations:

Automatic resulting trusts: do not depend on the intention of parties but arise as an automatic consequence of the transferor’s failure to dispose of the entirety of the beneficial interest.
Presumed resulting trusts: based on the presumed intention of the transfer of property. Arises because there is a rebuttable presumption of trust based on inferred intention.

An automatic resulting trust arose here meaning Vandervell still held the legal interest in the shares and so could be taxed.

	Created by cadhla_corrigan over 10 years ago

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LLB Trusts and Equity (3. Formalities ) Note on Formalities , created by cadhla_corrigan on 09/04/2014.