Assignments and Dispositions cont’d

Assignments and Assignments and Dispositions cont’dDispositions cont’d

Associate Professor Cameron Associate Professor Cameron StewartStewart

Division of LawDivision of Law

Recap on last weekRecap on last week

Things that can’t be assignedThings that can’t be assignedLegal assignmentsLegal assignments– Real Property – old system and TorrensReal Property – old system and Torrens– Goods – Sale of Goods Act 1923Goods – Sale of Goods Act 1923– Debts and other choses in action – Section 12Debts and other choses in action – Section 12

Equitable assignmentsEquitable assignments– Future property Future property – Equitable assignment of legal property for considerationEquitable assignment of legal property for consideration– Equitable assignment of legal property without considerationEquitable assignment of legal property without consideration– Equitable assignment of assignment of legal property not Equitable assignment of assignment of legal property not

assignable at law without considerationassignable at law without consideration– Equitable assignment of equitable propertyEquitable assignment of equitable property

Equitable assignment of equitable Equitable assignment of equitable propertyproperty

The assignment of equitable property can only The assignment of equitable property can only be achieved in equity. Because equitable be achieved in equity. Because equitable property is not recognised at common law it property is not recognised at common law it cannot be the subject of a legal assignment. For cannot be the subject of a legal assignment. For a voluntary assignment of equitable property the a voluntary assignment of equitable property the assignment must be absolute. Apart from any assignment must be absolute. Apart from any statutory requirement of writing, all that is statutory requirement of writing, all that is necessary for a valid equitable assignment is ‘a necessary for a valid equitable assignment is ‘a clear expression of an intention to make an clear expression of an intention to make an immediate disposition’: immediate disposition’: Norman Norman at CLR 30; ALR at CLR 30; ALR 149, per Windeyer 149, per Windeyer

Section 23C of the Conveyancing Section 23C of the Conveyancing ActAct

23C Instruments required to be in writing23C Instruments required to be in writing(1) Subject to the provisions of this Act with respect to the creation of (1) Subject to the provisions of this Act with respect to the creation of

interests in land by parol:interests in land by parol:(a) no interest in land can be created or disposed of except by writing (a) no interest in land can be created or disposed of except by writing

signed by the person creating or conveying the same, or by the signed by the person creating or conveying the same, or by the person’s agent thereunto lawfully authorised in writing, or by will, or person’s agent thereunto lawfully authorised in writing, or by will, or by operation of law,by operation of law,

(b) a declaration of trust respecting any land or any interest therein (b) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some must be manifested and proved by some writing signed by some person who is able to declare such trust or by the person’s will,person who is able to declare such trust or by the person’s will,

(c) a disposition of an equitable interest or trust subsisting at the time of (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 disposition, must be in writing signed by the person disposing of the same or by the person’s will, or by the person’s agent thereunto the same or by the person’s will, or by the person’s agent thereunto lawfully authorised in writing.lawfully authorised in writing.

(2) This section does not affect the creation or operation of resulting, (2) This section does not affect the creation or operation of resulting, implied, or constructive trusts.implied, or constructive trusts.


The writing requirements within s 23C(1) The writing requirements within s 23C(1) can be satisfied by more than one can be satisfied by more than one document provided they are obviously document provided they are obviously interconnected: interconnected: Australia and New Australia and New Zealand Banking Group Ltd v WidinZealand Banking Group Ltd v Widin (1990) (1990) 102 ALR 289 at 297–300 per Hill J.102 ALR 289 at 297–300 per Hill J.


Section 23C(1)(b) merely requires Section 23C(1)(b) merely requires evidence in writing in relation to a evidence in writing in relation to a declaration of trust of land. declaration of trust of land. However, the disposition or creation of an However, the disposition or creation of an interest pursuant to s 23C(1)(a) must interest pursuant to s 23C(1)(a) must itselfitself be in writing. be in writing. In all Australian jurisdictions except In all Australian jurisdictions except Queensland, the disposition of a Queensland, the disposition of a subsisting interest pursuant to s 23C(1)(c) subsisting interest pursuant to s 23C(1)(c) or its equivalents must also be in writing. or its equivalents must also be in writing.


Section 23C(1)(a) and s 23C(1)(b) apply to Section 23C(1)(a) and s 23C(1)(b) apply to the creation or disposition of interests, the creation or disposition of interests, whereas s 23C(1)(c) only applies to the whereas s 23C(1)(c) only applies to the disposition of subsisting interests.disposition of subsisting interests.


Section 23C(1)(a) applies to the Section 23C(1)(a) applies to the disposition of legal and equitable interests disposition of legal and equitable interests in land in land

Section 23C(1)(a) and s 23C(1)(b) apply Section 23C(1)(a) and s 23C(1)(b) apply only to land, whereas it has been held only to land, whereas it has been held that, despite the references to land in the that, despite the references to land in the opening sentence of the section, s 23C(1)opening sentence of the section, s 23C(1)(c) applies to interests in land and (c) applies to interests in land and personalty personalty

Equitable assignment of equitable Equitable assignment of equitable interestinterest

23C(1)(c) requires assignments of 23C(1)(c) requires assignments of subsisting equitable interests to be in subsisting equitable interests to be in writing.writing.

It does not apply if the assignor has both It does not apply if the assignor has both the legal and equitable interest in the the legal and equitable interest in the property. This is a consequence of the property. This is a consequence of the decision in decision in Commissioner of Stamp Duties Commissioner of Stamp Duties (Queensland) v Livingston(Queensland) v Livingston [1965] AC 694 [1965] AC 694

Equitable assignment of equitable Equitable assignment of equitable interestsinterests

Nor does s 23C(1)(c) apply when where Nor does s 23C(1)(c) apply when where an absolute owner of property disposes of an absolute owner of property disposes of an equitable interest in that property, the an equitable interest in that property, the equitable interest is created by the equitable interest is created by the disposition. A similar line of reasoning disposition. A similar line of reasoning applies to the equitable assignment of a applies to the equitable assignment of a legal interest in property. Here the legal interest in property. Here the assignee’s interest is a newly created one assignee’s interest is a newly created one and not the assignment of a subsisting and not the assignment of a subsisting equitable interest. equitable interest.

Disposition by way of a direction by Disposition by way of a direction by a beneficiary to a trustee a beneficiary to a trustee

Direction to hold property on trust for a Direction to hold property on trust for a third partythird party

What if a beneficiary instructed his or her What if a beneficiary instructed his or her trustee to hold the equitable interest in the trustee to hold the equitable interest in the trust on trust for someone else? trust on trust for someone else?

What would be required for this interest to What would be required for this interest to pass?pass?


Grey v Inland Revenue CommissionersGrey v Inland Revenue Commissioners [1960] AC 1 [1960] AC 1Hunter was the beneficiary under a bare trust of 18,000 shares. Hunter was the beneficiary under a bare trust of 18,000 shares. Grey was the trustee. Grey was the trustee. On 18 February 1955 Hunter orally and irrevocably directed Grey to On 18 February 1955 Hunter orally and irrevocably directed Grey to hold those shares on various trusts for Hunter’s grandchildren.hold those shares on various trusts for Hunter’s grandchildren.One week later Hunter executed various declarations of trust One week later Hunter executed various declarations of trust confirming the effect of the oral direction given to Grey. confirming the effect of the oral direction given to Grey. Was to oral directive effective to pass the interest?Was to oral directive effective to pass the interest?If it was then stamp duty was only payable on a nominal basis on If it was then stamp duty was only payable on a nominal basis on the confirming declarationsthe confirming declarationsThe House of Lords ruled against Grey and found that the oral The House of Lords ruled against Grey and found that the oral directions were ineffective. This was the disposition of a subsisting directions were ineffective. This was the disposition of a subsisting equitable interest and needed to be in writingequitable interest and needed to be in writingAAd valoremd valorem stamp duty had to be paid on the written declarations of stamp duty had to be paid on the written declarations of trust. trust.


Direction to transfer property to a third partyDirection to transfer property to a third partyIn In Vandervell v Inland Revenue Commissioners Vandervell v Inland Revenue Commissioners [1967] 2 [1967] 2 AC 291 a bank was a bare trustee of shares for AC 291 a bank was a bare trustee of shares for Vandervell. Vandervell orally directed the bank to Vandervell. Vandervell orally directed the bank to transfer the shares to the Royal College of Surgeons. transfer the shares to the Royal College of Surgeons. His intention was that the college acquire both the legal His intention was that the college acquire both the legal and equitable interests in the shares. and equitable interests in the shares. Vandervell was assessed as liable for a surtax on the Vandervell was assessed as liable for a surtax on the shares pursuant to relevant income tax legislation, on shares pursuant to relevant income tax legislation, on the basis that his oral direction to the bank did not result the basis that his oral direction to the bank did not result in a disposition of the shares to the college. in a disposition of the shares to the college. If the oral direction was an effective disposition of the If the oral direction was an effective disposition of the shares to the college, Vandervell was not liable for the shares to the college, Vandervell was not liable for the surtax. surtax.


The House of Lords unanimously ruled in favour of Vandervell, The House of Lords unanimously ruled in favour of Vandervell, holding that his direction to the trustee was not a disposition within holding that his direction to the trustee was not a disposition within the parameters of s23C(1)(c). the parameters of s23C(1)(c).

On the issue of Vandervell’s oral direction the House found that it On the issue of Vandervell’s oral direction the House found that it was effective and did not have to be in writing. was effective and did not have to be in writing.

Grey v IRCGrey v IRC was distinguishable from the present case because in was distinguishable from the present case because in that case the transaction was one that dealt only with the subsisting that case the transaction was one that dealt only with the subsisting equitable interest, whereas in the present case the transaction equitable interest, whereas in the present case the transaction involved dealing with both the legal and equitable interests. It was involved dealing with both the legal and equitable interests. It was not the disposition of a not the disposition of a subsisting subsisting equitable interestequitable interest

Neither were S 23C(1)(a) or (b) relevant because the interests were Neither were S 23C(1)(a) or (b) relevant because the interests were personaltypersonalty

Disposition by way of a contract to Disposition by way of a contract to assign an equitable interest assign an equitable interest

Do contracts for valuable consideration to assign an Do contracts for valuable consideration to assign an equitable interest in property have to be in writing?equitable interest in property have to be in writing?There is divided opinionThere is divided opinionOn one view a contract for valuable consideration to On one view a contract for valuable consideration to assign an equitable interest in property would be a assign an equitable interest in property would be a ‘disposition’ within the meaning of the legislation, and ‘disposition’ within the meaning of the legislation, and would therefore have to be in writing. would therefore have to be in writing. On another view s 23C(2) effectively dispenses with the On another view s 23C(2) effectively dispenses with the requirement of writing in the context of the creation of, requirement of writing in the context of the creation of, constructive trusts. constructive trusts. It is a well-settled principle of law that a contract for It is a well-settled principle of law that a contract for valuable consideration to assign property of any kind gives valuable consideration to assign property of any kind gives rise to a constructive trust whereby the vendor is a rise to a constructive trust whereby the vendor is a constructive trustee of the property for the purchaser eg constructive trustee of the property for the purchaser eg the rule in the rule in Lysaght v EdwardsLysaght v Edwards


Oughtred v Inland Revenue CommissionersOughtred v Inland Revenue Commissioners [1960] AC [1960] AC 206206Mrs Oughtred held a beneficial life estate in certain Mrs Oughtred held a beneficial life estate in certain shares. shares. Her son Peter held the equitable reversionary interest in Her son Peter held the equitable reversionary interest in those shares. those shares. Mrs Oughtred also owned absolutely a number of other Mrs Oughtred also owned absolutely a number of other shares in the same company. shares in the same company. By an oral agreement of 18 June 1956 Mrs Oughtred and By an oral agreement of 18 June 1956 Mrs Oughtred and her son agreed that on 26 June 1956 she would transfer to her son agreed that on 26 June 1956 she would transfer to him the shares in the company that she owned absolutely him the shares in the company that she owned absolutely and in return Peter would surrender to her his equitable and in return Peter would surrender to her his equitable reversionary interest in the shares in which Mrs Oughtred reversionary interest in the shares in which Mrs Oughtred had an equitable life estate, thereby making her the had an equitable life estate, thereby making her the absolute beneficial owner of those shares absolute beneficial owner of those shares


On 26 June 1956 three documents were executed to effectuate the On 26 June 1956 three documents were executed to effectuate the oral agreement of 18 June 1956. oral agreement of 18 June 1956. The first document was a deed of release which noted that the The first document was a deed of release which noted that the shares formerly held by trustees on trust for Mrs Oughtred for life shares formerly held by trustees on trust for Mrs Oughtred for life with an equitable reversionary interest to Peter, were now held on with an equitable reversionary interest to Peter, were now held on trust for Mrs Oughtred absolutely and that it was intended to transfer trust for Mrs Oughtred absolutely and that it was intended to transfer legal title to her whereupon the trustees would be released from legal title to her whereupon the trustees would be released from their trusteeship. their trusteeship. The second document transferred, for nominal consideration, the The second document transferred, for nominal consideration, the shares formerly owned absolutely by Mrs Oughtred to Peter. shares formerly owned absolutely by Mrs Oughtred to Peter. The third document was a transfer, for nominal consideration, of the The third document was a transfer, for nominal consideration, of the legal title from the trustees to Mrs Oughtred in relation to the shares legal title from the trustees to Mrs Oughtred in relation to the shares referred to in the first document. referred to in the first document. The third document was assessed by the taxing authorities as liable The third document was assessed by the taxing authorities as liable for the payment of for the payment of ad valoremad valorem stamp duty on the basis that the stamp duty on the basis that the earlier oral contract was ineffectual in transferring Peter’s equitable earlier oral contract was ineffectual in transferring Peter’s equitable reversionary interest to Mrs Oughtred reversionary interest to Mrs Oughtred


A bare majority in the House of Lords found in favour of the taxing A bare majority in the House of Lords found in favour of the taxing authorities.authorities.Lord Jenkins (Lord Keith concurring) opined that, even if the earlier oral Lord Jenkins (Lord Keith concurring) opined that, even if the earlier oral agreement created a constructive trust, the later transfer to Mrs agreement created a constructive trust, the later transfer to Mrs Oughtred from the trustees would have conferred upon her rights Oughtred from the trustees would have conferred upon her rights superior to those gained on the creation of the constructive trust. In superior to those gained on the creation of the constructive trust. In such circumstances the transfer would be dutiable at such circumstances the transfer would be dutiable at ad valoremad valorem rates rates under the stamp duty legislation under the stamp duty legislation Lord Denning also was of the view that the oral agreement was Lord Denning also was of the view that the oral agreement was ineffective to dispose of Peter’s equitable reversionary interest because ineffective to dispose of Peter’s equitable reversionary interest because of the requirement of writing in s23C(1)(c). In his Lordship’s view s of the requirement of writing in s23C(1)(c). In his Lordship’s view s 23C(2) did not do away with that requirement.23C(2) did not do away with that requirement.Lord Radcliffe for the minority, accepted the view that the oral Lord Radcliffe for the minority, accepted the view that the oral agreement of 18 June 1956 gave rise to a constructive trust and that the agreement of 18 June 1956 gave rise to a constructive trust and that the disposition was effected by the oral agreement. In such a situation s disposition was effected by the oral agreement. In such a situation s 23C(2) dispensed with the need for writing. The transfer from the 23C(2) dispensed with the need for writing. The transfer from the trustees to Mrs Oughtred of 26 June 1956 did not dispose of Peter’s trustees to Mrs Oughtred of 26 June 1956 did not dispose of Peter’s reversionary interest and accordingly was only liable to nominal stamp reversionary interest and accordingly was only liable to nominal stamp duty duty


In In Neville v WilsonNeville v Wilson [1997] Ch 144 the Court of Appeal in England, [1997] Ch 144 the Court of Appeal in England, when confronted with this diversity of opinion in when confronted with this diversity of opinion in Oughtred v IRCOughtred v IRC, , unanimously endorsed Lord Radcliffe’s view that a constructive unanimously endorsed Lord Radcliffe’s view that a constructive trsust had effective transferred the interest orally. trsust had effective transferred the interest orally.

Disposition of an equitable interest Disposition of an equitable interest by way of declaration of trustby way of declaration of trust

A disposition includes a declaration of trust A disposition includes a declaration of trust for the purposes of s 23C(1)(c)for the purposes of s 23C(1)(c)

QuestionQuestion

Mrs Dole was the absolute beneficial owner of 10,000 Mrs Dole was the absolute beneficial owner of 10,000 shares in Macquarie Mines Ltd (MML). The registered shares in Macquarie Mines Ltd (MML). The registered holder as trustee of the shares was MML’s bank and it holder as trustee of the shares was MML’s bank and it was obliged to transfer the legal title to the shares to Mrs was obliged to transfer the legal title to the shares to Mrs Dole at any time if called upon to do so by Mrs Dole. Dole at any time if called upon to do so by Mrs Dole. One week ago Mrs Dole called the manager of the bank One week ago Mrs Dole called the manager of the bank and said to him: ‘I want my son Bob to have my shares and said to him: ‘I want my son Bob to have my shares in MML. Please transfer them to him’. The manager in MML. Please transfer them to him’. The manager replied: ‘Very well’. Two days later, and before any steps replied: ‘Very well’. Two days later, and before any steps were taken by the bank manager to carry out Mrs Dole’s were taken by the bank manager to carry out Mrs Dole’s instructions, Mrs Dole died. In her will she left her entire instructions, Mrs Dole died. In her will she left her entire estate to her husband Eric.estate to her husband Eric.Eric seeks your advice as to who is entitled to the shares Eric seeks your advice as to who is entitled to the shares in MML.in MML.

AnswerAnswer

The issue is whether Mrs Dole’s oral direction to the trustee The issue is whether Mrs Dole’s oral direction to the trustee disposes of the property to Bob or is the direction a disposition of a disposes of the property to Bob or is the direction a disposition of a subsisting equitable interest caught by the writing requirement in s. subsisting equitable interest caught by the writing requirement in s. 23C(1)(c) of the 23C(1)(c) of the Conveyancing ActConveyancing Act. . Because the property is personalty there is no question of s. 23 (1)Because the property is personalty there is no question of s. 23 (1)(a) or s. 23C(1)(b) applying as they are confined to land. (a) or s. 23C(1)(b) applying as they are confined to land. Section 23C(1)(c) does apply to both interests in land and Section 23C(1)(c) does apply to both interests in land and personalty. personalty. Whether Mrs Dole's direction is within s. 23C(1)(c) depends upon a Whether Mrs Dole's direction is within s. 23C(1)(c) depends upon a consideration of consideration of Vandervell v IRCVandervell v IRC which held that it doesn’t on these which held that it doesn’t on these facts. facts. Even though Mrs Dole is getting rid of her equitable interest s Even though Mrs Dole is getting rid of her equitable interest s 23C(1)(c) does not apply because Mrs Dole intends to and has the 23C(1)(c) does not apply because Mrs Dole intends to and has the power to deal with both the legal and equitable interests in the power to deal with both the legal and equitable interests in the shares. Thus, the oral direction is effective to pass the equitable shares. Thus, the oral direction is effective to pass the equitable interest to Bob. At her death Mrs Dole has no interest in the shares interest to Bob. At her death Mrs Dole has no interest in the shares and Eric does not inherit any interest in them upon her death.and Eric does not inherit any interest in them upon her death.

Assignments and Dispositions cont’d

Documents

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