36 / 338
Transfer of settlement shares by donor
liable
to ad
valorem stamp duty on
the consideration given by
her son's reversionary interest in the shares.
On June 18, 1956, O.'s son, being absolutely
entitled to shares subject to O.'s life interest under
a settlement, made an oral agreement with O. to
exchange his reversionary interest in these settlement
shares for other shares
to
the intent that O.'s
life interest in the settlement shares should be
enlarged into absolute ownership. On June 26,
1956, O. transferred to nominees for her son the
shares that she had agreed to exchange, the trustees
of the settlement executed a transfer of the settle–
ment shares to her (her son not being a party to
this deed) and the trustees, O. and her son executed
a deed of release to the trustees in respect of the
settlement trusts. The deed of release recited that
on June 18, 1956, O.'s son and O. had agreed
that they would exchange on June 26 the reversion–
ary interest of the former for the shares of the
latter " to the intent that " O.'s life interest in the
settlement shares " should be enlarged into absolute
ownership thereof." The deed of release continued
" The trust fund ... is now held by the trustees
in trust for O. absolutely .
.
. and it is intended
that the same shall forthwith be transferred to
O.
The operative part began :
" Now in con–
sideration of the premises and of the transfer to be
made as aforesaid," and
this was followed by
the release and discharge to
the trustees.
On
appeal from a decision that the transfer of the
settlement shares by the trustees did not attract
ad valorem
stamp duty under s. 54 of the Stamp
Act, 1891, as O.'s son's beneficial interest in the
settlement shares had passed by the oral contract
of June 18, 1956, writing not being necessary for
this purpose by reason of s. 53 (2) of the Law of
Property Act, 1925.
Held by the Court of Appeal (Lord Evershed
M.R., Morris
and Ormerod, L.J.,
reversing
Upjohn J., that the transfer of the settlement
shares to O. was liable to
ad valorem
stamp duty
(at a rate appropriate to a conveyance on sale)
on the consideration given by her for her son's
reversionary
interest
in
the
settlement
shares,
notwithstanding that he was not a party to the
deed transferring them, because (i) O. had not
acquired the whole beneficial interest in the settle–
ment shares before the three deeds of June 26,
1956, were executed and (ii), the three deeds of
June 26 being contemporaneous,
the deed of
transfer of the settlement shares was
the com–
pletion of the oral contract of exchange of June 18,
the
true view of the contemporaneous
deeds
(deduced particularly from the terms of the deed of
release) being that the trustees were enabled to
transfer the shares with all rights to them to O.
Note.—
Though the question of the effect of s.
53 (2) of the Law of Property Act, 1925, did not
arise for decision by the Court of Appeal, the
court expressly declined to accept the decision in
the court below on that question. On the further
question whether the contract of June 18, 1956,
would have been ineffective to transfer the son's
equitable reversionary interest in the shares on
the ground that it was an oral contract the present
case should be compared with Grey
v.
Inland
Revenue Commissioners.
(Oughtred
v.
Inland Revenue Commissioners
(1958) 2 All. E.R. 443).
Stamp duties on voluntary dispositions—duty payable.
On Feb. i, 1955, H. transferred eighteen thousand
shares in a company to trustees to hold to his order,
and on Feb. 18, 1955, he orally and irrevocably
directed the trustees to divide the shares into six
groups of three thousand shares each and to hold
one such group on the trusts contained in each of
six settlements made by him in 1949 and 1950 in
favour of his grandchildren. The directions were
given to the intent that they should result in the
entire exclusion of H. from all future right, title
and benefit to or in the shares. On Mar. 25, 1955,
the trustees, who were also the trustees of the six
settlements, executed six deeds, called declarations
of trust, each of which recited H.'s directions as
Feb. 18, 1955, and the trustees' acceptance of them.
In each case the trustees declared that they had been
holding the shares since Feb. 18 and were then
holding them on the trusts of the relevant settlement
of 1949 or of 1950.
H. also executed each deed
to testify the nature of the directions that he had
previously given.
The six deeds were charged
with
ad valorem
stamp duty as voluntary dispositions
within s. 74 of the Finance (1909-10) Act, 1910.
Held by the Court of Appeal (Morris and Ormerod
L.J., Lord Evershed, M.R., dissenting),
reversing
Upjohn J. that H.'s oral direction to the trustees
on Feb. 18, 1955, though not a direct assignment
or transfer of his equitable interest in the shares,
was a purported disposition of that interest, within
the meaning of the word " disposition " in s. 205
(i) (ii) and s. 5 3 (i)
(c)
of the Law of Property Act,
1925, and, being oral, was rendered ineffective by s.
53
C1)
(f)'>
tne deeds of Mar. 25, 1955, operated,
in the circumstances, as effective declarations of
trust and attracted
ad valorem
stamp duty. Dictum
of Sargant, J., in Re Chrimes ((1917) i Ch. at pp.
36, 37) considered.
Note.
All members of the Court of Appeal
agreed that the directions given on Feb. 18, 1955,
did not constitute an assignment of a subsisting