The Gazette 1958-61

Transfer of settlement shares by donor

liable

to ad

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

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