LA-203 Equity and Trusts Coursework
I. Introduction
The Statute of Frauds 1677 introduced formalities for the creation of trusts of land. Section 7 required that, “… all declarations or creations of trusts or confidences of any lands, tenements or hereditaments, shall be manifested and proved by some writing signed by the party who is by law entitled to declare such trust, or by his last will in writing, or else they shall be utterly avoid and of none effect”. Section 53(1) of the Law of Property Act 1925 is the modern provision that is used by the courts nowadays, although the original provisions are still used in some jurisdictions. The first part of this essay is concerned with the formalities in relation to a lifetime (inter vivos) express …show more content…
holding on a bare trust for him to transfer both the legal and the equitable interest to a third party, the Royal College of Surgeons. It was held by the majority of the House of Lords in this case that, the transfer was not caught by section 53(1)(c) , which creates queries as to why in Grey, it was. The case had similar grounds to Grey v IRC, but in Vandervell, it was made clear that the reason the transfer was outside the scope of section 53(1)(c) is because there was a transfer of the entire estate in the property, which was the legal title and the beneficiary title, to one body as to which differed from Grey, as there was only a disposition of equitable interest. Subsequently, Mr Vandervell was still entitled to pay tax to the Inland Revenue because of the option the Vandervell Trustees Ltd. had, to repurchase the shares from Royal College of Surgeons. The exact terms of the trust had not been spelt out which means no one knew who held the equitable trust; hence the court held there was a resulting trust to Mr Vandervell. From this case the importance of the formalities was greatly highlighted, as without formalities, there would be confusions as to which party holds which interest therefore the cautionary function cannot be satisfied. Besides that there is an argument saying that section 53(1)(c) is all about tax raising as …show more content…
Case in point, Re Vendervell Trusts (No.2) where Vandervell seek to rid himself entirely of any interest that he had in shares. The issue arose from this case was whether there was a disposition or declaration of a new trust when Mr Vandervell orally directed his trustees to repurchase the shares from the Royal College of Surgeons and hold the shares for his children. Vandervell argued that the repurchase was a new trust, in addition, the trustees used the fund from Vandervell’s children settlement and they both intended the shares to be held for the children making it a gift. Therefore, the Court of Appeal held that the property now held for the children was a new trust, which required no formalities. The resulting trust of Vandervell ceased when the repurchase was made hence it was not a disposition of a subsisting equitable interest. It was in fact a declaration of trust in shares and required no
I. Introduction
The Statute of Frauds 1677 introduced formalities for the creation of trusts of land. Section 7 required that, “… all declarations or creations of trusts or confidences of any lands, tenements or hereditaments, shall be manifested and proved by some writing signed by the party who is by law entitled to declare such trust, or by his last will in writing, or else they shall be utterly avoid and of none effect”. Section 53(1) of the Law of Property Act 1925 is the modern provision that is used by the courts nowadays, although the original provisions are still used in some jurisdictions. The first part of this essay is concerned with the formalities in relation to a lifetime (inter vivos) express …show more content…
holding on a bare trust for him to transfer both the legal and the equitable interest to a third party, the Royal College of Surgeons. It was held by the majority of the House of Lords in this case that, the transfer was not caught by section 53(1)(c) , which creates queries as to why in Grey, it was. The case had similar grounds to Grey v IRC, but in Vandervell, it was made clear that the reason the transfer was outside the scope of section 53(1)(c) is because there was a transfer of the entire estate in the property, which was the legal title and the beneficiary title, to one body as to which differed from Grey, as there was only a disposition of equitable interest. Subsequently, Mr Vandervell was still entitled to pay tax to the Inland Revenue because of the option the Vandervell Trustees Ltd. had, to repurchase the shares from Royal College of Surgeons. The exact terms of the trust had not been spelt out which means no one knew who held the equitable trust; hence the court held there was a resulting trust to Mr Vandervell. From this case the importance of the formalities was greatly highlighted, as without formalities, there would be confusions as to which party holds which interest therefore the cautionary function cannot be satisfied. Besides that there is an argument saying that section 53(1)(c) is all about tax raising as …show more content…
Case in point, Re Vendervell Trusts (No.2) where Vandervell seek to rid himself entirely of any interest that he had in shares. The issue arose from this case was whether there was a disposition or declaration of a new trust when Mr Vandervell orally directed his trustees to repurchase the shares from the Royal College of Surgeons and hold the shares for his children. Vandervell argued that the repurchase was a new trust, in addition, the trustees used the fund from Vandervell’s children settlement and they both intended the shares to be held for the children making it a gift. Therefore, the Court of Appeal held that the property now held for the children was a new trust, which required no formalities. The resulting trust of Vandervell ceased when the repurchase was made hence it was not a disposition of a subsisting equitable interest. It was in fact a declaration of trust in shares and required no