Trust Law - Computer Assessment 1

Which of the following statements provides the most accurate summary of the effect of section 53(1)(c) of the Law of Property Act 1925?
Choose one answer. A. Assignments of a beneficiary's interest under a trust can only be evidenced by writing which is signed by the beneficiary or his/her agent
B. Dispositions of a beneficiary's interest under a trust can only be made in writing which is signed by the beneficiary
C. Dispositions of a beneficiary's interest under a trust can only be evidenced in writing which is signed by the beneficiary
D. Dispositions of a beneficiary's interest under a trust can only be made in writing which is signed by the beneficiary or his agent
E. Don't know
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That's correct.
This answer is correct, firstly, because the provision is not evidentiary but dispositive, secondly, because, unlike its predecessor, section 9 of the Statute of Frauds 1677, it is concerned with 'dispositions' and not only 'assignments', and thirdly, there is provision in the sub-section for signature by an agent.

Correct
Marks for this submission: 1/1.Question 2
Marks: 1 As a matter of logic, what does section 53(1)(c) pressuppose?
Choose one answer. A. That the object of any trust has an interest which he/she can transmit to others
B. That the object of some trusts has an interest which he/she can transmit to others
C. That the object of a trust can create a trust of his/her interest under the trust
D. That the object of a trust can contract to assign his/her interest to another
E. Don't know
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That's correct.
In that section 53(1)(c) LPA 1925 lays down formalities for the disposition of an object's interest under a trust, it pressupposes that the interest is transmissible. But it says nothing about the circumstances in which a transmissible interest will arise, and for that reason it is wrong to say that the object of any trust has an interest which he/she can transmit to others; as we saw in Chapter 4, the objects of a discretionary trust have no assignable interest. It is also wrong to say that the object of a trust can create a trust of his/her interest under the trust, because though it is true that the object, at least of a fixed trust, can create a trust of their interest under the trust, a sub-trust, this is not presupposed by section 53(1)(c). For exactly the same reason it is wrong to say that the object of a trust can contract to assign his/her interest to another.

Correct
Marks for this submission: 1/1.Question 3
Marks: 1 To what type of trusts does section 53(1)(c) apply?
Choose one answer. A. Only trusts of land
B. Only trusts of shares
C. All trusts
D. Possibly all trusts
E. Don't know
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That's correct.
The law in this area is uncertain. Section 53(1)(c)'s predecessor, section 9 of the Statute of Frauds 1677, probably only applied to trusts of land. And though on its face, section 53(1)(c) would appear not to be so restricted, especially when compared to sub-sections (a) and (b), both of which specifically restrict themselves to land, the provision has to be read in light of the definition section in the Law of Property Act 1925, section 205(1)(x) of which defines 'equitable interests' as equitable interests 'in or over land'. Section 205 is, however, prefaced by the statement that it applies 'unless the context otherwise requires', and some textbooks argue that to make sense of section 53 as a whole requires us to disapply section 205(1)(x) in this case: see, eg, Oakley, pp 98-99. Note that the point was not taken in any of the leading cases on section 53(1)(c), Grey, Oughtred, and Vandervell, and, despite what certain textbooks may tell you, the issue cannot therefore be said to be settled either way.

Correct
Marks for this submission: 1/1.Question 4
Marks: 1 Which of the following statements provides the most accurate summary of the effect of section 53(1)(b) of the Law of Property Act 1925?
Choose one answer. A. Allegations of a declaration of trust of land can only be proved by the production of written evidence signed by the party capable of declaring the trust
B. Declarations of trust must be in writing which is signed by the party capable of declaring the trust
C. Allegations of a declaration of trust can only be proved by written evidence signed by the party capable of declaring the trust or by his agent
D. Declarations of trusts of land must be in writing signed by the party capable of declaring the trust or by his agent
E. Don't know
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That's correct.
This answer is correct because, differently to section 53(1)(c), section 53(1)(b) is evidential, not dispositive, which means that the two answers that require the declaration to be 'in writing' are wrong. The other answer mentioning an agent for the party capable of declaring the trust is wrong both because it allows the possibility of an agent signing the relevant writing and because it is not confined to declarations of trust respecting land.

Correct
Marks for this submission: 1/1.Comprehension
Each question in the Comprehension section refers to an extract. Please make sure you read the relevant extract before answering the questions below.
Please read the following extracts from the speeches of Viscount Simonds and Lord Radcliffe in Grey v IRC [1960] AC 1, then answer the five questions (Q5 - Q9) that follow. Question 5
Marks: 1 What were the arguments of Mr Hunter?
Choose one answer. A. That section 53(1)(c) had no application because he was the beneficiary of a trust of shares, not land
B. That the word 'disposition' had to be given its natural meaning, which was 'grants or assignments'
C. That the Law of Property Act 1925 was a consolidating statute and the word 'disposition' had therefore to be given a meaning equivalent to 'grants and assignments' under the Statute of Frauds 1677, and that a direction such as his was not a 'grant or assignment' but the creation of a new trust
D. That his direction amounted to a declaration of a sub-trust, which was not caught by the statutory provision
E. Don't know
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That's correct.
The argument that section 53(1)(c) had no application because he was the beneficiary of a trust of shares, not land, though plausible, was not one put to their lordships by Mr Hunter. The argument that the word 'disposition' had to be given its natural meaning, which was 'grants or assignments', was not argued by Mr Hunter. The argument that his direction amounted to a declaration of a sub-trust, which was not caught by the statutory provision, does not fit the facts of the case; although Mr Hunter did argue that a new trust had been created, he did not say that it was a sub-trust.

Correct
Marks for this submission: 1/1.Question 6
Marks: 1 How did their lordships deal with the argument about consolidation?
Choose one answer. A. The Law of Property Act 1925 consolidated the relevant provisions of the Statute of Frauds 1677, with the result that it should be construed as not having changed the law. The word 'disposition' could not therefore be read as equivalent to 'grants and assignments'
B. The Law of Property Act 1925 was not a consolidating statute, with the result that there was no connection between section 9 of the Statute of Frauds 1677 and section 53(1)(c) of the 1925 Act
C. The Law of Property Act 1925 consolidated the relevant provisions of the Statute of Frauds 1677, with the result that it should be construed as not having changed the law. The word 'disposition' must therefore be read as equivalent to 'grants and assignments'
D. The Law of Property Act 1925 had not consolidated the relevant provisions of the Statute of Frauds 1677, with the result that the word 'disposition' had to be read as equivalent to a 'declaration of trust'
E. Don't know
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That's correct.
If the 1925 Act had indeed not changed the law, then the word 'disposition' should have been read as equivalent to 'grants and assignments', which invalidates one of the answers. Moreover, their lordships found that the 1925 Act was not a consolidating statute: consequently the two answers that assert that it was a consolidating statute are incorrect. Indeed, the answer that claims that such consolidation meant that the word 'disposition' must be read as equivalent to 'grants and assignments' was the losing argument of Mr Hunter. Although their lordships did indeed find that the 1925 Act was not a consolidating statute, they did not hold that the word 'disposition' had to be read as equivalent to a 'declaration of trust'. If you are in any doubt as to what is meant by a 'consolidating statute', you should revisit your work on Common Law Reasoning and Institutions, where it will have been explained.

Correct
Marks for this submission: 1/1.Question 7
Marks: 1 What did Lord Radcliffe say to the argument that an oral direction was not a 'grant or assignment'?
Choose one answer. A. Even if the Law of Property Act 1925 could be seen as a consolidating statute, there was an argument for saying that what Hunter did amounted to a 'grant or assignment' of his interest under the trust
B. Since the Law of Property Act 1925 was not a consolidating statute, the question whether Hunter's oral direction might have amounted to a 'grant or assignment' need not be addressed
C. Even if the Law of Property Act 1925 was to be seen as a consolidating statute, what Hunter did amounted to a 'grant or assignment' of his interest under the trust
D. What Hunter did amounted to the creation of a new trust, and as such did not amount to a transfer of his interest under that trust to those entitled under the six settlements
E. Don't know
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That's correct.
To say that "since the Law of Property Act 1925 was not a consolidating statute, the question whether Hunter's oral direction might have amounted to a 'grant or assignment' need not be addressed" is wrong because, unlike Viscount Simonds, Lord Radcliffe was at least prepared to address the issue. To say that "even if the Law of Property Act 1925 was to be seen as a consolidating statute, what Hunter did amounted to a 'grant or assignment' of his interest under the trust" is wrong, however, because although Lord Radcliffe did think that there was an argument that Hunter's contentions would have in any case failed even if the consolidation argument were accepted, he was not unequivocal on this point. Lastly, to say that "what Hunter did amounted to the creation of a new trust, and as such did not amount to a transfer of his interest under that trust to those entitled under the six settlements" is wrong because this is precisely the argument which Hunter raised and which Lord Radcliffe, albeit tentatively, rejected.

Correct
Marks for this submission: 1/1.Question 8
Marks: 1 How did their lordships define the word 'disposition'?
Choose one answer. A. The word 'disposition' was to be equated with 'grants and assignments'
B. The word 'disposition' meant any act by which the beneficiary was deprived of his interest under the trust
C. The word 'disposition' was to be equated with 'declaration'
D. The word 'disposition' was to be given its 'natural meaning'
E. Don't know
Feedback
That's correct.
To say it was to be equated with 'grants and assignments' is wrong because this was the argument of Mr Hunter rejected by their lordships. The answer that it meant any act by which the beneficiary was deprived of his interest under the trust was not the answer given by their lordships, and would in any case have been beyond the possible scope of the sub-section. To say it was to be equated with 'declaration' is wrong because it would render section 53(1)(b) of the Law of Property Act 1925 redundant. And though it is correct to say that 'disposition' was to be given its 'natural meaning', their lordships unfortunately did not venture to define the word 'dispostion' any further than this.

Correct
Marks for this submission: 1/1.Question 9
Marks: 1 In what way was Mr Hunter's oral direction a 'disposition' of his interest under the trust?
Choose one answer. A. Mr Hunter's oral direction was a 'disposition' because his beneficial ownership of the shares was now vested in his grandchildren
B. Mr Hunter's oral direction was a 'disposition' because the trust under which they had originally been held had come to an end
C. Mr Hunter's oral direction was a 'disposition' because he had assigned his interest in the shares to his grandchildren
D. Mr Hunter's oral direction was a 'disposition' because he no longer held the beneficial interest
E. Don't know
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That's correct.
The answer that "it was a 'disposition' because the trust under which they had originally been held had come to an end" is wrong because, although it was true that Mr Hunter's interest under the trust had come to an end, this was not the ground on which the House of Lords found that he had purported to make a disposition. And it could not in any case be the answer, because trusts can come to an end for reasons outside the control of the beneficiary, and section 53(1)(c) clearly comprehends some act on the part of such a person. The answer that it "was a 'disposition' because he had assigned his interest in the shares to his grandchildren" is wrong because both Viscount Simonds and Lord Radcliffe, though more tentatively, proceed on the assumption that Hunter's oral direction was not an assignment of anything. Lastly, the answer that it "was a 'disposition' because he no longer held the beneficial interest" is wrong because, although it is correct to say that Hunter no longer held the beneficial interest, both Viscount Simonds and Lord Radcliffe placed emphasis on the fact that the beneficial interest was now in the grandchildren.

Correct
Marks for this submission: 1/1.Please read the following extract from the speech of Lord Upjohn in Vandervell v IRC [1967] 2 AC 291 and then answer the three questions (Q10 - Q12) that follow. Question 10
Marks: 1 What does Lord Upjohn mean when he says that the Inland Revenue's arguments with regard to section 53(1)(c) would have been 'untenable' before the cases of Grey and Oughtred?
Choose one answer. A. It was previously thought that section 53(1)(c) only applied to trusts other than trusts of land
B. It was previously thought that section 53(1)(c) only applied to trusts of land
C. It was previously thought that section 53(1)(c) only applied to trusts of shares
D. It was previously thought that section 53(1)(c) only applied to testamentary dispositions
E. Don't know
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That's correct.

Answer (b) is correct because, as we saw, it seems to have been accepted on all sides in Grey (and also in Oughtred) that section 53(1)(c), differently to section 9 of the Statute of Frauds 1677, was not confined to land. What Lord Upjohn does not say, however, and this point is vital, is that the question was not raised in either of those two cases. It is therefore still open to a litigant to argue that section 53(1)(c) is confined to land, though subject, of course, to the argument mentioned in the feedback to question 3 (above). Answer (a) is wrong because it gets the history the wrong way around, answer (c) is wrong because it inverts the assumption in both Grey and Oughtred, and answer (d) is wrong because section 53(1)(c), though it includes them, is clearly not confined to testamentary dispositions.

Correct
Marks for this submission: 1/1.Question 11
Marks: 1 How does Lord Upjohn distinguish the decision of the House of Lords in Grey?
Choose one answer. A. That was a case where the trustee had vested in him both the legal and equitable estate
B. That was a case where the trustee was dealing with the equitable estate
C. That was a case where the dealings by the beneficiary did not amount to a disposition of his equitable interest
D. That was a case where the legal estate remained outstanding in a trustee and the beneficiary was dealing only with the equitable estate
E. Don't know
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That's correct.

In the present case, Vandervell had instructed his trustee to convey the shares to the Royal College of Surgeons. In that sense, the facts were different to Grey, for there the shares themselves were not to move from one person to another, but merely to be held for a different person than before. Answer (a) is clearly wrong, because if it was true that the trustee had vested in him both the legal and equitable estates, there would have been no trust at all. Answer (b) is also incorrect, because the trustee is not able to deal with an interest he does not have. And answer (c) is incorrect because it is the exact opposite of what was decided in Grey.

Correct
Marks for this submission: 1/1.Question 12
Marks: 1 What, for Lord Upjohn, was the purpose of section 53(1)(c)?
Choose one answer. A. To enable the Inland Revenue to collect tax
B. To keep manufacturers of paper in business
C. To enable companies to know to whom they should be paying dividends
D. To prevent hidden oral transactions in equitable interests in fraud of those truly entitled, and making it difficult, if not impossible, for the trustees to ascertain who were their beneficiaries
E. Don't know
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That's correct.

Answer (a) is wrong, although it is an answer commonly given by examinees. It is simply a coincidence that tax is sometimes leviable on written instruments, on the one hand, and that section 53(1)(c) requires a written instrument for certain types of transaction, on the other. Answer (b) is simply facetious; and answer (c) cannot be right because the provision is not limited to shares and in any case the dividends will be payable to the trustee, who has the chose in action consisting of the shares, not the beneficiary.

Correct
Marks for this submission: 1/1.Application
Please read the following examination question and then answer the two questions which follow:

Consider the following factual scenario:
Ben, the beneficiary of a bare trust of a title to a painting, orally directs Tom, his trustee, to give the title to Amelia, it being Ben's intention that Amelia receive it as a gift. Tom hands her the painting. Ben later dies intestate, and Fred, his next of kin, asserts that Amelia holds the title to the painting for him on a bare trust and demands that she convey it to him under the rule in Saunders v Vautier.
Question 13
Marks: 1 What argument will Fred make in relation to section 53(1)(c) of the Law of Property Act 1925 in support of his claim?
Choose one answer. A. That Ben's failure to comply with the sub-section means that the trustee did not manage to convey to Amelia Ben's interest under the trust
B. That Ben's failure to comply with the sub-section means that nothing passed from the trustee to Amelia
C. That Ben's failure to comply with the sub-section means that Ben's interest under the trust was still in him on his death
D. That Ben's failure to comply with the sub-section means that Ben's interest in the trust was destroyed on the transfer of title to Amelia
E. Don't know
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That's correct.

The only argument which has the remotest possibility of working for Fred is argument (c). Argument (a) is a non-starter, because the trustee did not have Ben's interest to transfer. Argument (b) is also a non-starter, for section 53(1)(c) only governs the beneficiary's dealings with his own interest, not the dealings of others with theirs. And argument (d), if true, would contradict Fred's claim altogether.

Correct
Marks for this submission: 1/1.Question 14
Marks: 1 Vandervell is obviously against Fred. How might he argue that it could be distinguished?
Choose one answer. A. That Vandervell concerned a gift to charity, while the present case involves a gift to a private individual
B. That Vandervell was a case concerning tax, while the present case concerns intestate succession
C. That Vandervell was a case concerning realty, while the present case concerns personalty
D. That Vandervell was a case concerning shares, while the present case concerns a painting
E. Don't know
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That's correct.

Of the four arguments presented, only argument (d) is a possible argument that Fred could present in order to distinguish Vandervell. The reason it is relevant is that some argue that it is part of the ratio of Lord Upjohn's speech that the transfer of the shares from the trustees to the Royal College of Surgeons had to be done in writing. This, said Lord Upjohn, made any further writing redundant. This case, however, is different, for title to the painting passed by delivery, a physical handing over of possession of the painting, without the need for any writing. If it was indeed fundamental to Lord Upjohn's reasoning that the writing required to transfer the shares was enough for the purposes of section 53(1)(c), then Fred could argue that this case is different. As to the other arguments, (a) is wrong because nothing turned on the fact that Vandervell's intention was to make a gift to charity; (b) is wrong because, again, nothing turned on this point; and (c) is wrong because it was not land which was the subject-matter of the transfer in Vandervell. Of course, there is, as we have seen, an argument that section 53(1)(c) is confined to land, but that is not the argument presented here. Note also that there are other arguments that Fred could make, most particularly in relation to the correctness of Vandervell itself. As further reading, you might want to now, with some knowledge of these difficult cases under your belt, look at Brian Green's article on the topic in (1984) 47 MLR 385.

Correct
Marks for this submission: 1/1.