Section 6 provides that nothing in section 10 to 12 or 59:
(a) invalidates any disposition by will; or
(b) affects any interest validly created before the commencement of the Act; or (c) affects the right to acquire an interest in land because of taking possession; or (d) affects the law relating to part performance; or
(e) affects a sale by the Court.
Section 6(d)
Section 6(d) provides that nothing in sections 10, 11, 12 or 59 affects the law relating to part performance. Nothing of the writing requirements espoused in the sections specified in section 6(d) affect the doctrine of part performance.
Part Performance
The doctrine of part performance provides that where there is an oral contract for the sale or other disposition of land, even if that oral contract is not later evidenced in writing, the contract will be specifically enforced in equity if the party seeking to enforce it has performed acts which are unequivocally referable (ie. Moves into occupation of land) to some such contract as that alleged. In McBride v Sandland, a purchaser taking possession of land was an example of part performance.
SECTION 12(2)
Section 12(2) provides that nothing in the Act shall affect the creation by parol (orally) of a lease taking effect in possession for a term not exceeding three years, with or without a right for the lessee to extend the term for any period which with the term would not exceed three years. Although there is no writing requirement if the lease is for a period less than three years, writing is advisable. Section 12(2) includes oral interest taking effect in possession, which contain a right to renew the lease, provided that the aggregate of the original and subsequent terms does not exceed three years. Section 12(2) only applies to leases taking effect in possession.
LEADING CASE RE-SECTION 11
Adamson v Hayes HCA (Book p126) is the leading case with respect to the various paragraphs of section 11. There is no clear ratio decidendi. The case is useful by analogy only. It dealt with section 34 of the Property Law Act (Western Australia) 1969, which is equivalent to section 11 of the Property Law Act (Queensland). In that case, Adamson, Hayes and Freebairn each acquired several mineral claims. The mineral claims were held to be interests in land. Each was a trustee of his various mineral claims for himself as well as for other beneficiaries. Some mineral claims were held absolutely. All of these three persons, namely the three trustees and all of their respective beneficiaries, including themselves in their capacity as beneficiaries entered into an oral agreement between themselves. That oral agreement provided for two matters and was not evidenced in writing.
• The beneficial interest were to be divided amongst certain persons. This agreement is known as the pooling arrangement because it purported to divide the beneficial interests into specified percentages. It did not purport to be a mere agreement to do something in the future. The total of all the mineral claims were to be pooled beneficially as follows: 44% for Hayes and Freebairn and 56% for Adamson and all other original beneficiaries except Hayes and Freebairn.
• The second matter was the options agreement. Adamson and the other beneficiaries granted options to purchase their legal and equitable interests in the mineral claims to Hayes and Freebairn or to their nominees. The effectiveness of the options agreement was dependent on the effectiveness of the pooling arrangement.
Facts Summary:
Oral Agreement
(over mineral claims in WA which court held = interests in land) Owners of claims:
- Absolute owners
- Trustees for themselves and others
1. Pooling Arrangements (Eq. Interest) 2. Options Agreement
44% of Eq Interest to H and F A gave option to purchase interests 56% to A and associates of A and associates (ie 56%) to H and F
However, when a company was eventually so nominated, Adamson and his other beneficiaries refused to transfer the interests pursuant to that oral agreement.
The High Court held that the oral agreement was ineffective for failure to comply with section 34 of the Property Law Act (Western Australia) which is the counterpart of section 11 of the Property Law Act (Queensland). The second part of the agreement was the option agreement. If the pooling arrangement was ineffective then the option agreement to purchase the interest created by the pooling arrangement would necessarily also have been ineffective because there would have been no interest to purchase. The entire agreement was oral and was not subsequently evidenced in writing. The mineral claims were interests in land within the meaning of the Property Law Act (Western Australia).
Barwick CJ in dissent (not important) held that the oral agreement did not purport to change the original trusts, because these trusts had not been intended to be changed until Hayes and Freebairn had found a partner and formed a mining partnership. No such partnership had yet been formed. There was no intention for an immediate disposition of the beneficial interests. A mineral claim is not an interest in land.
Menzies J (not a crucial judgment) held that section 34(1)(a) was confined to the creation or disposition of legal interests in land (wrong according to Dennis). Otherwise, sections 34(1)(b) and 34(1)(c), equivalent to sections 11(1)(b) and 11(1)(c) in Queensland, would not have been necessary. In his view, sections 34(1)(b) and 34(1)(c) respectively deal with the creation and disposition of equitable interests in land. If section 34(1)(a) is not confined to the creation of legal interests than they would not be overlapping with sections 34(1)(b) and 34(1)(c) and therefore (b) and (c) would be superflous. Although this is a minority view and is not law, it is not unpersuasive. According to the view of Menzies J, section 34(1)(c) is confined to disposition of equitable interests in land, even though the terms of section 34(1)(c) do not confine it in such a way. The judgment of Menzies J has two features:
• Section 34(1)(a) should be confined to the creation and disposition of legal interests in land. 3 Js rejected this view in Adamson v Hayes.
• Section 34(1)(c) should be confined to the disposition of existing interests in land. This view is supported by the decisions in PT Ltd v Maradona Pty Ltd. In addition Menzies J rejected Menzies view
If section 34(1)(a) is not confined to legal interests in land, the view of Menzies J cannot be valid. As the three other judges did not agree with Menzies J, his judgment is wrong in two respects:
• It is wrong to suggest that section 34(1)(a) is confined to legal interests in land. The better view is that it applies to both legal and equitable interests in land.
• It is wrong to suggest that section 34(1)(c) is confined to equitable interests in land because the better view is that it applies to equitable interests in land as well as to equitable interests in pure personalty.
Reasoning of Menzies J then analysed the pooling arrangement – which he said were declarations of trust. He noted that all the mineral claims were held in trust and were therefore beneficial interests in existence with respect to these claims. The pooling arrangement purported to alter the pre-existing beneficial interests in land. This purported alteration could have been achieved in one of two ways.
• Firstly, by declarations of trust made by the existing beneficiaries so that such declarations had to comply with section 34(1)(b) as the mineral claims were interests in land. Not having complied with section 34(1)(b) because the declarations of trust were not evidenced in writing, the declarations were ineffective.
• Secondly, by a disposition in compliance with section 11(1)(c).
However, he did say in the alternative (ie. If he were wrong) that if no new trusts had been declared then there would have been dispositions (ie. Assignment) of the existing beneficial interests from the old beneficiaries to the new
beneficiaries such as to attract section 34(1)(c). The mineral claims were interests in land and since the dispositions had not been made in writing, they were ineffective. Menzies J held that since the pooling arrangements were ineffective, the options to purchase were also ineffective since there was nothing to purchase. The result would be slightly different in Queensland. Section 11(1)(c) requires dispositions to be evidenced in writing whereas section 34(1)(c) requires the dispositions to be made in writing. Menzies J did not distinguish between the absolute owners and beneficial owners; according to Dong – in the case of the absolute owners, he should of said that it was a declaration of trust. In the case of the beneficial owners, it should have been classed as an assignment.
Walsh J took the view that the pooling arrangement came within section 34(1)(a) as it applies to both legal and equitable interests in land (this is the majority view). The pooling arrangement, being an agreement to alter the original beneficial interest in the claims, involved the creation and disposition of an existing equitable interest in land. The pooling arrangement was therefore ineffective to comply with section 34(1)(a) as it was made orally and not in writing. Since the pooling arrangement was ineffective, the options agreement was also ineffective. Walsh J did not say which part of the arrangement created and which part disposed of interests, ie. A problem of which were creations and which were dispositions?
Gibbs J held that section 34(1)(c) was not confined to dispositions of equitable interests in land. It extended to dispositions of equitable interest in pure personalty. He also noted that section 34(1)(a) was not confined to legal interests in land but extended to equitable interests in land. Gibbs J held that the pooling arrangement was a declaration of trust and not a disposition of an existing equitable interest. Section 34(1)(b) therefore applied and not (c). The declaration of trust was therefore required to be evidenced in writing. Section 34(1)(c) did not apply because the declaration of trust was not a disposition of an existing equitable interest but the creation of a new equitable interest. The pooling arrangement was ineffective because it had not complied with section 34(1)(b), as there was no written evidence. The options agreement created rights but those rights were not declarations of trust. The options, as distinct from the pooling arrangement, fell outside section 34(1)(b). Gibbs J noted that the options were not dispositions (he used a very narrow view of dispositions – ie. Confined to assignments) of existing equitable interests and therefore the options also fell outside section 34(1)(c). However, the options created equitable interests in land and therefore fell within section 34(1)(a). Not having been granted in writing, the options were ineffective. (Note:
we cannot cite Gibbs J to resolve the ‘Declaration of Trust’ falling within (c) as WA definition is narrow. Only in QLD & NSW does a ‘disposition’ include a declaration of trust)
Stephen J held that the pooling arrangement declared trusts of land and therefore fell within both section 34(1)(a) and section 34(1)(b). The problem with this approach is that section 34(1)(a) and section 34(1)(b) cannot both be applied because they have different writing requirements. (Note: now resolved by James in that if (a) and (b) apply, then apply the less stringent (b)). Section 34(1)(a) requires the creation or disposition if interests in land to be made in writing. Section 34(1)(b) requires declarations of trust to be evidenced in writing. Stephen J took the view that a declaration of trust fell within section 34(1)(a) because it created an interest in land. A declaration of trust fell within section 34(1)(b) because it was a declaration of trust respecting land. If the pooling arrangement had not only created an interest in land, but had additionally disposed of an existing equitable interests in land, then that would constitute another ground for applying section 34(1)(a). For an unexplained reason, Stephen J did not apply section 34(1)(c) to such a disposition of an existing equitable interest in land. Stephen J simply said that the pooling arrangement had failed to comply with sections 34(1)(a) (no writing) and section 34(1)(c) and was therefore ineffective.
In summary, two out of the five judges, Walsh and Stephen JJ held that section 34(1)(a), the equivalent to section 11(1)(a), applied to the pooling arrangement. Three out of the five judges, Barwick CJ, Menzies and Gibbs JJ, held that section 34(1)(a) did not apply to the pooling arrangement, although they had different reasons for doing so.
Thus, a majority of the Court rejected the application of section 34(1)(a) to the pooling arrangement and to the options agreement.
A majority of three out of the five judges, Menzies, Gibbs and Stephen JJ held that section 34(1)(b) applied to the pooling arrangement. Thus, the ratio decidendi of the case is that the pooling arrangements purported to be declarations of trust respecting land. Two out of the five judges, Barwick CJ and Walsh J held that section 34(1) (b) did not apply to the pooling arrangement.
Only one out of the five judges, Menzies J, applied section 34(1)(c) to the pooling arrangement. The Court rejected the applicability of section 34(1)(c) to the pooling arrangement.
In Secretary, Department of Social Security v James, (Book p96) Lee J held that a declaration of trust of land fell within section 34(1)(b) but did not fall within section 34(1)(a). Such a declaration of trust over land merely had to be evidenced in writing in compliance with section 34(1)(b) and did not have to be made in writing. Otherwise, section 34(1)(b) would be superfluous. Section 34(1)(a) has limited scope. Where there is conflict between the writing requirements, the less stringent requirement will be applied (ie. If both (a) and (b) apply, apply (b)) . This implicitly
rejects the view of Stephen J in Adamson v Hayes that section 34(1)(a) applied to a declaration of trust respecting land. Lee J further held that the evidence in writing required by section 34(1)(b) did not have to come from a single document but could be based on a combination of documents capable of being read together.
GOOD SUMMARY OF THE APPLICATION OF SECTION 11
It could be argued by way of analogy with the judgment of Lee J that where a disposition of an existing equitable interest in land fell within section 11(1)(b) it would fall outside section 11(1)(a). Otherwise, a disposition of an equitable interest in land, which falls within section 11(1)(c) but not section 11(1)(a), would be ineffectual. This issue only arises in Queensland where section 11(1)(a) requires the creation or disposition to be made in writing.
Section 11(1)(c) only requires it to be evidenced in writing. In other states, this problem does not arise because the counterparts to section 11(1)(c) require the disposition to be made in writing. If there is a disposition of an existing equitable interest in land and it is evidenced in writing but not made in writing, it would comply with section 11(1) (c) and would be effective. The problem of overlap between section 11(1)(a) and section 11(1)(b) is so acute that (a) has very limited scope. When section 11(1)(a) conflicts with a less stringent requirement, namely s ection 11(1) (b) or section 11(1)(c) , the less stringent requirement is applied. If a transaction is literally with sections 11(1)(a) and 11(1)(b) or within sections 11(1)(a) and 11(1)(c) , apply sections 11(1)(b) or 11(1)(c) because, otherwise, these sections would be superfluous with respect to such a dispute.
Something can be created orally and can later be evidenced in writing. If it is made in writing, it is therefore evidenced in writing. If a transaction falls under both sections 11(1)(a) and 11(1)(c) , section 11(1)(c) should be applied and not section 11(1)(a) to avoid an impossible situation, namely a situation where a transaction need be made in writing and merely evidenced in writing. The conflict between sections 11(1)(a) and 11(1)(c) is impossible to avoid with respect to some transactions.
Grey Direction (Can only release to trustee)
In Grey v Inland Revenue Commissioners, Hunter was the beneficial owner (Beneficiary) of 18,000 shares in a company. He orally directed his trustees (which was really a ‘release on terms of the new trust’) to hold his entire beneficial interest in the shares in equal parts for the beneficiaries (B1) of six existing settlements or trusts. After this oral direction, the trustees executed a written declaration of trust, which referred to the oral directions, and their acceptance of the new trusts. (Hunter purported to confirm in writing that he had given the oral direction). Hunter then signed these declarations to confirm that he had given the oral direction earlier. The Inland Revenue Commissioners assessed the written declarations of trust for stamp duty, on the ground that the earlier oral direction was ineffective (as it is a disposition and ineffective under (c)) to dispose of Hunter’s beneficial interest and that beneficial interest was only disposed of by the written declarations of trust . Those written declarations of trust were therefore liable to stamp duty. It is a fundamental principle that stamp duty is not levied as such but on instruments.
An oral transaction is not an instrument. The Commissioner’s case depended critically on the argument that the oral direction was ineffective for failure to comply with section 53(1)(c) of the Law of Property Act (United Kingdom) 1935, a counterpart to section 11(1)(c) of the Property Law Act. However, it is not an exact counterpart. Whereas the United Kingdom section requires the disposition to be made in writing, the Queensland section merely requires the transaction to be evidenced in writing. The Commissioner’s argued that the direction was a disposition of an existing equitable or beneficial interest. It was not made in writing and was therefore ineffective under section 53(1) (c). By contrast, the trustees who wished to avoid stamp duty argued that because section 9 of the Statute of Frauds, from which section 53(1)(c) is derived, used the phrases grants and assignments. The trustees argued that the word disposition in section 53(1)(c) should be read synonymously with grants and assignments. As the oral direction was neither a grant nor an assignment, it would therefore fall outside section 53(1)(c).
The House of Lords rejected the trustee’s argument. It was held that the term disposition should be given its ordinary meaning and should not be restricted to grants and assignments . Given its ordinary meaning, disposition included an oral direction by a beneficiary to his trustees to immediately hold his beneficial interest for other persons. The Court did not explain what the ordinary meaning of disposition was, except to say that it was wider than grants and assignments. Commissioner Won.
(Doctrine of Merger of Estates)
It is likely that Hunter’s action was a ‘release of his beneficial interest to the trustees on the terms of the new trust’. That release was not unconditional; it was a release on terms. There could have been no assignment made to the trustee’s, as the beneficiary cannot assign to the trustees owing to the doctrine of merger of estates. The House of Lords decision necessarily means that the direction was not an assignment.
SUMMARY: In Grey v Inland Revenue Commissioner’s, the direction to the trustees was to hold Hunter’s beneficial interest immediately for other persons. The meaning of this phrase is not absolutely clear. Dennis: It seems that such a direction is analytically a release of the existing beneficial interest to the trustees , such that the beneficial interest so released is held in trust for the new beneficiaries.
Grey v Inland Revenue Commissioner’s would not be decided in the same way in Queensland. In Queensland, section 11(1)(c) merely requires the disposition to be evidenced in writing. The oral direction in Grey v Inland Revenue Commissioner’s was subsequently evidenced in writing when Hunter signed the trustee’s declarations of trust.
It is unclear what the nature of a direction by the sole beneficiary of a trust to the trustee to immediately hold the entire beneficial interest for another person is. A further issue is whether such a direction falls within section 11(1) (c), even where the property is not land but pure personalty? According to Grey v Inland Revenue Commissioners, such a direction constitutes a disposition of an existing equitable interest. In Queensland, such a direction would fall within section 11(1)(c).