The Supreme Court upheld the Court of Appeal’s decision that a specifically enforceable oral agreement to transfer a beneficial interest in shares in a private company to the legal owner of those shares was effective to pass the relevant interest, without the need for any writing.

The shares had the necessary quality of uniqueness, and the oral agreement had been supported by valuable consideration so that it was specifically enforceable. Such a specifically enforceable agreement gave rise to a “vendor-purchaser constructive trust”. Where there is such a constructive trust, the effect of section 53(2) of the Law of Property Act 1925 is to disapply the regime for formalities in section 53(1)(c), so that writing is not required despite there being “disposition” of an equitable interest. It did not matter that, on the facts, the agreement had involved the beneficial owner surrendering, or releasing, his interest to the trustee. The resulting merger of beneficial and legal interests did not prevent the surrender or release being, in substance, a transfer of a kind which could be the subject of a vendor-purchaser constructive trust. Nor did it matter that the constructive trust had only a momentary existence before the beneficial interest merged with the legal interest.

Andrew Twigger KC was instructed (together with Paul Strelitz and Oliver Hyams) by IBB Law.

The first appellant was represented by Clare Stanley KC, William Buck and Jen Coyne instructed by Fladgate LLP and the second appellant was represented by Alex Barden instructed by Schofield Sweeney LLP.

The full judgment can be found here