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Property: What is a Disposition?

Property: What is a Disposition?

Section 7 of the Conveyancing Act 1919 (NSW) (‘CA’) provides definitive guidance on the terms assurance and disposition. An assurance includes a conveyance and a disposition otherwise than by will. A disposition includes a conveyance and also an acknowledgment under section 83 of the Probate and Administration Act 1898 (NSW), vesting instrument, declaration of trust, disclaimer, release and every other assurance of property by any instrument except a will, and also a release, devise, bequest or an appointment of property contained in a will.

 

A particularly interesting analysis of the phrase disposition is provided by Lord Evershed in Grey v IRC (1958) (‘Grey Case’) ICH 690 where His Honour stated:

 

‘It is competent for an owner of personal property to declare himself effectively by word of mouth a trustee of the property for another. Such a declaration did not require writing for its efficacy according to section 9 of the Statute of Frauds nor, in my judgment, is the situated altered by virtue of the repeal of that section… still, if A declares himself a trustee of the property wholly for B, he may, in common sense and common terminology, be said to have ‘got rid of’ that is ‘disposed of’, his former subsisting beneficial interest… where the rights of the equitable owner are defeated upon a purchase for value of the legal estate by one without notice of the equitable interest. Another instance is the defeasance of a subsisting vested interest by the exercise of a special power of appointment… a subsisting equitable interest may be ‘disposed of’, though it is not the subject of any – ‘surrender’ in favour of the holder of some other interest out of which the subsisting interest is derived’.

 

Lord Ormerod in the Grey Case further provided that:

 

‘The word disposition has been used and in my judgment this word should be given its normal meaning. If this be right there can, I think be little doubt that the case comes within the section and the transaction void for want of writing. This was an interest which he had himself created, apparently for the purpose of being in a position to give the appropriate directions to the trustees at a later date. In order to do this effectively, it was essential that the equitable interest should be vested in him and that it should cease to exist at the time and by reason of the direction. The transaction was therefore one which was in my judgment a disposition within the meaning of the section of the settler’s equitable interest. He ‘disposed of’ or ‘got rid’ of it, by causing it to cease to exist in carrying out the purpose for which he brought it into being’.

 

Section 23C CA is the present regulation with respect to the disposition of property. It provides that:

 

(1) Subject to the provisions of this Act with respect to the creation of interests in land by parol: 
(a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by the person’s agent thereunto lawfully authorised in writing, or by will, or by operation of law, 
(b) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by the person’s will, 
(c) a disposition of an equitable interest or trust subsisting at the time of the disposition, must be in writing signed by the person disposing of the same or by the person’s will, or by the person’s agent thereunto lawfully authorised in writing. 
(2) This section does not affect the creation or operation of resulting, implied, or constructive trusts.

 

When a sale occurs there is normally a disposition if it is conveyed in writing.

 

It is arguable that an option is not a disposition because it merely sterilises the putative vendor’s right to sell. Wood Preservation v Prior (1969) IWLR 1077 and Broken Hill Pty Ltd v FCT (2000) 43 ATR 204 are good cases to read on this point.

 

If you would like to discuss dispositions, please do not hesitate to contact me by:

 

Email: ptiliakos@wentworthchambers.com.au
Phone: (02) 9232 4466
Website: www.thebarristersydney.com.au
Facebook: @thebarristersydney
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