Re Vandervell's Trusts (No 2)
A beneficiary under a resulting trust lost his interest when the trustees, with his money, exercised an option and declared new trusts with his consent.
Facts
After Vandervell v IRC, the trustee company exercised the option to buy back the shares from the Royal College of Surgeons, using money from a settlement for Mr Vandervell's children. It told the Inland Revenue that the shares would be held on trust for the children's settlement. Dividends were then paid into that settlement. After Mr Vandervell's death, his executors claimed that the shares, and the dividends, still belonged to his estate under a resulting trust, because he had not disposed of his equitable interest in writing.
Legal principle
The Court of Appeal held that the shares and dividends belonged to the children's settlement. Lord Denning MR said that the resulting trust of the option came to an end when the option was exercised, and the trustees then held the shares on the new trusts for the children, with Mr Vandervell's consent, so there was no need for a written disposition under section 53(1)(c) of the Law of Property Act 1925. Mr Vandervell would in any event have been estopped from claiming the shares. The reasoning has been criticised, but the decision reflects the settlor's real intentions.
Related cases on formalities and constitution of trusts
- Re Brooks' Settlement Trusts [1939] Ch 993
- Cannon v Hartley [1949] Ch 213
- Choithram (T) International SA v Pagarani [2001] 1 WLR 1
- Fletcher v Fletcher (1844) 4 Hare 67
- Grey v IRC [1960] AC 1
- Hodgson v Marks [1971] Ch 892
- King v Dubrey [2015] EWCA Civ 581, [2016] Ch 221
- Mascall v Mascall (1984) 50 P & CR 119
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