The three Vandervell cases were concerned primarily Essay Example

The three Vandervell cases were concerned primarily Essay The three Vandervell instances were concerned chiefly with the issue of ensuing trusts. The purpose of this assignment is to reexamine the determinations reached in the three determinations and remark on whether or non these determinations, on contemplation, produced right results. It will see the assorted opinions by the Law Lords and whether or non the opinions produced consistent results. The first of these instances is Vandervell v Inland Revenue Commissioners. [ 1 ] In 1958, Vandervell, the commanding manager and stockholder of VP Ltd, decided to give 100,000 portions in VP Ltd to the Royal College of Surgeons to establish a chair in pharmacological medicine. The portions were presently held by Vandervell’s bank under a bare trust for him. Consequently, he directed the bank to reassign 100,000 portions to the RCS. It was intended that RCS should maintain the portions for a limited period merely, and should release them after having ?150,000 income on the portions by manner of dividends. To guarantee that these portions were non kept by the RCS forever, the College, upon reception of the portions, executed an option in favor of a legal guardian company set up by Vandervell. The footings of the option provided that the College must reassign the portions to the legal guardian company upon the future reception of payment of ?5,000 from the legal guardian company. By 1961 the College had received over ?150,000 in dividends from the portions and so the legal guardian company exercise the option to buy back the portions for ?5,000. The present action was brought by the Inland Revenue Commissioners to retrieve revenue enhancement from Vandervell which had been assessed on the dividends. The inquiry that arose was whether or non Vandervell had owned the portions during the period in which the dividends were declared. The Revenue argued that Vandervell, in directing the bank to reassign the portions to the College, had purported to dispose of his just involvement in the portions but had failed to make so because the temperament had non been made in composing [ 2 ] . We will write a custom essay sample on The three Vandervell cases were concerned primarily specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on The three Vandervell cases were concerned primarily specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on The three Vandervell cases were concerned primarily specifically for you FOR ONLY $16.38 $13.9/page Hire Writer It was held that by the Godheads that the option has been held by the legal guardian company upon unspecified trusts. In conformity with the axiom equity abhors a vacuity in good ownership, the option could non be permitted simply to stay â€Å"in the air† . Their Lordships held that the benefit of the option must hold been held by the legal guardian company under a resulting trust for Vandervell. In neglecting to stipulate trusts of the option, Vandervell had failed to deprive himself of his just involvement in the option. It followed that he had besides failed to the full to deprive himself of his just involvement in the portions which were the topic of the option. As a consequence, Vandervell was apt to pay revenue enhancement on the dividends, declared on the portions. As a consequence of the Inland Revenue’s claim against him personally, Vandervell, executed a title in 1965 under which he transferred to his legal guardian company all or any right, title or involvement which he might hold in the option, to be held by it on trust for Vandervell’s kids harmonizing to the footings of an bing colony. He so died in 1967. His executors brought the action against the legal guardian company [ 3 ] , claiming that Vandervell had owned the portions for the period between 1961 and 1965. The Inland Revenue was joined to the action and sought to retrieve revenue enhancement from Vandervell’s estate for the period between 1961 and 1965. The Trustee company claimed that the portions should be treated as belonging to the children’s colony. Megarry J held that there are two types of ensuing trusts: â€Å"automatic ensuing trusts† and â€Å"presumed ensuing trusts. [ 4 ] † It was there Lordship’s position, the former arises â€Å"automatically† when some or all of the good involvement in belongings held on an express trust has non been exhausted. In contrast a â€Å"presumed resulting trust† would originate in instances where X buys belongings in Y’s name, or gratuitously transportations belongings to Y. Therefore Megarry identified two chief issues, the first of these was to find whether or non the suspect legal guardian company had taken the option beneficially or on trust. Second, what those trusts were. Having decided that the legal guardian company held the option on trust, his Lordship so asked: â€Å"was the option held on ensuing trust or other trust for Mr Vandervell, or was it held on the trust of the children’s colony? † He concluded that on the above analysis a ensuing trust in favor of Mr Vandervell had arisen: â€Å"I can non see how an purpose non to acquire the portions back can veto a resulting trust if in the event he made no effectual temperament of his good involvement in them and the operation of equity brought them back to him in ways neer considered by him. Whatever may be the place under a presumed resulting trust, I do non see how the donor’s purpose non to hold the good involvement can predominate where the resulting trust is automatic† Megarry J’s position has some support from Lord Upjohn in the first of these instances [ 5 ] when he stated that: â€Å"If A intends to give away all his good involvement in a piece of belongings and thinks he has done so but by some error or accident or failure to follow with the demands of the jurisprudence, he has failed to make so, either entirely or partly, there will, by operation of jurisprudence, be a resulting trust for him of the good involvement of which he has failed effectually to dispose† Megarry J’s analysis was doubted by Lord Brown Wilkinson in West Deutsche Landesbank Girozentrale v Islington London Borough Council, [ 6 ] he claimed that there was no existent difference between the two categories of instance that Megarry J had identified: [ 7 ] â€Å"Megarry J in Re Vandervell’s Trusts ( No 2 ) suggests that a resulting trust of type ( B ) does non depend on purpose but operates automatically. I am non convinced that this is right. If the trustor has expressly, or by necessary deduction, abandoned any good involvement in the trust belongings there is in my position no ensuing trust† He said in the first instance as in the 2nd, Ten transportations legal rubric to belongings to Y and gives nil in return for it. In the first instance as in the 2nd, the infliction of a resulting trust leads to the creative activity of a new just belongings right for X, and as a new right, as Professor Chambers points out â€Å" it can non be explained as the inactiveness of a preexistent good involvement [ 8 ] † It was held, on entreaty from Megarry J, that as a consequence of the exercising of the option by the legal guardian company in 1961, the legal guardian company thenceforth held the portions on trust for the children’s colony. This was because it had been the purpose of Vandervell and the legal guardian company that the portions should be thenceforth held for the benefit of the children’s colony, and the ?5,000 used to exert the option had really been taken from the fund of the children’s colony. It followed that, after the exercising of the option, the share’s did non organize portion of Vandervell’s estate and his estate could non be taxed for the period 1961 to 1965. Lord Denning MR stated that when the option was exercised the â€Å"gap in the good ownership† came to an terminal. The ensuing trust under which the portions had antecedently been held for the benefit of Vandervell ceased to be upon the exercising of the option and the enroll ment of the portions in the name of the legal guardian company. Vandervell and the legal guardian company had, after the exercising of the option â€Å"done everything which needed to be done to do the colony of these portions adhering upon them.† Lord Denning MR, besides held that even if Vandervell had retain an just involvement in the portions after the exercising of the option he would hold been estopped from asseverating his entitlement to those portions as against his kids. Lord Denning said that he could non claim to have the portions holding done everything possible to give them off to the trustee’s of the children’s colony. There are some incompatibilities in the Lord Denning’s opinion. As Watt points out â€Å"Lord Denning MR held that in 1961 Vandervell intended, and did so divest himself of his just involvement in the portions, despite the fact that Vandervell seemingly did non gain until much subsequently that he might hold any just involvement in the portions [ 9 ] † The trouble with Megarry’s differentiation between a presumed and automatic trust is that it is difficult to warrant analytically, and even harder to use in pattern. To state that the ensuing trust arises automatically is to do an averment without any conceptual foundation, it explains simply that such a trust does non originate harmonizing to the settlor’s presumed purpose, it does non explicate, for illustration, why, when a trustor clearly intended to do an straight-out temperament of his belongings, the excess does non go through â€Å"automatically† to the Crown as Bona Vacantia. On the other manus, the job with Lord-Browne Wilkinson’s analysis is that it provides no solution to a instance like Vandervell where Vandervell clearly did non mean to retain the benefit of the portions, but even more clearly did non mean that they should go through to the Crown as bona vacantia. Therefore it can non be said that this instance was decided right, nevertheless a reappraisal of the Air Jamaica Case [ 10 ] , suggests that the Lords of the position that this determination was right, and revealed a return to the place adopted by Megarry and Lord Millet said: â€Å"Like a constructive trust, a ensuing trust arises by operation of jurisprudence, though unlike a constructive trust it gives consequence to purpose. But it arises whether or non the transferor intended to retain a good involvement – he about ever does non – since it responds to the absence of any purpose on his portion to go through a good involvement to the receiver. It may originate even when the transferor positively wishes to portion with the good interest† In the concluding analysis it is concluded that whilst the determination in Vandervell was non an ideal solution to the jobs raised, it is possibly the most suited solution to the trouble of ensuing trusts. It has been said that possibly the best solution to this trouble is in bar and non remedy ; decently constructed trusts will allege the demand for such determinations to be made. In the absence of such bar, the determinations reached in Vandervell produce the right result, the return to the Vandervell place in the Air Jamaica instance support this decision. Bibliography Legislation Law of Property Act 1925 Cases Air Jamaica Limited v Charlton [ 1999 ] 1 WLR 1399 Re Vanderell’s Trust ( No 2 ) [ 1974 ] 1 ALL ER 47 Vandervell V IRC [ 1967 ] 1 ALL ER 1 Vandervell v Inland Revenue Commissioners [ 1967 ] 2 AC 291 West Deutsche Landesbank Girozentrale v Islington London Borough Council [ 1996 ] A C 669 Journal Articles Chambers R, ( 2000 ) â€Å"Resulting Trusts in Canada† , Alberta Law Review 379 Millet, ( 1998 ) â€Å"Restitution and Constructive Trusts† , Law Quarterly Review 114 399 Books Birks P, ( 2002 ) , â€Å"Receipt in Breach of Trust† , Hart Publishing, Oxford Hayton D A ; Mitchell C ( 2005 ) â€Å" The Law of Trusts and Equitable Remedies† , Twelfth Edition, Thomson Sweet A ; Maxwell Ramjohn M, ( 2004 ) â€Å"Cases and Materials on Trusts† , Third Edition, Cavendish Publishing Riddall J G, ( 2002 ) , â€Å"The Law of Trusts† , Sixth Edition, Butterworths, Lexis-Nexis Todd P A ; Watt G ( 2003 ) , â€Å"Cases and Materials on Equity and Trusts† , Fourth Edition, Oxford University Press Watt G, ( 2004 ) â€Å"Trusts† , Oxford University Press