Re Vandervell's Trusts (No 2)
Encyclopedia
Re Vandervell's Trusts [1974] Ch 269 is a leading English trusts law
case, concerning resulting trusts.
, an old and wealthy racing car manufacturer, was attempting to make a donation to the Royal College of Surgeons to establish a chair in his name. He wanted to avoid paying tax, and had come up with a second scheme, after a first attempt to make a tax free donation had failed in Vandervell v IRC.
He instructed the tax company to repurchase shares in his company, through the option that had been granted. Vandervell did not want to pay tax on the option, and did not want to pay tax on the shares (the trust of which he would be an object, the trustee being his trust company).
The purchase money came from a trust, held by the same trust company, but in favour of Vandervell's children. As such, the trust company took themselves as holding the purchased shares on trust for the children.
Lord Denning MR gave his judgment as follows.
Stephenson LJ, with some reservation, concurred. Lawton LJ gave a concurring judgment.
English trusts law
English trusts law is the original and foundational law of trusts in the world, and a unique contribution of English law to the legal system. Trusts are part of the law of property, and arise where one person gives assets English trusts law is the original and foundational law of trusts in the...
case, concerning resulting trusts.
Facts
Tony VandervellTony Vandervell
Guy Anthony "Tony" Vandervell was an English industrialist, motor racing financier, and founder of the Vanwall Formula One racing team.-Biography:Vandervell was the son of Charles Vandervell, founder of CAV, later Lucas CAV...
, an old and wealthy racing car manufacturer, was attempting to make a donation to the Royal College of Surgeons to establish a chair in his name. He wanted to avoid paying tax, and had come up with a second scheme, after a first attempt to make a tax free donation had failed in Vandervell v IRC.
He instructed the tax company to repurchase shares in his company, through the option that had been granted. Vandervell did not want to pay tax on the option, and did not want to pay tax on the shares (the trust of which he would be an object, the trustee being his trust company).
The purchase money came from a trust, held by the same trust company, but in favour of Vandervell's children. As such, the trust company took themselves as holding the purchased shares on trust for the children.
Judgment
The Court of Appeal (overturning the judgment of Megarry J in the High Court) held that the option ceased to exist once it was exercised. Thus, there was no disposition, and no consequent liability to pay tax. It also held that the children were the equitable owners of the shares, and, as such, Vanderwell had divested himself of equitable ownership of the shares.Lord Denning MR gave his judgment as follows.
Stephenson LJ, with some reservation, concurred. Lawton LJ gave a concurring judgment.
See also
- English trusts lawEnglish trusts lawEnglish trusts law is the original and foundational law of trusts in the world, and a unique contribution of English law to the legal system. Trusts are part of the law of property, and arise where one person gives assets English trusts law is the original and foundational law of trusts in the...
- Resulting trusts in English lawResulting trusts in English lawResulting trusts in English law are trusts created where property is not properly disposed of. It comes from the Latin resultare, meaning to spring back, and was defined by Megarry VC as "essentially a property concept; any property that a man does not effectually dispose of remains his own". These...
- Vandervell v IRC [1967] 2 AC 291
- Tinsley v Milligan [1994] 1 AC 340
- Tribe v Tribe [1996] Ch 107
- Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669
- Air Jamaica Ltd v Charlton [1999] 1 WLR 1399
- Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567
- Twinsectra Ltd v Yardley [2002] 2 AC 164