i really need help with this problem question...
David was the beneficiary of a trust, consisting of 1000 shares in Coco's ltd, of which Andrew was the trustee. In January 2009, he telephoned Andrew and told him that henceforth he (Andrew) was to hold his trust property for the benefit of Sophie. In March 2009 he completed a document in which he acknowledged the transfer of his interest to Sophie. In the meantime, in March 2009, a dividend was declared on the Coco shares, of £1 per share.
has anyone got any ideas? thanks so much!
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trusts and equity watch
- Thread Starter
- 27-01-2010 16:28
- 27-01-2010 19:30
The question raises formalities issues concerning s53 1 c LPA 1925. The basic point is that the person who is beneficially entitled to the shares when the dividend is declared gets the dividend. To transfer only the equitable interest, you need to do it in writing, as per s53 and Grey v IRC.
It looks like the disposition to Sophie either fails completely or doesn't take effect until the document is completed (n.b. the disposition of the equitable interest has to actually be in writing, just evidencing it in writing isn't necessarily enough). The main ways around this would be to interpret David's instructions to say that Andrew should transfer the legal title to Sophie as well as the equitable in which case no formalities are needed per Vandervell v IRC, or if there were was a specifically enforceable contract between David and Sophie giving rise to a constructive trust per Oughtred v IRC (n.b. you can usually get specific performance for shares in a private company but not in a public company). Neither appear to be particularly convincing arguments on these facts.
Post again if you encounter further problems in this area.Last edited by jacketpotato; 27-01-2010 at 19:32.