Hey i'm not quite sure what Lord Wilberforce is saying in Vandervell v. IRC???
What are the main points he makes, the speeches are really long and I need to get to the point.
If anyone could help that would be great
Vandervell v. IRC - Can someone explain... watch
- Thread Starter
- 27-03-2011 15:13
- 27-03-2011 15:23
I'm only a first year so I haven't studied this yet, but from Wikipedia ():
The House of Lords, by three to two, found that Vandervell was indeed liable to pay tax on the £250,000 of dividends given to the Royal College of Surgeons. The House of Lords held that LPA 1925 s 53(1)(c) was not applicable to situations where a beneficiary directs his trustees, by way of his Saunders v Vautier right to do so, to transfer full legal and equitable ownership to someone else. As such, Vandervell had successfully divested himself of ownership (legal and equitable) in the shares, notwithstanding that he did so by means of an oral instruction. He was thus not liable to pay tax on the shares.
However, Vandervell was not so fortunate in respect of the option to purchase. The option to purchase a substantial fraction of the company for only £5000 was extremely valuable. As such, Vandervell, if he retained an interest in it, would have to pay considerable surtax on it. The House of Lords held by a 3-2 majority that whilst the trust company had the legal title to the option, Vandervell had not successfully divested himself of an equitable interest in the option. As such, the option was held on a resulting trust for Vandervell. It was held that a resulting trust would arise where equitable interest had not successfully been divested, because an equitable interest cannot merely hang, unattached to an owner. As such, Vandervell was liable to pay surtax on the option.
Lord Wilberforce said that there was,
"no need, or room to invoke a presumption. The conclusion, on the facts found, is simply that the option was vested in the trustee company as a trustee on trusts, not defined at the time, possibly to be defined later. But the equitable, or beneficial interest, cannot remain in the air: the consequence in law must be that it remains in the settlor."
- 27-03-2011 21:53
Are you stuck on what he says about the resulting trust point or on his analysis of s 53(1)(c) Law of Property Act 1925?
On the latter point I know Lord Wilberforce has a different take from Lord Upjohn in that he reasons that Vandervell had done everything he could have done to transfer the shares to the Royal College of Surgeons (Re Rose), whereas Lord Upjohn referred to the underlying rationale of s 53(1)(c) (i.e. avoiding hidden transactions in equitable interests) in reasoning that it simply didn't apply where the transfer was to make the transferee the absolute owner of the property rather than leaving the legal title with the trustees.