Re Vandervell (No2) [1974]

V family trust company decided to exercise the
buy-back option.
Trustees used money from the trust of the children of
the family to purchase the shares.
V then exercised his control over the company and had
various dividends declared.
In doing this he intended to provide for his children.
However after V’s death his executors claimed that none
of the preceding transactions had worked so as to displace V’s beneficial
interest in the buy-back option.
Hence shares and dividends were V’s property in equity
and trust co held the shares on trust for V’s estate.
Yet Court of Appeal decided a valid trust had been
declared in favour of the children and therefore the dividends belonged in the
children’s trust.
Denning: ‘Before the option was exercised, there was a
gap in the beneficial ownership. So there was a resulting trust for Mr V. But
as soon as the option was exercised and the shares registered in the trustee’s
name, there was created a valid trust of the shares in favour of the children’s
settlement. Not being a trust of land, it could be created without writing’.