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, (1841) 4 Beav 115 is a leading
English trusts law English trust law concerns the protection of assets, usually when they are held by one party for another's benefit. Trust law, Trusts were a creation of the English law of English property law, property and English contract law, obligations, a ...
case. It laid down the rule of equity which provides that, if all of the
beneficiaries A beneficiary in the broadest sense is a natural person or other legal entity who receives money or other benefits from a benefactor. For example, the beneficiary of a life insurance policy is the person who receives the payment of the amount of ...
in the trust are of adult age and under no disability, the beneficiaries may require the
trustee Trustee (or the holding of a trusteeship) is a legal term which, in its broadest sense, refers to anyone in a position of trust and so can refer to any individual who holds property, authority, or a position of trust or responsibility for the ...
to transfer the legal estate to them and thereby terminate the trust. The rule has been repeatedly affirmed in
common law Common law (also known as judicial precedent, judge-made law, or case law) is the body of law primarily developed through judicial decisions rather than statutes. Although common law may incorporate certain statutes, it is largely based on prece ...
jurisdictions, and is commonly referred to as "the rule in ''Saunders v Vautier''" for shorthand.


Facts

A
testator A testator () is a person who has written and executed a last will and testament that is in effect at the time of their death. It is any "person who makes a will."Gordon Brown, ''Administration of Wills, Trusts, and Estates'', 3d ed. (2003), p. ...
, one Richard Wright, had bequeathed £2,000 worth of
stock Stocks (also capital stock, or sometimes interchangeably, shares) consist of all the Share (finance), shares by which ownership of a corporation or company is divided. A single share of the stock means fractional ownership of the corporatio ...
in the
East India Company The East India Company (EIC) was an English, and later British, joint-stock company that was founded in 1600 and dissolved in 1874. It was formed to Indian Ocean trade, trade in the Indian Ocean region, initially with the East Indies (South A ...
on trust for his great-nephew, Daniel Wright Vautier, and his wife and heirs. According to the terms of the trust, it was to accumulate until Vautier reached the age of 25. The stock's dividends were to be accumulated along with the capital. Daniel Wright Vautier's father (confusingly, also named Daniel Vautier) died in the testator's lifetime, but after the testator's death, Daniel Vautier's widow, Susannah, commenced a suit for payment out of maintenance to her son during his minority. That order was made on 25 July 1835. Daniel Wright Vautier then turned twenty-one (the age of majority at the time) in the month of March 1841, and as he was about to be married, he presented a petition for the trustees to be ordered to transfer to him the East India stock, or it be sold and the proceeds transferred to him. His application came before the Master of the Rolls, who on becoming aware of the earlier order dated 25 July 1835 remitted it to the Lord Chancellor for hearing to enable other residuary legatees to present an appeal petition from that order to the Lord Chancellor.


Judgment

The case was ruled in Vautier's favour. The rights of the beneficiary were held to supersede the wishes of the settlor as expressed in the trust instrument. Lord Cottenham LC held as follows: Although the case is most famous for the principle enunciated above, the court also held that the fact that an earlier maintenance order may have been made erroneously should not have precluded the Master of the Rolls from hearing and determining the case rather than remitting it to the Lord Chancellor.


Significance

Although the rule is most often exercised where there is a sole trustee holding the trust fund on a bare trust for a sole beneficiary (usually where the trusts were held for the benefit of a tenant for life, who has died, and the sole beneficiary is the remainderman), the rule is not limited to those circumstances. However, if there is more than one beneficiary, then all of them need to be adults and without any disability. There are a number of reasons why the beneficiaries may elect to do this. In ''Saunders v Vautier'', the accumulation trusts were to continue until the beneficiary was 25, and (at 21) the beneficiary wished to terminate the accumulation. Similarly, if the trusts are held for a tenant for life, and then for the benefit of a remainderman, both tenant for life and remainderman may decide to terminate the trusts and obtain the capital immediately, and agree a partition of the funds between them; this situation often occurs where changes in the revenue laws means that upon the death of the tenant for life the trust fund may be subject to
inheritance tax International tax law distinguishes between an estate tax and an inheritance tax. An inheritance tax is a tax paid by a person who inherits money or property of a person who has died, whereas an estate tax is a levy on the estate (money and pro ...
in a way that was not envisaged when the trust fund was originally set up. It has also been held that the rule in ''Saunders v Vautier'' also applies to
discretionary trust In the trust law of England, Australia, Canada, and other common law jurisdictions, a discretionary trust is a trust where the beneficiaries and their entitlements to the trust fund are not fixed, but are determined by the criteria set out in ...
s as well as fixed trusts.''Re Smith'' 928Ch 15 However, some caution is in order, as that decision was made at a time when the law was understood to require that a valid discretionary trust need to be able to draw up a complete list of the beneficiaries of the trust in order to be valid; subsequent to the decision of the
House of Lords The House of Lords is the upper house of the Parliament of the United Kingdom. Like the lower house, the House of Commons of the United Kingdom, House of Commons, it meets in the Palace of Westminster in London, England. One of the oldest ext ...
in '' McPhail v Doulton'' 971AC 424, this is no longer the appropriate test, and accordingly it may be that not all discretionary trusts are capable of being terminated by the beneficiaries under the rule. Where the beneficiaries are all
sui juris ''Sui iuris'' (), also spelled ''sui juris'', is a Latin phrase that literally means "of one's own right". It is used in both the Catholic Church's canon law and secular law. The term church ''sui iuris'' is used in the Catholic ''Code of Canon ...
, and between them absolutely entitled to the trust property, they may require the trustees to end the trusts and distribute the funds as the beneficiaries agree.


See also

*
English trusts law English trust law concerns the protection of assets, usually when they are held by one party for another's benefit. Trust law, Trusts were a creation of the English law of English property law, property and English contract law, obligations, a ...
* Claflin doctrine


Notes


References

{{reflist, 2 Common law rules Court of Chancery cases English trusts case law 1841 in case law 1841 in England 1841 in British law