England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE.
COURT OF APPEAL
Appeal by defendants from judgment of
Mr. Justice Megarry on 17th July 1973.

		Royal Courts of Justice.
		3rd July 1974.

THE MASTER OF THE ROLLS: The late Mr. Vandervell died on 10th March, 1967. His affairs have twice been to the House of Lords. The first is reported in 1967 2 AC 291. The second in 1971 AC 912. The third is now on its way.

During his lifetime Mr. Vandervell was a very successful engineer. He had his own private company — Vandervell Products Limited - the products company, as I will call it - in which he owned virtually all the shares. It was in his power to declare dividends as and when he pleased.

In 1949 he set up a trust for his children. He did it by forming Vandervell Trustees Ltd. - the trustee company, as I will call it. He put three of his friends and advisers in control of it. They were the sole shareholders and directors of the Trustee Company. Two were chartered accountants. The other was his solicitor. He transferred money and shares to the Trustee Company to be held in trust for the children. Such was the position at the opening of the first period.

THE FIRST PERIOD: 1958-1961

The first period covers the three years from October 1958 to October 1961. Mr. Vandervell decided to found a Chair of Pharmacology at the Royal College of Surgeons. He was to endow it by providing £150,000. But he did not do it by a direct gift. In November 1958, he transferred to the Royal College of Surgeons 100,000 "A" shares in his products company. His intention was that his products company should declare dividends in favour of the Royal College of Surgeons which would amount in all to £150,000 or more. But, when that sum had been provided, he wanted to be able to regain the shares so as to use the dividends for other good purposes. So, about the time of the transfer, on 1st December 1958, he got the Royal College of Surgeons to grant an option to his Trustee Company. By this option the Royal College of Surgeons agreed to transfer the 100,000 "A" shares to the Trustee Company for the sum of £5,000 at any time on request within the next five years. (This £5,000 was far less than the real value of the shares). At the time when the option was granted, Mr. Vandervell did not state definitely the trusts on which the Trustee Company were to hold the option. He meant the Trustee Company to hold the option on trust — not beneficially for themselves - but on trust for someone or other. He did not specify the trusts with any kind of precision. But at a meeting with the chairman of the Trustee Company it was proposed - and Mr. Vandervell approved - that the option should be held either on trust for his children (as an addition to the children's settlement) or alternatively on trust for the employees of his products company (see the particulars declared by the executors, A.33). He had not made up his mind which of those should benefit. But one thing he was clear about, he thought that he himself had parted with all interest in the shares and in the option.

Afterwards, during the years from 1958 to 1961, he saw to it that his products company declared dividends on these 100,000 shares which were paid to the Royal College of Surgeons. They amounted to £266,000 gross (before tax), or £157,000 net (after tax). So the Royal College of Surgeons received ample funds to found the Chair of Pharmacology.

But there were other advantages hoped for. The Royal College of Surgeons thought that, being a charity, they could claim back the tax from the Revenue. And Mr. Vandervell thought that, having parted with all interest in the shares, he was not subject to pay sur-tax on these dividends.

The Revenue Authorities, however, did not take that view. They claimed that Mr. Vandervell had not divested himself of all interest in the shares. They argued that he was the beneficial owner of the option and liable for sur-tax on the dividends. Faced with this demand, in October 1961, the Trustee Company, on the advice of Counsel, and with the full approval of Mr. Vandervell, decided to exercise the option. They did it so as to avoid any question of sur-tax thereafter being payable by Mr. Vandervell. This ended the first period (when the option was in being) and started the second period (after the option was exercised).

THE SECOND PERIOD: 1961-1965

In October 1961 the Trustee Company exercised the option. They did it by using the money of the children's settlement. They paid £5,000 of the children's money to the Royal College of Surgeons. In return the Royal College of Surgeons, on 27th October 1961, transferred the 100,000 "A" shares to the Trustee Company. The intention of Mr. Vandervell and of the Trustee Company was that the Trustee Company should hold the shares (which had replaced the option) on trust for the children as an addition to the children's settlement. They made this clear to the Revenue Authorities in an important letter written by their solicitors on 2nd November 1961, which I will read:

"G. A. Vandervell: Esq. - Surtax

Further to our letter of the 7th September last, we write to inform you that in accordance with the advice tendered by Counsel to Vandervell Trustees Ltd., the latter have exercised the option granted to them by the Royal College of Surgeons of the 1st December 1958, and procured a transfer to them of the shares referred to in the option, with funds held by them upon the trusts of the Settlement created by Mr. G.A. Vandervell and dated the 3rd December 1949, and consequently such shares will henceforth by held by them upon the trusts of that Settlement".

Mr. Vandervell believed that thenceforward the Trustee Company held the 100,000 "A" shares on trust for the children. He acted on that footing. He got his products company to declare dividends on them for the years 1962 to 1964 amounting to the large sum of £1,256,458 gross (before tax) and £769,580 10s. 9d. (after tax). These dividends were received by the Trustee Company and added to the funds of the children's settlement. They were invested by the Trustee Company for the benefit of the children exclusively.

But even now Mr. Vandervell had not shaken off the demands of the Revenue Authorities. They claimed that, even after the exercise of the option, Mr. Vandervell had not divested himself of his interest in the 100,000 "A" shares and that he was liable for Surtax on the dividends paid to the children's settlement. Faced with this demand Mr. Vandervell, on the advice of Counsel, took the final step. He executed a deed transferring everything to the Trustee Company on trust for the children. This ended the second period, and started the third.

THE, THIRD PERIOD: 1965-1967

On 19th January 1965, Mr. Vandervell executed a deed by which he transferred to the Trustee Company all right title or interest which he had on the option or the shares or in the dividends - expressly declaring that the Trustee Company were to hold them on the trusts of the children's settlement. At last the Revenue Authorities accepted the position. They recognised that from 19th January 1965, Mr. Vandervell had no interest whatever in the shares or the dividends. They made no demands for surtax thenceforward.

On 27th January 1967, Mr. Vandervell made his will. It was in contemplation of a new marriage. In it he made no provision for his children. He said expressly that this was because he had already provided for them by the children's settlement. Six weeks later, on 10th March 1967, he died.

SUMMARY OF THE CLAIMS

The root cause of all the litigation is the claim of the Revenue Authorities.

The first period - 1958-1961: The Revenue Authorities claimed that Mr. Vandervell was the beneficial owner of the option and was liable for surtax on the dividends declared from 1958 to 1961. This came to £250,000. The claim of the Revenue was upheld by the House of Lords - see Vandervell (No. 1) 1967 2 AC 291.

The second period-1961-1965: The Revenue Authorities claimed that Mr. Vandervell was the beneficial owner of the shares. They assessed him for surtax in respect of the dividends from 11th October 1961: to 19th January 1965, amounting to £628,229. The Executors dispute the claim of the Revenue. They appealed against the assessments. But the appeal was, by agreement, stood over pending the case now before us. The executors have brought this action against the Trustee Company. They seek a declaration that, during the second period, the dividends belonged to Mr. Vandervell himself, and they ask for an account of them. The Revenue asked to be joined as parties to the action. This Court did join them - see Vanderyell No. 2 (1970) 1 Ch. 44; but the House of Lords reversed the decision - see 1971 A.C. 1912. So this action has continued -without the presence of the Revenue - whose claim to £628,229 has caused all the trouble.

The third period - 1965-1967: The Revenue agree that they have no claim against the estate for this period.

THE LAW FOR THE FIRST PERIOD

The first period was considered by the House of Lords in Vandervell No. 1. They held, by a majority of three to two that, during this period, the Trustee Company held the option as a trustee. The terms of the trust were stated in two ways. Lord Upjohn (with the agreement of Lord Pearce) said that the proper inference was that "the trustee company should hold as trustees upon such trusts as Mr. Vandervell and the trustee company should from time to time declare", see 1967 2 A.C. at page 315 F-G, 317 B-D. Lord Wilberforce said "that the option was held by the Trustee Company on a trust, not at the time determined, but to be decided on at a later date", see 1967 2 A.C. at page 352 G(ii), 328-G,

The trouble about the trust so stated was that it was too uncertain. The trusts were not declared or defined with sufficient precision for the trustees to ascertain who the beneficiaries were. It is clear law that a trust, (other than a charitable trust) must be for ascertainable beneficiaries, see Re Gulbenkian's Settlement (1970) A.C. at pages 523-524 by Lord Upjohn. Seeing that there were no ascertainable beneficiaries, there was a resulting trust for Mr. Vandorvell. But if and when Mr. Vandervell should declare any defined trusts, the resulting trust would come to an end. As Lord Upjohn said (at page 317): "....until these trusts were declared, there was a resulting trust for Mr. Vandervell".

During the first period, however, Mr. Vandervell did not declare any defined trusts. The option was, therefore, held on a resulting trust for him. He had not divested himself absolutely of the shares. He was, therefore, liable to pay surtax on the dividends.

THE LAW FOR THE SECOND PERIOD

In October and November 1961, the Trustee Company exercised the option. They paid £5,000 out of the children's settlement. The Royal College of Surgeons transferred the legal estate in the 100,000 "A" shares to the Trustee Company. Thereupon the Trustee Company became the legal owner of the shares. This was a different kind of property altogether. Whereas previously the Trustee Company had only a chose in action of one kind - an option - it how had a chose in action of a different kind - the actual shares. This trust property was not held by the Trustee Company beneficially. It was held by them on trust. On this occasion a valid trust was created at the time of the transfer. It was manifested in clear and unmistakable fashion. It was precisely defined. The shares were to be held on the trusts of the children's settlement. The evidence of intention is indisputable:

(1) The Trustee Company used the children's money - £5,000 - with which to acquire the shares. This would be a breach of trust unless they intended the shares to be an addition to the children's settlement; (ii) the Trustee Company wrote to the Revenue Authorities the letter of 2nd November 1961, declaring expressly that the shares "will henceforth be held by them upon the trusts of the children's settlement"; (iii) thenceforward all the dividends received by the Trustees were paid by them to the children's settlement and treated as part of the funds of the settlement. This was all done with the full assent of Mr. Vandervell. Such being the intention, clear and manifest, at the time when the shares wore conveyed to the Trustee Company, it is sufficient to create a trust. Mr. Balcombe for the executors admitted that the intention of Mr. Vandervell and the Trustee Company was that the shares should be held on trust for the children's settlement. But he said that this intention was of no avail. He said that during the first period, Mr. Vandervell had an equitable interest in the property, namely, a resulting trust; that he never disposed f this equitable interest (because he never knew he had it): and that in any case it was the disposition of an equitable interest which, under Section 53 of the Law of Property Act 1925, had to be in writing, signed by him or his agent, lawfully authorised by him in writing (and there was no such writing produced). He cited Grey v. I.R.C. (1960) AC 1 and Oughtred v. I.R.C. (1960) AC 206.

There is a complete fallacy in that argument. A resulting trust for the settlor is born and dies without any writing at all. It comes into existence wherever there is a gap in the beneficial ownership. It ceases to exist whenever that gap is filled by someone becoming beneficially entitled. As soon as the gap is filled by the creation or declaration of a valid trust, the resulting trust comes to an end. In this case, before the option was exercised, there was a gap in the beneficial ownership. So there was a resulting trust for Mr. Vandervell. But, as soon as the option was exercised and the shares registered in the trustees' name, there was created a valid trust of the shares in favour of the children's settlement. Not being trust of land, it could be created without any writing. A trust of personalty can be created without writing. Both Mr. Vandervell and the Trustee Company had done everything which needed to be done to make the settlement of these shares binding on them. So there was a valid trust, see Milroy v. Lord(1862) 4 De G.F. & J. at page 274 by Lord Justice Turner.

THE LAW AS TO THE THIRD PERIOD

The executors admit that from 19th January 1965, Mr. Vandervell had no interest whatsoever in the shares. The deed of that date operated so as to transfer all his interest thenceforward to the Trustee Company to be held by them on trust for the children. I asked Mr. Balcombe: What is the difference between the events of October and November 1961, and the event of 19th January 1965? He said that it lay in the writing. In 1965, Mr. Vandervell disposed of his equitable interest in writing: whereas in 1961 there was no writing. There was only conduct or word of mouth. That was insufficient. And, therefore, his executors were not bound by it.

The answer to this argument is what I have said. Mr. Vandervell did not dispose in 1961 of any equitable interest. All that happened was that his resulting trust came to an end - because there was created a new valid trust of the shares for the children's settlement.

ESTOPPEL

Even if Mr. Balcombe were right in saying that Mr. Vandervell retained an equitable interest in the shares, after the exercise of the option, the question arises whether Mr. Vandervell can in the circumstances be heard to assert that claim against his children. Just see what happened. He himself arranged for the option to be exercised. He himself agreed to the shares being transferred to the Trustee Company. He himself procured his products company to declare dividends on the shares and to pay them to the Trustee Company for the benefit of the children. Thenceforward the Trustee Company invested the money and treated it as part of the children's settlement. If he himself had lived, and not died, he could not have claimed it back. He could not be heard to say that he did not intend the children's trust to have it. Even a Court of Equity would not allow him to do anything so inequitable andunjust. Now that he has died, his executors are in no better position. If authority were needed, it is to be found in Milroy v. Lord (1862) 4 De G.F. & J. 264. In that case Thomas Medley assigned to Samuel Lord fifty shares in the Bank of Louisiana on trust for his nieces but the shares were not formally transferred into the name of Samuel Lord. The Bank, however, paid the dividends to Samuel Lord. Be paid them to the niece, and then, at Thomas Medley's suggestion, the niece used those dividends to buy shares in a fire insurance company - taking them in the name of Thomas Medley. After Thomas Medley's death, his executors claimed that the Bank shares belonged to them as representing him, and also the Fire Insurance shares. The Lords Justices held that the executors were entitled to the bank shares, because "there is no equity in this Court to perfect an imperfect gift". But the executors were not entitled to the fire insurance shares. Lord Justice Turner said that: "the settler Mr. Medley, made a perfect gift to his niece of the dividends upon these shares, so far as they were handed over or treated by him as belonging to her, and these insurance shares were purchased with dividends which were so handed over or treated". So here Mr. Vandervell made a perfect gift to the Trustee Company of the dividends on the shares, so far as they were handed over or treated by him as belonging to the Trustee company for the benefit of the children. Alternatively, there was an equitable estoppel. His conduct was such that it would be quite inequitable for him to be allowed to enforce his strict rights (under a resulting trust) having regard to the dealings which had taken place between the parties, see Hughe v Metropolitan Railway (1877) 2 A.C. at page 448.

THE PLEADINGS

Mr. Balcombe for the executors stressed that the points taken by Mr. Mills were not covered by the pleadings. He said time and again: "This way of putting the case was not pleaded". "No such trust was pleaded". And so forth. The more he argued, the more technical he became. I began to think we were back in the bad old days before the Common Law Procedure Acts, when pleadings had to state the legal result; and a case could be lost by the omission of a single averment (see Bullen and Leake, 3rd Edition page 147). All that has been long swept away. It is sufficient for the pleader to state the material facts. He need not state the legal result. If, for convenience, he does so, he is not bound by, or limited to, what he has stated. He can present, in argument, any legal consequence of which the facts permit. The pleadings in this case contained all the material facts. It does appear that Mr. Mills put the case before us differently from what it was put before the Judge: but this did not entail any difference in the facts, only a difference in stating the legal consequences. So it was quite open to him.

CONCLUSION

Mr. Balcombe realised that the claim of the executors here had no merit whatsoever. He started off by reminding us that "hard cases make bad law". He repeated it time after time. He treated it as if it was an ultimate truth. But it is a maxim which is quite misleading. It should be deleted from our vocabulary. It comes to this: "Unjust decisions make good law": whereas they do nothing of the kind. Every unjust decision is a reproach to the law or to the Judge who administers it. If the law should be in danger of doing injustice, then equity should be called in to remedy it. Equity was introduced to mitigate the rigour of the law. But in the present case it has been prayed in aid to do injustice on a large scale - to defeat the intentions of a dead man - to deprive his children of the benefits he provided for them - and to expose his estate to the payment of tax of over £600,000. I am glad to find that we can overcome this most unjust result. The dividends for the second period were properly paid to the Trustee Company for the benefit of the children's settlement. There is no equity in Mr. Vandervell or his executors seeking to recover them. I would allow the appeal and dismiss the claim of the executors.

LORD JUSTICE STEPHENSON: I have had more doubt than my brethren whether we can overturn the judgment of Mr. Justice Megarry in what I have not found an easy case. Indeed, treading a (to me) dark and unfamiliar path, I had parted from both my fellow-travellers and following the windings of Mr. Balcombe's argument had nearly reached a different terminus before the light which they threw upon the journey enabled me to join them at the same conclusion.

To expound my doubts would serve no useful purpose to state them shortly may do no harm. The cause of all the trouble is what the Judge called "the ill-fated option" and its incorporation in a deed which was "too short and simple" to rid Mr. Vandervell of the beneficial interest in the disputed shares, as a bare majority of the House of Lords held, not without fluctuation of mind on the part of one of them (Lord Upjohn), in Vandervell No.1. The operation of law or equity kept for Mr. Vandervell or gave him back an equitable interest which he did not want and would have thought he had disposed of if he had ever known it existed. It is therefore difficult to infer that ho intended to dispose or ever did dispose of something he did not know he had until the judgment of Mr. Justice Plowman in Vandervell No. 1, which led to the Deed of 1965 enlightened him, or to find a disposition of it in the exercise by the Trustee Company in 1961 of its option to purchase the shares. And even if he had disposed of his interest, he did not dispose of it by any writing sufficient to comply with Section 53(1)(c) of the Law of Property Act 1925.

But my Lords are able to hold that no such disposition is needed because (1) the option was held on such trusts as might thereafter be declared by the Trustee Company or Mr. Vandervell himself, and (2) the Trustee Company has declared that it holds the shares in the children's settlement. I do not doubt the first, because it was apparently the view of the majority of the House of Lords in Vandervell No. 1 I should be more confident of the second if it had been pleaded or argued either here or below and we had had the benefit of the learned Judge's views upon it. If Counsel for the Trustee Company in the Court below had thought that the evidence supported it, he would not, I think, have sought and obtained the amendment of the defence which he did to allege what the Judge rejected as an unusual and improbable form of trust which was not supported by the evidence. If Counsel for the Trustee Company in this Court had accepted it, I do not think that he would have opened this appeal as he did with references to perfecting or completing the trust but none to declaring it. I see, as perhaps did Counsel, difficulties in the way of a limited company declaring a trust by parole or conduct and without a resolution of the Board of Directors, and difficulties also in the way of finding any declaration of trust by Mr. Vandervell himself in October or November 1961, or any conduct then or later which would in law or equity estop him from denying that he made one.

However, my Lords are of opinion that these difficulties, if not imaginary, are not insuperable and that these shares went into the children's settlement in 1961 in accordance with the intention of Mr. Vandervell and the Trustee Company - a result with which I am happy to agree as it seems to me to be in accordance with the justice and the reality of the case.

LORD JUSTICE LAWTON: In my judgment the starting point in this appeal is the finding of the majority of the House of Lords in Vandervell v. I.R.C.- (1967) 2 AC 291 that it was the late Mr. Vandervell's intention that the trustee company should hold the option to purchase the shares from the Royal College of Surgeons on such trusts as might thereafter be declared by the trustee company or Mr. Vandervell himself. This was a finding of fact in a different action and as such not binding on this Court; but it was a finding which I would myself have made on the evidence in this case. As no trusts had been declared, the House of Lords adjudged as a matter of law that there was a resulting trust in favour of Mr. Vandervell himself. This had grave financial consequences for him.

When making that finding of fact it was not necessary for the House of Lords to specify what trusts were "in the air" as Lord Wilberforce put it (see page 328). There were two whose shapes could be made out, one much more clearly than the other. In 1949 the trustee company had become trustees of a settlement which Mr. Vandervell had made in favour of his children. In 1958 he had talked about setting up a fund for the benefit of the employees of his company, Vandervell Products Ltd., but he had done nothing to start the fund. It follows that in the early autumn of 1961 there was a settlement to which the trustee company could attach the benefit of the option if it decided to do so or Mr. Vandervell directed it to do so.

Did the trustee company attach the benefit of the option to the children's settlement with Mr. Vandervell's knowledge and consent in such a way as to extinguish his resulting trust? Mr. Mills submitted that it had.

Mr. Balcombe, on behalf of the executors, did not challenge, indeed he could not have done so, that both the directors of the trustee company and Mr. Vandervell thought that the shares were bring held on the trusts of the children's settlement. His case was first that the way Mr. Mills had put his case before this Court, and which was different from the way other counsel had put it before Mr. Justice Megarry, was not open to him on the pleadings; secondly, that there was no evidence, or no sufficient evidence, that the trustee company had declared a trust of the beneficial interest in the shares in favour of the children's settlement; and, thirdly, that this beneficial interest could not in law be held on the trusts of this settlement because there had been no disposition of it which complied with section 53(1)(c) of the Law of Property Act 1925.

As to the pleading point, it is pertinent to bear in mind what, under the Rules of the Supreme Court, should be put into pleadings. Order 18 rule 7 provides as follows:

"Subject to the provisions of this rule, and rules 7a, 10, 11 and 12 (none of which arc relevant in this case), every pleading must contain, and contain only, a statement in summary form of the material facts on which the party pleading relies for his claim or defence, as the case may be....and the statement must be as brief as the nature of the case admits."

It follows, so it seems to me, that the question for decision in this case is whether the material facts have been set out in the pleadings, not whether Mr. Mills made submissions before this Court as to legal consequences which had not been set out. Much the same kind of point was taken before this Court in Lever Bros. Ltd. v Bell (1931) 1 K.B. 557 at page 582. When dealing with it Lord Justice Scrutton said:

"In my opinion the practice of the Courts has been to consider and deal with the legal result of pleaded facts, though the particular legal result alleged is not stated in the pleadings, except in cases where to ascertain the validity of the legal result claimed would require the investigation of new and disputed facts which have not been investigated at the trial".

These comments are apt to fit this case, which is not one within the exception. In my judgment the pleadings did set out all the material facts sufficient to justify the legal results which the Master of the Rolls has adjudged follow and with which I agree.

As to the second of Mr. Balcombe's answers it is pertinent to remember that Mr. Vandervell, who was most anxious not to have any beneficial interest in the shares which he had transferred to the Royal College of Surgeons, was kept full informed by his solicitor of what was in contemplation and what Counsel had advised. He was present at the meeting of the directors of the trustee company held on the 2nd October 1961, at which they resolved "that in view of the advice given by both conveyancing counsel and tax counsel, the trustees should exercise their option to acquire the shares held by the Royal College of Surgeons". On or about the 10th October 1961, the trustee company acquired the shares with money taken by them from the children's settlement. In my judgment the inference from this course of conduct is that Mr. Vandervell intended that to happen which did happen and that when the directors of the trustee company used money from the children's settlement to pay for the shares he intended that company to hold the shares not for himself but for the trusts of the children's settlement. If the trustee company had used this money otherwise than for the benefit of the children they would have been in breach of trust, and as Mr. Vandervell knew what was happening and intended it to happen, he would have been guilty of aiding and abetting them. The result in law is that after the transfer the trustee company held the shares for the benefit of the children's settlement as Mr. Vandervell had intended it should. This followed from the operation of the rule that if A uses B's money to buy property, in the absence of any evidence to show otherwise, A holds that property for the benefit of B. It follows that once the transfer of the shares had been registered the beneficial interest in them was held by the trustee company on the trusts of the children's settlement so that no declaration of trust was necessary. There is no directors' minute recording the making of a declaration, but there is, in my judgment, ample evidence from which the Court is entitled to infer, and I do infer, that a declaration of trust was made by the trustee company with the knowledge and approval of Mr. Vandervell. By letter dated 2nd November 1961, the trustee company's solicitor wrote to the Special Commissioners of Income Tax informing them, as was the fact, that the option had been exercised out of funds from the children's settlement. This letter ended with these words: "and consequently such shares will henceforth be held by them upon the trusts of that settlement". Thereafter, Mr. Vandervell, knowing what had been done, procured Vandervell Products Ltd., which he controlled, to declare dividends on those shares. Had Mr. Vanderveli been alive at the date of trial in this case he would not have sought to submit that after the transfer of the shares to the trustee company he held a beneficial interest in them; and had he tried to do so, he would not have been heard to deny the existence of a beneficial interest for the children which he had done his best to ensure they had. His executors can be in no better position than he would have been.

Estoppel, however, is not the only answer to Mr. Balcombe's submission based on an absence of writing complying with section 53(1)(c) of the Law of Property Act 1925. The exercise of the option and the transfer of the shares to the trustee company necessarily put an end to the resulting trust of the option. There could not be a resulting trust of a chose in action which was no more. The only reason why there ever had been a resulting trust of the option was the rule that the beneficial interest in property must be held for some one if the legal owner is not entitled to it. The legal, but not the beneficial, interest in the option had vested in the trustee company. The beneficial interest had to be held for some one and as the trustee company had declared no trusts of the option, the only possible beneficiary was Mr. Vandervell. Once the trustee company took a transfer of the shares the position was very different. The legal title to them was vested in the trustee company and by reason of the facts and circumstances to which I have already referred it held the beneficial interest for the trusts of the children's settlement. There was no gap between the legal and beneficial interests and in consequence no need for a resulting trust in favour of Mr. Vandervell to fill it. Neither the extinction of the resulting trust of the option resulting from its exercise nor the creation of a beneficial interest in the shares by the declaration of trust amounted to a disposition of an equitable interest or trust within the meaning of sections 53(1)(c) and 205(1) (ii) of the Law of Property Act 1925.

I would allow the appeal.

Appeal allowed. Action dismissed with costs here and below. Leave to appeal to the House of Lords.