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Beneficiaries, Beneficiary rights, Deed of Trust, Trusts, Variation

The minority can inherit the earth … sometimes

A little licence in the heading, maybe not the earth, but in some circumstances, an interest in trust at least.

The rule in Saunders v Vautier allows the final beneficiaries of a trust to bring the trust to an end provided that all of the trustees are in agreement and are of age. The rule is described in Lewin on Trusts as follows: 

“If there is only one beneficiary, or if there are several beneficiaries all of full age and capacity and of one mind, the specific execution of the trust may be stayed and the special trust will acquire the children of a bare or simple trust; for through whatever channel the settlor may have intended his bounty to flow, the beneficiaries, as the persons ultimately to be benefited, are in equity and from the creation of the trust, and before the trustees have acted in the execution of the trust, the absolute beneficial proprietors. The principle applies both to a trust fund as a whole and to a particular gift out of a fund, such as legacy.”

In New Zealand, the rule is described similarly in Garrow and Kelly Law of Trusts and Trustees as follows:

“If a sole beneficiary has a vested interest in the trust property and has full legal capacity, that beneficiary may put an end to the trust by directing the trustees to transfer the trust property to that beneficiary, despite any directions to the contrary in the trust document. The same rule applies where there is more than one beneficiary. It applies even if they are not all entitled to benefit immediately but one after another. Provided that they are unanimous in wishing to end the trust, they may do so.”

What of the case where there is more than one beneficiary, but the beneficiaries are not “of one mind” regarding calling up the trust?

Conveniently, although not commonly considered, the Saunders v Vautier has been extended beyond its original bounds. In Stephenson (Inspector of Taxes) v Barclays Bank Trust Co Ltd, Walton J, discussed the matter as follows:

“So much for the rights of the beneficial interest holders collectively. When the situation is that a single person who is sui juris has an absolutely vested beneficial interest in a share of the trust fund, his rights are not, I think, quite as extensive as those of the beneficial interest holders as a body. In general, he is entitled to have transferred to him (subject, of course, always to the same rights of the trustees as I have already mentioned above) an aliquot share of each and every asset of the trust fund which presents no difficulty so far as division is concerned. This will apply to such items as cash, money at the bank or an unsecured loan, stock exchange securities and the like. However, as regards land, certainly, in all cases, as regards shares in a private company in very special circumstances (see Re Weiner’s Will Trusts and possibly (although the logic of the addition in facts escapes me) mortgage debts (see Re Marshall ([1914] 1 Ch 192 at 199, [1911–13] All ER Rep 671 at 674) per Cozens-Hardy MR) the situation is not so simple, and even a person with a vested interest in possession in an aliquot share of the trust fund may have to wait until the land is sold, and so forth, before being able to call on the trustees as of right to account to him for his share of the assets.”

The authorities, as they relate to what might be ‘very special circumstances’ and where they would justify a departure from the general rule are considered in Gough v Strahl where the following observations are made:

  • real property is not to be distributed in undivided shares. The reason for that doctrine is that an undivided share has a lesser value. That suggests that the “special circumstances” that would justify the extension of that doctrine to personal property, such as shares, would be likely to be circumstances that might lead to a diminution in value if the property were divided
  • simply having a controlling interest in shares is not a special circumstance, because the trustees, in having regard to the interests of the beneficiaries, would need to take into account the wishes of the different beneficiaries in exercising their voting power, so that the shares might not necessarily be voted as a block: Re Sandeman’s Will Trusts
  • the fact that shares would be more valuable if held as part of a controlling interest than if held in separate parcels has been held not to be a special circumstance which could justify refusing the transfer of the shares. as to accede to the submission that the transfer should be refused would mean in effect that there never could be a division, because it must involve the loss of control: Re Wiener’ Will Trusts
  • care must be taken not to mix company and trust law.  Conduct that might not be readily remediable under company law as oppressive conduct.  In this regard it has been noted that “… in my view this argument really only illustrates the limitations of attempting to administer the corporations through the law of trusts and succession, which are ill-equipped for that purpose”: Re Henley (In the Estate of Weinstock
  • liability to costs under a trust deed is not a special circumstance (ie the remaining beneficiaries will incur a greater proportionate share of the costs).  However, before making a distribution the trustees could calculate the relevant contingent liability
  • inter-family conflict is not a matter that will constitute a special circumstance to deprive a beneficiary of the right to have a share of the trust property transferred (in circumstances where the existing trust structure has not engendered warm feelings between tranches of a family embroiled in dispute).  Or to re-state it, regardless of the settlor’s wishes, the beneficiaries rights should prevail in the absence of special circumstance.

Also see New court decision in wealthy Christchurch family power struggle

It is noted that the proposed new Trusts Act should restate the rule in Saunders v Vautier, and confirm that “a legally capable adult beneficiary of a fixed share of trust property may, where the beneficiary has an absolute vested interest in that share, request the trustees to  transfer that share to him or her. The trustees may only refuse to do so where the property is not in a form, or cannot be changed into such a form, that allows the beneficiary’s share to be transferred to the beneficiary without detrimentally affecting the interests of other beneficiaries.”


  • Saunders v Vautier (1841) Cr & Ph 240, 41 ER 482 (Ch)
  • Gough v Strahl [2013] NZHC 3184
  • Lewin on Trusts (18th ed, Sweet & Maxwell, London, 2008) at [24-07]
  • Garrow and Kelly Law of Trusts and Trustees (7th ed, LexisNexis, Wellington, 2013) at [25.27]
  • Stephenson (Inspector of Taxes) v Barclays Bank Trust Co Ltd [1975] 1 All ER 625 (Ch) at 637-638
  • Re Marshall ([1914] 1 Ch 192 at 199, [1911–13] All ER Rep 671 at 674
  • Re Sandeman’s Will Trusts [1937] 1 All ER 368 (Ch)
  • Re Henley (In the Estate of Weinstock) [2013] NSWSC 975
  • Review of the Law of Trusts – A New Trusts Act for New Zealand www.lawcom.govt.nz


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