Saunders v Vautier [1841]

Saunders v Vautier (1841) 4 Beav 115 is a leading authority in English trust law which established the fundamental equitable principle that beneficiaries who are all of full age and capacity and who together are absolutely entitled to the trust property may require the trustees to transfer the legal title to them and thereby terminate the trust. The decision confirms that, in such circumstances, the collective wishes of the beneficiaries prevail over the intentions of the settlor as expressed in the trust instrument. This principle has become known as the rule in Saunders v Vautier and has been consistently followed throughout common law jurisdictions.

The case arose from a will under which the testator bequeathed £2,000 of East India Company stock on trust for his great-nephew, Daniel Wright Vautier. The terms of the trust directed that the income should be accumulated and added to capital until Vautier reached the age of twenty-five, at which point the fund would be transferred to him. While still a minor, maintenance payments had been authorised for his benefit. However, after attaining the age of twenty-one, which was the age of majority at the time, Vautier sought to obtain the trust property immediately rather than wait until twenty-five. He petitioned the court for an order requiring the trustees to transfer the stock to him or to sell it and pay him the proceeds.

Lord Cottenham LC held in Vautier’s favour. The court reasoned that because Vautier had an absolute and indefeasible interest in the trust fund and was legally competent to give a valid discharge, he was not obliged to wait for the postponed date specified in the will. Although the settlor had directed accumulation until age twenty-five, equity would not compel an adult beneficiary with full entitlement to remain bound by that restriction. Accordingly, the trustees were required to transfer the property to him. The court therefore prioritised the beneficiary’s proprietary rights over the administrative timetable set out in the trust.

The significance of the decision is considerable. It establishes that where all beneficiaries are sui juris and absolutely entitled, they may collectively collapse the trust and demand immediate distribution of the assets, even if this defeats the settlor’s express intentions. While the rule most commonly applies where there is a single beneficiary under a bare trust, it also extends to situations involving multiple beneficiaries, provided all consent and none are under any disability. The principle has been applied to both fixed and, in some circumstances, discretionary trusts. Today, the rule remains a cornerstone of trust law, reflecting the idea that beneficiaries who own the entire equitable interest should ultimately control the destiny of the trust property.