Rights of the Beneficiary, Including Saunders v Vautier (Sections 55 to 58)

Chapter VI of the Act (Sections 55 to 69) turns from the trustee to the beneficiary. Its first four sections define what the beneficiary is entitled to in the trust itself: the income of the property, the specific execution of the trust and, in the right circumstances, the property itself, access to the trust's documents and accounts, and the freedom to transfer his interest. These rights give content to the "right against the trustee" that Section 3 calls the beneficial interest (Topic 6).

1. Rents and Profits (Section 55)

Section 55, Indian Trusts Act, 1882 (rights to rents and profits)

The beneficiary has, subject to the provisions of the instrument of trust, a right to the rents and profits of the trust property.

The income of the trust property belongs, in substance, to the beneficiary. Rent from a trust house, dividends on trust shares, and interest on trust deposits are received by the trustee but held for the beneficiary. The right is subject to the instrument, which may direct accumulation, give the trustee a discretion over distribution, or divide income and capital between different beneficiaries.

2. Specific Execution and Transfer of the Property (Section 56)

Section 56 (right to specific execution)

The beneficiary is entitled to have the intention of the author of the trust specifically executed to the extent of the beneficiary's interest; and, where there is only one beneficiary and he is competent to contract, or where there are several beneficiaries and they are competent to contract and all of one mind, he or they may require the trustee to transfer the trust property to him or them, or to such person as he or they may direct.

Specific execution

The first limb gives every beneficiary the right to have the author's intention carried out to the extent of his interest. This is the beneficiary's counterpart to the trustee's duty under Section 11, and it is enforced by suit (Sections 59 and 61; Topic 26).

The rule in Saunders v Vautier

The second limb states in statutory form the rule in Saunders v Vautier (1841), an English case in which a beneficiary entitled to stock with accumulations at age twenty-five was allowed to claim it on reaching majority at twenty-one. The principle is that the trust exists for the beneficiaries; if they are together entitled to the whole beneficial interest and are all of full capacity, they can end the trust and call for the property, whatever the author directed about timing.

Condition	Meaning
Sole beneficiary competent to contract	An adult of sound mind who is absolutely entitled may demand transfer
Several beneficiaries, all competent and of one mind	Together they hold the whole beneficial interest; if all agree, they may demand transfer to themselves or as they direct
Transfer to whom	To the beneficiary or beneficiaries, or to any person they direct, including new trustees on new terms

The rule has natural limits. If any beneficiary is a minor, of unsound mind, unborn or unascertained, the beneficiaries cannot all consent, and the rule cannot operate. In a discretionary trust, all the objects together, if all are ascertained and of full capacity, may combine to call for the property, but a single object cannot. The court's power to consent for incompetent beneficiaries in Section 11 relates to modifying directions, not to ending the trust under Section 56.

The married woman proviso

Section 56 contains a proviso that where property is transferred or bequeathed for a married woman so that she cannot deprive herself of her beneficial interest (a "restraint on anticipation"), the right to call for the property does not apply during her marriage. Section 58 has a matching proviso. These reflect nineteenth century attitudes to married women's property and are of historical interest; their compatibility with constitutional equality would be open to serious question today.

3. Inspection and Copies (Section 57)

Section 57 (right to inspect and take copies of instrument, accounts, etc.)

The beneficiary has a right, as against the trustee and all persons claiming under him with notice of the trust, to inspect and take copies of the instrument of trust, the documents of title relating solely to the trust property, the accounts of the trust property and the vouchers (if any) by which they are supported, and the cases submitted and opinions taken by the trustee for his guidance in the discharge of his duty.

Section 57 lists four classes of documents the beneficiary may inspect and copy: the instrument of trust; the documents of title relating solely to the trust property; the accounts and supporting vouchers; and the legal advice (cases submitted and opinions taken) obtained by the trustee for the trust's administration. The last category is notable: because the advice was obtained for the trust and paid for from it, the trustee cannot claim privilege against the beneficiary. The right runs against the trustee and anyone claiming under him with notice. It matches the trustee's duty in Section 19 (Topic 15).

4. Transfer of the Beneficial Interest (Section 58)

Section 58 (right to transfer beneficial interest)

The beneficiary, if competent to contract, may transfer his interest, but subject to the law for the time being in force as to the circumstances and extent in and to which he may dispose of such interest.

Capacity: the beneficiary must be competent to contract.
Mode: the transfer follows the law applicable to the kind of interest. An interest in a trust of immovable property may need a registered instrument; an interest in a trust of movables may pass by assignment.
Limits: the transfer is subject to any law restricting the beneficiary's power to dispose, and to restrictions validly imposed by the instrument, such as a protective trust that ends the interest on attempted alienation.
Notice to the trustee: the transferee should give the trustee notice at once; a trustee who pays the original beneficiary without notice of the transfer is protected (Section 28).
Transferee's position: the transferee takes the interest subject to the rights and liabilities attached to it (Section 69; Topic 28).

⚠ Key point

Subject to the instrument, the beneficiary is entitled to the rents and profits (Section 55). He may have the author's intention specifically executed to the extent of his interest, and a sole competent beneficiary, or several competent beneficiaries all of one mind, may require the trustee to transfer the property to them or as they direct, the rule in Saunders v Vautier (Section 56). He may inspect and copy the instrument, title documents, accounts and vouchers, and legal opinions taken for the trust (Section 57). If competent, he may transfer his interest, subject to the law on disposition (Section 58). The married woman provisos are historical.

5. Related Topics and Provisions

Nature of the beneficiary's interest (Topic 6)
Impartiality, accounts and information (Topic 15): Section 19
Beneficiary's remedies against the trustee (Topic 26): Sections 59 to 62
Extinction and revocation (Topic 31): ending a trust