The appellant settled a trust and sold shares of a company to his wife in her capacity of trustee. The trust deed basically provided that until the division date in 1991 the trustee could pay some or all of the income and capital to the appellant's children, and that after the division date the children would be paid 1/3 of their share upon attaining 25, and the remainder at 30. In 1975 and 1976 the infant children and the trustee jointly filed preferred beneficiary elections and the children were paid dividends on the shares.
It was held that the appellant had transferred property rights to his children by means of a trust, and the dividends were deemed to be income of the appellant. In the view of Thurlow, C.J., it was irrelevant that in 1975 and 1976 the shares had not yet vested in the infant children, as was the fact that only one of the children had been born at the time of settling the trust.