Beneficiary Principle Flashcards
In general, trusts fro private purposes (other than charitable) are prima face void
Re Astor’s Settlement Trust
A purpose trust
A trust created for the fulfilment of a purpose, rather than the benefit of a person and therefore is an exception to the beneficiary rule.
- it will become a private purpose trust.
A trust for a private purpose my fail if it
- is insufficiently certain
- offends the beneficiary principles
- has an unwilling trustee
- infringes the rule against inalienability.
The three certainties must be present in a private purpose trust.
Re Endacott
- A trust for ‘some useful memorial to myself’ (sufficient)
The beneficiary principle
A trust must have ascertainable beneficiaries capable of enforcing its terms
Morice v Bishop of Durham
- A trust for ‘such objects fo benevolence as the Bishop shall approve of’ (offended the beneficiary principle)
The exceptions to the Beneficiary Principle
Laid out in Re Endacott
- The erection and maintenance of monuments and graves
- The saying of private masses
- The upkeep of particular animals
- Miscellaneous Exceptions
The erection and maintenance of monuments and graves
Note: if it the monument is attached to the fabric of the church, or the trust is for the general benefit fo the church, then it will be a charitable trust
(Re Hooper)
The saying of private masses
Bourne v Keane
Note: if the masses may be held in public, this will meet the public benefit test of a charitable trust
(Re Heatherington)
The upkeep of particular animals
Pettingall v Pettingall
Miscellaneous exceptions
Re Thompson
Unwilling trustee
If there is no one who wishes to perform the purpose trust, the court will not interfere, and the trust will fail.
If the trustee is not willing to carry out the terms of the trust they cannot be compelled to do so
Re Endacott
The courts have never directly enforced a trust against an unwilling trustee
Re Astor
A trustee can give an undertaking to the court that they will carry out the trust’s terms
Re Thompson
A private purpose trust will come to an end before the common law perpetuity period of 125 years
Perpetuities and Accumulation Act 2009
- there must always be someone to collapse the trust (Saunders v Vautier)
It must be expressly stated at the time the trust is created that it will come to an end within the perpetuity period
Re Kelly
Phrases such as ‘as long as the law allows’ and ‘as long as is legally permitted’ will be interpreted as meaning 21 years.
Re Hooper - the law allows
Piribright v Salwey - legally permitted
It is assumed that the construction of monuments will last less than 21 years
Mussett v Bingle
A trust for the maintenance of a cat offended the perpetuity period as it must be stated the time at which the trust is to come to an end.
Re Haines.
The 21-year perpetuity period can be extended by nominating a ‘life in being’
The 21-year time limit will only begin upon the death of the nominate person
The life in being must be a human life (Re Kelly)
‘Royal lives’ clauses
i.e. nominating the youngest living descendant of king George V as the ‘life in being’ are acceptable
Grender v Dresden.
The trust must not be capricious in nature
McCraig v University of Glasgow
Motive Cases
What appears to be a purpose trust could be held to be an absolute gift with the ‘purpose’ being no more than the non-binding motive for making the gift (Re Osoba)
A purpose trust could be held to be a charitable trust if it
- has a charitable object
- Is exclusively charitable
- Has sufficient public benefit.
Re Denley Purpose Trust
Land was held on trust for use as a sports ground for the employees of a certain company.
A purpose trust that would otherwise be void can be upheld if:
a. It is for the benefit of known or ascertainable individuals
b. the purpose benefits the whole class of individuals and is not too vague
c. The trust complies with the perpetuity rules
Whether a purpose trust is a trust is a question of fact and it will be a trust if the fund is not at the free disposal by the recipient of the fund.
Cooper v Powerhouse
The purpose did not exhaust the fund: partial failure of the trust and the resulting surplus went back to the contributors
Re Abbot Fund Trusts
- maintenance of two ladies.
If property which is the subject matter of a trust is meant to be given in its entirety to the beneficiaries, with a specific purpose assigned to it, the purpose is considered to be the motive of the gift, rather a limitation of its use
Re Andrews Trust
Unincorporated Associations (UA)
Two or more persons bound together for a common, non-business purpose by identifiable rules regarding rights, duties, funding and membership
CUCO v Burrell
UA’s have no legal personality, so have no beneficiaries who can enforce the trust
Leahy v AG for New South Wales
Since the Beneficiary Principle is offended, the trust of gift to the UA will fail, unless the disposition can be effected in one of the following ways.
- A perpetual endowment for the association is prima face void
- A trust for the present members - will validate the gift but usually defeats the intention of the donor.
- A trust for present and future members - prima face void as it contravenes the perpetuity period.
A UA can be made valid under certain circumstances, i considering which interpretation to apply, the courts will consider the donor’s intention (Re Reacher)
- An immediate outright gift for present members
- An immediate Gift to members subject to contract
- A trust for present and future members
- An ordinary purpose trust
- An Re Denley Purpose Trust
- Mandate Theory
An immediate outright gift for present members (IOG)
The members each take a share individually with no obligation to the UA (Cocks v Manners)
An IOG will only work if it accords with what the court thinks the donor’s intentions are
Re Recher
e.g. a farm was not an outright gift to a group of nuns but instead a trust because the beneficiaries were spread all over the world and it was impractical to divide the land into tiny plots(Leahy v AG for NSW)
An Immediate Gift to Members Subject to Contract (IGM) (Contract Holding Theory)
Each member holds his share of the gift according to the rules of the UA
It is an accretion to club funds and goes to the other members when he dies or resigns (Re Recher)
An IGM is most applicable where the UA still exists, has clear rules and where the gift rather than a trust was intended.
Artistic Upholstery v Art Forma
Assets in an IGM must be freely available, so the gift will be void unless the members have control over spending the assets, or can disolve the UA and divide the funds.
Re Grant
- Gift to the local labour party failed because ti was controlled by the party headquarters.
A degree of minor external control may not cause the disposition to fail.
Re Horley Town FC
- allowing other club’s players to be ‘social members’
A trust for Present and Future Members
Leahy v AG for NSW
- the members must be ascertained or ascertainable, and the trust must comply with the rule against remoteness fo vesting otherwise it will be prima face void.
An Ordinary Purpose Trust
This is likely to fail as ti will offend the Beneficiary Principle
Leahy v AG for NSW
An Re Denley Purpose Trust
A purpose trust for ascertained or ascertainable individuals, where those individuals are memebrs of a UA (Re Lipinski)
Madate Theory
Cuco v Burrell
- Club treasurer is given a mandate to spend the money in a particular way. Thus a quasi-agency relationship exists between the treasurer and the members.
- This is only possible for lifetime gifts
A future interest is void unless it is certain that the interest will not vest (go to the beneficiary) after 125 years.
Perpetuities and Accumulations Act 2009
Dissolving a UA
If the original donation was a trust, surplus funds will be returned to present and past members (Re Gillingham Bus Disaster Fund)
If it was a gift subject to contract, contributions will be split equally between present members (Re Buck
If no members are left then the funds go bona vacantia to the crown (West Sussex Widows Children’s Fund)
