Beneficiary Principle & Unincorp asso

Question 1

Why are trusts for purely private purposes generally void?

Answer 1

Lack a beneficiary → no one to enforce the trust and also traps money.

Question 2

What is the beneficiary principle?

Answer 2

Idea that trust must have someone to perform it/enforce it and someone that owns trust property in equity at all times
→ Addresses the policy concerns that prop. always have an owner capable of contribution to economy

Question 3

Reasons purely private trusts fail

Answer 3

→ Infringing rule against inalienability of capital - needs to be able to come to an end / money move
→ Vagueness - purpose must be defined
→ Capricious (irrational)

Question 4

Re Astor’s ST 1952

Answer 4

A gift can be made to persons (incl corporations) but cannot be made to a purpose or to an object - unless charitable

Question 5

Re Shaw (1957)

Answer 5

New alphabet - held trust purely for private purpose

Was CAPRICIOUS

Question 6

Exceptions to rule against private purpose (trusts of imperfect obligation - Re Endacott)

Answer 6

→ Erection/maintenance of tombs or monuments - Musset v Bingle
→ Care/maintenance of specific animals (horses + hounds) - Re Dean - limit 21 years
→ Saying of masses - Bourne v Keane
→ Fox hunting (now banned under Hunting Act 2004) - Re Thompson

Question 7

How to circumvent rule against against private purpose trusts

Answer 7

1. Create a company with object clause corresponding to intended purpose
2. Donation to unincorp asso with matching purpose
3. Make a gift to a charity with desired purpose - won’t fail - cy-pres - will find matching charitable purpose → Re Tyler - shiny monument
4. Draft as a trust which is limited to a suitable perpetuity period with expressed purpose and that benefits individuals → Re Bowes
5. Outright gift with expressed motive → Re Osoba
6. Use letter of wishes → popular with offshore trusts (must be beneficiary)

Question 8

Re Bowes (1896)

Answer 8

Suitable perpetuity period, directly benefit individual, expressed purpose
‘I leave money for planting trees on this estate’ - people in charge said already lots of trees - use money for road? Go to court and say trees are absolutely necessary. Judge said purpose is only a suggestion, can’t be a trust for planting of trees but for the people.
→ The expressed purpose of planting trees was not intended to be imperative, was an indicator of testator’s motive for creating a trust for benefit of estate owners
→ Estate owners able to bring trust to an end using Saunders v Vautier

Question 9

Re Tyler

Answer 9

Outright gift to charity with expressed ‘incentive’ → monument wanted to be kept shiny forever - law limits to 21 years, but charities never die. Income from pot of money until statue starts to look messy/unclean

Question 10

What is an unincorporated association ?

Answer 10

Clubs/societies

Non-charitable asso in a trust pure for private purposes of asso → No legal status/personality

Question 11

Re Recher’s WT

Answer 11

Deceased gave a share of residue to ‘The Anti-Vivisection society’. Society had been dissolved so gift could be construed as a gift to the members of a different association and therefore failed. Void - no beneficiary
→ Gift ceased to exist by time testatrix died

Question 12

4 ways to gift property to unincorp asso

Answer 12

1. Abso gift to present members of asso as joint tenants
   → Can sever share. Better to give as gift - no perpetuity, and available now
2. Absolute gift to the present members of the association to hold subject to the contractual bond between them
3. Gift on trust for present members of asso
   → If also for FUTURE members - need to limit to perpetuity period. Can bring trust to end only if you are a B. Money can get stuck with future members too so limit to 21 years
4. Donation made to an agent subject to ‘mandate’ → cannot be set up in will, either give prop away in will OR a mandate

Question 13

Neville Estates Ltd v Madden & others

Answer 13

Money can be given to an individ but contract/club constitution bind them all together, money has to be used as whole club. If you leave you cease to be an abso owner
→ As joint tenants you can sever shares

Question 14

Re Grant’s WT

Answer 14

May be something in contract which precludes members from taking subject matter. Clause in constitution contract: spend money as long as giver of gift agrees. If contract says can only spend with permission or bring club to an end with permission, not a FREE contract - cash trapped, not valid. Need to be able to bring to an end.

Question 15

Re Turkington

Answer 15

Every member was a beneficiary and trustee so could bring trust to an end

Question 16

Re Denley’s Trust Deed

Answer 16

Land left to be used as sports ground for employees of company and any other person trustee would have allowed. Land held for ascertainable individual who would not supervise the trust.
→ Not a purpose trust and not contrary to B-principle as individual would ensure no fraud. Trust for a clear purpose, benefits identifiable class. Must be limited to perpetuity period (life+21 years) if future members, if not not perpetuity.

Question 17

Re Lipinkski

Answer 17

Donation to a society for Jewish youth – young people not adults. Says ‘trusts’ so cannot be option 1 or 2. Just for present young Jews, not future, BUT doesn’t limit to 21 years, so if it is a donation, has no limit, not valid. Not a mandate, can’t be in a will, so surely not valid. BUT JUDGE ALLOWED IT.

Question 18

Donation will fail if capital rendered inalienable in perpetuity

Answer 18

→Present and future members unless expressly limited to take effect in perpetuity period
→ Even abso gift will be void if infringes rule against inalienability of capital
→ Re Grant’s WT - gift could not take effect as gift for current members because members were not free under rules of association to dispose of prop in any way they see fit → offended rule of inalienability of capital

Question 19

4 ways to terminate unincorp asso

Answer 19

Present + future members, cannot bring to an end → need perpetuity

1. In accordance with asso rules
2. By agreement of all person’s interested
3. By order of court
4. When no longer effective purpose for which the asso was founded

Question 20

Re GKN Bolts and Nuts Sports Social club

Answer 20

Held: club ceased to exist, but only by virtue of the positive resolution of the members to sell the club’s sport’s ground → when a club comes to an end, hard to understand why, make it work

Question 21

Re Horley Town Football Club

Answer 21

Trustees of club sought directions of court as to whether held club assets for ‘temporary members’, ‘associate members’ and ‘full members’
→ HELD: B ownership was held on bare trust for all FULL members only, because they could either unanimously or at an AGM call for assets to be transferred to them