Equities - Private purpose trusts, unincorporated associations and charities

Question 1

Beneficiary Principle - definition and source

Answer 1

You need human beneficiaries who can enforce the trust (Morice v Bishop of Durham)

Question 2

Beneficiary principle - exceptions

Answer 2

1) Unusual exceptions:
- care/maintenance of animals (Re Dean)
- care/maintenance of graves/monuments (Re Hooper)

2) Purpose trusts:
(Re Denley) Normally violate the beneficiary principle, however they can satisfy the requirement provided they have ascertainable beneficiaries and are directly for the tangible benefit of individuals. E.g. “I give £x to be held on trust for the education of my children for 5 years.
- must comply with perpetuity

Question 3

Re Endacott

Answer 3

List of exceptions - trusts of imperfect obligations:

1) Construction / maintenance of monuments and graves (Re Hooper)
2) Private masses (Bourne v Keane)
3) Maintenance of specific animals (Re Dean)(Pettingall)
4) Miscellaneous cases (Re Thompson) - Fox hunting

Case itself concerned “some useful memorial”

Question 4

Re Douglas

Answer 4

Trusts for monuments and graves may be charitable, on religious grounds, if the monument is located inside or attached to the fabric of the building or if the grave is inside the churchyard and the trust is for the church in general.

Question 5

Re Hetherington

Answer 5

Trusts for saying masses can be charitable but only if said in public. If private, not charitable but can still be a valid private purpose trust.

Question 6

Re Hooper

Answer 6

Valid trust for care/maintenance of graves.

Rule against inalienability - non-charitable purpose trusts must either (1) allow the trustees to spend all the trust capital on one given purpose, hence ending the trust at any time; or (2) be limited in duration to 21 years.

Trust made use of wording: “for so long as the trustees can legally do so” - held to be valid compliance with perpetuity regs.

Question 7

Re Denley

Answer 7

Trust for a sports ground for employees and those others permitted by employees, gift over to charity.

Held to be valid as had:

1) ascertainable beneficiaries and was
2) directly for the tangible benefit of individuals (i.e. non-abstract purpose).
3) complied with perpetuity requirements.

Purpose trusts which confer onto ascertainable individuals a tangible benefit will be valid because these individuals will be able to enforce the trust in court.

Question 8

Conservative and Unionist Central Office v Burrell

Answer 8

Unincorporated association definition

A group bound together for a common purpose, not being a business purpose.

Question 9

Morice v Bishop of Durham

Answer 9

You need human beneficiaries who can enforce the trust.

Unincorporated associations have no legal personality and so cannot hold property in the name of the association.

Question 10

Re Recher

Answer 10

possible route for disposition to unincorporated association:

1) Treat as outright gift - e.g. “I give $10k to Finchley cricket club” - vests immediately - consider intention
2) An accretion to the association’s funds to be dealt with according to the rules of the association. N.B. If said rules prevent members from dissolving the association and dividing the funds/spending it all at once, gift will be void - assets must be freely available. (Re Grant)
3) Trust for future and present members
4) Private purpose trust (Denley)

Question 11

Re Lipinski

Answer 11

Left half his estate to an association ‘to be used solely in constructing the new building for the association and/or improvements to said buildings’; held to be valid.

Where a gift with purpose is given to an association, this can either be constructed under Re Recher as a gift to members or under Re Denley as a purpose trust.

N.B. under Re Recher the stated purpose will not be binding and the members will be able to use the funds in accordance with club rules.

Question 12

Re Grant

Answer 12

Wanted to give estate to Chertsey and Walton Constituency Labour party - however did not have autonomy - rules forbade dissolution and sharing of funds therefore void.

Gifts must not offend the rule against inalienability; if the club rules allow members to spend all assets at any time, or if the rules can be altered to introduce such a right, the rule will not be offended; if the members are not allowed to do so, the gift will be void.

Question 13

Mussett v Bingle

Answer 13

Building and maintaining a monument

Building held however maintaining breached perpetuity.

Question 14

Re Horley Town FC

Answer 14

A small amount of external control will not necessarily defeat a gift as per (Grant)

Question 15

IRC v Broadway Cottages

Answer 15

Charitable exemption:

Number of beneficiaries can’t be negligible, can’t be a class within a class.

Question 16

Re Scarisbrick

Answer 16

Trusts for the relief of poverty are charitable even if the benefit is limited to a small class of objects.

Question 17

Independent Schools Council v Charity Commission

Answer 17

Schools whose sole object was the education of children whose families could afford to pay the fees would not be charitable. A trust that excludes the poor from benefit cannot be a charity. In this context ‘poor’ did not mean destitute but included people of modest means.