Explain the principle of cy-pres

Question 1

Perpetual nature of charitable trusts

Answer 1

Due to the perpetual nature of charitable trusts, the trust often outlives the charitable purpose for which it was created. In these cases, the court will step in to modify the trust under the cy-pres doctrine.

Question 2

What does the cy-pres doctrine allow?

Answer 2

The cy-pres doctrine allows the court to apply the funds in a manner “as nearly like” as possible to the settlor’s original intention, e.g. by transferring funds to another charity with the same purpose.

Question 3

What is the application of cy-pres dependant on?

Answer 3

It is dependent upon an application to the charity commission whether cy-pres can be applied.

Question 4

Two types of failure

Answer 4

A gift to a charity may fail initially or subsequently.

Question 5

Initial failure

Answer 5

Initial failure means the gift never made it to the organisation, e.g. the charity never existed.

Question 6

Application of cy-pres for initial failure

Answer 6

To be able to apply cy-pres here, it must be determined whether there was a genuine charitable intention form the settlor (Re Spence (1979)), if not the gift will go back to the settlor on a resulting trust.

Question 7

Subsequent failure

Answer 7

Subsequent failure means the gift does make it to the charity, but the funds are no longer applicable e.g. the charity cures cancer.

Question 8

Application of cy-pres for subsequent failure

Answer 8

In Re Wright (1954) it was held that if a gift subsequently fails it has already been assigned for charitable purposes and thus cannot go back on resulting trust, meaning that cy-pres will be automatically applied.