PRIVATE PURPOSE TRUSTS Flashcards
1
Q
The Beneficiary Principle
A
-
Morice v Bishop of Durham: “every other trust [which is not charitable] must have a definite object. There must be somebody in whose favour the court can decree performance”
- If you leave property to be held on trust for the pursuit of an abstract purpose (instead of an object), an abstract purpose cannot enforce a trust
- With charitable trusts, the AG and Charity Comm have powers to enforce these trusts
- Bowman v Secular Society: “A trust to be valid must be for the benefit of individuals … or must be in that class of gifts for the benefit of the public which the courts in this country recognise as charitable in the legal as opposed to the popular sense of that term”
2
Q
General rule for private purpose trusts
A
- A trust for a purpose that is not charitable and not part of the exceptions will fail
3
Q
Re Astor
FACTS
A
- A trust was created for various purposes, including “the maintenance of good relations between nations [and] the preservation of the independence of the newspapers”
- The question was in whose favour can the courts decree performance
4
Q
Re Astor
HELD
A
- “A trustee would not be expected to be subject to an equitable obligation unless there was somebody who could enforce a correlative equitable right, and the nature and extent of that obligation would be worked out in proceedings for enforcement”
- You must owe duties to somebody
- If there is no object for the obligation, there is no point to it
- As a matter of policy, it is undesirable – if we permitted trusts for abstract non-charitable purpose, that will tie up funds to be held in pursuit in principle for activities but it cannot be monitored because no one has an equitable right by the creation of the trust
5
Q
Re Shaw
A
- Shaw wanted to leave money to the research of a 40 letter British alphabet and the translation of his play into this alphabet
- The trustees were willing to go through with this
-
You cannot permit a trust to be created for the pursuit of abstract purposes
- Unless you can show that the purpose is charitable or that it falls within an exception, it will fail because of the beneficiary principle and the concerns about the need for enforcement
6
Q
Re Endacott
A
- “No principle perhaps has greater sanction or authority behind it than the general proposition that a trust by English law, not being a charitable trust, in order to be effective, must have ascertained or ascertainable beneficiaries”
- If there are no beneficiaries, there is no scope for the rule in Saunders v Vautier to come into play
7
Q
The rule in Saunders v Vautier
A
- This rule provides that a beneficiary of a full age (now 18) and capacity (sui iuris in Latin) may direct the trustee to wind up the trust and convey the property to them.
- An abstract purpose cannot do this because it has no identity
8
Q
Objections to private purpose trusts
A
- Enforcement
- Practicality
- Intellectual incoherence
- Alienation (Tying up property)
- Certainty
- Capriciousness
- Out of Date
9
Q
Construction
Purpose or gift with motive
A
- We must start with the terms of the document in question of construction
- Even if it at first sight looks like a trust for a purpose, it might be an outright gift with a motive as to what is to be done with the property
10
Q
Re Osaba
A
- Settlor left all his property to his 2nd wife provided she lived in Nigeria and continued to be known as Mrs Osoba. He left the rent of his properties on trust for the maintenance of his wife, the maintenance of his mother and his daughter’s education
- Look at whether the testator has left the money for the specific purpose and to be disposed of when the purpose has been achieved, or if it is a gift with a specific motive attached to it
- If it is a gift, the recipient gets to keep the money when the purposes have been achieved
11
Q
Exceptions for private purpose trusts
A
- Trusts for charitable purposes are not void because they are for the benefit of society
- If it is not a charitable trust, the only way to save it is to fall within one of the historical exceptions that are tolerated as longstanding authority
-
Does it fall squarely within an existing exception?
- Tombs and memorials
- Maintenance of specific animals
- Indirect benefit
- Saying masses
- Fox hunting
- Sports clubs
12
Q
Re Endacott exception
A
- We must be able to say with certainty that the disposition falls within an existing exception, unless the trust will fail [Re Endacott]
13
Q
Tombs and memorials
A
- The care and upkeep of family graves and monuments is charitable [Re Hooper]
- This is limited to a period of 21 years
- “Some useful memorial to myself” is not specific enough [Re Endacott]
14
Q
Indirect benefit
Re Denley
A
- There was a trust which held land to be held on trust for it to be used as a sports ground
- The justification for ruling out the private purpose trust is the problem of enforcement; on these facts, the problem of enforcement can be solved, and thus the general rule can be set aside
- “Where, then, the trust, though expressed as a purpose, is directly or indirectly for the benefit of an individual or individuals, it seems to me that it is in general outside the mischief of the beneficiary principle”
- Where you can identify the people, who would benefit indirectly from the carrying out of the purpose, they can come to the court and enforce the trust, even though they are not ‘beneficiaries’ of a trust (they are people who will benefit from the trust being carried out)
- To be read narrowly, applies only where the trust, through expressed as a purpose, is indirectly or directly for the purpose of individuals
- Taking the problem of enforcement, and letting the people who would indirectly benefit from the
15
Q
Maintaining specified animals
A
-
Pettinghall v Pettinghall: case concerning horses. An annuity of £50 was left in a will to maintain the testator’s favourite horse. This was held to be valid
- Is valid provided they do not offend perpetuity
- Re Dean: trust for the maintenance for particular horses and dogs, an annuity of £750 a year for 50 years
- Specified animals