Private Purpose Trusts and Unincorporated Associations Flashcards
Beneficiary Principle
A private trust must have ascertainable beneficiaries.
Beneficiaries have personal interests in the terms being carried out properly. They, therefore, have the power or standing to take trustees to court to enforce performance of their obligations.
A charitable trust does not require ascertainable beneficiaries. Therefore, an exception to beneficiary principle.
Morice v Bishop of Durham [1804]
Beneficiary Principle
Private Purpose Trusts
‘There must be somebody in whose favour the court can decree performance.’
Endacott Exceptions
Private Purpose Trusts
- Construction/maintenance of monuments and graves
- Private Masses
- Maintenance of specific animals
- Miscellaneous Cases
- Unincorporated Associations
Musset v Bingle [1876]
Trusts for Monuments and Graves
Exemptions
Private Purpose Trusts
Monuments must be of a traditional “funerary nature” – covers gravestones, headstones, plaques. If it’s outside of this it’s likely to not be allowed, e.g. Re Endacott
Re Douglas
Trusts for Monuments and Graves
Exemptions
Private Purpose Trusts
If you maintain the entire graveyard, it’s likely to be charitable purpose
Re Hooper [1932]
Trusts for Monuments and Graves
Exemptions
Private Purpose Trusts
If a monument is physically attached to a church / other religious buildings, it will most likely be considered ’charitable’.
If it’s outside the church building, it’s not charitable.
Re King [1932]
Trusts for Monuments and Graves
Exemptions
Private Purpose Trusts
Stained glass window held to be charitable
Hoare v Osborne [1866]
Trusts for Monuments and Graves
Exemptions
Private Purpose Trusts
Monument in a church held to be charitable
Earl Mountbatten of Burma Statue Appeal Trust [1981]
Trusts for Monuments and Graves
Exemptions
Private Purpose Trusts
If a monument is to an individual who provides a great example, public benefit, it could be a charitable and not private person trust
Bourne v Keane (1919)
Private Masses
Exemptions
Private Purpose Trusts
‘holy, believing, persevering prayer whereby someone pleads with God on behalf of another or others who desperately need God’s intervention.’
Has to be private
Re Hetherington (1990)
Private Masses
Exemptions
Private Purpose Trusts
If mass is open to the public, it will likely be a charitable trust.
Pettingall v Pettingall (1842)
Trusts for Specific Animals
Exemptions
Private Purpose Trusts
‘my favourite black mare’
Re Dean (1889)
Trusts for Specific Animals
Exemptions
Private Purpose Trusts
‘maintenance of [my] horses and hounds’ for 50 years
Re Thompson (1934)
Exemptions
Miscellaneous
Private Purpose Trusts
towards the promotion and furthering of fox-hunting’
Hunting Act 2004 – fox hunting is now illegal so don’t have to worry
Re Endacott (1952)
Three Certainties
Private Purpose Trust
PPTs must comply with Three Certainties
‘some useful memorial to myself’. Not enough precision in purpose. Wouldn’t know what a ‘useful memorial’ was.
Rule Against Remoteness of Vesting
Private Purpose Trusts
- s18 Perpetuities & Accumulations Act 2009 – introduced a 125 year ‘perpetuity’ period.
- Applies to trusts for people and has no application to PPT
- Applies to unincorporated associations.
Common Law Perpetuity Period
Private Purpose Trusts
- Specified time period of up to 21 years
- Human life(s) in being + 21 years
- ‘royal lives’ clause – last living descendant of Queen Victoria plus 21 years. Don’t have to have any connection to the person you’re tying the trust to. Often chosen to extend duration of trust.
Re Hooper [1932]
Common Law Perpetuity Period
Private Purpose Trusts
‘so far as the law allows’
drafting technique to prevent trust falling foul of law against inalienability – means to bring the trust to an end at the end of the legal perpetuity period (so 21 years). May fail today for lack of precision.
Musset v Bingle (1876)
Perpetuity Problems
Private Purpose Trusts
- £300 left to build a monument and £200 to maintain it.
- No perpetuity period but was upheld on grounds that monument would be built within 21 years.
- Dangerous precedent though because trustee could sit on the money for much longer as in a PPT, there is nobody there to enforce it. Also, have to consider planning permission etc. Courts unlikely to accept these days.
- £200 failed on perpetuity grounds. No duration was specified so the maintenance could have carried on indefinitely.
Re Dean (1889)
Perpetuity Problems
Private Purpose Trusts
Longer perpetuity periods have been upheld for PPT cases.
50-year period permitted “for care of horse and hounds”.
However, pre Endacott and would not be followed today.
Re Kelly [1932]
Perpetuity Problems
Private Purpose Trusts
Reference for perpetuity must be for human lives, not animal lives
Would have to undertake a subjective test on how long animals live for.
Also, can’t predict how long an animal will live, e.g. goldfish can live to 40, giant tortoise can live to be centuries old.
(Irish case so no precedental value in England and Wales but decided on same grounds as would be in UK).
Re Haines [1952]
Perpetuity Problems
Private Purpose Trusts
Most animals don’t live longer than 21 years so having a trust “as long as my cat lives” is unlikely to last more than 21 years so no harm to allow it.
Re Bowes [1896]
Trusts Limited by a Purpose
- Legacies given with purposes attached are usually treated as gifts, with mere motives attached, by the courts because otherwise they would be PPTs that fall outside of Endacott and so wouldn’t work.
- Father and son living on a farm. Son left a legacy for purpose of planting trees. North J held that the real aim of the trust was not for the purpose of planting trees, but to benefit the owners of the estate. All the planting of trees represented, therefore, was the motive through which the life tenant and remainderman were to benefit from the trust (motive for a gift). Therefore, they could use Saunders v Vautier rights to receive that money and do what they pleased with it.
Re Sanderson’s Trust
Trusts Limited by a Purpose
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Where a legacy is left but only a portion is for a specific purpose (e.g. looking after children), beneficiaries can only draw out what is necessary.
- Page-Wood VC held there were two different outcomes for what happens for trusts limited by purposes.
- ‘…if a gross sum be given, or if the WHOLE income of the property is given, and any special purpose assigned…this court ALWAYS regards this gift as ABSOLUTE, and the purpose merely as the motive…on the other hand, IF A PORTION ONLY of the fund is given for MAINTENANCE, then they are entitled to draw out SO MUCH ONLY as may be necessary.’
Re Osoba [1979]
Trusts Limited by a Purpose
- Individual left property for purpose of education up to university level. Once daughter left university, what happened with the surplus of the property?
- Megarry tried to make a DISTINCTION between cases where the purpose has been fulfilled when B is DEAD and where B is still alive.
- When B is dead, the purpose has been fulfilled and so the remaining property should go to S/S’s estate.
- Where B is still alive, ‘the major purpose of providing help and benefit… can STILL be carried out EVEN AFTER the stated means have all been accomplished,’ and so the gift should be seen as an ABSOLUTE gift to B.
- BUT- ARGUABLE - cf. Penner!
- Talking about the vesting of property rights, and in this instance, this is decided by luck – whether beneficiary is dead or not – and this is not ideal.
Conservative and Unionist Central Office v Burrell [1982]
Unincorporated Associations
- Unincorporated Associations require:
- 2+ people BOUND together for COMMON PURPOSE, THAT IS NOT A BUSINESS PURPOSE. (often have a benevolent purpose)
- These people have MUTUAL RIGHTS/DUTIES ARISING FROM A CONTRACT BETWEEN THEM.
- Organisation has RULES identifying WHO CONTROLS/HAS FUNDS, and the terms on which this control can be exercised (often a voting majority)
- Can be JOINED/LEFT at will (you volunteer to enter into and leave the contract – you have freely accepted)
Re Recher’s Will Trusts [1972]
Unincorporated Associations
The court will try and decide which interpretation is the best reflection of what the testator presumable intended.
Immediate Gift to Present Members
Unincorporated Associations
- Donor does not give the property to the UA, but to each individual member who are free to “pocket a share”. Could be:
- through absolute gift
- trustees holding property for members of the club, rather than club itself
- If interpretation applies, no issues with the beneficiary principle or perpetuity as property vests immediately in ascertainable individuals.
- Cocks v Manners [1871] – gift to a convent upheld in favour of individual nuns. Easy to do when its personal property/residuary of estate.
Leahy v AGNSW [1959]
Immediate Gift to Present Members
Unincorporated Associations
- Disposition of a very large farm being left for charitable and non-charitable causes.
- Viscount Simonds identified 3 reasons why testator unlikely to have intended a gift to the individual members of those orders and these need to be considered:
- How legacy is worded – testator does not often want to leave property to individuals but wants to ensure it is vested with the UA
- Type of property involved – land is not very amenable to this sort of disposition; money or personal property is more likely
- How recipients of property can be classified – left to nuns and brothers all over the world (thousands of people) so less likely to work
Re Grants Will Trust [1959]
Immediate Gift to Present Members
Unincorporated Associations
Supper Club theory’ - if you’re dealing with a relatively small group of people who use a convenient label, this disposition could work, e.g. supper club, book club
Contract Holding Theory
Unincorporated Associations
Nothing more than adding property to the bare trust that already exists within a UA
Legal title vested in one or several suitable people, e.g. treasurer; hold that property and it is then applied for current members of the UA subject to voting mechanism or whatever rules of UA state
not subject to perpetuity as all the members have the right to collapse the trust and take the interest for themselves (Saunders v Vautier). Therefore, trust can theoretically last forever which is why internal control is essential for the theory to work.
Contract Holding Theory
Requirements
Unincorporated Associations
- How is gift described – must be for MEMBERS’ benefit not a purpose
* Re Lipinski – left property to a non-charitable religious organisation, Hull Judeans. Wanted them to use property “solely for the purpose of” constructing new buildings and maintaining existing ones. Judge said even though it looks like a purpose, court can treat it like a motive as in re Bowes. - Members must have INTERNAL CONTROL of property (Re Grant’s)
- Re Grant’s – chapter of labour party did not have internal control as they were subject to the executive branch of the Labour party and National Executive had power to override them. Therefore, disposition failed
- BUT cf. Horley Town FC (2006) – Given away voting rights at AGM to other clubs in return for other rights, e.g. selling alcohol. Rights were only worth 2% so they couldn’t override or block member’s votes. Therefore, disposition was allowed. (FOCUS ON EFFECT, NOT VOTING SHARE – MEMBERS HAVE TO BE FREE TO USE AS THEY WISH)
Re Grants Will Trust [1980]
Contract Holding Theory
Unincorporated Associations
Members of local Labour Part did not have internal control as they were subject to the executive branch of the Labour party and National Executive had power to override them. Therefore, disposition failed
Horley Town FC [2006]
Contract Holding Theory
Unincorporated Associations
Given away voting rights at AGM to other clubs in return for other rights, e.g. selling alcohol.
Rights were only worth 2% so they couldn’t override or block member’s votes. Club maintained internal control. Therefore, disposition was allowed.
(FOCUS ON EFFECT, NOT VOTING SHARE – MEMBERS HAVE TO BE FREE TO USE AS THEY WISH)
Re Denley [1969]
Unincorporated Associations
- A trust for a non-charitable purpose, which would otherwise be void because it falls outside the Re Endacott exceptions, may nevertheless be upheld if the trust is expressed to be for the benefit of ascertainable individuals.
- Large piece of land turned over to employees and other groups of Mr Denley to be used as a recreational/sporting ground.
Re Denley [1969]
Requirements
Unincorporated Associations
- Beneficiaries must be ascertainable
- Beneficiaries must have locus standi to sue
- BUT also note need a valid perpetuity period to be specified (up to 21 years or a life in being plus 21 years)
- Note also that Denley had a gift over (following end of perpetuity period, property in question given over to a local charity). Courts like this because provides court with certainty - know what happens when it expires.)
Re Lipinski
Unincorporated Associations
Denley Trust in all aspects apart from perpetuity period and so he turned it into a contract holding theory
IF YOU HAVE SOMETHING THAT LOOKS LIKE A PPT BUT DOESN’T HAVE A PERPETUITY PERIOD, CAN TURN IT INTO A CONTRACT HOLDING THEORY)
Re Hobourn Aero Components Air Raid Distress Fund
Unincorporated Associations
When an unincorporated association ends, property returns to its original source on resulting trust (use for re Denley)
After the war ended, organisation no longer existed, trust finished, and members get contributions back under a resulting trust
Re Bucks Constabulary Widows Friendly Society Test
Unincporporated Associations
- (1) First see if any rules stating what happens to property when UA dissolved - rules form a contract and the contract is paramount
- (2) If nothing in UA rules, then members should try to agree as how to distribute assets – probably through vote
- (3) If members can’t agree then can go to court.
- Generally, court will order equal division of assets (Re GKN Nuts and Bolts Ltd Sports and Social Club)
- But IF there is something that suggests that unequal division should be made, court will follow that (Re Sick and Funeral Society of St John’s Sunday School, Golcar)
- Look at things like voting rights
