Purpose Trusts Flashcards
Beneficiary principle
There must be somebody in whose favour the court can decree performance (Morice v Bishop of Durham)
Common law perpetuity rule
Cannot continue for longer than the life of an identified person or persons in being plus 21 years, if no person, then 21 years
Trusts of imperfect obligation
- Trust for the care and maintenance of specific animals
- Trust to erect and maintain monuments and graves
- Trust for the saying of private masses
Re Hooper 1932
Trust for the care and upkeep of family graves and monuments, valid only for 21 years, after that surplus passes to residue
Bourne v Keane 1919
Trusts for the saying of private masses must still satisfy the perpetuity rule
Re Endacott 1960
The categories of trusts of imperfect obligation are closed;
Also beneficiary principle approved
Re Denley 1969
F: Money raised “to be maintained and used for the purpose of a recreation or sports ground primarily for the benefit of employees and secondarily for the benefit of such other persons as the trustees may allow to use the same”
I: Is the trust valid?
H: Yes, as passes Broadway Cottages certainty test, passes perpetuities as specified as 21 years from death of the last survivor of a group of named individuals, the purpose was to provide a sports ground for the employees - they were not beneficiaries, but they were enough to ensure the protective role of the beneficiaries to oversee the trustees
Re Astor 1952
Beneficiary principle
What did Lord Goff do to beneficiary principle in Re Denley?
He didn’t overrule it, but rather confined it to its purpose - since here the trust was directly or indirectly for the benefit of an individual or individuals
What to do where the purpose is merely expressed as a motive for a gift/trust or to explain a gift/trust?
Solve it by removing limitation or use it to quantify sum
Re Sanderson’s Trust 1857
F: Property left on trust to pay or apply the whole or any part of towards maintenance, attendance and comfort of the testator’s brother, brother then died
I: Was it a gift if whole to the brother (so goes to his estate) or gift of limited sum to him
H: Not a purpose trust, purpose words merely to calculate beneficial share - it’s a trust for a person, not a purpose trust
Re Andrew’s Trust 1905
F: Fund for the education of the children of Bishop Barclay
I: How much were the children entitled to?
H: Purpose not exhausted merely because children had attained ages where education in the vulgar sense was no longer necessary, children were entitled to what remained in equal shares
Purpose trusts with the purpose as motive - the difference between beneficiaries who are alive and beneficiaries who are dead
Re Osoba, 1979
If dead, then resulting trust
But if alive, the major purpose of providing help and benefit can still be carried out
Re Osoba 1979
F: Bequest to testator’s widow on trust for the maintenance and training of daughter up to uni grade and for the maintenance of mother, widow and mother died, daughter had been to university
I: Was she entitled to the surplus?
H: Interpreted as a trust for the granddaughter
Re Bowes 1896
F: Trust for E for life remainder plus gift of £5000 to trustees for planting trees for shelter on the estate
I: How this should be interpreted?
H: Trust was ultimately for the benefit of E and his successors, with the purpose of benefitting the estate, so surplus money once trees planted went to E and his successors
Re Abbot Fund Trusts 1958
The one with sisters who died, RT
Unincorporated association
Two or more persons bound together for one or more common purposes (not business) by mutual undertakings each having mutual duties and obligations in an organisation which has rules that identify in which control of it and its funds rest, and on what terms it can be joined or left
Must be contractual bond between the members
Leahy v AG for New South Wales 1959
F: Testators left homestead on trust for such order of nuns of the Catholic Church or Christian Brothers as executors and trustees should select
I: Who was it a gift to?
H: UAs not exception to beneficiary principle anymore
Contract-holding theory
In gifts to UAs, they are construed as gifts to existing members not as joint tenants, but subject to their respective contractual rights and liabilities towards one another as members of the association
Re Reacher’s Will Trusts 1972
F: R gave a share of her residuary estate to the London and Provincial Anti-Vivisection Society (which ceased to exist prior to R’s death
I: Was the gift valid?
H: No, if it had still existed, it would have been a gift to the members beneficially, subject to their association contract. Yet because it had ended, there was no outright gift to the members
Advantages of the contract-holding theory
- If on trust, beneficiary principle satisfied
- A member who leaves extinguishes their contractual entitlement: property will belong beneficially to remaining members
- A member who joins (post-acquisition) will obtain beneficial rights arising from the UA’s rules
- The perpetuity rule will be satisfied as long as the contract can be terminated
- Fact that future members might benefit after the 125 year period will not invalidate the trust because it’s possible to exclude potential members whose interests might vest outside the perpetuity period
What if the rules of the UA prevent distribution among members?
The trust is void because of the beneficiary principle and for perpetuities, see Re Grant’s Will Trusts 1980
What is crucial when it comes to the ability to terminate the contract and share assets in UA-s?
That the members hold under a contract where they can at any time terminate the contract and share out the assets
Cunnack v Edwards 1896
F: Society to raise funds for annuities for widows of deceased members, surplus of £1250 claimed by personal representatives of last members
I: Was the surplus held on an RT?
H: No, no possibility of an RT - each member had paid their contributions without reserving any beneficial interest to themselves
Re West Sussex Constabulary’s Widows, Children and Benevolent Fund Trusts 1971
F: 4 principal sources of fund: other donations and legacies, contributions of past and present members, proceeds of entertainments, raffles and sweepstakes, and anonymous contributions to collection boxes
I: Who does it belong to?
H: Only other donations and legacies on RT
What is contract-holding theory according to Lewison J in Hanchett-Stamford v AG 2008?
It is a subspecies of joint tenancy, although taking effect subject to any contractual restrictions applicable as between members
