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Equity and Trusts Unit 3 > The Beneficiary Principle > Flashcards

The Beneficiary Principle Flashcards

1
Q

Is making trusts for a purpose rather than people permissible in English law?

A

No

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2
Q

Why must a trust have human beneficiaries to be enforceable?

A
  1. Enforceability
  2. Control
  3. Certainty
  4. Capriciousness
  5. Perpetuity
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3
Q

Morice v Bishop of Durham (1804) - Enforceability

A

“Every other trust must have a definite object. There must be somebody in whose favour the court can decree performance”.
- However, trusts for public purposes will be enforceable.

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4
Q

Re Astor’s Settlement Trusts [1952] - Control

A
  • Was held that it’s difficult to visualise the growth of equitable obligations which nobody can enforce… no court and no department of state can control.
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5
Q

When could a trust be held as too capricious?

A

Where there’s a trust which doesn’t have human beneficiaries.

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6
Q

Brown v Burdett (1882) - Capriciousness

A
  • Trust was void where it was for the blocking up of rooms in a house
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7
Q

McCaig v University of Glasgow (No.2) 1906 - Capriciousness

A
  • Courts refused to allow the erection of statues of relatives as they benefitted nobody and the courts wanted to avoid trusts that had no human beneficiaries.
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8
Q

What is perpetuity?

A
  • The idea that trusts go on forever.
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9
Q

What interests does remoteness of vesting apply to?

A

Contingent interests and discretionary trusts

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10
Q

What is the rule against remoteness of vesting?

A
  • The trust is void unless the interests vest in some B or Bs absolutely within the perpetuity period - now 125yrs. for trusts/wills created after 6th April 2010
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11
Q

What is the rule against inalienability?

A

A non-charitable purpose trust is void if it stops the capital from being alienated (spent) for a period longer than the perpetuity period. Normally 21yrs.

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12
Q

Re Endacott [1960]

A

A trust to “provide some useful memorial to myself” was held to be void as it was unspecified.

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13
Q

Pettingall v Pettingall (1842)

A
  • A trust for the upkeep of the testator’s favourite horse was held to be valid.
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14
Q

Re Howard [1908]

A

A trust for money to be paid for the maintenance of a parrot during the lives of 2 named individuals was held to be a valid trust.

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15
Q

Pirbright v Salwey [1896]

A
  • Trust for the upkeep of a grave and to decorate it with flowers for as long as the law permits.
  • Held to be valid as no inalienability - was for as long as the law permits
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16
Q

What is the problem with the exceptions - animals, tombs etc.?

A
  • They’re trusts of imperfect obligation - there’s nobody to enforce them.
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17
Q

Re Endacott

A

The categories of anomalous exceptions appear to be closed.

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18
Q

Re Lipinski’s WT

A

An alternative approach is to have a 3rd party named as a protector/enforcer

19
Q

Re Osoba [1979] - Identifying people as benefitting from the trust directly

A
  • A trust put in place for the “training of my daughter up to university grade”.
20
Q

Re Denley [1969] - IMPORTANT

A

You can get around the beneficiary principle issue easily if it is a direct benefit but also if it is an indirect benefit for specified people.

21
Q

What is an Unincorporated Association?

A

Often clubs, amateur societies etc.

22
Q

What is the problem with gifts to Unincorporated Associations?

A

They have no separate legal identity - so how can they accept gifts/legacies?

23
Q

Leahy v AG for New South Wales [1959]

A
  • If you cannot identify individual people to be beneficial owners of the trust then the trust will be void.
24
Q

Neville Estates Ltd v Madden [1962]

A
  • A way to validate a gift.
  • It will be treated as a gift to the relevant members as JTs so each member can sever his share and take it.
  • Works for small groups
25
Q

What is the contract holding theory?

A
  • There will be a gift for the present members of the club/society subject to their contractual rights and duties to one another.
  • For more formal clubs/societies.
26
Q

Re Recher - IMPORTANT - Shows CHT

A
  • The rule against inalienability will not be an issue if the club allows their members to dissolve the club, split the cash and spend it.
27
Q

Flaws of the CHT?

A
  • What happens to incapable or minors?
  • Not implementing Settlor’s Intentions
28
Q

How would the CHT work if someone doesn’t have contractual capacity?

A
  • The Settlor is to make a gift on trust for present and future members of the association.
29
Q

What happens if a member leaves the club?

A
  • The trust will need to be transferred to remaining members in writing, as per S.53 (1) (c) LPA 1925
30
Q

What happens if a gift is on trust for a purpose which would indirectly benefit members?

A
  • Valid under Re Denley principle.
  • If there’s something which sounds like a purpose but we’ve been able to identify some people who’d have an indirect benefit, then we can uphold it and regard those people as the enforcers of it.
31
Q

Re Lipinski’s WT [1976] - most recent approach

A
  • Oliver J suggested a trust for a purpose (for UA) was valid under either the Re Recher (CHT approach) or the Re Denley approach (Benefitting from purpose test).
32
Q

Re Grants WT [1979]

A

For there to be no issues with inalienability - a body or B of the trust needs to be able to dispose of the funds as they see fit.
- If they cannot do this = no trust.

33
Q

New Group Newspapers v SOGAT [1986]

A
  • If the B can dissolve itself from their national organisation then the gift will be valid - no inalienability.
34
Q

Why is it important to determine membership of an UA?

A
  • Important issue when it comes to UA selling their land to building developers
35
Q

Re GKN Bolts & Nuts Ltd v Birmingham Works Sports & Social Club [1982]

A
  • A sports ground wanted to be bought by a developer for £253k.
  • Courts decided that the money had to be split between the members at the date that the court determined the association had dissolved.
36
Q

What if there was only 1 member of a group left? Hanchett Stamford v AG

A

CHT means it belongs to the members - would go to that one person.

37
Q

What is the definition of an unincorportated association under Conservative and Unionist Central Office v Burrell [1982]?

A

“Two or more persons bound together for one or more common purposes, not being business purposes, by mutual undertakings, each having mutual duties and obligations…”

38
Q

Agency/Mandate Theory - An alternative approach to CHT and indirect benefit approach.

A
  • The idea that the gift is made to the recipient as agent for the donor, and with his permission to use the gift in a particular way.
39
Q

Flaws of the agency/mandate theory?

A
  • Is of no use if the agent dies or is declared bankrupt.
  • Only applies when the donor is living - e.g., inter vivos trusts.
40
Q

Can a debt and a trust co-exist?
Barclays Bank v Quistclose Investments Ltd [1970] -IMPORTANT

A
  • There was a 2-trust approach –> Primary trust for paying dividends and a secondary trust to return the money to the lender if the first trust wasn’t possible.
  • A contract and a trust can co-exist.
41
Q

Re EVTR [1987] - IMPORTANT

A
  • C won premium bonds - lent money to employer for machinery - company went into liquidation - C seeking refund money.
  • Held that a Quistclose Trust arose, despite the money not being put into a separate bank account. Attached to the refund instead.
42
Q

Re Farepak Food and Gifts Ltd [2006] - No QT

A
  • No Quistclose trust as money could be used for other purposes than the making of the Christmas hampers.
43
Q

Twinsectra v Yardley [2002] - Reinterpretation of the QT

A

Lord Millet
- Parties intended that the money is not to be at the free disposal of the recipient.
- Considered the B of the trust to be the lender - not for a purpose.
- Unless applied in accordance with directions, then the trust will still belong to the lender and must return to the lender.

Equity and Trusts Unit 3 (1 decks)

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