The Beneficiary Principle/Unicorporated Associations

Question 1

What is the beneficiary principle?

Answer 1

Trust need to have a human beneficiary generally to make them enforceable

Question 2

Which case is authority for the fact that the beneficiary principle requires a valid trust to have human beneficiaries?

Answer 2

Morice v Bishop of Durham (1804)

Question 3

Which case is authority for the fact that trusts that do not have a human beneficiary are generally void?

Answer 3

Re Astors ST [1952]

Question 4

Why does a trust have to have human beneficiaries?

Answer 4

(1) Enforceability
(2) Control
(3) Certainty
(4) Capriciousness
(5) Perpetuity

Question 5

What is the rule against remoteness of vesting?

Answer 5

The trust is void unless the interests vest in some beneficiary or beneficiaries absolutely within the perpetuity period

Question 6

What sort of trust interests does the rule against remoteness of vesting apply to?

Answer 6

Trusts that create contingent interests

Question 7

What is the perpetuity period? What is the authority for that?

Answer 7

125 years for trusts created or will executed after 6 April 2010 under the Perpetuities and Accumulations Act 2009

Question 8

Why do we have the rule against inalienability of trust capital?

Answer 8

Stops money from being tied up in a trust too long meaning that not in the economy

Question 9

What is the rule against inalienability of trust capital?

Answer 9

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

Question 10

Which case is authority for the fact that the perpetuity period does not have to be legally defined but it must be made clear that it is within that period? What were the words used in this case?

Answer 10

Re Hooper [1932]

‘So long as the trustees can legally do so’ was valid declaration of the perpetuity period

Question 11

In which case was a trust for the purpose of ‘providing some useful memorial to myself’ held to be void as a trust for a purpose?

Answer 11

Re Endacott [1960]

Question 12

In which case was a trust for the ‘preservation of the independence and integrity of the newspapers’ held to be void as a trust for a purpose?

Answer 12

Re Astors ST [1952]

Question 13

What are the two general exceptions to the rule that you cannot have a trust for a purpose?

Answer 13

Trusts for monuments/graves and trusts for animals/pets

Question 14

What is the principle and significance of the ruling in Mussett v Bingle [1873]?

Answer 14

Trust to erect a monument for testator’s first husband was valid but the bequest for its upkeep was void as no perpetuity period was stipulated so the latter part of the trust failed.
So can have trust to erect a monument but not for its upkeep unless rule against inalienability is followed

Question 15

In which case was a trust for the upkeep of a grave and decorating it with flowers ‘for as long as the law for the time being permits’ held to be valid?

Answer 15

Pirbright v Salwey [1986]

Question 16

What is the ruling from Pettingall v Pettingall (1842)?

Answer 16

You can have a trust for the upkeep of animals. Here a trust for the upkeep of the testator’s favourite horse was valid.

Question 17

In which case was a trust to provide £750 for 50 years to feed the testator’s horses and hounds valid?

Answer 17

Re Dean (1889)

Question 18

What are two ways of remedying a trust that offends the beneficiary principle?

Answer 18

Identifying people that benefit directly from the trust

Identifying people that benefit indirectly from the trust

Question 19

What is the significance of Re The Trust of the Abbot Fund [1900]?

Answer 19

Court held that a fund raised for the maintenance and support of two deaf and dumb old ladies was a trust directly benefitting them so was not a purpose trust.

Question 20

In which case was a trust for ‘training of daughter up to university grade’ held to be for the daughter so she was a beneficiary rather than it being a purpose trust?

Answer 20

Re Osoba [1979]

Question 21

Which case established the principle that you can have a purpose trust if it indirectly benefits someone?

Answer 21

Re Denley [1969]

Question 22

What are the facts of Re Denley [1969]?

Answer 22

Land given on trust to be maintained and used as a recreation and sports ground primarily for the benefit of employees of a company for 21 years. Employees were held by the court to have an indirect benefit from the trust as they would be allowed to play sports on it so it did not offend the beneficiary principle.

Question 23

What is the definition of an unincorporated association and what is the authority for this?

Answer 23

An unincorporated association is formed when two or more people come together for a common purpose.
Conservative and Unionist Central Office v Burrell [1982]

Question 24

Why is there an issue with gifts to unincorporated associations?

Answer 24

Unincorporated associations have no legal personality and therefore cannot own property.

Question 25

What are the different constructions for holding a gift to an unincorporated association valid?

Answer 25

(1) A gift to the relevant members as joint tenants so each member can sever his share and take it
(2) The Contract Holding Theory
(3) A gift on trust for the present and future members
(4) A gift on trust for a purpose which would indirectly benefit members
(5) Re Lipinski - can be viewed either under Re Recher or Re Denley if gift specified for a purpose
(6) Agency - only for inter vivos gifts

Question 26

What is the authority for the fact that one construction views gifts to unincorporated associations as a gift to the relevant members as joint tenants so each member can sever his share and take it?

Answer 26

Neville Estates Ltd v Madden [1962]

Question 27

How does the contract holding theory interpret a gift to an unincorporated association? What is the authority for this?

Answer 27

A gift for the present members subject to their contractual rights and duties to each other (i.e. The club’s constitution or rules)
Re Recher [1972]

Question 28

What are the benefits of the contract holding theory? What do you specifically need to ensure the club has power to do under this interpretation?

Answer 28

Satisfies the beneficiary principle as gift to people.
Capital has to be capable of being alienated so club must have power to dissolve if it wished and distribute the money in accordance with club rules.

Question 29

Which case confirms that under the contract holding theory the club must have the power to dissolve itself? What did the case concern?

Answer 29

Re Grants WT [1979]
Gift to local constituency Labour Party but rules said that national Labour Party had power to dissolve so gift void as did not comply with the rule against alienability.

Question 30

What are the theoretical issues with the contract holding theory?

Answer 30

(1) A disposition of an equitable interest requires signed writing under s.53(1)(c) LPA 1925 but members do not provide this or assign their interests to someone else when they leave the club
(2) Members could lack contractual capacity (e.g.
Junior members) so what happens then?

Question 31

Which case established that if the club rules allowed the local branch to secede from the national organisation and dissolve itself the gift to the unincorporated association would be valid and not infringe the rule against inalienability?

Answer 31

New Group Newspapers v SOGAT [1986]

Question 32

What were the facts and ruling in Horley Town Football Club [2006]?

Answer 32

The existence of temporary and associate members did not prevent the application of the contract holding theory between the full members of the club on its dissolution and distribution of its assets so the gift to the unincorporated association was valid.

Question 33

What is the agency approach to gifts to unincorporated associations?

Answer 33

Views the gift to the recipient as agent for the donor with permission to use the gift in a particular way.

Question 34

When is the agency construction of gifts to unincorporated associations relevant?

Answer 34

When there is an inter vivos gift

Question 35

What are the requirements of the construction of a gift to an unincorporated association as a gift on trust for the present and future members?

Answer 35

It satisfies the beneficiary principle but will be void unless confined to the perpetuity period

Question 36

Which case is authority for the fact that a gift to an unincorporated association could be construed as a gift on trust for a purpose which would indirectly benefit members?

Answer 36

Re Denley [1969]

Question 37

What were the facts of Re Lipinski’s WT [1976]?

Answer 37

Left residue of estate to association with the purpose ‘to be used solely in constructing the new buildings for the Association and/or improvements to the said buildings’.

Question 38

What did Oliver J hold in Re Lipinski’s WT [1976]?

Answer 38

That the gift with a specified purpose could be valid either under Re Recher (and the money could be spent on anything stipulated within the club’s rules) or under Re Denley for the purpose suggested as the members indirectly benefitted.