TRUSTS Flashcards
What did Lord Evershed M.R. state in Re Endacott?
Lord Evershed in Re Endacott stated that a PURPOSE TRUST IS INVALID unless CHARITABLE
Brightman J (as he was then) in Re Recher’s Will Trusts
A trust for non-charitable purposes, as distinct from a trust for individuals, is clearly void because there is no beneficiary
Roxburgh J. in Re Astor’s S.T on fundamental ideas of a Trust: that is enforceable in court AND => someone to enforce it
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 could be worked out in proceedings for enforcement
Examples of purpose and thus invalid not charitable trusts
- (as per MILLETT in The Quistclose Trust: Who Can Enforce it?” (1985)) 2.
The beneficiary principle
a trust is only valid if there is a beneficiary, CF enforceability principle:trust is valid only if there is someone to enforce it
Definition of a Resulting trust
*A type of trust *Imposed by law. What does it do? It returns the beneficial ownership in the trust property back to the settlor. When? 1. When settlor of an express trust fails to tell the trustees what to do with the trust property (or part of it). EX1 Tilda sets up a discretionary trust for the benefit of her siblings, but does not say what is to happen to the trust fund once her siblings have died. Her siblings die, and there are assets still held in trust. The trust assets are therefore held on a resulting trust for Tilda (or her estate if Tilda has also died). EX2 A purchaser fails to give a seller agreed consideration in exchange for receiving property. The beneficial interest in the property results back to the seller.
The Enforceability Principle
⇒ Enforceability principle holds a trust can be valid only if there is someone to enforce it ⇒ Importantly, the enforceability principle can also accommodate some categories of legally valid purpose trust
Locus standi
the right or capacity to bring an action or to appear in a court.
Quote for Beneficiary Principle
Grant MR in Morice v Bishop of Durham CF What is a Beneficiary?
What is a Beneficiary? 2 types
1 EQUITABLE OWNER So when does X have “equitable ownership” of trust property? ⇒ X has equitable ownership of trust property if he has an *immediate claim* to the trust property → X has a claim to the trust property if he can avail himself of the rule in Saunders v Vautier (1841) (i.e. is able to wind up the trust and take the trust property absolutely) 2 HOLDER OF PROPRIETARY INTEREST What is meant by ‘proprietary interest’ is a matter of great contention view1 Nolan: if it is at least possible (ie at least possible up to certain==> wider definition than 1) that the trust property will be paid out to him view2 It it is possible for someone to have a proprietary interest in trust property without having equitable ownership of the property → so you can have a proprietary interest without being able to invoke Saunders v Vautier
Case with rule to wind up the trust and take the trust property absolutely
Saunders v Vautier (1841)
What is a bare trust?
A Bare trust is a simple trust, where the beneficiary (or beneficiaries) has an *immediate and absolute right* to both the *capital and income* of the trust. The property is held in the name of the trustee (or trustees), but the trustee has no discretion over the assets held in trust. The trustee of a bare trust is a mere nominee, in whose name the property is held. Except in the case of bare trusts for minors, the trustee has no active duties to perform. The trustee must simply follow the (lawful) instructions of the beneficiary in relation to the assets held in trust. A bare trust can be express or implied.
For X for life; remainder to Y and Saunders v Vautier
Neither X, Y can do it indepenently but can wind up trust and take property absolutely if acting jointly.
Define a Purpose Trust
A Purpose Trust does not provide for the trust fund to be given to a person(s) as cash but instead specifies that it is to be spent on delivering a particular purpose
What are the 3 categories of legally valid Purpose Trusts?
i. Charitable trusts ii. Miscellaneous, non-charitable trusts iii. Re Denley trusts ELSE ⇒ A purpose trust not falling within one of the above categories is legally void (Re Astor’s Settlement Trusts [1952]; Re Shaw’s Will Trust [1957])
money was settled to a trustee for various purposes, including maintaining cooperation between nations and preserving the independence and integrity of newspapers. CASE and outcome?
Re Astor’s Settlement Trusts [1952]: The trust was held not to fall under any of the three categories, so the trust was therefore void 3 are Charitable, Re Denley, Misc Roxberg J said: ‘if the purposes are valid trusts, the settlors have retained no beneficial interest and could not initiate [proceedings].’ One cannot generally have a trust without a beneficiary or, at least a person who can move the court to enforce the trust: ‘This seems to me to be good equity and good sense.’
Shaw left money on trust for the creation of a 40 letter alphabet.
Re Shaw’s Will Trust [1957]: Purpose trust not in 3 categories ==> invalid
What is a Charitable Trust?
⇒ A charitable trust is one aimed at exclusively charitable purposes (CA s.1)
Examples of VALID MISCELLANEOUS, NON-CHARITABLE PURPOSE TRUSTS
i. Constructing and/or maintaining graves and monuments (Re Hooper [1932]) ii. Privately saying masses (Bourne v Keane [1919]) We know that a trust for publicly saying masses will be charitable (as that would advance religion and be for the public benefit), but a trust for privately saying masses cannot be charitable iii. Maintaining particular animals (Re Dean (1889)) A trust for maintaining animals in general tends to be charitable, but a trust for maintaining particular animals is not charitable because of a lack of public benefit – nevertheless, this type of trust can be legally valid as a non-charitable purpose trust iv. Promoting fox-hunting (Re Thompson [1934]) This is presumably defunct now because most forms of fox hunting are now illegal
Can a trust for privately saying masses be valid?
NO Bourne v Keane [1919]
What are RE DENLEY PURPOSE TRUSTS?
⇒ Trusts aimed at purposes are valid when there are individuals directly and tangibly benefited by the purpose’s performance (Re Denley [1969]) Facts of Re Denley 1969 trust for the purpose of providing a sports field to be used by the employees of a particular company was held legally valid Goff J : this kind of T is in general outside the mischief of the principle that every trust must have a certain cestui qui trust
Define cestui qui trust
beneficiary of a trust (simply)
A trust fund was created to provide for two deaf and dumb elderly sisters who lacked the means to support themselves. Valid trust?
(+) RE ABBOTT FUND TRUSTS [1900] 2 CH 326 Facts: A trust fund was created to provide for two deaf and dumb elderly sisters who lacked the means to support themselves Held: NOT held for the sisters’ absolute benefit, but rather as a trust for the purpose of providing for the sisters; BUT valid as a purpose trust because there were individuals (i.e. the sisters), as in Re Denley, who were directly and tangibly benefitting from the purpose’s performance
A discretionary trust for a huge class of beneficiaries comprising “officers and employees or ex-officers and ex-employers of the Company and any relatives or dependants of such persons” Case and valid Trust?
McPhail v. Doulton 1971 AC Wilberforce: Valid +
What is a chose in action?
Torkington v Magee [1902] 2 KB 427
What did MIllet J say in Armitage v Nurse 1998?
If the beneficiaries have no rights enforceable against the trustees there are no trusts
Where objects of a power of appointment have no rights to be informed that they are objects - still valid trust?
See per Templeman J. in Re Manisty’s Settlement [1974] Ch. 17 at p. 25, where he stated that there was no need to take steps to inform objects of the power who were employees of the settlor’s company or relatives of those who were the primary object of the settlor’s bounty. Recent DNA advances (showing most Europeans to be descendants of one of six women) make “relatives” a huge class, the word meaning descendants of a common ancestor (whose bones might be dated to 2000 B.C.) as held in Re Baden’s Deed Trusts (No 2) [1973] Ch. 9. A discretionary trust for S’s relatives (potentially well over 10 million) should be void for administrative unworkability nowadays.
Argument for Common Law jurisdictions having same law?
Globalisation contributes to harmonisation. Ex Trust perpetuity rules difference between rules in England and overseas also over English assets which should
Hayton’s idea in Developing the obligation characteristic of the trust for a redefinition of a trust as… David Hayton Professor of Law, King’s College, London University and Acting Justice of the Supreme Court of The Bahamas.
?????
DO individuals who *may* benefit from a Charitable Trust have legal standing to enforce these benefits?
NO Purpose Trust ==> Charitable Trust are enforced by the Attorney General in the name of the Crown
What does certainty mean in terms of a Trust?
Only certain of object that exclusively charitable uses is required. => cf Three Certainties 1 Certainty of intention, 2 Certainty of subject matter && 3 Certainty of object.
What does cy-pres mean?
as near as possible to the testator’s or donor’s intentions when these cannot be precisely followed.
Rule against perpetuities
requires that future trust interests (that is, interests that do not take effect immediately) must be certain to vest within a defined period of time known as the perpetuity period ELSE void at Common Law BUT potentially savable under Perpetuities and Accumulations Act 2009, the Perpetuities and Accumulations Act 1964 or the Law of Property Act 1925. The Perpetuities and Accumulations Act 2009 also restricted the scope of the rule with effect from 6 April 2010.
4 Pemsel cases defining charities
Pemsel’s Case 1891, as per Macnaghten Trusts for 1. The relief of poverty 2 advancement of education 3 advancement of religion 4 other purposes beneficial to community
Charities Act 2011 s.3
3 Descriptions of purposes (1) A purpose falls within this subsection if it falls within any of the following descriptions of purposes— (a) the prevention or relief of poverty; (b) the advancement of education; (c) the advancement of religion; (d) the advancement of health or the saving of lives; (e) the advancement of citizenship or community development; (f) the advancement of the arts, culture, heritage or science; (g) the advancement of amateur sport; (h) the advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity; (i) the advancement of environmental protection or improvement; (j) the relief of those in need because of youth, age, ill-health, disability, financial hardship or other disadvantage; (k) the advancement of animal welfare; (l) the promotion of the efficiency of the armed forces of the Crown or of the efficiency of the police, fire and rescue services or ambulance services; (m) any other purposes— (i) that are not within paragraphs (a) to (l) but are recognised as charitable purposes by virtue of section 5 (recreational and similar trusts, etc.) or under the old law, (ii) that may reasonably be regarded as analogous to, or within the spirit of, any purposes falling within any of paragraphs (a) to (l) or sub-paragraph (i), or (iii) that may reasonably be regarded as analogous to, or within the spirit of, any purposes which have been recognised, under the law relating to charities in England and Wales, as falling within sub-paragraph (ii) or this sub-paragraph.
Key Case Morice v Bishop of Durham 1804
legacy given to BoD on trust for “such objects of benevolence and liberality” as he should choose. => not exclusively charitable => non charitable => ==> Non-Charitable Purpose Trust ==> void(+)
a testator transferred property by his will for ‘such charitable and benevolent institutions in the city of Birmingham as the Lord Mayor should choose’. Charitable Trust?
(+) Re Best 1904
A bequest of 200,000 provided for the income to be paid to orthopaedic hospitals, subject to 100 per annum for dinners for trustees when they met on trust business. Charitable Trust?
Re Coxen 1948 dinners merely incidental ==> charitable (+)
unspecified part of a fund was made for charitable purposes (the relief of poverty) and the remainder for a private purpose (the testator’s relatives). Was severance possible?
Yes Salusbury v Denton 1857
A testator directed his executors to apply the residue of his estate ‘for such charitable or benevolent objects’ as they might select.
Chichester Diocesan Fund v Simpson [1944] Viscount Simon: ‘It is NOT disputed that the words charitable and benevolent DO NOT ordinarily mean the same thing; they overlap in the sense that each of them, as a matter of legal interpretation, covers some common ground, but also something which is NOT covered by the other. ….inevitably follows that the phrase charitable or benevolent occurring in a will must, in its ordinary context, be regarded as *too vague* to give the certainty necessary before such a provision can be supported or enforced. The conjunction or may be sometimes used to join two words whose meaning is the same, but, as the conjunction appears in this will, it seems to me to indicate a variation rather than an identity between the coupled conceptions. => charitable git (-) Prima facie, the conjunction, ‘and’ is construed conjunctively but may exceptionally be construed disjunctively in a way similar to the word ‘or’. The construction of the expression will depend ultimately in the context in which the words were used in the trust instrument or will.
Are organisations set up in England Wales to provide benefits abroad charitable?
No control of High Court s.2 2011 Act?
Charity Commission Guidance What is the Charity Commission Guidance PB1 on Public Benefit? 1 (wider tangible benefit == benefit aspect)
1 A purpose must be beneficial && 2 Any detriment or harm from the purpose must not outweigh the benefit
Charity Commission Guidance What is the Charity Commission Guidance PB1 on Public Benefit? 2 (narrower benefit == public aspect)
- benefit the public in general or a sufficient section AND 2 not give rise to more than incidental *PERSONAL* benefit. NB Incidental personal benefit is OK
What did Evershed MR say in Re Coulthurst 1951 on what constitutes poverty?
Poverty means being short of something Relief gives you what you would o/w not have does not mean Destitution Going short
A bequest of £20,000 to trustees was subject to the direction that the income be paid to the widows and orphans of deceased officers and ex-officers of Coutts & Co, as the trustees may decide the most deserving of such assistance, having regard to their financial circumstances.
Re Coulthurst 1951 Trust to benefit widow and orphans of employees and ex employees who “were most deserving of such assistance” relative to the other widows and orphans of employees and ex employees HELD for relief of poverty ==> charitable (+)
Gift for the provision of housing for the working classes. Charitable?
(-) Re Sanders Will Trusts Grounds? group needs to be assumed to be in need of help. What about those in group not in need? Also Re Gwyon 1930 Reverand teenage boys in Farnham since rich could also have benefited ==> charitable (-)!!!
person in special need
Re Cohen 1973 A trust for relatives who were “in special need” ==> in special need does not necessarily mean poor. BUT ==> judge was assured trustees would only choose those genuinely poor +> trust(+) ?? Open to criticism!!
A bequest was made on trust ‘for such relations of my said son and daughters as in the opinion of the survivor shall be in needy circumstances’.
KEY Re Scarisbrick 1951 The court was asked whether a trusts for poor persons within a restricted category, the testator’s descendants, not meeting the usual requirement that the benefits be available to a wider section of the community, may be held charitable. Held: Such a trust could be charitable (!!) Distinction between charitable trust and private trust. CT for relief of poverty amongst a particular description of poor people versus PT gift to particular poor persons the relief of poverty among them being motive for gift SEEMS PT but exception granted: Basically for relief of poverty ==> exception to the general rule in that trusts or gifts for the relief of poverty have been held to be charitable even though they are limited in their application to some aggregate of individuals ascertained as above, and are, therefore, not trusts or gifts for the benefit of the public or a section thereof.
Dingle v Turner 1972
Trust to pay pensions to poor employees who were old or disabled The testator left part of his property on charitable trusts for the relief of the poverty of ‘the poor employees’ of a company. The appellant argued that it was not a charitable gift, and that the gift failed. Held: Charitable(+) based on Poor Relations exceptions Approved Re Scarisbrick 1951 case on poor relatives ==> personal nexus extended to poor employees either too old or disabled. Lord Cross: did not want to overrule poor relations cases because many trusts in existence based on them (=?==> invalid?) even if personal nexus which is usually not permitted < it must be accepted that wherever else it may hold sway the Compton rule has no application in the field of trusts for the relief of poverty.’> Lord Cross
Charity Commission Guidance on Public Benefit
* recognise law accord. to old poverty trusts * benefit aspect only for charities for relief (sometimes: prevention of) poverty * can define benefit with reference to descent from one individual, employer relationship, membership of unincorporated association (EX Nottingham Tennis Centre) * must not be for named individuals even if poor
What is the Cy-près doctrine
as near as possible if evident purpose cannot be carried out ==> can use it to ==> old purposes replaced by new ones similar and can be carried out in full If general charitable intent && trust impossible to perform ==> cy-pres (+)
general charitable intent ?
Did the Testator intend a general gift and expressed a particular method as a means of carrying gift into effect (imposs to perform==> cy-pres + ) OR did he intend gift for particular purpose CF Cy-pres
What is the Compton rule?
Powell v Compton 1945 Ratio: The court considered the charitable status of a trust ‘for the education of Compton and Powell and Montague children’. Held: It was not charitable. No tr would be charitable where a potential beneficiary would have to show he was related to a persons Existence of personal nexus took out of public into private sphere => not public => charitable (-)
Simonds in Oppenheim v Tobacco Securities Trust Co Ltd [1951] AC 297
Facts Education of children of employees or ex employees of BAT (110,000 employees) strict application of personal nexus test in definition of sufficient section of public => charitable(-) BUT MacDermott dissented
Private Trusts and perpetuity period
Must vest w/in perpetuity period which is 125y (s.9 Perpetuities and Accumulations Act 2000) since policy argmt == do not want assets tied up for definite period of time does !=>apply to charities => charities perpetuity period (-)
If falls within Advancement of Religion, Relief of Poverty OR Advancement of Education
Rebuttable Presumption of Public Benefit
The testatrix left a fund on trust stating that part was for the foundation of a school (a charitable purpose) and the remainder was for the benefit of her relatives (a private purpose).
Salusbury v Denton (1857) 3 K&J 529 Held: Charitable(+) Maxim: relevant part could be identified and severed from rest
s.4(3) Public benefit?
No real definition - have to look at Case law before 2011 and Charity Commission (1853) *Guidance*
Exam Structure
- Is it a charitable purpose? ==> CA 2001, s.3(1) 2.is it for public benefit? ==> 2 stage test 1. Benefit? 2. General public of sufficient section of it (personal must be incidental)
A trust which also benefits the rich is charitable?
(-) providing for those who could have afforded the trousers anyway Re Gwyon 1930
The property in question was a yacht registered in the name of Mr Prance. Ms Rowe gave up her flat and put her furniture in store so that she and Mr Prance could live together on the yacht. He regularly referred to the yacht as “ours”
Prance v. Rowe [1999]
•Use of word “our” in relation to the yacht and reference to it as her “security” led to an express trust
UNIDENTIFIED TANGIBLE PROPERTY = TRUST WILL FAIL FOR UNCERTAINTY OF SUBJECT MATTER
Re London Wine Co [1986]
Lack of segregation ==> trust failed for lack of certainty of subject matter.
Buyers of wine stored in various warehouses could not establish a trust of particular bottles in their favour as the bottles had not been segregated or identified in any way. So when the wine supplier went into liquidation, the customers could not claim priority over other creditors by saying that particular bottles of wine were held on trust for them
WINE = TANGIBLE PROPERTY… E.G. SOME OF THE WINE COULD HAVE STARTED TO DETERIORATE… WHO WOULD GET THE LOWER QUALITY WINE, AND WHO THE BETTER? WHO CAN CLAIM EACH WINE.
UNIDENTIFIED TANGIBLE PROPERTY = TRUST WILL FAIL FOR UNCERTAINTY OF SUBJECT MATTER
Re Goldcorp Exchange Ltd [1995]
The property was gold bullion purchased by the plaintiffs who had received a certificate of ownership. The contract of sale clearly stated that no specific gold had been allocated to any particular purchaser. The seller retained the right to sell/buy gold and to treat the gold as its own.
No trust, no segregation of property so no identifiable property for a trust to attach to.
Purchasers of bullion, who had paid for it but not taken delivery, claimed rights to it on the insolvency of the company. Their claims were rejected, apart from a group whose buillion had been segregated. There was no trust for the others as there was no identifiable property on which any trust could attach, as no particular buillion had been segregated for them.
