Beneficiary Principle & Purpose Trusts by dfhercbml

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									                                                                                                                                                                                                                                                                                        a trust made for purposes that are beneficial to the public will be upheld as a charitable trust
                                                                                                                                                                                                                                                                                        once the trust comes within the definition of charity it does not matter that the property is left for a purpose rather than an individual
                                                                                                                                                                                                                                                                                        however if a trust is outside this definition then it will generally fail for the lack of a beneficiary
                                                                                                                                                                                                                                                                                        cf. charitable trust, all problems of purpose are eradicated, the AG can always enforce
                                                                                                                                                                                                                                                                                                       who owns the equitable interest in trust for purposes?
                                                                                                                                                                                                                                                                                        problems
                                                                                                                                                                                                                                                                                                       perpetuity period, if funds are large enough, could last forever
                                                                                                                                                                                                                                 star trusts
                                                                                                                                                                                                                                                                                                                 Grant
                                         enforcement can be in the hands of a third party enforcer that is named                                                                                                                                 Cayman                                 Morice v Bishop
                                                                                                                                                                                                                                                            other                       of Durham 1804           every trust must have a definite object. there must be someone in whose favour the curt can decree specific performance
                                         in the trust document, with provision for a replacement as well                        the beneficiaries aren't named for tax reasons              allows a non charitable PT to be upheld              Islands
                                                                                                                                                                                                                                                            jurisdictions                                        why?        no obvious beneficiary to enforce or who could challenge the actions of the trustees
                                                                                                                                    problem is the enforcer who doesn't have an interest and then forcing them to enforce
                                                                                                                                                                                                                                                                                                                                                                                    Terms        the
                                                                                                                                                                                                                                                                                                                                                                                                 ‘ maintenance… of good understanding between nations
                                                                                                                                                                                                                                                                                                                                                                                    were
                                                                                                                                                                                                                                                                                                   Settlement of all the issued shares of the Observer newspaper                                 the preservation of the independence and integrity of the newspapers
                                                                                                                                  concessions to human weakness               over the years the courts have allowed some gifts to be upheld
                                                                                 groups should remain small and exceptions should not be extended, have                       and a group of quite random exceptions have grown up                                                                                                                                                                                Purposes were uncertain and above all objects were uncertain, allowed room for a policy decision
                                                                                                                                                                                                                                                                                                                                                      It offended against the beneficiary principle
                                                                                 no obligation to perform but have a duty to apply fund for other purposes                                                                                                                                                          Held the trust was invalid
                                        generally upheld, although other principles of trust law will apply so such gifts must not                                                                                                                                                                                                                                                                                             anomalous and exceptional… concessions to human weakness or sentiment”
                                                                                                                                                                                                                                                                                                                                                                                                                               “
                                        exceed the perpetuity period and the wording of such gifts must be sufficiently clear                                                                                                                                                                                       Reviewed the exceptions to the beneficiary principle and commented that they were
                                                                                                                                                  cases where capital left either to build or maintain a monument or grave.
                                                                                              if wording is too vague, the gift will fail                                                                                                                                                          Roxburgh         If a trust does not have beneficiaries then the court will not be able to enforce and supervise it
                                                                                                                                                                                                                                                                                        Astor                       a
                                                                                                                                                                                                                                                                                                                    “ court of equity does not recognise as valid a trust which it cannot both enforce and control”
                                                                  problem is that T'or left a sum of money for a memorial, words he used weren't sufficiently clear ' some useful memorial'                          Re Endacott 60                                                     52
                                                                                                                                                                                                                                               Tombs and                                                            In many of the cases of exceptions to the beneficiary principle there was a residuary legatee who would be able to ensure the purpose was carried out
                                                                                   £1000 to executors to use income for family graves and monuments for so long as they lawfully can do so                                                     monuments                                                            Although that isn't exactly what the settlor said
                                                                                                                                                                                                                      Re Hooper 32
                                                                                                                                                                                                  contrast with
                                                                                                                                                                                                                                                                               BP                                                                   currently under review           list will be much longer
            200 for upkeep was void for perpetuity period, not saying wouldn't run out but nothing to say it wouldn't             no problem with specific sum, problem with period for which money
                                                                                                                                  was being applied, 300 to build monument, 200 for the upkeep                          Mussett v                                                                                                   Pemsel's                           for the reduction of poverty
                                                                                     fail unless within perpetuity period                                                                                                                                                                          could avoid if fit under
                                                                                                                                                                                                                        Bingle 1876                                                                                                 case 1891       four               for the advancement of education
                                                                                                                                            court doing utmost to save a gift, severed it so at least got 300                                                                                      charitable trust                                 definitions
                                                                                                                                                                                                                                                                                                                                                                       for the advancement of religion
                                                                                                                               trusts for the care of animals in general will be usually be charitable, but trusts for the care
                                                                                                                               of a single animal could not be charitable because it will not satisfy the public benefit test                                                                                                                                          for any other purpose beneficial to the community

                                                                                               the courts have upheld these gifts so long as it doesn't offend against the perpetuity period, the exception is Re Dean                                          Beneficiary Principle                                    though one knows that there have been decisions at times which are not really to be satisfactorily classified, but are perhaps merely occasions when Homer has
                                                     trust of £750 pa for the maintenance of horse and hounds for 50yrs or so long as they should live                     may be able to go beyond perpetuity period                                            & Purpose Trusts                      Harman            nodded, at any rate these cases stand by themselves and ought not to be increased in number, nor indeed followed, except where one is exactly like another
                                                                                                                                                                                                                                                                                        Endacott
                                                                                                                                                                                                                                                                                        60
                                                                                                                            i do not assent to such a view                                                                           Dean                                                                                 no principle perhaps has greater sanction or authority behind it than the general proposition that a trust by English
                                                                                                                                                                     court considered BP but chose to simply ignore it               1889                                                              Evershed           law, not being a charitable trust, in order to be effective must have ascertained or ascertainable beneficiaries
                                                    didn't consider 21yrs, considered the 'life in being'        more concerned with perpetuity period
                                                                                                                                                                                   case has lately been disapproved of                                                                             George Bernard Shaw left residuary estate to trustees to apply income to purposes including research into a 40 letter alphabet and transliteration of one of his plays into such an alphabet
                                                                                                                                                                                                                                                  Animals                                          Held, charitable purposes and failed as purpose trusts
                                                                                                                                                                   gift to horse, period of 21yrs specified          Mitford v Reynolds                                                 Shaw
                                                                                                                                                                                                                                                                                        57         The supervision of trusts relies first and foremost on the beneficiaries, as the persons most interested in the proper administration of the trust, bringing abuses to the attention of the court
                                                                                                                                                                                 favourite horse         Pettinghall v Petinghall 1842                                                             did this come within the advancement of education?                  lordships decided not

                                                                                                                                     court took judicial notice of the fact a cat wouldn't live beyond 21yrs                                                                                       fails on BP
                                                                                                                                                                                                                           Re Haines 52
                                                                                                                                                                                                                                                                                                                                 money accepted was to be applied for the people of West Yorks, clearly PT
                                                                                                                                             possibility of the carers taking the benefit and enjoying it for themselves              Kelly                                             ex parte West Yorks MCC 58
                                                                                                                                                                                                                                                                                                                                 court considered DT, problem of administrative unworkability                   would fail on lack of objects if didn't fail for AU
                                                                      it was suggested that the last of the dogs could in fact not outlive the T'or by more than 21yrs. i know nothing of that.                                       32
                                                                                                                                                                                                                      Meredith
                                              the court does not enter into the question of a dog's expectation of life. in point of fact neighbour's dogs and cats are unpleasantly long lived                                                             Anomalous                   justification for this rule is based on the need for every trust to have an ascertainable beneficiary                     it is also important that the court is clear in whose favour
                                                                                                                                                                                                                                                            Exceptions                  who can enforce the trust on his own behalf and who can be said to own the trust property.                                it is to enforce the trust in the event of a challenge
                                                                                                                                     court took judicial notice that a cat would not live beyond 21yrs                Re Hetherington 89

                                                             was the religious ceremony open to the public? if closed to the public it cannot be charitable but may still be upheld as a private trust
                                                                                                                                                                                                                              Re Le Cren                                                           if a trust is phrased in such a way that it appears to be for a purpose but behind the trust there are hidden beneficiaries then the trust will be upheld
                                                                    75% of religious services not open to the public and healing open to the public                  religious services and faith healing sessions            Clarke 96                                                                          Fund of £284 collected and established in 1890 for the support of two deaf and dumb ladies, on death in 1899 surplus remained
                                                                                                       was there sufficient public benefit to be charitable? private element didn't prevent it being public                                                                                                      Held, surplus should be held for the benefit of those who had subscribed to the fund
                                                                                                                 not restricted to Christianity, ceremony to be said in memory of ancestors                                                                                                        Abbott                                                                                                                                    s
                                                                                                                                                                                                                                                                                                                 Was it crucial that the beneficiaries of the fund were deceased and could derive no further benefit from it? Was the settlor’ intention to preclude a resulting trust?
                                                                                                                                                                                                              Re Khoo Cheng Teow 32                Others                                          1900                        The fund was never intended to become the absolute property of the ladies
                                                                                                       legacy of past student of Trinity Hall, Cambridge, fund to be applied by legatee Mr Lloyd in such                                                                                                                       The strictness of the beneficiary principle (which invalidates trusts for non-charitable purposes ab-initio) and the cy-pres doctrine (which operates in relation
                                                                                                       manner he should think fit to promote and further fox hunting, the surplus to go to the college                                                                                                           Stirling
                                                                                                                                                                                                                                                                                                                               to surplus funds of charities) operates to restrict the circumstances in which an express trust is able to be created for a purpose, which may subsequently be
                                                                                     legatee was prepared to uphold gift, but residuary legatee the College wanted an order from the court to be sure                            Thompson                                                                                      accomplished leaving an unexpended surplus
                                                                                                                            would be illegal today                                                                               34
                                                                                                                                                           held, the private element, didn't prevent it being public                                                                                                          trust for purpose or for persons?
                                                                                                                                                                                                                                                                                                   Gillingham Bus
                                                                                                                                                                                                                                                                                                   Disaster Fund 59           fund collected for group of cadets who had been involved in crash, collection wasn't charitable, it was a private PT
                                                            Revisited in Re Astor, disapproved of Re T as illogical that residuary legatee is the person who will benefit if it is successfully enforced
                                                                                                                                                                                                                                                                                                                              who could claim the surplus?           held, was to be held on resulting trust for the contributors
                                                 then would pass to legatee under the will        trust set up purely for the purpose of blocking up house's windows and doors for 20yrs
                                                                                                                                                                                                              Brown v Burdett                                                                      in both Re A and Re GBDF court didn't suggest the trust should fail, there were obvious groups of beneficiaries who could enforce, the only thing is they could not necessarily enjoy
                                                                                                                                              court rejected on the basis it would confer no benefit
                                                                                                                                                                                                                                                                                                                  D transferred land to trustees to be maintained and used as a                                            for employees
                                                                                                                                                                                                                     M'Caig v            Capriciousness                                                                                                                                               terms were
                                                                                                             left entire estate to be applied for building monuments, left entire estate to be                                                                                                                    sports field for the employees of a company, specifically said 21yrs                                     for those as the trustees may allow
                                                                                                             applied for building monuments and artistic towers for himself all around the estate                    University
                                                                                                                                                                                                                     of Glasgow
                                                                                                                                                     it seems one is reasonable but more than one isn't                                                                                                                      Although the trust was expressed to be for a purpose, it was in fact for the benefit of individuals
                                                                                                                                                                                                                                                                                                                             because they would benefit, directly or indirectly, from the carrying out of the purpose.                                As such it was outside the mischief of the beneficiary principle
                                                                                                                                                                             severed gift         Mussett v Bingle                                                               Valid trusts
                                                                                                                                                                                                                         gifts which last longer than                            which                                       the objection is not that the trust is for a purpose or an object per se, but that there is no beneficiary or cestui que trust
                                                                                                                                                                                                                         the perpetuity period                                   appear to                        Goff
                                                                                                                                                      wording that would allow the gift to fail        Re Hooper                                                                                                             Upheld a gift which appeared to establish a purpose trust, because                     negatively by restraining any improper disposition or use of the land, or
                                                                                                                                                                                                                                                                                 be for a
                                                                                                                                                                                                                                                                                                                             the court could act to enforce it at the suit of the beneficiaries, either
                                                                                                                                                                                                                                                                                 purpose                                                                                                                            positively by ordering the trustees to allow the employees to use the land for recreation
                                                                                                                                                                                                                     Charitable trusts
                                                                                                                                                                                                                                                                                                                  court, revisited Re Astor, in some cases the group's benefit is so intangible or their standing is so intangible that they have no right to enforce the trust
                                                                                                             Re Shaw could have been saved in this way, would have a power given to a trustee                         use of powers                                                                Denley
                                                                                                                                                                                                                      instead of trust                                                             69                                 criticises the court for giving little indication as to how disputes about the way in which the land was to be used could be settled
                                                                    can't argue trustees would be forced to act, even a fiduciary power cannot cause the trustees to do more than consider
                                                                                                                                                                                                                                               Exceptions                                                                             while the indication that Leahy may not be the final word on purpose trusts as far as English law is concerned is to be welcomed, the need
                                                                                                                                                                                                       Re Lipinski       absolute gift                                                                                                to force such trusts into the same mould as ordinary private trusts apparently felt by Goff has produced unnecessary analytical confusion
                                                                                                                                                                                                                                                                                                                                      while pure purpose trusts should be treated as valid powers, subject to limitations on duration, perhaps
                                                                                                                                                     create a company with objects corresponding to the intended purposes                                                                                         Criticism by        a financial ceiling and a rule preventing expenditure of money on socially useless purposes?
                                                                                                                                                                                         transfer to unincorporated association                                                                                   JM Evans
                                                                                                                                                                                                                                                                                                                                                                  employees may have sufficient interest to enforce and therefore should have a right under Saunders v Vautier, but they didn't do that
                                                                                                                                                                                                                                                                                                                                      Goff doesn't say            wording was that should never have a right to the land, but they have every right to enforce against trustees
                                                                                                                                                                                                                                                                                                                                      who owns the land                                                                not satisfactory but logical
                                                                                                                                                                                                                                                                                                                                                                  states a factual benefit will be sufficient
                                                                                                                                                                                                                                                                                                                                                                  argument that the employees enjoy the land as contractual licencees, although also logical, still not satisfactory
                                                                                                                                                                                                                                                                                                                 a gift of £5000 upon trust to expend the same in planting trees for shelter on the Wemergill estate
                                                                                                                                                                                                                                                                                                   Bowes         upheld on the basis that the owners of the estate for the time being were the hidden beneficiaries behind the gift
                                                                                                                                                                                                                                                                                                   1896
                                                                                                                                                                                                                                                                                                                 contrary to Re A and Re GBDF that in some PTs it may be the beneficiaries own the interest and the purpose is just ancillary to their proprietary right
                                                                                                                                                                                                                                                                                                                 allusion to the perpetuity period, with words such as 'so long as the law allows' okay

                                                                                                                                                                                                                                                                                                                  possible to look at PT if can show property is being passed absolutely to another and the purpose is ancillary to that                              request not to individual, to association
                                                                                                                                                                                                                                                                                                   Lipinski
                                                                                                                                                                                                                                                                                                                  as group may be able to hold funds, absolute gift to the association, who could then hold the funds?
                                                                                                                                                                                                                                                                                                   76
                                                                                                                                                                                                                                                                                                                                                                                                        what happens to property specified by the T'or, as outright gift
                                                                                                                                                                                                                                                                                                                  where outright gift, BP doesn't apply, the property passes absolutely
                                                                                                                                                                                                                                                                                                                                                                                                        certainly could use the gift to improve buildings, but alternatively could do anything



Paul Hogarth-Blood

								
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