Summary Non-Charitable Purpose Trusts - Equity & Trusts Law (LLB)
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Course
Equity And Trust
Institution
City University (City)
Non-charitable Purpose Trusts Summarised Notes for the Equity and Trusts Law module, LLB, at City, University of London (achieved a 1st class using these) - can of course be used for other universities as well! Should be used with the full bundle of notes!
NATURE OF NON-CHARITABLE PURPOSE TRUSTS
Non-charitable purpose trust= purpose trust is a type of trust which has no beneficiaries, a trust
to achieve a non-charitable purpose rather than benefit a human beneficiary
Cannot be perpetual trusts expressly limited to 21years or even vague restriction will not fail
Settlor can expressly limit to life + 21years or just 21years (Re Hooper) no stipulation then void
BENEFICIARY PRINCIPLE
For express trusts, control consciences of trustees beneficiaries bring trustees to court
Trustee holds property, beneficiaries acquires proprietary right gives locus standi if fail perform
Beneficiary principle= must be an ascertainable beneficiary for a trust to be valid so trust can
be exercised by court, beneficiary under class of persons sufficiently certain locus standi
Morice v Bishop of Durham [1804]: ‘Every non-charitable trust must have a definite object. Must
be somebody in whose favour court can decree performance’
Re Endacott[1960]:Testator estate to Council for ‘useful memorial for myself’held uncertain
Trusts not for benefit of ascertainable beneficiaries= abstract purpose, void under English law, no
beneficiary to enforce trustee’s obligation in court abstract purpose trusts may continue in
existence in perpetuity, prevents benefit people ‘rule against remoteness of vesting’
2 exceptions of beneficiary principle: 1) few anomalous cases 2) charitable trusts (AG sues in
place of beneficiary) ascertainable beneficiaries= ‘people trusts’, abstract=’purpose trusts’
5 Exceptions – beneficiary principle cannot be for a purpose, UNLESS it is one of these
1. Trust for the maintenance of monument and graves
Re Hooper [1932]
Hooper left a sum of money on trust for maintenance of certain family graves and monuments
held valid, in the creation of monuments, with perpetuity can be over 21 years (this period of 21
years accepted as seen in Re Denley)
2. Trust for the saying of masses (prayers)
Re Hetherington [1990]: Masses for family and other close relatives – if deemed to be of public
benefit then it is religion and thus charitable, but if private nature, then non-charitable purpose
3. Trust for particular animals
Re Dean [1889]:750 pounds for horses and hounds, no perpetuity clause which is no problem as
horses cannot live more than 21 years
Pettingall v Pettingall ]1842]: £50 per year for maintenance of house valid
4. Trusts for the benefit of unincorporated Associations
5. Fox Hunting
Re Thompson [1935]: £1000 to friend to promote fox hunting held valid
Key Points to Remember
A non-charitable purpose trust is a type of trust which has no beneficiaries, but instead exists for
advancing some non-charitable purpose of some kind
There objections to these trust for no beneficiaries, uncertain, perpetuity etc
There some trust which are valid and regarded as exceptions
1
,Strict approach to beneficiary principle
Literal interpretation of trust instrument + vest in a person as beneficiary within reasonable time
Perpetuities and Accumulations Act 1964 enacted, prevent trusts for abstract purposes case
law developed rules for property to vest in beneficiaries in sufficient time or trust terminate
Re Wood [1894]: trust for purpose of working gravel pits so profits held for identified members,
draft meant would last in perpetuity held void for remoteness of vesting held void as gravel
could be extracted so slowly trust would last in perpetuity – ‘slaughter of innocence’ doctrine
Perpetuities and Accumulations Act 1964 permits cases continue beyond perpetuity period,
statutory perpetuity period (now 125 years) not void if poorly drafted so not invalid
Re Astor’s [1952]*: trust created to advance ‘preservation of independence and integrity of
newspapers’ Astor family mainly created held no beneficiary, uncertain void
Re Shaw [1957]*: Bernard Shaw, left money in will for new alphabet (objective develop new
language) held void as no identifiable beneficiary court require at least 1 person to have
some proprietary benefit in subject matter
Distinction between ‘people’ and ‘purpose’ trusts
Trust to benefit identifiable people as beneficiaries, not abstract purpose beneficiary principle
Purpose pursues abstract purpose no identifiable beneficiaries against principlevoid
Leahy [1959]: property to ‘nuns of Catholic Church… as trustees shall select’. Trustees selected
non-charitable order of Carmelite nuns, property large land in Wales (sheep station with 730
acres and homestead of 20 rooms) held non-charitable purpose trust for abstract purposes
rather than benefit of any individuals beneficiaries void order of nuns rather than individual
nuns, future so perpetuity breach remoteness of vesting + no ‘immediate possession’
Alternative approach to Leahy v AG: could it have been taken as a gift as in Cocks v Manners
rather than a purpose or object or as a gift for each member
Cocks v Manners [1871]:money for nuns with Mother Superior acting as trustee held transfer
was not for purpose of nuns but as a valid gift beneficiary rule not apply
Re Denley [1969]:sports ground for recreational purposes of company’s employees, trust
provided ‘used for benefit of employees or other persons as trustees may allow’, 21 year
perpetuity period, Goff suggested similar to discretionary trust held valid people trust that fell
in ‘wait and see’ provisions of Perpetuities and Accumulations Act
Beneficiary principle satisfied if identifiable beneficiaries will take benefit, even if indirect
Comparison of Leahy v AG and Re Denley
Both cases large land with buildings, impossible for class of people use land same time
Leahy ascertainable who members of religious order individuals take turns to use land
Re Denley employees use sports ground, unlikely all employees used sports ground
Re Lipinski’s Will Trusts [1976]: doubted approach in Leahy, bequest for social club, benefit for
membership for members of sufficiently certain beneficial class, found membership had control
over trust fund valid trust focus on individual benefit
As Re Denley + Re Lipinski show, cannot validate where not expressed for benefit of individuals
3 CONDITIONS FOR VALID PURPOSE TRUST
1. The trust must be for a purpose which has been recognized in the past as valid,
2. The trust must be limited in perpetuity,
3. There must be someone who is willing and able to execute the trust
2
, Strict approach still used (despite Re Denley)
Re Grant’s Will Trusts [1979]: transfer for ‘benefit of Chertsey, Constituency Labour Party’ or if
constituency ceased to exist, for national Labour Party found abstract purpose void
Distinction between cases
But Simonds in Leahy held trust void and Goff in Denley valid judges from different
generations Simonds focus on holding settlor to exactly what he said + beneficiaries need to
take immediate possession of rights in land and Goff took purposive interpretations to validate
But in Denley can satisfy beneficiary principle where some benefit directly or indirectly
Rule in Saunders v Vautier all beneficiaries must be able to direct trustees to deal with property
must be clearly identifiable Simond’s view nuns not beneficial as entirety of nuns expected to
go into immediate possession, BUT Goff view sufficient employees, use= immediate possession
Where a transfer interpreted as a gift rather than trust
Structure disposition of property as outright transfer (under contract or gift) rather than trust
Re Lipinski: gift left for an association, appeared as purpose trust, residuary estate ‘for Hull
Association in memory of late wife to build new buildings or improvements’ control capital
immediatelyheld equivalent to transfer of absolute beneficial title gift of money
Re Turkington [1937]: property for Masonic lodge to trustees who were also sole beneficiaries,
gift made to members of lodge gift valid as ascertainable beneficiaries (satisfied principle)
Purpose trust or mere motive
Motive of settlor’s intention rather than impose trust obligations or create a gift rather than trust
Re Bowes [1896]: held principle in could be applied so absolutely entitled beneficiaries acting
together would be able to direct trusts how deal with trust property, £5k settled on trust to plant
trees on large estate, but only 2 beneficiaries entitled to direct trustees to transfer title in money
to beneficiaries outright purpose trust overlooked for validity of trust for beneficiaries
Re Osoba [1979]*: bequest for testator’s widow ‘for maintenance and training of my daughter up
to university grade and maintenance of my mother absolute gift to 3 people with a merely
moral obligation expressed in trust settlor not intend create trust, but say how gift used
Re Andrew’s Trust [1905]: trust created for 7 children of clergyman once their education
completed held intention not create purpose trust rather gift with statement of motive
Re Gillingham Bus Disaster[1958]: subscription fund for bus crash, victims of crash did not
require all money raised, surplus money held to be held resulting trust for subscribers
Anomalous purpose trusts which have been held as valid
Purpose trusts still held to be valid valid on basis no further anomalies will be permitted
Re Endacott, avoided settlement of money for purpose expressed by settlor’ proving some useful
monument to myself gift challenged as bad in law. Council appealed saying purpose was gift,
not a trust affecting gift Held: Non-charitable purpose trusts are anomalous.
4 anomalous cases, each offend beneficiary principle as no human beneficiary with locus standi
to enforce trust 1)trust for maintenance of specific animals) 2) erection or maintenance of grave
or monuments 3) saying Catholic masses in private 4) promote fox hunting
Trust still need of perpetuity period or offend rule against alienability
After Endacott, recognized these cases are wrong and NOT applied in future
3
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