The Beneficiary Principle:

The beneficiary principle = the principle that for a trust to be valid, it must have a human beneficiary who can enforce the trust.
Trusts for private purposes are not usually valid.
Public purpose trusts (charitable trusts) are valid.

s18 Perpetuities and Accumulations Act 2009: Charitable purpose trusts are exempt from the rule against perpetuities. Private trusts are not, testator cannot enforce a purpose trust for over 21 years

Morice v Bishop of Durham: There must be somebody in whose favour the court can decree performance

Bowman v Secular Society Ltd: a trust is valid if it is to the benefit of individuals or benefits the public (i.e. is a charitable trust)

Leahy v AG: A gift can be made to persons but it cannot be made for a purpose or object.

Re Astor's Settlement Trusts: a trust was formed for the maintenance and improvement of good understanding between nations. Equity will not recognise a trust to carry out a purpose as no individual beneficiaries can be determined.

Saunders v Vautier: Beneficiary asked for money to be transferred to him before the date specified; held, a beneficiary has a beneficial interest or right and can invoke the doctrine of sui juris

Re Shaw: Provision to develop a new 40 letter alphabet was struck down as not being charitable, as defined by law, and the provision failed as a non-charitable purpose trust.

Exceptions:
Re Endacott: Endacott wrote in his will that he would give his son some houses and a factory, and then all the rest to the Devon Parish Council ‘for the purpose of providing some useful memorial to myself failed for the beneficiary rule. There were held to be only 3 exceptions to the purpose rule-

trusts for the erection or maintenance of [funerary] monuments or graves
trusts for the saying of masses
trusts for the maintenance of particular animals

Mussett v Bingle: Money to erect and maintain a momument- the money for upkeep was not under the trust as this could go on forever therefore broke the perperutity rule. If no time limit has been specified, the trust will fail.

Pribright v Salway: the upkeep of graves was allowed for a long as Law allowed. Thus passed the perpetuity rule and a limit of 21 years was placed.

Bourne v Keane:  trusts for the saying of private masses are barely distinguishable from public masses

Pettingall v Pettingall: testator provided a sum of money per annum for upkeep of mare. This was upheld to be valid as there were persons in the residue of the estate who could enforce the trust. The executor was issued a Pettingall Order and undertook the purpose of the trust for the money to be spent on the upkeep of the mare.

Re Dean: testator left money for looking after Hounds and Horses, the money left over did not become the residue of the estate and so it did not matter if there was no one to enforce the trust.

Re Thompson: Testator bequeathed money to friend for the promotion of hunting. The residuary was left to go to the of Cambridge. following the Pettingal Rule, the friend assured that the money would be used for the purpose and so the trust was held to be valid.

The Rule in Re Denley:
Re Denley's Trust Deed: trust deed was formed to maintain land for use as sports ground upon sale, the trustees had to convey the land to a charity if the purchasing company fell into liquidation. Sporting facilities were not considered charitable but they were purposeful. Because the employees were allowed to use the sports ground, the court held that this constituted to an ascertainable class of peoples. The sports ground was therefore to the benefit of individuals and so the trust was valid. Trusts expressed in the form of a purpose may still be valid if the benefit is for an ascertainable class of individuals. These individuals are considered to be beneficiaries even though they do not have ownership rights which means they can enforce the trust.

Re Grant's Wills Trust: A bequest was given to the Labour Party Property Committee for the benefit of the Chertsey Headquarters. This meant that unlike a normal association, the members could not unanimously agree to waive the rules and divide the property between themselves. Re Denley is not about purpose trusts, but rather a discretionary trust to individuals, no distinction was drawn between a discretionary trusts and a trust to facilitate the enjoyment of land for the purpose amongst a class of peoples. This overlooks the importance of purpose in Re Denley, particularity as in Re Denley the trustees could not exercise any discretion.

Re Lipinski Wills Trust: Lipinski gave the residual part of his estate for the Hull Judeans (Maccabi) Association  to be used for constructing new buildings.  The trust must be to the benefit of individuals of the unincorporated association, however an unincorporated association has no obligation to enforce the trust, this was in conflict with the ruling in Re Denley.

Valid Trusts for Persons:

Re Sanderson's Trust: Money was given to pay upkeep of brother who died leaving a surplus of money. Held, because the whole amount of fund is given, the purpose is a motivation for the gift as opposed to a limited amount only for the purpose (in which case the remainder of the money would go to the residuary of the estate). Express valid trusts which are expressed or limited by a purpose are private trusts.

Re Bowes:  Bowes in his will left his estate to the defendant which included a gift for planting trees upon the estate. There was much more money than needed for planting trees. Held, It held that a trust which uses words relating to a purpose of doing something, but ultimately for the benefit of a group of people, can be construed as being for the benefit of those people. The consequence is that the people may exercise their right to dissolve the trust.

Re Abbott Fund Trusts: A purpose trust for the maintenance of two old ladies was for their benefit, it was decided that excess funds after they die will be held on resulting trust for the settlor. (the general rule is put aside if the court can find intention to benefit specific individuals)

Re Andrew's Trust: Money held on trust for, daughter, mother and wife was held to be a valid trust for persons for the purpose of using it for the daughter's education ie. it was for the benefit of an individual.

Re Osoba: Money was given on trust for the training of daughter through university up to training grade. Held, the money did not go back to residuary as this was an absolute gift to benefit his daughter for the purpose of training and the university was merely a motivation. Where there is an intention to benefit specific individuals the surplus funds remain with the beneficiary.

	Created by cadhla_corrigan almost 10 years ago

LLB Trusts and Equity (5. Purpose Trusts) Note on Purpose Trusts, created by cadhla_corrigan on 01/05/2014.

Purpose Trusts