Flashcards
Beneficiary Principle
Cards in this deck (36)
- 1What two rights do beneficiaries have?Proprietary right in trust fund.
Personal right against trustee. - 2What happened in Saunders v Vautier? - What did they argue?Testator left East India stock to accumulate until Daniel Wright turned 25.
Daniel turned 21 and petitioned to have the fund transferred to him.
- Daniel had a vested interest and as the accumulation and postponement was for his benefit alone, he should be able to waive it and have the funds transferred immediately. - 3What was held in Saunders v Vautier?Held that if a legacy is to accumulate for a period of time, or where payment is postponed, if the legatee has an absolute indefeasible interest in the property they are not bound to wait until expiration.
- 4What was stated in Re Holt's Settlement (1)?If under a trust 100% of beneficiaries were under no disability and agreed to the rearrangement or termination of the trust, then under the doctrine in Saunders v Vautier, they could use the trust as they saw fit.
- 5What were the qualifications in the statement in Re Holt's Settlement (3)? - What happened if any failed?Infant.
Unborn.
Unascertained person.
- Court had no jurisdiction to agree with any arrangement on behalf of that beneficiary. - 6What were the rough facts of Stephenson v Barclay Bank and Lloyds Bank v Duker?Both involved a beneficiary wanting to take their share of a trust fund.
- 7Why was Stephenson v Barclay Bank and Lloyds Bank v Duker decided differently?In the first case the beneficiary taking their share did not cause loss or harm to the other beneficiaries.
In the second case, the portion of fund included shares which, taken together with the other shares in the fund, gave the trust a majority shareholding in a company. - 8What was stated in Morice v Bishop of Durham (2)?There can be no trust, over the exercise of of which this court will not assume control.
There must be somebody in whose favour the court can decree performance. - 9What is the 'beneficiary principle' (2)?The courts can only control the trustees if there is a beneficiary who can sue them.
Therefore, trusts law requires their must be an ascertainable beneficiary or beneficiaries. - 10A people trust is ___? A purpose trust is ___?Valid.
Void. - 11What is a trust which is not for the benefit of ascertainable beneficiaries described as?For an abstract purpose.
- 12Why won't a trust for an abstract purpose be valid (3)?No one to bring the trustees to court.
No ownership of equitable interest.
Trust could go on for perpetuity. - 13Which view did traditional cases take? - What view do modern cases take?Narrow view.
- More lenient view. - 14What happened in Leahy v AG of NSW? - Who did the trustees select? - What was the property? - What was the question before the court?Property was left "upon trust for such order of nuns of the Catholic Church ... as my executers shall elect.
- The non-charitable order of Carmelite nuns.
- 730 acres of farmland and homestead comprising 20 rooms.
- Was the trust for an abstract purpose? - 15Which judge held the trust to be what for how many principle reasons?Viscount Simonds held it to be void for three principal reasons.
- 16What was the first reason?Trust was made out to the 'order' of nuns, rather than for specific, individual nuns.
Trust deemed to be for the abstract purpose of the order. - 17What was the second reason?Because the terms of the trust provided that the property was held for the order of nuns then that would mean that the trust would be used for people who would become nuns in the future.
This could go on for perpetuity. - 18What was the third reason?Viscount Simonds seems to have considered that to be a beneficiary under a trust required that you take 'immediate possession' of your rights.
He held that as a matter of logic it could not have been intended that immediate possession of rights could have been taken by all the nuns int he order over a small homestead. - 19What happened in Re Denley? - What was the question to be answered?A sports ground was left for the recreational purposes of a company's employees.
- Whether this was a void purpose trust for the maintenance of a sports ground or a valid people trust for the benefit of the employees. - 20Which judge held what? - What did he do?Goff J held it was valid.
- He said the facts of Leahy were distinguished as creating a trust for abstract purposes, whereas Denley was a trust for the benefit of the beneficiaries. - 21What principle did Goff J set out?Where, then, the trust, though expresses a a purpose, is directly or indirectly for the benefit of an individual or individuals, it seems to me that it is in general outside the mischief of the beneficiary principle.
- 22What is a potential reason Leahy and Delaney reached different outcomes on similar facts?Viscount Simonds mostly reached judgements based on narrowly-argued literal interpretations of the documents without any interest in the broader context.
Goff J gave carefully progressive judgements in many cases and was concerned to maintain the validity of socially useful trusts. - 23What happened in Re Lipinksi?Half of testator's residuary estate was to go to an association in memory of his late wife to be used solely in the work of constructing the new buildings for the association and/or improvements in said buildings.
- 24What did which judge hold - What did this mean?Oliver J held that this was a case involving a gift.
- Trusts law rules did not apply. - 25What did Oliver J hold?There is a clear distinction between the case where a purpose is described which is clearly intended for the benefit or ascertained or ascertainable beneficiaries, particularly where those beneficiaries have the power to make the capital their own, and the case where no beneficiary at all is intended.
- 26What does this mean in other words?Difference between trusts for a memorial of a pet compared to trusts where beneficiaries can be ascertained.
- 27Why is an issue every time something is transferred to an unincorporated organisation? - Why is this?Someone had to become the common law owner of the property.
- An unincorporated organisation is not regarded as a separate legal person in the way a company is. - 28What are possible constructions if transfers to unincorporated associations and state whether each one is valid (7).Trust for abstract purpose of UO: Void
Outright gift to present members: Valid
Trusts for people who are present members: Valid
Trusts for present and future members: May be void
Transfer to members as an accretion to the club's capital to be used in accordance with the clubs constitution: vaid
Transfer subject to a mandate to use the property in accordance with the clubs constitution: valid
Trust for charitable purposes. - 29Why do you want to avoid creating a trust for an abstract purpose of an unincorporated body. - How should you avoid wording these trusts (3)?Risk of rendering the trust void.
- Avoid wording which suggests that the orghanisation as opposed to identified people will benefit from the transfer or, or that the transfer might continue in perpetuity, or that the people who will take benefit will not have some sort of beneficial interest in the property itself. - 30What is the advantage of making a gift of property? - What must be made clear?Trusts law concept of beneficiary does not apply.
- Absolute title in the property is being transferred from the donor to the members of the association as donees personally. - 31How must you make a trust of present members of an UO?Must be clear in the wording that it is restricted to present members as opposed to future members.
- 32What did Brightman J suggest in Re Recher's Will Trusts?The beneficiary principle will not be an objection to the validity of a transfer of property to an unincorporated organisation if it was made under the law of contract as an accretion to the clubs funds.
- 33What did this analyse not explain? - What is the problem? - What is the only sensible answer?How the ownership of the property is to be explained.
- An unorganised association is not a legal person, therefore an accretion to the funds does not tell us anything about its ownership.
- That the property is held on trust by the association's officers. - 34Give an example of a mandate. Why does this not mean there is no problem with trusts law? - Why does the donor had reassurance in these circumstances?Instructing your bank to make a regular standing order.
- It falls under contract law and therefore the beneficiary principle does not apply.
- They are reassured their property will be used appropriately because the recipients status as an agents means they are bound by fiduciary duties. - 35Does the beneficiary principle apply to trusts for charitable purposes?No.
- 36—Holding
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- Old Flashcards on Beneficiary Principle, created by Jordan Quigley on 10/10/2018.
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- Jordan Quigley
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