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The Beneficiary Principle Notes

GDL Law Notes > GDL Equity and Trusts Notes

This is an extract of our The Beneficiary Principle document, which we sell as part of our GDL Equity and Trusts Notes collection written by the top tier of Cambridge/Bpp/College Of Law students.

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THE BENEFICIARY PRINCIPLE & PRIVATE
PURPOSE TRUSTS


The beneficiary principle

Morice v Bishop of Durham per Lord Grant, MR.
 "Every trust must have a definite object. There must be somebody in whose favour the court can decree performance".
o In a private express trust the beneficiaries have personal interests in the terms being carried out properly. They therefore have the power (or 'standing') to take the trustees to court to enforce performance of their obligations.
o A charitable trust does not require ascertainable beneficiaries. The Attorney General has the power to enforce the terms
Equity abhors a vacuum - must be able to identify the owner of a property at all times.
Orthodox position is that private purpose trusts must fail:
o Leahy v AG New South Wales [1959]
 Gift upon trust for a group of contemplative Carmelite nuns, as a worldwide order no individual could enforce it. Privy council concluded the gift was designed to further the purposes of the nunnery, but as not a charity this trust failed.
o Re Astor's Settlement Trusts [1952]
 Trust for advancing the preservation of the independence and integrity of the newspapers. Purpose not charitable, no human beneficiaries therefore void.
o Chichester Diocesan Board v Simpson [1944]
 Trust for 'charitable or benevolent objects' - not considered charitable as no human beneficiaries therefore void.
 If the purposes are 'charitable and philanthropic', they are wholly charitable; but if they are described as
'charitable or philanthropic', the trust will not be charitable as the funds could be applied entirely to noncharitable purposes. So will fail.

TRUSTS

OF

IMPERFECT OBLIGATION

The Exceptions in Re Endacott [1960]
o There are some purpose trusts, these amount to 'concessions of the human sentiment'
 per Harman LJ "there have been decisions at times which are not really to be satisfactorily classified, but are perhaps merely occasions when Homer has 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."
o Three conditions for purpose trusts: 1) The trust is for a purpose that has been recognised in the past as valid
 2) The trust has been limited in perpetuity
 3) There is someone who is willing and able to execute the trust.
o These are trusts of imperfect obligation 1) Recognised purposes

i) Monuments, tombs and graves
 Re Hooper [1932] £1000 to provide "so far as they can legally do so and for as long as may be practicable for:
 A grave, a monument, and upkeep of a vault.
 Mussett v Bingle [1876] £300 for the erection of a monument and £200 for its maintenance.
 The first part valid, the second one void as it was not limited for a specific duration - statutorily limits to 99 years.
 Must not be capricious e.g. McCaig v University of
Glasgow (1907)
 Money left by testator to build a statute of himself and towers in his memory in prominent places.
 McCaig's Trustees v Kirk-Session (1915) 11 bronze statutes each costing not less than £1000 to be erected in Scotland in the memory of the members of his family. Stuck out.
 NB in Endacott a trust for a memorial was deemed not to fall within the exception of monuments.
o ii) The Upkeep of Individual animals
 Re Dean (1889)
 Fund for maintenance of horses and hounds for 50 years if any of them shall live so long - Valid trust
 Pettingall v Pettingall (1842)
 £50 was left to be used to maintain a black mare after the testator's death - Valid trust
 Note - gifts for individual animals cannot be charitable,
hence they can only take effect as a purpose trust.
o iii) The Saying of Private masses
 Re Hetherington [1989]
 Masses in public are charitable, in private -
cannot be charitable, but may take effect as a valid purpose trust
 Bourne v Keane [1919] AC 815
 Upheld private masses as a valid trust

iv) Fox hunting (not likely since 2004)
 Re Thompson [1934]
 Now probably would not be followed due to the
Fox Hunting Act 2004 2) Limited in Perpetuity

Rule against inalienability

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