More broadly in Re DENLEY the beneficiary principle is confined to trusts which are abstract or impersonal, where the objection is not that there is a purpose. Persons who directly or indirectly benefit have locus standi to sue to enforce the trust, even though they are not beneficiaries in the sense of being equitable owners.
However there needs to be equal certainty of the persons able to enforce as for a trust for those persons and must be a device through appointment in the trust document of an enforcer or protector.
If the trust involves holding capital it must comply with the perpetuity rule will be void if it last longer than the perpetuity period An expressed limitation to ‘so long as the law will allow’ will validate the trust.
The trust to extension of the building will be valid if it is through expenditure of capital. But trusts to maintain from income or to benefit persons must be limited to the perpetuity period.
The purpose must not encourage illegality or else it will fail on grounds public policy and the courts may also hold invalid a purpose that is considered useless or capricious.
The hurdles which purpose trust generally must overcome are removed for charitable trusts. These are perfectly valid as they encourage the provision of matters of public benefit from private funds. The beneficiary principle is fulfilled as the public as a whole are the beneficiaries and the Attorney-General, or the Charity Commissioners, on behalf of the public can bring action to enforce. The rule against perpetuity does not apply as there is no harm perceived in having capital tied up indefinitely for charitable purposes. The charities can therefore hold a permanent endowment.
There is no need for the exact definition of the purpose as courts will give a ‘benignant construction’ to give effect to a paramount charitable intention and can direct a scheme to give effect to this where the trust itself is ambiguous.
The following applies both to the existence of purpose and to the impossibility of purpose; where the purpose cannot be carried out from the beginning or it is clear from the beginning that there will be a surplus. CY-PRES (the next nearest scheme) will apply if there is a general charitable intention (GCI), however if there is no such intention there will be a resulting trust.
Where a gift is to a charitable UA or fund that has ceased to exist if the purpose has failed, and the intention to give to this organisation alone, a resulting trust applies. If the purposes were GCI then the CYPRES application for those purposes will ensue.
An unincorporated association (UA) does not have legal personality so the gift is given to UA members, who have proprietary rights in the assets of the association. But there is no right to demand an individual share and no right that can be assigned. Rights will therefore be lost upon leaving the association and by joining, new members will gain rights. But existing members can decide to divide up the assets because there is a combination of contract and trust. But although the members are beneficial owners they are contractually bound to leave assets in the association for the associations purposes, unless they agree to vary this.
A gift is given to the association or on trust for present members beneficially as joint tenants, so that each member can sever his share. A will is not possible if the rules or terms of the gift prevent a member taking out his share primarily because such an intention is unlikely.
A trust for purposes of association is a more probable intention but is still faced with the normal problems of purpose trusts. The rule against alienability applies as does the beneficiary principle.
The decision in LIPINSKI held that a decision which would make most gifts to association invalid will be valid if the purpose is for the benefit of its members. Express gift to trustee may indicate a purpose trust as a may a gift to an association that is not free to alter the rules.
Because the club dissolved there will no longer be any members, the fund can therefore be distributed in three ways;
The fund is normally distributed to members equally, irrespective of length of membership. This is because they are beneficial owners and the division will not be based on contribution. However as was seen in DENLEY…if the intention was mainly for the purpose and the fund was either unspent or the surplus is of a large amount a resulting trust may be more appropriate. Thus the money will return to the contributor/s.
If the UA was charitable a resulting trust may be unfair, as the contributors or donators may have already benefited (albeit non- financial)and it may be impossible to find the donors. In WEST SUSSEXthe decision opposed of the contractual distribution as there would be nobody to regulate how the distribution would be spent. The members could alter the contract to permit uses which were not for the purpose of the UA. A failure to trace the owner renders the fund ownerless and it goes to the crown.
When a person lends money to another they are a creditor and the borrower is the debtor. The debtors liability to pay back a loan is contractual, any breach of terms =liability with no additional proof needed. Where a trustee is bankrupt the beneficiary takes the position of secured creditor because he has retained equitable property, which will be protected from claims from general creditor. Where a bank holds money on trust for another, the beneficiary is able to claim back the entire sum.
Morice v Bishop of Durham (1804) 9 Ves 399
,
Re Astor’s ST [1952] Ch 534
. Endacott.
mitford v REYNOLDS and REHOOPER
Following the decision in rethompson
Re Thompson [1934] Ch D 342
Lord Goff in Re DENLEY, Re Lipinski’s WT [1976] Ch 235,
R v District Auditor, ex p West Yorks MCC (1986) 26 RVR 24
SAUNDER V VAUTIER (the length of specified lives plus 21years or, if no lives are specified, simply 21 years).
MACAULAY V ODONNELL
REDENLEY
Brown v Burdett (1882) 21 Ch D 667
The strong presumption is that if a particular institution is named, the gift is for that institution alone it is much less common for a wider intention to be found. .
Where the charity initially takes effect but subsequently fails or the terms become unsuitable ‘having regard to the spirit of the gift’, as funds are now dedicated to the charity, they remain in charity (via cy pres) even if there was not a general charitable intention. This includes where for example a charity is wound up after the testators’ death but before the estate is distributed. Or if it is wound up during the continuance of a prior life interest
Conservative and Unionist Central Office v Burrell [1982] 2 All ER 1
CARNE V LONG, Macaulay v ODONNELL, creates no problems regarding validity RECLARKE but it
Re Lipinski’s WT [1976] Ch 235
Neville Estates v Madden [1963] Ch 832
Re Bucks Constabulary Fund [1978] 2 All ER 571
Re West Sussex Constabulary Fund [1971] Ch 1
Neville Estates v Madden [1963] Ch 832 Re Recher’s WT [1972] Ch 526 MAUCAULAY