Beneficiaries And The Beneficiary PrincipleTable of ContentsBeneficiary Rights1Beneficiary Principle2General Application3Trusts of imperfect obligations3Care of animals4Maintenance of specific graves and monuments4Saying masses for the dead.4Capriciousness4Trusts Benefitting an identifiable class of persons.4Distinction. Person vs Purpose?4Purpose v Motive5Unincorporated Associations6What6Law6Dissolution7Bona Vacantia7Proportions8

General rule that there should always be a beneficiary capable of enforcing the trust. Morice v Bishop of Durham. there must be someone in whose favour the court can order performance Lord Evershed MR a trust must have ascertained or ascertainable beneficiariesBeneficiary RightsMorice v Durham doesnt explain what the beneficiarys rights are. This is to be found in Suanders v Vautier. Effectively means that each beneficiary has an equitable proprietary right in the trust property. But Rights in personam (aka like a debt) Trustees personally liable for the trust: Target Holdings v Fedferns. Lord Eldon. Earl of oxford. The courts of erquity correct mens consciences for breach of trusts Rights in rem (proprietary) HOWEVER, as LBW in Westdeutsche makes it clear, the beneficiaries rights are not limited to personal claims against the trustee themselves. Also extends to assertable rights over traceable substitutes for the trust propert, unless the purchaser is equitys darling. Saunders v Vautier.

Saunders v Vautier. The beneficiaries, together and sui juris, can compel the trustees to dispose of the property how they see fit. I.e. On the facts, the beneficiary could require the trustees to transfer the trust property to him, notwithstanding he had not reached the requisite 25 years of age tha thte settlor had stipulated. Has been described per Mummery LJ in Goulding v James as being the right to overbear and defeat settlors intentions. Megarry in Re Holt. An outright gift cannto be fettered by prescribing a mode of enjoyment: Re Nelson. Where allt eh equitable interest is settle for the benefit of a group of beneficiaries solely, this is tantamount to transferring title outright to them by measn of an assiagnment. Gosling v Gosling per Page Wood. Effectively means that the law recognizes that the ultimate title is vested in the beneficiary. Beneficiary can also withdraw his divisible share in the whole of the trust fund as long as the property was capable of such division. Stephenson v Barclays Bank. Applied strictly Lloyds Bank v Ducker couldnt withdraw his share as it would rob the others of a majority shareholding in a private company. Contrary to American approach, as evidence by Claflin v Claflin Supreme Court of Massachusetts.

In relation to discretionary trusts.Emerges from Romer J in Re Smith if the trust The beneficiaries can collectively claim their Saunders right to compel the trustees to act as they see fit. Aka. NOT When there are potential future members (e.g. trust for the settlors children when settlor was still alive Re Trafford per Peter Gibson.) No duty to exhaust. how could the beneficiaries claim the whole if trustees may give it to others. Federal Court of Australia: Richstar Enterprises Pty Ltd v Carey. (No 6).

However, they do not individually have a right to the property. Gartside v IRC per Lords Reid and Wilberforce. UNTIL power has been excercised in their favour. Their rights are competitive.

Fiduciary Mere PowersRe Brooks Settlement trust. Only have a hope, or spes, that the property will be transferred to them

The rights they have are Gulbenkian and Schmidt v Rosewood Trust. 1. To the property when and if given to them2. Right to have the power properly exercised.

Beneficiary PrincipleRationales1. Without beneficiaries there is no owner2. The trust cannot be enforced by the courta. Harman J in Re Wood. b. Morice v Bishop of Durham. There must be somebody in whose favour the court can order performance. Lrod Grant MR. 3. The trust will violate the rule against perpetuity. Viscount Simmonds. They tend to perpetuity in Leahy.

Note change from Leahy, whereby the courts were more ready to strike down trusts as being void for falling foul of the beneficiary principle, to Denley where a more indulgent court attitude is willing to find that a group of people can sensibly enforce the trust.

The fuck is perpetuity?Magic gravel pit case: Re Wood. Trust for the purpose of working gravel pits was struck down on the basis that it tended to perpetuity. Clearly illogical because at some time the gravel pit would run out. No desire to keep money out of the economy, tied down in abstract purposes.

Have a specific perpetuity period within the Perpetuities and Accumulations Act. Normally there are two options1. A fixed period of 80 years (s1)2. A life in being plus 21 years.

If they dont, then before 1964, they would have been void. After s3(3) of the Act, the law treats such trusts as being valid as until or when they transgress the relevant limitation period.

If it goes over, then s4(4) comes into operation. It prevents future beneficiraies from becoming entitled to the fiund. Then winds down the trust and distributes it amongst the beneficiaries so currently entitled.

Usually, you can simply say this trust shall continue in full force and effect as far as the law allows re Hooper. That way the perp. Is read into the trust. General Application

Re Astors Settlement Trusts the trust was invalidated as it fell foul of the rule. With respect to a trust for Maintenance of good understanding between nations Preservation of independence and integrity of newspapers Protection of newspapers from becoming absorbed by combines

Held not to be charitable purposes. Roxburgh then held that it was void due to the following1. Violation of principle2. Purposes were uncertain

Examined Harman J in Re Wood gift on trust must have a cestui qui trust

Re Shaw. George Bernard Shaw couldnt leave his estate to be put towards research into a 40 letter alphabet and transliterate his plays into such a language. Fell foul of the principle.

Re Endacott. Gift to a Parish Council to erect a suitable memorial. Failed.

Remember that if a gross sum be given and a special purpose be assigned to this gift the court regards the gift as absolute and the purpose as merely the motive for the gift Re Sanderson Re Bowes the grant of 5000 pounds to spend planting trees on the deceaseds estate was held to amount to a trust for the estate owners absolutely with the motive of spending on trees. But they were free to spend it how they wished. Confirmed by the rule in Saunders v Vautier.

Trusts of imperfect obligationsRoxburgh in Astor Anomalous and exceptional. In Endacott Harman LJ ought not be increased and only be followed in cases where the one is exactly like the otherMust not be capricious or pointlessMust not violate the rule against perpetuities Valid unenforceable trusts (trusts of imperfect obligation) Trustee cannot be compelled by the court to carry out the trust Court can simply intervene in cases of maladministration

Care of animalsA trust for animals generally will held to be charitable

However, a trust for a specific animal can be a valid unenforceable trust as long as it doesnt violate the period for perpetuity. Pettingall v Pettingall favorite black mare. Maintenance of specific graves and monumentsPirbirght v Salwey gift of 800 pounds for the upkeep of the burial enclosure of a child in a churchyard for as long as the law permitted was held to be valid until 21 years after the testators death. (i.e.subject to rule against inalienability and restricted to perpetuity period)

Musset v Bingle Provided sum for erection of moneument and a sum for its upkeep. The latter was held void for violation of rule against perpetutities.

However, must be a precise monument. Not simple a some useful memorial Re Endacott.

Saying masses for the dead. Re Hetherington Held that the saying of masses in public can be a charitable activity for the enhancement of religion.

However, if said in private it seems as though it would give rise to a trust of imperfect obligation: Bourne v Keane. And may extend to other rites: Re Khoo Cheng Teow. CapriciousnessBrown v Burdett a trust to block up all rooms of a house for 21 years was held to be void. Scotland has been more ready to set aside blatantly pointless trusts Erection of artistic towers round estate MCaig v University of Glasgow. Erection of bronze statutes of testatrix and her children MCaig v United Free Church of Lismore

Trusts Benefitting an identifiable class of persons. Distinction. Person vs Purpose?What are trusts for persons vs trusts for purpose? The judicial approach has shifted. Leahy. Simmonds. A trust could not be made for the benefit of an order of Nuns as it was a purpose trus Trust did not name individual nuns. Couldnt be construed as a series of gifts to specific Carmelite nuns. Would tend to perpetuity as a trust for the furtherance of Carmelite nuns would necessarily have to include later converts. The thousands of Carmelite nuns worldwide could not be said to be benefitted through the dozen that would directly benefit as alleged beneficiaries of the trust. To be contrasted with Cocks v Manners. Trust for nuns was held as valid as the Mother Superior was clearly identified as a beneficiary.

Just because a trust has envisages a specific purpose does not render it de facto void as long as there is an ascertainable class of persons who would possess the locus standi to enforce the trust by virtue of their direct or indirect benefit from the trust. (Re Denley). Distinguishing Leahy on the basis that it was an abstract purpose trust and not a trust for the benefit of indefinable persons.

Oliver developed this in Lipinski. Stated that theres a difference between a purpose intended to benefit ascertained/able beneficiaries cases where no beneficiary at all is intended.

Contrast with Viscount Simmonds who would have drawn a distinction between trust for the immediate and direct benefit of individuals taking immediate possession trust for present and future beneficiaries of a class (void)

Real difference attributed to a shift in attitude. Viscount Simmonds was at the height of his career. Oliver (Lipinski) and Goff (Denley) just started out.

BUTConstruction is still very important. Re Grants Will Trusts. Made a bequest of his estate to the Labour Party to be held on trust for the benefit of a smaller Labour party in his constituency. Failed because Smaller constituency did not control the property given to the Labour Party, unlike the class in Lipinski. Clearly a gift to trustees (the LPC), and not to an unincorporated organization. However, it is difficult to see why it could not have been seen as being a bequest for the benefit of individual members with a super-added direction that it be used for the purposes of the local labour party. Vinelott sinply was not supportive of the Denley approach.

A way around this approach is to adopt the analysis of Oliver J in Lipinski by structing the disposition of property as an outright transfer rather than a trust. Here he drew a distinction between1. Situations where the purpose is intended for the benefit of ascertained or ascertainable beneficiaries2. No beneficiary is intended at all (i.e. outright transfer)

This is in contrast to the approach in Leahy which distinguishes1. Trusts for the immediate benefit of individuals taking immediate passion of their rights (valid)2. Trusts for the present and future beneficiaries of a class (void)Purpose v MotiveBoth a trust for the benefit of people (e.g. children to study for A levels) with the obligation of a particular purpose (build a library).

Re Bowes. Trust for the purpose of planting trees on the settlors Estate. This would fall foul of beneficiary principle BUT Only two beneficiaries To whom the trustees had to transfer the funds outright Therefore, under Saunders v Vautier, they could exercise the trust. Trust was upheld, but not the purpose.

Part of if a gross sum be given and a special purpose be assigned to this gift the court regards the gift as absolute and the purpose as merely the motive for the gift Re Sanderson Re Osoba. Unincorporated AssociationsWhatConservative and Unionist Central Office v Burrell1. Two or more persons2. Bound together for common non-business purposes3. Mutual rights and duties arising from a contract between them4. In an organization with rules to determine who controls it5. Which members must be able to join or leave at will

Cannot speak of property being owned by such a society, or on their behalf. This creates difficult problems for trusts. They cannot claim that they own the money bequeathed to them since they: have no separate legal existence.

LawHow to get around as per Lawrence Collins J in Re Horley Town FC. 1. Outright gift to present membersa. Oliver J in Lipinksi. This was possible because the transfer granted the transferee complete control over the use of capital and the members were ascertainable. Outright transfer. b. Whether a gift was treated as a purpose trust or an absolute gift to an unincorporated non-charitable body with a superadded direction, the gift was valid if the beneficiaries were ascertainablec. Not always possible though. Grants WT. gift to LPC as trustees, not to the relevant Labour Party of the Chertsey and Walton Constituency. 2. Trust for present membersa. A valid people trust. Re Denley. b. Collectively the people can exercise their collective saunders right. Simple, no problem! Accepted in Re GrantsWT. c. The restriction to present members removes the perpetuities problem. d. Good because it means that the usual remedies for breach of trust would apply. 3. Endowment capital (trust for present and future members)a. As long as there is a clear perpetuities provision indicating at which point the future members cease to be entitled to the trust property, this should be fine AND clearly for the members themselves. b. BUT it does run the risk of being simply construed as a trust for the furtherance of the purpose of the society, as voided by Leahy. c. How could it be interpretedi. Trust for people capable of interpretation as lasting for a maximum perpetuity period (either ewithin the provision or statutory)ii. Trust for people that offends the rule against the remoteness of vesting. iii. Trust for the purposes of the association. NO NO NO. 4. Transfer to members as an accretion to the clubs capitala. Brightman J in Re Rechers WT. He treated the legacy to the association as being a legacy to the members as an accretion to the funds subject to the contract they had made inter se. BUT explicitly transfer purported to so be. b. Essentially renders the transfer governable by contract law (the constitution binding the society) and not trust law. Held by the associations officers on the terms of the associations constitution as the agents of the associations membership (NOT as trustees) c. Universe Tankships of Monrovia v ITWF. Accepted this analysis, concluding that payments made under duress to trade unions as per Lawrence Collins in Artistic Upholsteries. 5. Transfer subject to a mandatea. Cross J in Neville Estates v Madden. Brightman in Burellb. Treasurer is simply an agent of the donor under contract law principles. Controlled by fiduciary duties, not the constitution, as above. c. Involves a contractual instruction which renders the instructee compelled to act in accordance with its terms as an agent of the instructor. This means that there are fiduciary duties which is great because it means that the transferor retains control of the money. d. Not open to objection on the score of perpetuity unless there is something within the terms or cirucmstances of the rules of the association that preclude the member at any given time from dividing the subejcct of the gift inter se. 6. Trust for an abstract purposea. NO YOURE FUCKEDb. Re Grants WTc. Leahy v AG of NSW. Nuns only entitled to the settlors donation as statute allowed them to. 7. Trust for a Charitable purpose Dissolution

Difficult as arguments in favour of 1. Property passing to Crown as bona vacantia when no one can establish title (I.e. to the Duchy of Cornwall, who pays the income to the Prince of Wales)2. Reverting back to external donors under resulting trust. Bona VacantiaGoff J in Re West Sussex Constabularys Benevolent Fund1. Contributions of members past and presenta. Passed to crown as the dead members had already reaped the benefits of their contractual association with the club, or, simply didnt have any relatives who could benefit b. Held on resulting trust for the donors estate. 2. Anonymous contributions to collecting boxesa. Presumed intention that donors wouldnt want money backb. Outright gift. 3. Contributionsa. Presumed intention. Distributed according to the rules of the association. b. Also contractual terms. You pay you get what you paid for. Extinct contractual liability. c. Passed to the crown. 4. Raffles and entertainmenta. Interaction was based on contract, and not on trusts. They had already received the contractual performance for which they provided consideration.

In circumstances where the contract provides for the division of assets, this is a purely contractual matter and does not hinge on the invoking of equitable doctrines: Re Bucks as per Walton J (no 2), as followed per Lawrence Collins in Upholstery Ltd. The membership of the association voluntarily subjugates its poroperty rights to the terms of the associations constitution.

Re Bucks Constabulary Widows and Orphans Fund Friendly Society. Stated that upon dissolution its assets are held on trust for such members to the total exclusion of any claim on behalf of the Crown. Can be reconciled with Re West on the grounds that this case concerned an unincorporated body governed by the Friendly Societies Act 1896. BUT. View expounds the wider approach that the contract-holding approach applies irrespective of pre or prior dissolution and irrespective of the nature of society. Very clearly a rejection of the resulting trust approach. Only ever goes to crown when the society becomes moribund. However, this was not applied in Hanchett-Stamford v Attorney General. Lewison J saw no basis for restricting principle that members are beneficially entitled to the societys assets subject to the contract to cases where there are two or more members. Also held that it would be an infringement of Human Rights to deprive her of funds. Assets didnt go to Crown. Absolutely vested in her free from any of the societys rules.

BUT: Davis v Richard and Wallington Industries Ltd Scott J. Resulting trust would be implied in favour of the funds unless it is absolutely clear that a resulting trust was to be excluded. :S WAAAAAAAAAA. Pension fund. Inland Revenue rules deal with member entitlement to surplus Seems to have considered that the only possibility with regard to surplus was a resulting trust or to the Crown. Omitted the vital contractual entitlement to surplus. Also, pensions fund isnt analogous to an Unincorporated association. Members do not sole control of scheme and cannot decide to wind it up themselves. Air Jamaice v Charlton. PC doubt. ProportionsClear that the funds will be divided equally amongst members at date of dissolution. No question of equity varying the proportions as it clearly was a question of entitlement at law by virtue of the core contractual heart of the society. Re Bucks.

Re Sick and Funeral Society. Surplus distributed in proportion to contributions. Megarry. Some members paid full rate some members paid half. Illustrates the difficult of trust law in that it is at odds with human understanding of possession. Whilst the members see their ownership as attaching to specific items, the law sees it as relating to amount of value in communal property and rights against individuals members.

GKN Blots and Nuts. Megarry VCbroad sword and regard to common sense therefore allowed the distribution of the proceeds of the sale of the sports grounds equally amongst the full members who had the right to vote in the winding up of the association. only Re Horley three levels of members. Those temporary members. Associate members. And full members. Although full and associate memebrs could vote, only full members were beficially absolutely entitled to property on their winding up. This was because they had no effective rights some members were introduced (amending the Rules in the process) simply to conform with Licensing laws. Therefore held that the assets of the club were not to be partionned among these additional members but as a bare trust for full members. Lawrence J.

Lastly, submitted that equity should not interfere with a resulting trust. Simpler to treat equity as requiring the parties to carry out contractual duties (i.e. give preference to the constitution). Walsh v Lonsdale. Equity treats as done what ought have been done Westdeutsche. Imposition of constructive trust where the legal title holders conscience is so affected. That way, the issue of resulting trust does not arise. The transferor loses title in the property as original owner and acquires property right only under contract. Far simpler.