“ Despite the being of the general regulation which seems to forbid purpose trusts in the non-charitable context, there are, it seems, certain state of affairss in which the non-charitable intent trusts have been upheld in English jurisprudence. ”
James Brown ( 2007 ) Conv 148,149
Critically analyse the jurisprudential footing for such trusts.
A trust is a set of duties placed in a individual described as a legal guardian. The duties relate to belongings that is transferred to and held by that legal guardian, or is under his control ; and he is required to administrate it in the mode prescribed by the trust instrument [ 1 ] . The legal guardian may be required to cover with the belongings for the benefit of another individual or group of individuals, which may include himself [ 2 ] .
English jurisprudence requires that for a valid trust to be, there must be three ‘certainties’ nowadays. These include:
- certainty of words, or footings, of the trust ;
- certainty of the capable affair, or belongings that is capable of the trust ; and
- certainty of objects, or individuals, for which the trust is to profit. Therefore in Morice V Bishop of Durham ( 1805 ) [ 3 ] , a trust made for “such objects of benevolence and liberalness as the Bishop of Durham in his ain discretion shall most O.K. of” was held to be null, on the footing that such “uncontrollable power of temperament would be ownership and non trust” .
On occasions, a giver may purport to make a trust in which he wishes his belongings to be used for intents that do non profit identifiable persons. Alternatively he may desire it to profit, for illustration, a cause, such as the care of a local school. Such a trust is referred to as a ‘purpose trust’ . This mechanism, instead than donating the belongings as an straight-out gift, allows him to retain control over how the money is put to utilize ; endowing the money with a mere look of desire over its concluding employment would non be adhering. Leting such a gift is in maintaining with the rule of freedom of testate, which denotes that a testate should be able to freely give his belongings to whoever or whatever he wishes. He may wish, for illustration, to donate his money for the promotion of a peculiar intent that he has strongly supported during his life-time.
But such a trust presents some conceptual troubles. The very nature of a trust is that of a relationship between individuals, based on the duties of the legal guardian and the corresponding right of the donees. Where the legal guardian fails to move in conformity with the footings of the trust, the beneficiary must be capable of taking stairss against the legal guardian, so as to implement the trust: a legal guardian “would non be expected to be capable to an just duty unless there was person who could implement a correlate just right” [ 4 ] . Where the trust is for the benefit of a intent, it is possible that no individual can lawfully be said to hold the right to implement the trust in tribunal. In order to continue the being of this necessary relationship between legal guardian and donee, the jurisprudence has hence restricted the usage of purpose trusts.
English jurisprudence by and large has merely upheld intent trusts where the intent is ‘charitable’ and where a trust is charitable, the power of enforcement that the donee would hold is normally vested in the Attorney General. Where a purpose trust does non hold charitable position, it will normally neglect. In Leahy v A-G for New South Wales ( 1959 ) [ 5 ] , Viscount Simonds explains that “a trust may be created for the benefit of individuals as cestuis que trust but non for a intent or object unless the intent or object be charitable. For a intent or object can non action but if it be charitable, the Attorney General can action to implement it” . So for illustration, in the instance Re Shaw ( 1957 ) [ 6 ] refering the will of George Bernard Shaw, this contained a proviso to develop a new 40 missive alphabet. This ‘purpose’ was struck down as non being charitable, as defined by jurisprudence, and the proviso hence failed as a non-charitable intent trust.
Where the trust is non charitable, per Roxburgh J in Re Astor’s, the Court has found that “it is hard to visualize the growing of just duties which cipher can enforce” . The purpose trust that the giver in Re Astors had purported to make was for, inter alia, the care of good apprehension between states and the saving of the independency and unity of the newspapers [ 7 ] . If this intent were non to be upheld by the legal guardian, it would be impossible to place who could truly come to tribunal and implement the trust. The Courts have refused to formalize non-purpose trusts in about all instances hence, because “the benefit ( of the trust ) is so indirect or intangible or which is otherwise so framed as non to give these individuals any venue standi to use to the tribunal to implement the trust” and in such instances, “the beneficiary rule would annul the trust rather apart from any issue of uncertainness or sempiternity [ 8 ] ” .
Similarly, the tribunals have found that “it is non possible to contemplate with composure the creative activity of big financess devoted to non-charitable intents which no tribunal and no section of province can command, or in the instance of maladministration reform” . In other words, where the gift is a big amount of money, the Court could non imagine it being left to the control of a legal guardian to transport out a general, non-charitable, intent, where no authorization could truly step in and step in where it would look the intent was non being decently furthered. Indeed, it is hard in such a state of affairs to place whom should really supervise whether or non the intent is being achieved.
On occasions the Courts have appeared to demo some flexibleness through reading of the trust: for illustration, in Re Denley ‘s Trust Deed [ 9 ] the Court recognised that a trust could hold an object phrased as a intent, every bit long as an identifiable category of individuals benefited from it, straight or indirectly. In Re Lipinski’s Wills Trusts ( 1976 ) [ 10 ] , a trust for the hard-on of edifices for the Hull Judeans ( Maccabi ) Association was expressed as a purpose trust but was for the benefit of discoverable persons, i.e. the members of the nine, so the trust was held to be valid. This position might salvage trusts where, for illustration, there is some confusion as to whether a trust for individuals or trust for intents has been created, such as a trust for the intent of educating someone’s kids or trust for the intent of keeping two old ladies during their life-time [ 11 ] . The Court has been willing to happen a trust that primie facie appears to be for the benefit of a non-charitable intent would be valid if it was in world a trust for the benefit of individuals – individuals that could implement the trust in tribunal. This determination has been accepted and followed elsewhere in the universe [ 12 ] . Regardless of this, nevertheless, the Court has acknowledged that, even if the donees are certain, for the trust to be valid it must be “in its nature a trust which the tribunal can control” [ 13 ] , and such control includes being about to construe the intent of the testate clearly [ 14 ] .
The Courts have, under really limited fortunes, made exclusions to the regulation and allowed non-charitable purpose trusts without, in their position, damaging the proposition that non-charitable purpose trusts should non be permitted [ 15 ] . Such exclusions were referred to in Re Endacott ( 1960 ) Ch 232 [ 16 ] as “perhaps simply occasions when Homer has nodded” and “stand by themselves and ought non to be increased in figure, nor so followed, except where one is precisely like the other” . The first two exclusions, sing the edifice or care of graves and memorials, and the care of pets, have been described as “concessions to human failing or sentiment” [ 17 ] . In Re Hooper ( 1932 ) 1 Ch 38 a trust for the care of Gravess was upheld. Such a trust would be valid provided that it besides complied with other trust demands, such as that of certainty. Consequently, in Re Endacott ( 1960 ) Ch 232, a purported trust for “the intent of supplying some utile memorial to myself” was struck down. The Court in Pettinghall V Pettingall ( 1842 ) 11 LJ Ch 176 upheld a purpose trust for the attention of a specific animate being ; and likewise, in Re Dean ( 1889 ) 41 Ch D 552, the Court upheld a trust for care of Equus caballuss and hounds for 50 old ages, mentioning to Mitford V Reynolds ( 1848 ) 16 Sim 105.
The Courts have on occasions upheld purpose trusts that do non associate to the edifice or care of memorials or care of animate beings. For illustration, in Re Thompson ( 1934 ) 342, the testate made a gift to Trinity Hall in Cambridge for the “promotion and promotion of fox hunting” , and this was upheld. However, the instances affecting exclusions have been described as “troublesome, anomalous and aberrant” by the Courts, and the construct of widening them has been frowned upon [ 18 ] . This is possibly because the objects of purpose trusts have, over the old ages, go more combative [ 19 ] , more abstract [ 20 ] and more bizarre [ 21 ] , and in response, the bench has become more doubting about broadening the classs of non charitable purpose trusts that will be permitted.
This attack is non wholly consistent with other countries of trust jurisprudence. For illustration, a discretional trust will go forth belongings to a legal guardian with the power to administer it between a figure of identifiable donees as he sees fit. The existent receiver of the money is hence non decided but the fact that there is a deficiency of certainty of objects ( because there is a category or group of objects ) does non do the trust to be null. In McPhail V Doulton, the footings of the discretional trust were that the “trustees shall use the net income of the fund in doing at their absolute discretion grants to or for the benefit of any of the officers and employees or ex-officers or ex-employees of the company or to any relations or dependents of any such individuals in such sums at such times and on such conditions ( if any ) as they think fit.” Prior to this determination, the jurisprudence was that it must be possible to pull up a list of the donees for a discretional trust to be valid [ 22 ] . In McPhail, this trial was abandoned in favor of a new trial of certainty phrased by Lord Wilberforce at 454 as: “Can it be said with certainty that any given person is or is non a member of the class” . Such an attack if applied to aim trusts could intend that far more non-charitable intent trusts were valid.
Where purpose trusts might fulfill the demands of an object, they could in any instance be struck down on other evidences. If the legal guardians had to continue the trust belongings intact for a length of clip greater than a lawfully defined period known as the ‘perpetuity period’ [ 23 ] , the trust would besides be null.
Similarly, the Court may declare the trust unenforceable for deficiency of certainty. In Morice V Bishop of Durham ( 1804 ) 9 Ves Jr 399 and Re Astor ( 1952 ) Ch 534 re-affirm the tribunal ‘s disinclination to implement trusts that are non specific and elaborate. The Court in Re Astor [ 24 ] stated that, where there is an numbering of intents outside the kingdom of charities, they must be stated in phrases that embody definite constructs ; and likewise, the agencies by which the legal guardians should achieve them must be prescribed with a sufficient grade of certainty.
McPhail V Doulton [ 25 ] has thrown some uncertainty on the logical thinking behind the Court’s involuntariness to declare non-charitable purpose trusts valid. The Court in McPhail v Doulton recognises its legal power to put to death a trust more flexibly if called upon to make so. The effect of McPhail v Doulton was that the ‘effecting of a settlor’s intention’ was elevated over ‘the demands of rigorous enforceability’ It has been argued that such a penchant could be applied to the beneficiary rule [ 26 ] . If the purpose of the Settlor is more of import than proficient building, so clearly the Court will be able to place that the Settlor could non hold intended the effects of his purpose trust neglecting – i.e. that ( a ) the belongings would go through as a gift to the legal guardian, or ( B ) the belongings would bounce to the Settlor by manner of ensuing trust and autumn into his residuary estate ( in either instance go throughing to whoever should be entitled under the Will, and decidedly non to his chosen purpose ) .
This idealistic attack does non work out one job: who should implement the trust in the event of failure? Lord Wilberforce in McPhail felt that the issue of Court intercession in such instances was more of a theoretical one, since there were no illustrations of a legal guardian declining to move in conformity with a discretional trust. In any event, nevertheless, he felt that since the tribunal had powers to take and replace legal guardians.
However, as we have identified, the job with purpose trusts is there may be cipher with a positive involvement in the trust being enforced. In fact, there may be several individuals with an involvement in itnonbeing enforced. For illustration, if the intent trust is created to keep a grave for a period of clip, there will be people with a positive involvement in the trust neglecting as they will acquire more money in the terminal [ 27 ] . Some legal powers [ 28 ] have dealt with this job by necessitating, by legislative act, a positive hatchet man of the trust. Moffat cites the Bermudan Trusts ( Particular Provisions ) Act 1989 US Secret Service 12-16 which permits intent trusts for up to 100 old ages but requires the colonist to supply for assignment of an hatchet man and replacements [ 29 ] .
The Bermudan attack besides takes into history policy considerations that Courts may hold, in annuling trusts that are created for useless intents ( such as that in Brown V Burdett ( 1882 ) 21 Ch D 667 [ 30 ] which required that the suites of a house would be sealed up for 20 old ages ) . The Bermudan legislative act requires that purpose trusts should be sensible, non immoral, contrary to public policy or improper [ 31 ] .
But should the bizarre testate be limited in his pick of what to make with his money? Arguably, a testate should hold the freedom to take what happens to his money, the Court should non hold the authorization to oppugn his determination even if the petition serves “no utile intent except the caprice of the testatrix” [ 32 ] . Indeed, the Court does non do such judgements where the testate decides to donate his money to relations who are “lazy, rich, thankless, barbarous, and convicted of condemnable offenses, including murder” [ 33 ] . On the other manus, there has to be at least some bounds to what a individual can make with his money – for illustration, fostering illegal or immoral intents ought non to be allowed. As Wilkie points out, the job with leting non-charitable purpose trusts is that determinations on what is ‘desirable’ involves hard value opinions for the Court [ 34 ] , and even the Bermudan attack does non work out this.
It is clear that the jurisprudence associating to non-charitable purpose trusts is complex and slightly unlogical. Our legal system encourages freedom of temperament and yet merely recognises the creative activity of a valid trust where the intent is a charity. Yet belongings may be left in trust for a worthy cause that meets some, if non all, of the demands identified in the Pemsel Case, i.e. “the alleviation of poorness, the promotion of instruction, the promotion of faith, and other intents good to the community” [ 35 ] . Many of the instances we have examined have really similar aims behind the trusts they concern yet those trusts have non been recognised by the Court. If such trusts are routinely held to be null, many worthy causes will lose out, straight against the purpose of the testate. Indeed, charitable trusts, besides known as public trusts because they are considered to be of value and importance to the community, enjoy particular regulations which exempt them from many of the demands of non-charitable purpose trusts: for illustration, a charitable trust will non neglect for uncertainness of objects ( even if the intent is every bit obscure as ‘such charitable intents as the legal guardians shall select’ ) . Neither are charitable trusts subject to the regulation against ageless trusts so they can go on indefinitely [ 36 ] . But many non-charitable intent trusts are made for worthy causes but will however neglect because of ‘the demands of rigorous enforceability’ . There are many not-for-profit administrations viing for contributions that are cause-oriented, directed towards societal and legal alteration, which lie outside the legal construct of charity [ 37 ] . The testate should hold the ability to go forth money to those causes without losing control of how it is used.
Our research has show that the Courts have made exclusions in the yesteryear, and that there are other countries of jurisprudence such as the jurisprudence of discretional trusts which cast uncertainty on he grounds for denying purpose trusts. The attack of recognizing lone trusts with objects is both rough and inflexible. The exclusions made by the Courts where a intent can be tied to indirect but however discernible objects are welcome.
- Dash, J A, Liburd, H W, & A ; McDowall, K A ( 2003 ) Trusts Other Than Trusts: Purpose Trust Legislation in Bermuda, the British Virgin Islands and Nevis
- Hayton, D J ( 2001 ) The Law of Trusts and Equitable Redresss ( 11ThursdayEdition ) Sweet & A ; Maxwell, London
- Kodilinye, G & A ; Carmichael, T A ( 2002 ) Commonwealth Caribbean Trusts Law ( 2nd Edition ) Routledge Cavendish
- Law Reform Commission of British Columbia, Working Paper 66: Non Charitable Purpose Trusts ( Chapter 3 )
- Moffat, G ( 2002 ) Trust Law: Text and Materials ( 3rdEdition ) Butterworths LexisNexis, London
- Mowbray, W J ( 1964 ) Lewin on Trusts ( 16ThursdayEdition ) Sweet & A ; Maxwell, London
- Lords, R & A ; Schiff, D ( 2007 ) The Emperor ‘s New Clothes, Modern Law Review 70 ( 1 ) , pp139–160
- Waters, D et Al ( 1984 ) Law of Trusts in Canada ( 2neodymiumEdition ) Carswell, Toronto
- Wilkie, M, Malcolm, R & A ; Luxton, P ( 2004-2005 ) Equity and Trusts ( 4ThursdayEdition ) Oxford University Press, Oxford
Bowman v Secular Society Ltd ( 1917 ) AC 406
Brown V Burdett ( 1882 ) 21 Ch D 667
Keewatin Tribal Council Inc. v. City of Thompson and Provincial Municipal Assessor, ( 1989 ) 5 W.W.R. 202 ( Man. Q.B )
Leahy v A-G for New South Wales ( 1959 ) AC 457
McPhail V Doulton ( 1971 ) AC 424
Morice V Bishop of Durham ( 1805 ) 10 Ves 522
Pemsel CAse ( 1891 ) AC 531 HL
Re Abbott Fund Trusts 1900 2 Ch 326
Re Astor ( 1952 ) Ch 534
Re Astor’s Settlement Trusts ( 1952 ) Ch 534
Re Denley ‘s Trust Deed ( 1969 ) 1 Ch 373 at 387
Re Endacott ( 1960 ) Ch 232
Re Gestetner Settlement ( 1953 ) Ch 672
Re Hooper ( 1932 ) 1 Ch. 38.
Re Lipinski ‘s Will Trusts ( 1976 ) Ch 235
Re Shaw ( 1957 ) 1 WLR 579