Purpose Trusts Validity

• Trusts for non-charitable purposes are generally considered void.
• However, purpose trusts have been recognized as valid in certain cases, seen as concessions to human weakness or sentiment per Re Astor's Settlement Trusts [1952]
• The object of a purpose trust is a purpose, lacking a human beneficiary to enforce it.

Reasons for Non-Enforcement

• A trust requires a human beneficiary to be valid, who can enforce the trust.
• According to Grant MR in Morice v Bishop of Durham, someone must be able to seek performance from the court.
• Re Denley's Trust Deed suggests this may not always be followed.
• If a trust with a purpose benefits specific people, it can be valid, even if written as a purpose trust.
• The beneficiary principle is not an issue if the people benefiting can enforce the trust.
• A trust fails if the benefit is too indirect or unenforceable in court.
• Purpose trusts can be valid if individuals have a clear benefit.
• Harman LJ criticized this judgement in Re Endacott, calling it "troublesome, anomalous, and aberrant."

Uncertainty and Lack of Clarity

• Non-charitable purpose trusts must be clear and certain to allow court oversight.

Applications

• Morice v Bishop of Durham
• A gift "for such objects of benevolence and liberality" was deemed too uncertain and unenforceable.
• Grant MR stated that "All trusts must be controlled by the court."
• Complete freedom over trust property without accountability means the person is the owner, not a trustee.
• A trustee has a duty to act for others, not just do whatever they want.
• A "trust" granting total power without oversight is ownership in disguise.
• Re Astor's Settlement Trusts illustrates this principle
• The trust aimed to support non-charitable goals but failed.
• Failed because there were no clear beneficiaries, breaching the beneficiary principle.
• The purposes were too vague to be enforced.

Contrasting Cases

• In Re Thompson:
• A trust to promote fox hunting was allowed due to its clear and specific purpose, even without individual beneficiaries suggesting trusts can be valid if the purpose is certain enough.
• This conflicts with Re Astor's Settlement Trusts.
• A trust may fail if its purpose is clear but lacks identifiable beneficiaries.

Rules Against Perpetuities and Inalienability

• This states that property cannot be tied up indefinitely.
• Purpose trusts must comply with the beneficiary principle and be limited by the perpetuity period to be valid.
• This requires showing that the trust terms do not violate the rule against perpetuities and the property will not be rendered inalienable.
• The perpetuity period is a life or lives in being plus 21 years, or 21 years if there is no life in being.
• Phrases like "so long as the law allows" are regarded as valid for 21 years.

Example

• Re Fossitt's Estate
• A bequest to the ‘Orange institution of Ireland' for the upkeep of the hall was rendered void, as the testator intended the continued existence of the fund.
• This was an indefinite period that exceeded that fixed by law (21 years).

Exceptions When Purpose Trusts Have Been Enforced

• Tombs and Monuments
• S.50 of the Charities Act 1961 allows gifts for tomb/vault/grave/tombstone maintenance as Charitable Gifts if they do not exceed £60/year (income) or £1,000 (other cases).
• Re Endacott:
• A residuary estate was bequeathed to a parish council for a memorial for the testator.
• The Court of Appeal held the gift void - Harman LJ found the case to be 'troublesome, anomalous and aberrant cases'.
• Re Hooper:
• Money was bequeathed to maintain family graves and monuments "as far as they can legally do so."
• Valid for 21 years from the testator's death, per Maugham J.
• Bourne v Keane - the saying of private masses
• Held to be a valid trust, masses are open to the public and categorised as charitable as per re Hetherington

Exceptions When Purpose Trusts Have Been Enforced (cont.)

• Certain Animals
• Animal welfare gifts are generally regarded as charitable in law.
• Lack of human beneficiaries is overlooked if the purpose is sufficiently clear and of limited duration.
• Pettingall v Pettingall
• A gift of £50 yearly was upheld for the testator's favorite mare.
• Re Dean upheld £750 per annum for 50 years for horse and hound care.
• In Re Kelly only a human life can be used as a measuring life for the purpose of applying the rule against perpetuities.

Unincorporated Associations

• Per Lawton LJ, an unincorporated association is two or more persons bound together by mutual undertakings for common, non-business purposes, with mutual duties/obligations, and rules identifying control/funds.
• An unincorporated association has no separate legal personality.
• Such gifts may violate the beneficiary principle or the rule against inalienability.

Ways to Avoid This to Set Up A Purpose Trust

• A Gift by Way of Endowment for the Benefit of the Association

Ways to Avoid This to Set Up A Purpose Trust (cont.)

• Endowment funds for non-charitable groups are usually invalid because it breaks the rule against inalienability as confirmed in Re Macaulay and Leahy v AG (NSW).
• Re Denley's Trust Deed shows that a gift is valid if it doesn't break the rule against inalienability, working around the beneficiary principle.
• A Gift to the Members of the Association for the Time Being
• A gift to an unincorporated association may be enforced if;
• It is recognized as a gift to current members when disposed of or, in a will, at the testator's death.
• Lovell stated that the beneficiary principle is satisfied if these members are ascertainable, and the rule against inalienability isn't infringed if they can freely dispose of the property (income and capital)..
• Morris v. M'Conville (1883) stated that a non-charitable gift to a religious group with possible future members voids the trust against perpetuities.
• A gift is okay if only for current members.
• Re Byrne
• The testator left his estate to the Jesuit Order in Ireland.
• The Supreme Court said wasn't a valid charitable trust since the Order's work wasn't fully charitable.
• Key was the testator's wording since the gift was meant for a recognisable group, it was upheld as a valid non-charitable gift.
• The contract-holding theory
• Brightman J said a gift to the Anti-Vivisection Society wasn't a trust or a gift to individual members, according to Re Recher's Will Trusts.
• Instead, it was a gift to the group's funds, to be used under the rules of their membership agreement—called the contract-holding theory.
• The members could benefit but not as individuals getting direct shares.
• This theory involves property held in trust as per the members' contract.
• This is contained the rules of the association.
• It will satisfy the requirements of the rule against inalienability provided that the members are entitled to wind up the association and divide its property between them at any time.