Beneficiary principle

What is the basic principle of trusts

They have human beneficiaries capable of being the trusts enforcers

What is the difference between incorporated and unincorporated assets?

Incorporated is legal persons and unincorporated is clubs and societies which aren’t legal persons in their own right.

What is morice v bishop of durham

A valid trust must have identifiable beneficiaries.

Key quote:“There must be somebody in whose favour the court can decree performance.”

Principle (beneficiary principle):

Someone must be able to enforce the trust

If no beneficiaries → trust is void

Application:

• Non-charitable purpose trusts usually fail

• Exceptions: charitable trusts + limited anomalous trusts

What is the rule against contingent trusts and discretionary trusts

Rule against remoteness of vesting - trust fails unless the interest vests in some beneficiary within the perpetuity period of 125 years.

Leachy v AG New South Wales

A trust must benefit identifiable individuals (beneficiary principle), unless it is charitable.

Facts:Gift to an order of nuns for purposes of the order.

Held:Invalid — not a charitable trust and no ascertainable beneficiaries.

Principle:

• A purpose trust disguised as a gift to persons will still fail

• Must distinguish between:
  

  • ✔ Gift to individuals beneficially

  • ❌ Gift for a purpose (no enforceable beneficiaries)

What is the inalienability principle

Rule that applies to non charitable purpose trusts. Stops money from being tied up in a trust too long and it’s void if it stops the capital from being alienated (spent)

What is the timing for inalienablility

21 years unless they explicitly refer to the 125 perpetuity rule.

What are the constructions that may validate a gift?

A gift to the relevant members of the unincorporated assets to keep as joint tenants or tenants in common. (Neville estates)

Or

A gift for the present members not as joint tenants or tenants in common but just subject to their duties however they cannot take their own individual share

What is the case of RE Recher

In Re Recher, the court resolved this by adopting the contract-holding theory, under which such a gift is construed as a gift to the current members of the association, subject to their contractual rights and obligations inter se. This ensures that the members, as identifiable individuals, can take the property beneficially while being bound by the association’s rules, thereby avoiding the invalidity of a non-charitable purpose trust. This construction is generally preferred as it gives effect to the testator’s intention while maintaining doctrinal consistency.

Re Astors settlement trusts

Trust being void because it was a trust for purpose and there was no certainty of objects

Pettingall v Pettingall

Trust was valid as an exception to the rule of purpose trusts because it falls under trust for the maintenance of specific animal exceptions however tha maintenance cannot last forever.

What are the recognised exceptions to purpose non charitable trusts

Maintenace of specific animals

Maintenance of graves

Private masses

What would make a purpose trust valid

If it had identifiable beneficiaries or if it was charitable.

What are trusts for imperfect obligations

They are not charitable but specifics and limited enough that the courts will allow them to stand.

Re Denley 1969

Land given for the benefit of employees to use as a sports ground. A construction where even if it’s expressed as a trust for purpose, it’s a gift for the benefit of people as the members directly benefitted.

Re Lipinski will trust 1976

Described as a purpose trust, leaving half of his estate to a Jewish group however was made valid as a gift to the association members subject to their obligations. Although it had motive to build so it’s not a legally binding purpose trust and members could still decide what to do with the money.

• The wording about building = how the testator hoped the money would be used

• Not a strict obligation the court would enforce

So legally:

• The members could agree to use it differently if they wanted

Re Grant

Trust to the Labour Party branch was void for inalienablilty because the members couldn’t dissolve or distribute its assets. If membership dwindled to one, the contractual basis collapses.

Mussets v Bingle

Erection of a monument for her first husband was valid but the maintenance trust was not because of inalienability. It fits into the trusts of imperfect obligation

What is the Barclays v quistclose case

Money is transferred for a specific purpose and should be used for that specific purpose alone. Quistclose lent the money to a company to pay out dividends, this was not completed due to liquidation and so the money couldn’t be taken by Barclays and resulted back to quistclose.

What is the twinsectra v yardley case

It emphasised the quistclose case as money resulted back to twinsectra after it was misused by the solicitor under strict instruction that the money should only be used for a specific purpose.

What are the key elements for quistclose

1. Express purpose specified by the lender

2. Money kept separate or identifiable

3. Failure of purpose or surplus funds → return to lender

Why is the Re Recher case favoured

• Respects intention of the testator

• Avoids invalid purpose trusts

• Satisfies the beneficiary principle

• Reflects the reality of how associations function

Contract holding theory

They hold it: As part of the club’s funds, not personally

Think of it like:

• Membership fees everyone pays into a shared pot

• The gift just gets added to that pot

✔ That pot is governed by the rules (contract) of the association

3. Why is it NOT joint tenancy or tenancy in common?

Because: Members can’t just demand their share And They only benefit through the club rules.

👉 So: Not personal ownership you can withdraw

More like collective ownership tied to membership

4. The key legal point (very important)

👉 The rights come from the contract between members, not a trust

So:

The money must be used according to the association’s rules

• Just like subscription fees

Re endancott

• It cannot be reasoned that the trust to create a memorial for yourself is analogous to trusts to erect and maintain monuments and graves (Re Hooper) and is thus valid