Non-charitable Purpose Trusts and Gifts to Unincorporated Associations

These flashcards cover key vocabulary and concepts related to non-charitable purpose trusts and gifts to unincorporated associations.

Non-charitable purpose trusts

• Trusts established for specific purposes rather than for identifiable persons.

• General rule = they are invalid but there are exceptions that courts tolerate

Private purpose trusts

Another term for non-charitable purpose trusts.

Beneficiary principle

The requirement that there must be someone who can enforce the trust.

Rationale for invalidity of non-charitable purpose trusts:

1. Enforceability - must be someone for the court to order performance in favour of

2. Certainty of purpose - vague or abstract terms will fair

3. Caprious/Wasteful - courts will not uphold eccentric or pointless purposes even if they’re not illegal

4. Inalienability - trust must vest or end within a limited lime

Morice v Bishop of Durham (1804)

‘there must be someone in whose favour the court can decree performance’

Re Denley's Trust Deed [1969]

• suggested trusts for private trusts for purposes that benefit ascertainable beneficiaries directly can be upheld.

• controversial

• a trust for the purpose of providing a sports field to be used by employees of a company was upheld because it delivered a real and tangible benefit

Re Astor’s Settlement Trusts [1952]

• Trust to hold shares of a company for the purposes such as “promoting the understanding and cooperation between nations and the independence and integrity of newspaper”

• Void = lack of ascertainable beneficiaries and uncertainty

M’Caigs Trustees v. Kirk-Session [1915]

• Testatrix wanted 11 gold statutes made of her parents and all their children

• Trustees were directed to maintain the statues and tower

• Certain beneficiary who stood to benefit from her estate challenged the validity of the instructions as their payments were delayed until this was implemented.

• Court held this was void - wasteful, no benefit to the public because they couldn’t access it

LCRA [2009] s. 16

• Rule against inalienability retained for non-charitable purpose trusts

• Public policy against property not being vested in anyone. Offends the free markets

🇮🇪 Rule of Perpetuity: Ireland

• abolished!

• trusts they can last beyond 21 years but they still must comply with the rule against inalienability (s.16 LCRA)

• Two rules are linked but not the same!

🇬🇧 Rule of Perpetuity: England

• non-charitable purpose trusts intended to endure beyond 21 year period = INVALID

Re Fossil’s Estate [1934]

• Gift to the Orange Order Hall in Dublin ‘for the upkeep’ held to violate the rule against inalienability

• Upkeep implies to would be maintained for an indefinite period.

Re Hooper [1932]

• Gift to trustee for the maintenance of family graves ‘as far as they legally can do so’

• Anomalous purpose trust

• Trust upheld and said to be valid for 21 years, after this any residual money was to be given to beneficiaries of the estate.

Exceptions to non-charitable purpose trust’s invalidity: Imperfect obligation trusts

• Trusts that cannot be legally enforced but may allow trustees to optionally carry out the trust's purposes.

• There are few examples were the court has tolerated anamolous trusts of this nature

• Court must decide if trustee is permitted to carry out these purposes.

• They are on the books because of their long history but courts will be unlikely to hear these now

Exception 1: Trusts for the maintenance of specific animals

• Non-charitable purpose trusts for the care of a specific animal

• Must be clear and have specific limits

Pettingall [1842]

• maintenance of testators ‘favourite black mare’ upheld

Re Dean (1889)

• maintenance of horses and hounds upheld

Mitford v. Reynolds (1848)

• ‘keep of horses’ and for them never to be used, ridden, driven or applied to labour

• upheld

Re Kelly [1932] IR 255

• £100 left in trust for the testators 4 greyhounds

• £4 a year to be used for the maintenance of each of them

• If any surplus remained after the last dogs death then this would be a ‘gift over’

• Gift for the maintenance = valid non-charitable purpose trust

  • could be severed after 21 years

  • sufficiently certain - 4 dogs at 4 pounds would not go over the 21 years

• Gift over = void

  • offended the rule against perpetuity

• Animals held not be be a life in being

Exception Two: Maintenance for Graves, Tombstones & Memorials

• Charities Act 1961, s.50: makes certain gifts for tombstones to be treated as charitable

• Outside s.50, if non-charitable purpose they must be:

  • Limited to perpetuity period

  • Not vague and sufficiently certain

  • Can be reframed as charitable

Re Endacott [1960]

• Testator left his estate to a parish council to provide "some useful memorial" to himself.

• Trust = void

  • no ascertainable beneficiaries, making it too vague to qualify as a valid non-charitable purpose trust.

  • no certain purpose of the trust

• Lord Evershed MR emphasised that vague purposes (like a "useful memorial") are not analogous to narrow exceptions (e.g., maintaining tombs in Re Hooper) and that anomalous cases should not be expanded.

• Memorials generally are not sufficient unless tied to specific, limited purposes like grave upkeep in Re Hooper.

• The exceptions to non-purpose trusts being invalid are very specific and this could not fall into one.

Arguments for change to approach to non-charitable purpose trusts

• USA use the Restatement which views non-charitable purpose trusts as ‘powers’

• Powers are not subject to the same formalities of a trust

• Keane also argues this for Ireland

• Seems to be rejected in UK’s Re Endacott as court said they can’t salvage valid power from an invalid trust.

Exception 3: Gifts to Unincorporated Associations

• Unincorporated association = aggregate of it’s members

• Example: school, sports groups, special interest groups and most religious orders.

• Judicial approached based on the language of the gift:

  1. Gift to individual members - valid

  2. Trust in favour of current/future members - invalid usually (rule against inalienability)

  3. Contract-holding' theory - valid if contractual link is valid

  4. Trust for the purpose of association - invalid unless the purpose = legally charitable/charitable trust

Contract-holding theory

• The theory that gifts to unincorporated associations are governed by the contractual rights of members.

• This is seen as the starting point for courts now when dealing with trusts to unincorporated groups.

Re Delaney [1883]

• Left to the sisters of mercy in Bandon

• This construction is valid– but note: this means that each member can simply take their portion of the gift and do what they like with it, which is unlikely to be the intention of the settlor/testator (nor is it likely to be welcomed by various religious orders)

Morris v McConville [1883]

• invalid gift to future members of an unincorporated association.

• This construction is, absent specific facts to the contrary, invalid because it violates the rule against inalienability

• Left to the ‘the convent’ implying it as an institution with a permanent contribution to be carried out, rather than individual members.

Neville Estates Ltd v Madden [1962] 1 Ch 832

• Laid down the contract holding theory for transfers to unincorporated associations

• Land held by Synangogue that promoted Judaism, held on valid charitable trust

• Cross J described what would happen if it was not a charity:

  • gift to an existing member at current date as joint tenants

  • gift to existing member subject to contractual transaction

  • property to be held on trust for the purposes of the unincorporated association

Conservative and Unionist Central Office v Burrell [1982] 1 WLR 522, 525

• There must be a valid trust amongst members

• Tory and Unionst MPs were part of association just by being elected.

• Property could not be held by them as there was no valid contract

Re Grant’s Will Trusts [1980]

• A case illustrating the need for contractual mechanisms in gifts to unincorporated associations.

• Member of Labour had donated gift to Labour Party Property Committee but this was held not to be contractually linked to him.

Bacon v Pianta (1966)

• Gift to Communist Party of Australia not valid

• No members list and no mention of how to distribute the property in contractual rules

Alston v Cormack Foundation Pty Ltd [2018]

• Charitable purposes for unincorporated associations were upheld.

Hanchett-Stamford v Attorney-General [2009]

• A case indicating the contract-holding theory as the prevalent interpretation in English law.

Leahy v Attorney-General

farm left to nuns, assumed they would not want to live in rural new south wales so court interpreted this as not what was intended

• valid

Unincorporated associations

Groups that do not have legal personhood and thus cannot individually hold property.

Re Eighmie [1935]

• Trust for the maintenance of a public memorial owned by local authority was reframed to be charitable for compliance

Lives in Being

• People who are alive at the date when the trust (or gift) takes effect — normally the death of the testator in a will, or the date of settlement if it’s a lifetime trust.
  

✅ They must be real, identifiable humans.
✅ They must be already alive at the time the trust starts — not unborn future people.

Note on animals and grave maintenance as the purpose for non-charitable trust

• old case law

• narrow exceptions and strictly applied e.g Re Endacott did not apply Re Hooper

• were allowed as ‘concessions to human sentiment’ but are now seen as anaomlies