Law of Trusts: Purpose Trusts (Lecture #7)
Purpose Trusts
the object of a trust can be a person (human or corporate), a public (e.g. Charitable) or private purpose… — Gary Watt
Person as Object: Private Express Trust
in private express trusts objects are people NOT a purpose to be valid and enforceable
beneficiary principle = there must be a person or persons to enforce the trust (Morice v Bishop [1805])
Private Purpose as Object
trusts for a purpose and not a person are usually void
‘There are however a number of important exceptions to this general rule, where trusts for private purposes are valid...’ — Gary Watt, Equity & Trusts (8h edn, Oxford University Press, 2025) 152
Public as Object: Public Trust
when the object of a trust isn’t a person or a purpose we call it a public (charitable trust)
charitable purpose = for the ‘Public Benefit’
‘...charities are not subject to the beneficiary principle.’ — Gary Watt, Equity & Trusts (8th edn, Oxford University Press, 2025) 175 The Attorney General enforces on behalf of the public.
Private Purpose as Object
there are some cases where there is no beneficiary and the trust is not public and the court is willing to enforce the trust
Unincorporated Organisations
Indirect Beneficiaries
Trusts of Imperfect Obligation
Indirect Beneficiaries
trusts for a purpose but which indirectly benefit people
‘[trusts] for private purposes have, in fact, been construed to be... in favour of the persons who would benefit from the carrying out of the purposes. ——Gary Watt, Equity & Trusts (8th edn, Oxford University Press, 2025) 159
example: Re Denley's Trust Deed [1969] 1 Ch 373 – trust for a sports club
Trusts of Imperfect Obligation
very narrow exception of trusts for private (non-charitable) purposes that
are still valid despite there being no human beneficiary = Re Endercote.g. trusts for the care of specific animals Pettingall v Pettingall (1842) 11 LJ Ch 176 (testator’s horse) and Re Dean (1889) 41 Ch D 552 (testator’s horse and hounds)
imperfect obligation is justified as ‘concessions to human weakness’ (Re Astor's Settlement Trusts [1952] Ch 534) and because the ‘trustee is willing to administer the trust (Pettingall v Pettingall (1842) 11 LJ Ch 176 )
Public as the Object: Public Trust
‘an institution which is established for charitable purposes only’ —> Charities Act 2011, s1(1)(a)
a purpose trust – for a charitable purpose
no identifiable beneficiary
tax advantages to charitable status
Valid Public Trust
to have a valid trust:
it must have a charitable purpose
be exclusively charitable
for the public benefit
Charities Act, s3
the charitable categories being considered were known as the ‘Pemsel Categories‘
a) the prevention or relief of poverty
b) the advancement of education
c) the advancement of religion
Charities Act, s3: Poverty
poverty = ‘includes many disadvantages and difficulties arising from, or which cause, the lack of financial or material resources' Charity Commission
Re Coulthurst [1951] Ch 661: 'going short'
Re Sanders’ Will Trust [1954] Ch 265: working class does not indicate poverty
‘...they are merely men working in the docks and their families, and, therefore, I cannot infer any element of poverty here.’ (Harman J)
Charities Act, s3: Education
education = …a balanced and systematic process of instruction, training and practicing containing…spiritual, moral, mental and physical elements' — IRC v McMullen [1981] AC 1, 18 (Hailsham L)
Examples:
Production of a dictionary (Re Stanford [1924] 1 Ch 73)
Supporting London Zoological Society (Re Lopez [1931] 2 Ch 130)
Research – if ‘some useful subject of study’ and ‘distributed to others’ Re Besterman’s Wills Trusts (1980) The Times
Charities Act, s3: Religion
religion = a spiritual or non-secular belief system, held by a group of adherents, which claims to explain mankind's place in the universe and relationship with the infinite, and to teach its adherents how they are to live their lives in conformity with the spiritual understanding associated with the belief systems' — R (on the application of Hodkin) v Registrar General of Births, Marriages and Death [2013] UKSC 77
Scope increased by Charities Act:
• CA 2011, s3(2)(a): a religion which involves belief in more than one god, and a religion which does not involve belief in a god‘Advancement’: "The provision of places to worship; raising awareness and understanding of religious beliefs and practices; carrying out religious devotional acts; or carrying out missionary and outreach work“ — Charity Commission
Exclusively Charitable
must be for charitable purposes only
cannot use funds for a mixture of charitable and non-charitable purposes
must be 'exclusively charitable’
but wording needs to be carefully considered...
Chichester Diocesan Fund and Board of Finances Incorporated v Simpson [1944] AC 341 = ‘for such charitable institutions or benevolent object or objects’
Re Best [1904] 2 Ch 354 = ‘such charitable and benevolent institutions as the trustees in their discretion shall determine.’
Public Benefit
Charity Act 2011, s 4(1) = “the public benefit requirement” means the requirement in section 2(1)(b) that a purpose falling within section 3(1) must be for the public benefit if it is to be a charitable purpose.
there are two aspects of public benefit:
the ‘benefit aspect’
the ‘public aspect’
legal requirement: for a purpose to be ‘for the public benefit’ it must satisfy both the ‘benefit’ and ‘public’ aspects — Charity Commission Guidance: Public benefit: the public benefit requirement (PB1) (September 2013, New Format January 2017)
Pemsel Purposes
it was presumed that a charitable purpose would benefit the public
CA 2011, s4(2) abolished this presumption
charity trustees must now always show charitable purpose is for public benefit.
CA 2011, S14(2): Charity Commission must ‘promote the public benefit objective’
CA 2011, s17(1) : "The Commission must issue guidance in pursuance of its public benefit objective"
Benefit Aspect
is the charitable purpose beneficial for the public?
benefit must be identifiable – usually must prove with evidence
Obvious Benefit
Re Shaw’s Will Trusts [1952] Ch 163: ‘.... purpose is so obviously beneficial to the community that to ask for evidence would really be absurd.’
'the trustees of an organisation whose purpose is to provide emergency aid in the context of a natural disaster would not need to provide evidence that
the purpose is beneficial' — Charity Commission Guidance
No Evidence of Benefit
Re Hummeltenberg [1923] 1 Ch 237: 'no evidence worthy of the name - nothing but vague expressions of opinion and belief, directed in the main to alleged powers of diagnosis and healing attributed to some mediums
Re Pinion [1965] Ch 85 at 86: 'worthless as a means of education, and no useful purpose could be served by foisting on the public a "mass of junk'''
Harm v Benefit
benefit must be balanced against any harm
National Anti-Vivisection Society v IRC [1948] AC 31
society's purpose was to campaign against animal testing.
a charity cannot have as its main aim a political purpose
Benefit Aspect: Public Benefit
the public must benefit
Gilmour v Coats [1949] AC 426: ‘upon trust ... [for]...the Roman Catholic community situate and known as the Carmelite Priory, St. Charles' Square, Notting Hill, in the County of London...’
Carmelite Priory – strictly cloistered nuns
Watt: ‘Do you think the nuns’ activities were beneficial to the community? Your answer will probably depend on whether you believe in the power of prayer!’ — Gary Watt, Equity & Trusts Law (8th ed, Oxford University Press (2025) 192
no benefit: Benefit of prayer to the public could not be proved
Public Aspect
"It is not appropriate for a settlor to obtain the benefits of charitable status through the mechanism of a trust where the beneficiaries are, in fact, a private group of people, such as the settlor's close family or friends." — Graham Virgo, The Principles of Equity & Trusts, (4th edn, OUP (2020)) 167
this can be a section of the public or the general public
‘Sufficient Section of the Public‘
Verge v Somerville[1924]
"To ascertain whether a gift constitutes a valid charitable trust… a first enquiry must be whether it is public - whether it is for the benefit of the community or of an appreciably important class of the community.
The inhabitants of a parish or town, or any particular class of such
inhabitants, may, for instance be the objects of such a gift, but private individuals, or a fluctuating body of private individuals, cannot"
IRC v Baddeley [1955] AC 527, 592 (Simonds L)
a sufficient section of the public cannot be too narrow
'persons resident in the County Boroughs of West Ham and Leyton ... who for the time being are in the opinion of such leaders members or likely to become members of the Methodist Church…’
Not a sufficient section of the public
‘The trust did not benefit a sufficient section of the public because the beneficiaries had been selected not only by reference to a particular geographical area, but by the further condition that they share a particular creed. (Gary Watt, Equity & Trusts (8th edn, OUP (2025) 199)
Oppenheim v Tobacco Securities Trust Co Ltd [1951] AC 297
there cannot be a personal connection between the settlor and those who will benefit (‘personal nexus’)
BUT.... personal nexus is permitted for Poverty (only): Dingle v Turner [1972] AC 601
The Independent Schools Council v The Charity Commission for England and Wales [2011] UKUT 421 (TCC)
a sufficient section cannot exclude ‘the poor’
a school that operates solely for the benefit of fee-paying students is not
sufficiently for public benefit