Can anyone tell me how we answer a problem question about private purpose trust?
Earlier this year, Brinda died and left the following will.
a) £100,000 to be spent on the renovation of a specified derelict monument, the monument to be dedicated to Brinda’s memory;
b) £100,000 to be invested and the income to be used to meet the running costs of the Shore, a skating rink used by the employees of Castaway, the company by which Brinda was employed prior to her death. It is provided that, at the end of 21 years, the £100,000 is to go to Sunitra;
c) £100,000 to the Leicestershire Skittles Association, the money to be spent on the purchase of new equipment. The Association has just had a general meeting and proposes to disband and reform itself as the Leicestershire Tennis Club and transfer all the assets of the Association to the new club;
d) £100,000 to be spent on the welfare of her collection of cats.
e) 100,000 upon trust to pay all or part of the income towards the maintenance and attentance of my disabled sister Lucy.
When Brinda died Lucy was already dead.
Sunitra is entitled on Brinda’s intestacy and claims to be immediately
entitled to all of the money left in Brinda’s will. Advise Sunitra.
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- Thread Starter
- 24-07-2009 10:13
- 24-07-2009 11:43
There are a number of possible interpretations you could take of words which appear to indicate a private purpose trust. It could be a invalid private purpose trust; it could really be a trust for the benefit of specified persons as in Re Denley; it could be an absolute gift with a mere expression of motive; it could create a bare trust with a mere power of capital appointment for the specified purpose (i.e. the trustee can disburse money for that purpose); and so on.
What you need to do is have a paragraph or two on each section of the question. Then run through the different interpretations a court might take of what is going on; and explain why a court would be likely (or not) to favour that interpretation.
For example, c) concerns unincorporated associations. It could be a absolute gift to the members, but this is probably unlikely.
It could be a trust for the purposes of the Association. This would be a invalid private purpose trust, the money going to Sunitra.
It may be possible to understand it as really a trust in favour of specified individuals; namely the members of the club. This is a trust in favour of individuals, and so is valid, Re Denley. However, if this is the case, then when the Association dissolves the money goes back to Brinda's estate by means of a resulting trust, Re West Sussex.
Finally, there are a lot of cases in this area of law which say that trusts law doesn't have a role to play at all - it could be seen as a gift to the unincorporated Association governed by contract, Re Bucks. Under this interpretation, its all governed by contract, and so what happens to the money is governed by the Association's constitution; so it can transfer the assets to the new club.
You have to run through those interpretations and then come up with reasons why one interpretation should be favoured over another. The general tendency in unincorporated association cases these days is to favour contract law, (Re Horley Town FC is an example of this), but it isn't universal (in Davis v Richards the judge said a trusts law approach is to be favoured).
Similarly, in d) there are a number of ways you can look at it. It could be a trust for the purpose of ensuring the cats welfare which would be invalid; it could really be a trust in favour of the owners of the cats which is a trust in favour of specified people and so is not a purpose trust and is valid (there are cases which say a trust in favour of animals is really in favour of the owners); it could be a gift to the owners with a mere expression of motive. d) is looking rather like an invalid purpose trust, but it is at least arguable that it creates a trust in favour of the new cat owners.
e) is rather similar to d) in that it could be a trust for the abstract purpose of maintaining Lucy which would be invalid; but it would more sensibly be understood as simply a trust in favour of Lucy.
Do a) and b) in similar fashion....
Google for Alastair Hudson's website and listen to his podcasts on the beneficiary principle and the one on unincorporated associations.
- Thread Starter
- 24-07-2009 17:26
thanks for the help! I have another question as regard this chapter and maybe you can help me on this as well. The case of Re Osaba, Re Sanderson's Trust and Re Bowes are cases of valid trusts for beneficiares where trust property was used for a specified purpose. Are these cases similar to Re Denley case?
- 28-07-2009 11:58
Can't remember any of those three cases, though I have a vague recollection of Re Osaba. Sounds like they probably are.
The important thing to understand is that cases like Re Denley, like pretty much all cases in this area, aren't laying down a rule of law. They are just different interpretations of different words. Re Denley is just a case where a trust which looked like it was a invalid private purpose trust was interpreted as being really for the benefit of specific beneficiaries. If something similar happened in Re Osaba, then it will be an example of a Re Denley-style approach.
- 03-01-2013 23:56
hi everyone..Really struggling to understand whether this would be a fixed or discretionary trust??? Some help would be great!!!!
Julie died last week. Her will is valid. It appoints Tony and Mike as her executors and trustees and includes the following legacy:
£30,000 to apply the income to provide a crèche in Salford for the children of employees of the University of Salford.
Julie left the residue of her estate on trust for her husband and son.
Julie's husband and son wish to challenge the above legacies. Advise them on the likelihood of a successful outcome, providing explanations for your advice.