Lecture 1.3 Capacity and The Beneficiary Principle - FOR Moodle UL PDF

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equity and trust...

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Lecture 1.3 Capacity and The Beneficiary Principle

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Capacity

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Capacity

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The Beneficiary Principle

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The Beneficiary Principle • Morice v Bishop of Durham (1805) 10 Ves 522: • …such objects of benevolence as the Bishop of Durham would approve of… “There must be somebody in whose favour the court can decree performance” • Re Astor’s Settlement Trusts [1952] Ch 534: • …for the maintenance of good understanding between nations… “…a court of equity does not recognise as valid a trust which it cannot both enforce and control.” •

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So, no ‘purpose’ trusts BUT…there are exceptions… • Charitable trusts

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• Trusts of imperfect obligation 8

…Charitable trusts see s.3 Charities Act 2011 (a) the prevention or relief of poverty; (b) the advancement of education; (c) the advancement of religion; (d) the advancement of health or the saving of lives; (e) the advancement of citizenship or community development; (f) the advancement of the arts, culture, heritage or science; (g) the advancement of amateur sport; (h) the advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity; (i) the advancement of environmental protection or improvement; (j) the relief of those in need because of youth, age, ill-health, disability, financial hardship or other disadvantage; (k) the advancement of animal welfare; (l) the promotion of the efficiency of the armed forces of the Crown or of the efficiency of the police, fire and rescue services or ambulance services; (m) any other [analagous] purposes …And must be “for the public benefit” (s2(1)(b) CA 2011) 9

…Trusts of imperfect obligation (anomalous exceptions) • Specific animals • Monuments, graves, tombs • Public masses • Promotion of fox hunting (Historic Hunting Act 2004) •

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The problems with purpose trusts: • Contravene the beneficiary principle

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• Lack of certainty - Re Endacott [1960] Ch 232 • Public policy…

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…Public policy: • Brown v Burdett [1882] 21 Ch D 667 • • M’Craig v University of Glasgow (1907) 44 SLR 198 “…if it is not unlawful, it ought to be unlawful, to dedicate…the whole income of a large estate…to objects of no utility, private or public, objects which benefit nobody, and which have no other purpose or use than that of perpetuating at great cost, and in an absurd manner, the idiosyncrasies of an eccentric testator.” • M’Craig’s Trustees v the Kirk-Session of the United Free Church of Lismore (1915) 52 SLR 347 “…it involves a sheer waste of money, and…it would be a dangerous thing to support a bequest…which can only gratify the vanity of testators…” •

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The problems with purpose trusts: • Contravene the beneficiary principle • Lack of certainty - Re Endacott [1960] Ch 232 • Public policy • Perpetuity: - Perpetuities and Accumulations Act 2009 - Common law rule against perpetuities (s18 PAA 2009) •

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Remember the anomalous exceptions… • 14

Kate and Tina 2004: £450,000 left on trust for Kate and Tina by Nora l “…for the maintenance of any dog or dogs which I may own at my death for the period of 21 years from the date of my death or until the death of the last of my dogs if earlier” dogs which I may own at my death for the period of 21 years from the date of my death or until the death of the last of my dogs if earlier”

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