LECTURE FIVE: PRIVATE PURPOSE TRUSTS

STARTS AT 23 MINUTES IN TRUSTS 4X1

General Rule
Private Trusts for persons - valid
Private Trusts for Purposes = invalid

Introduction
Re Osoba [1979] 1 WLR 247 (Testator left his property to wife and
family in Nigeria and was given to his wife for her maintenance and for the
training of his daughter up to university grade and for the maintenance of
his aging mother. The testator had an earlier marriage and had a son.
This son argued that the will was invalid. The court held that the money
was a gift to the wife and the daughter.)
Buckley LJ concurred and said the following.
If a testator has given the whole of a fund, whether of capital or income,
to a beneficiary, whether directly or through the medium of a trustee, he
is regarded, in the absence of any contra indication, as having manifested
an intention to benefit that person to the full extent of the subject matter,
notwithstanding that he may have expressly stated that the gift is made
for a particular purpose, which may prove to be impossible of performance
or which may not exhaust the subject matter.

Re Astors ST [1952] Ch 552 clear example of purpose trust (Astor

attempted to set up a trust for the maintenance of good understanding
between nations and the preservation of the independence and integrity
of newspapers. He attempted to do this with money from shares in a
newspaper. The trust failed because there was a lack of beneficiaries.
This trust was a pure purpose trust.): The basic rule is that you need a
beneficiary to enforce the trust.
Roxburgh J
But if the purposes are not charitable, great difficulties arise both in
theory and in practice. In theory, because having regard to the historical
origins of equity it is difficult to visualize the growth of equitable
obligations which nobody can enforce, and in practice, because it is not
possible to contemplate with equanimity the creation of large funds
devoted to non-charitable purposes which no court and no department of
state can control, or in the case of maladministration reform....

... A court of equity does not recognise as valid a trust which it cannot
both enforce and control...

Re Shaw [1957] 1 WLR 279 (There was a testamentary gift, to research

into a new 40 letter alphabet. The issue was whether this was a charity or
a private purpose trust. The case held that this was not a charity.)

THERE ARE FOUR REASONS WHY PURPOSE TRUSTS ARE

GENERALLY UNENFORCEABLE.
1. The Beneficiary Principle
In other words there must be someone who can enforce the trust.
Morice v Bishop of Durham (1804) 9 Vs Jr 399 (Bishop of Durham was
given money and he had complete free range of who to give the money
to. Although in theory someone could come forward, because he had an
absolute discretion as to who could benefit, the court held that this was
too vague and far too wide.)
Every trust must have a definite object. There must be somebody in
whose favour the court can decree performance.

2. Lack of Certainty
Re Astors ST [1952] Ch 552 (Purpose trusts have a lack of certainty.
In this case, Astor was talking about maintenance of good understanding
between nations and preserving and maintaining independence of
newspaper was too wide and uncertain.)
He had wished to create a trust for the maintenance of good
understanding between nations and the preservation of the
independence and integrity of newspapers with money from the shares
he owned in his newspaper The Observer.

Re Endacott [1960] Ch 232 (Gave most of the money to his son and
some money to the local council to set up a memorial to himself. Court
held that because he used the words some useful memorial to himself,
that was too uncertain.)
for the purpose of providing some useful memorial to myself unless his
wife was still alive, in which case the interest should be paid to her.

3: Perpetuities
The rule in relation to purpose trusts is life + 21 years (21 years set out
under common law).
Private purpose trusts are still governed by the common law on
perpetuities.
Deech (1981) LQR ()
Necessary to strike a balance between on the one hand the freedom of
the present generations and on the other that of future generations to
deal as they wish with the property in which they have interests. If a
settlor has total liberty to dispose of his property among future
beneficiaries, the recipients being fettered by his wishes would never
enjoy the same freedoms in turn.

Hancock v Watson [1902] xxxx

4. Public Policy
Re Astor [1952] 1 All ER 106
Roxburgh J
It is not possible to contemplate with equanimity the creation of large
funds directed to non-charitable purposes which no court and no
department of state can control, or in the case of maladministration
reform.

Brown v Burdett (1882) 21 Ch D 667 (Testator was an old lady who

made a will and said the house was to be boarded up with good long nails,
her clock was to remain inside the house for 20 years, she directed that
her trustees visit the house every 3 months to ensure that the trust was
being upheld and that if the trustees didnt check the house they would
not receive what they were entitled to under the will. The court held this
was a useless trust and failed.)

EXCEPTIONS TO THE PRIVATE PURPOSE RULE

1. Erection/maintenance of monuments and graves
Musset v Bingle [1876] WN 170 (Under the will the testator gave 300
to consutruct a memorial for a relative and then another200 for the
maintenance of the memorial. The court held that in relation to
constructing the memorial it was valid, however, the 200 for maintenance

was invalid because it was against the rules of perpetuities, beucase they
didnt speicify how long it was to go on for.)

Re Hooper [1932] 1 Ch 38 (Testator left money for trustees, for the care
and upkeep for a grave and tablet and window. The issue was whether all
those items were valid or whether some or none were. The court held
that the upkeep of the tablet and window were void because they are not
within the class of exceptions, but the fort and the monuments which had
been stipulated at 21 years (came within the perpetuities rule) were thus
valid.)

Pirbright v Salwey [1896] WN 86 (Money was given for the upkeep of

a burial enclosure and the clause had a length of time satisfying the
perpetuity rule.)

The gift will fail if to vague

Re Endacott [1959] EWCA Civ 5 (Demonstrates that courts are not
willing to extend the exception. Prior to Re Endacott the exception only
included memorials for other people. In this case it considered whether
the class would be extended to memorials to oneself. However, the courts
were not willing to extend the class.)

2. Maintenance of specific animals/pets

The courts are willing to uphold trusts in favour of animals as the following
cases illustrate.
Pettingall v Pettingall [1842] 11 LJ Ch 176 (It was a trust for a horse
for $50/year for the testators favourite horse. The court held that it was
valid.)
There was a valid trust for a horse. The disposition in this case was 50
per year for the maintenance of the testators favourite horse, which the
executor of his estate had promised to honour. The court held that there
was a trust because the residuary legatee could enforce the trust.

Re Dean (1889) 41 Ch D 552 (It was a trust for a horse. Testator gave
$750 on trust for a period of 50 years to be used for looking after his
horses and hounds for that period or for as long as they shall live. The
clause was held to be valid, despite 50 years, which offended against the
rule of perpetuities. Court said that perpetuities only applies to people
and thus was not applicable in this case (horses).)

Re Haines (1952) The Times 7 November (Trust for maintenance of

cats was valid. At the time cats did not live over 21 years and therefore
would not offend the perpetuity rule.)

Animals and the perpetuity period

The confusion is how do you apply the perpetuity rule in relation
to animals. Does it run from the dates of the testator or does it
run from the date of the animal?
The changes made to the rules against perpetuity under the Perpetuities
and Accumulations Act 2009 do not apply to purpose trusts.
This means that the common law rule against perpetuity is applicable in
relation to animals.
Re Dean (supra) (Causes several problems because it did not apply the
perpetuity rule.)
Re Kelly [1932] IR 255 (Testator left $100 for maintenance of dogs and
then after was to be used for the saying of masses. The judge said that
the masses is far too remote. But he then went on to say that perpetuity
rule does not apply to lives of animals. Upheld this as a trust because
dogs do not live 21 years.)
Re Haines (1952) The Times 7 November

3: Trust for saying of masses

Re Hetherington [1989] 2 All ER 129 (The saying of masses suggested
that they were to be said in private. However, the court held that because
they could be held in public, even though that was not the real intention,
it was valid. Provided it was not a purely private saying of masses the
trust will be valid.)

Bourne v Keane [1919] AC 815 ()

Re Khoo Cheng Teow [1932] Straits settlements LR 226 (This was a

commonwealth decision and therefore is purely obiter. Testator wanted a
particular religious ceremony carried out during the perpetuity period.
Demonstrates that this does not only apply to Christian saying of masses,
rather it applies to all religions.)

4: Promotion of Fox-hunting
Re Thompson [1934] Ch 342 (Testator gave a legacy of money to be
used for promoting fox-hunting and it was found to be valid. This would
likely not be valid today because it would be contrary to public policy and
it is illegal today.)

No extension of the Exceptions

Re Endacott [1960] Ch 232 (The court took a strict view in relation to
extending the restrictions. He said that the exceptions were difficult to
justify and they should not be extended further. It was said that the
exceptions are out of sync with the general purpose.)
Justifying the exceptions
It is difficult to justify the exceptions. It has been suggested that they are
an allowance for human sanctomant because they are in relation to
human emotional issues, such as pets. Perhaps another way to look at it
would be to argue that it should be enforced in relation to memorials.
Really the exceptions are here because in the late 19th century the courts
decided these exceptions should exist. However, nowadays it is very
difficult to justify them.

Conditional Gift
It is important to look at whether a conditional gift is a gift or a purpose
Re Tyler [1891] 3 Ch 232 (Testator donated money to a charity on the
condition that they maintained the familys vault. And if the charity did
not maintain the family vault, then the money was to go to a different
charity altogether. The difficulty was whether this was a conditional gift or
a purpose trust. The court held that this was a conditional gift because
you had a beneficiary. It also meant in relation to this particular case that
it didnt infringe the perpetuity rule.)

Valid Trusts which appear to be for a purpose

Re Denleys DT [1969] (Settlor owned company and gave land to
trustees to be used for the recreational purposes for primarily the benefit
of the employees of the company. Up to 75% of the people using the land
had to be company employees. The issue was whether that was a
purpose trust or whether that was a trust because you had beneficiaries.
Court held that there were beneficiaries because they had the use of the
land. Although it had a purpose (Recreational facilities), but because it
was qualified by who could use the land it meant that it was a trust.

Where there is a purpose however, there are people who can enforce that
purpose, because there are beneficiaries, it will be a trust. The key issue
was whether there was someone who could enforce the trust.)

Re Bowes [1896] 1 Ch 307 (Was upheld because the people on the

estate could enforce the trust. The trees were on the estate and had to be
maintained, the people living on the estate were the beneficiaries, and
therefore it was not a purpose trust. What this means is that where you
can find a beneficiary, it will not be a purpose trust, it will be a trust which
is enforceable.)

Leahy v Attorney General for NSW [1959] AC 457 (Testator died and
left 750 acres on trust for such orders of nuns which the trustees would
select. They decided to select a group of nuns who did not have
charitable status (order or caramalide nuns). These nuns did not carry out
charitable works. The issue was whether or not that could be upheld as a
trust in relation to beneficiary principle. The issue was the problem of the
wording and it was decided that based on the wording because it did not
have any beneficiaries it was a purpose trust. Had they chosen a
charitable group of nuns then it would been okay. . There was a
perpetuity issue because there was no fixed period in it. Further issue is
because of the wording you couldnt say it was to the nuns as individuals,
rather it was to the group of nuns both now and in the future, so you
didnt know who was in the group. Because of the wording it appeared to
be for the purpose of the nuns and therefore a purpose trust and void.
This is a very strict interpretation of the rule.)