LA32920

081546286
Why did the Law of England and Wales originally prohibit most private purpose trusts?
Is this prohibition still effective today?

The Law of England and Wales originally prohibited most private purpose trusts, for

three main reasons.1

The first reason being that traditionally, the law insists that trusts must be for the

benefit of legal persons,2 or cestui que trust, not merely for the object of carrying out

purposes.

The second reason being that all trusts should fulfil the requirement of the three

certainties3, and specifically, that people to whom trustees owe a duty should be readily

determinable;4 termed ‘the beneficiary principle’5- that ‘there must be somebody in

whose favour the court can decree performance’67

The final reason, is that if a trust were created for a private purpose, there is no

guarantee that the purpose would ever be completed so as to bring the trust to an end 8-

and if a trust offends against the perpetuity period, it is void ab initio9.

The rationale for the trust requiring cestui que trust, is that a trustee cannot be

compelled to fulfil the terms of the trust, if he is unwilling to do so; though this

requirement is more recent10 than that of the beneficiary principle, as in Re Dean, where

an objection that there was no cestui que trust was rejected with the words ‘I am not

aware that such a trust is in any way invalid.’11

1
RA Pearce, J Stevens and W Barr, The Law of Trusts and Equitable Obligations (5th edn Oxford University
Press, 2010) pp458
2
Morice v Bishop of Durham (1804) 9 Ves 399, per Sir William Grant MR at 405
3
Knight v Knight (1840) 3 Beav 148 per Lord Langdale MR
4
G Watt, Trusts and Equity (4th edn Oxford University Press, 2010)
5
RA Pearce, J Stevens and W Barr, The Law of Trusts and Equitable Obligations (5th edn Oxford University
Press, 2010) pp458
6
Morice v Bishop of Durham (1804) 9 Ves 399, per Sir William Grant MR at 441
7
G Watt, Trusts and Equity (4th edn Oxford University Press, 2010)
8
RA Pearce, J Stevens and W Barr, The Law of Trusts and Equitable Obligations (5th edn Oxford University
Press, 2010) pp460
9
Halsbury's Laws of England, TRUSTS (VOLUME 48 (2007 REISSUE)) 1(2)(iv) para. 684
10
LA Sheridan, The Law of Trusts (12th edn Barry Rose Law Publishers, Chichester 1993) pp155
11
Re Dean (1889) 41 Ch. D 552, per North J at 556

Page 1 of 8
LA32920
081546286
Why did the Law of England and Wales originally prohibit most private purpose trusts?
Is this prohibition still effective today?

The rationale for the beneficiary principle is stated that without beneficiaries there is no

owner, and therefore the trust cannot be enforced- though it was suggested that Grant

MR12 meant “no more than that if objects are uncertain, the trust fails,”13 but nowadays,

the courts tend to infer the meaning as a requirement for a definite human, or corporate

beneficiary, or charitable purpose; as in Re Wood, where there being no cestui que trust,

and uncertainty as to the existence of a charitable purpose, no enforcement was

possible. 14

Charitable purpose trusts15, distinct from those for a private purpose, have historically

been allowed on public policy grounds,16 stemming from the historical significance of

trusts, and their adoption as a tool within the common law.

Some commentators criticise the beneficiary principle as fragile: 17 that the principle has

become entrenched within trust law, that beneficiaries need not be the only enforcers of

the trust, and18 that too much significance has been given to the principle. It is then

submitted that the rule in Saunders v Vautier, seeing the trustees holding balance

between beneficiaries, allowing beneficiaries to terminate a trust 19, could have

influenced the courts continued prohibition of private purpose trusts, as beneficiaries

are required if such a balance is to be held.

Examining whether or not these prohibitions are still effective; exceptions to the general

rule, Quistclose trusts, and unincorporated associations will be analysed.

12
Morice v Bishop of Durham and another [1803-13] All ER Rep 451, per Sir William Grant MR at 454
13
LA Sheridan, The Law of Trusts (12th edn Barry Rose Law Publishers, Chichester 1993) pp154
14
Re Wood [1949] Ch. 498
15
Halsbury's Laws of England, CHARITIES (VOLUME 8 (2010) 5TH EDITION) 1(1) para 2
16
Halsbury's Laws of England, CHARITIES (VOLUME 8 (2010) 5TH EDITION) 1(1) para 1
17
S Scott-Hunt and H Lim, Feminist perspectives on Equity and Trusts (Cavendish, London 2001) pp266
18
S Scott-Hunt and H Lim, Feminist perspectives on Equity and Trusts (Cavendish, London 2001) pp268
19
Saunders v Vautier (1841) Cr & Ph 240 at 245

Page 2 of 8
LA32920
081546286
Why did the Law of England and Wales originally prohibit most private purpose trusts?
Is this prohibition still effective today?

The courts have historically allowed exceptions 20 to the prohibition of private purpose

trusts, though these have been criticised as being anomalous exceptions, ‘concessions to

human weakness or sentiment’21.

These exceptions are sometimes called gifts of imperfect obligation 22, and trustees

cannot be compelled to carry out such a trust23 – though there is ‘little in sound basis’ to

understand why such unenforceable trusts have been upheld 24 – in fact, it is in the

interest of the trustees for such to fail, to obtain the benefit of the funds. There is a long

line of cases where benevolent purpose trusts were held void for lacking a human

beneficiary25, as in Morice v Bishop of Durham,26 while at the same time, cases exist27

where only certainty of objects was required, without the need for a human

beneficiary.28 Such trusts only require that trustees undertake not to misappropriate

funds for other purposes29 – procured through a Pettingall order,30 allowing interested

parties, usually residuary legatees 31, to come to court if misappropriations occur,32

though time and court fees may act as a deterrent to action.

20
Encyclopaedia of Forms and Precedents, WILLS AND ADMINISTRATION (VOLUME 42(1) (2010)) 1(A)
(7)(D) para 70.2
21
Re Astor’s Settlement Trusts [1952] 1 All ER 1067, per Roxburgh J at 1074
22
Mark Powlowski and Jo Summers, ‘Private purpose trusts - a reform proposal’ (2007) (Sep/Oct)
CONVPL 440 pp440
23
John Gray, ’Gifts for a Non-Charitable Purpose’ (1902) 15(7) HLR 509 pp528
24
Mark Powlowski and Jo Summers, ‘Private purpose trusts - a reform proposal’ (2007) (Sep/Oct)
CONVPL 440
25
Mark Powlowski and Jo Summers, ‘Private purpose trusts - a reform proposal’ (2007) (Sep/Oct)
CONVPL 440 pp441
26
Morice v Bishop of Durham and another [1803-13] All ER Rep 451 at 454
27
Re Dean (1889) 41 Ch. D 552, per North J at 556
28
Nigel Gravells, ‘Public Purpose Trusts’ (1977) 40 Mod. L. Rev 397 pp402
29
G Watt, Trusts and Equity (4th edn Oxford University Press, 2010) pp105
30
Pettingall v Pettingall (1842) 11LJ Ch176, 177
31
Halsbury's Laws of England, TRUSTS (VOLUME 48 (2007 REISSUE)) 1(1)(i)(b) para. 607
32
G Watt, Trusts and Equity (4th edn Oxford University Press, 2010) pp105

Page 3 of 8
LA32920
081546286
Why did the Law of England and Wales originally prohibit most private purpose trusts?
Is this prohibition still effective today?

Some commentators note that pet owners may have standing33 to enforce the trust after

the testators death34, as stated in Re Denley’s Trust Deed.

Outside of those trusts explicitly purporting to be private purpose trusts, recent

developments35 in Quistclose36 trusts37 came under scrutiny, after the Cooper v PRG

Powerhouse38 case, which appears39 to recognise such trusts as another form40 of

purpose trust.41

Moreover, gifts to unincorporated associations appear to be used as a vehicle 42 allowing

private purpose trusts to exist for the benefit of all association members 43 as in Re

Denley’s Trust Deed – because the ’beneficiary principle does not invalidate a gift which,

though expressed as a purpose, is for the benefit of an individual or individuals.’ 44

Trusts for non-charitable associations can have effect if the purpose of the association

does not contravene law or public policy- 45 though a gift fettered by conditions for use

can cause a question of perpetuity to arise.46

Often, if a gift is given to an association which already exists for a purpose, as in the case

33
LA Sheridan, The Law of Trusts (12th edn Barry Rose Law Publishers, Chichester 1993) pp153
34
Re Denley’s Trust Deed [1969] 1 Ch. 373
35
Twinsectra Ltd v Yardley and others [2002] 2 AC 164
36
Barclays Bank Ltd v Quistclose Investments Ltd [1970] 1 AC 567
37
G Watt, Trusts and Equity (4th edn Oxford University Press, 2010) pp165
38
Cooper v PRG Powerhouse Ltd & Ors [2008] EWHC 498 (Ch) 
39
Rowena Meager, 2009. Purpose Trusts. Rowena Meager's Property Law Blog; Barrister & Property Law
Lecturer. [online] Available at: <http://rowenameager.com/2009/05/29/purpose-trusts/> [Accessed
06/03/2011].
40
Will Gunston and Andrew Roberston, 2008. The purpose trust [online] (Updated 01 August 2008)
Available at: <http://www.insolvencylawforum.co.uk> [Accessed 04 March 2011].
Note: Authors are Insolvency Barristers, and also write for the Corporate Rescue & Insolvency
journal, according to http://www.dickinson-dees.com/people/Will_Gunston.asp .
41
Cooper v PRG Powerhouse Ltd & Ors [2008] EWHC 498 (Ch), per Mr Justice Evans-Lombe at 11
42
LA Sheridan, The Law of Trusts (12th edn Barry Rose Law Publishers, Chichester 1993) pp148
43
Re Denley’s Trust Deed [1969] 1 Ch. 373, per Goff J at 381
44
Halsbury's Laws of England, GIFTS (VOLUME 52 (2009) 5TH EDITION) 1(3) para 221
45
Re Bowman [1915] 2 Ch. 447, per Pickford LJ at 467
46
LA Sheridan, The Law of Trusts (12th edn Barry Rose Law Publishers, Chichester 1993) pp149

Page 4 of 8
LA32920
081546286
Why did the Law of England and Wales originally prohibit most private purpose trusts?
Is this prohibition still effective today?

of Leahy47, once a body has been selected, the gift is absolute, not incurring questions of

perpetuity.

Under contract holding theory48, utilised in the case of Neville Estates,49 the gift is

subject to being a contract holding member of the association – while an association

runs, the gift is utilised for the purpose of the association, fulfilling roles similar to that

of a private purpose trust, as in Re Lipinski’s Will Trusts50; though upon unwinding an

unincorporated association, not all of the gift will vest within the contract holders-

much will pass to the crown bono vacantia51.

It is submitted that the traditional52 position53 that private purpose trusts are

prohibited54 still applies generally; however developments within unincorporated

associations55, the possible misinterpretation of the Morice case56, and the development

of Quistclose trusts57 as a possible purpose trust in disguise, mean that it is possible that

the courts may be modifying their stance on their traditional position. This could be

further compounded by developments in other common law jurisdictions 58, including

those of British Crown Dependencies, that have created a body of case law 59, on private

purpose trusts and ‘foundations.’

47
Leahy and others v A-G for NSW [1959] A.C. 457 at 461
48
C.E.F. Rickett, ‘Unincorporated Associations and Their Dissolution’ (1980) 39(1) CLJ 88 pp95
49
Neville Estates v Madden [1962] Ch 832, per Cross J at 850
50
Re Lipinski’s Will Trusts [1976] Ch 235, per Oliver J at 248
51
Halsbury's Laws of England, CHARITIES (VOLUME 8 (2010) 5TH EDITION) 1(3)(i) para 62
52
RA Pearce, J Stevens and W Barr, The Law of Trusts and Equitable Obligations (5th edn Oxford University
Press, 2010) pp458
53
Morice v Bishop of Durham and another [1803-13] All ER Rep 451, per Sir William Grant MR at 454
54
G Watt, Trusts and Equity (4th edn Oxford University Press, 2010) pp102
55
Neville Estates v Madden [1962] Ch 832, per Cross J at 850
56
LA Sheridan, The Law of Trusts (12th edn Barry Rose Law Publishers, Chichester 1993) pp155
57
Cooper v PRG Powerhouse Ltd & Ors [2008] EWHC 498 (Ch) per Mr Justice Evans-Lombe at 11
58
Patrick O'Hagan, ‘Foundations and trusts’ (2009) 23(2) Tru. L.I. 80 pp5
59
Patrick O'Hagan, ‘Foundations and trusts’ (2009) 23(2) Tru. L.I. 80 pp6

Page 5 of 8
LA32920
081546286
Why did the Law of England and Wales originally prohibit most private purpose trusts?
Is this prohibition still effective today?

Page 6 of 8
LA32920
081546286
Why did the Law of England and Wales originally prohibit most private purpose trusts?
Is this prohibition still effective today?

Barclays Bank Ltd v Quistclose Investments Ltd [1970] 1 AC 567

Cooper v PRG Powerhouse Ltd & Ors [2008] EWHC 498 (Ch) 

Knight v Knight (1840) 3 Beav 148

Leahy and others v A-G for NSW [1959] A.C. 457

Morice v Bishop of Durham (1804) 9 Ves 399

Morice v Bishop of Durham and another [1803-13] All ER Rep 451

Neville Estates v Madden [1962] Ch 832

Pettingall v Pettingall (1842) 11LJ Ch176

R v District Auditor ex parte West Yorkshire Metropolitan County Council The Times 25 July 1985, CO/569/85

Re Astor’s Settlement Trusts [1952] 1 All ER 1067

Re Bowman [1915] 2 Ch. 447

Re Dean (1889) 41 Ch. D 552

Re Denley’s Trust Deed [1969] 1 Ch. 373

Re Endacott [1959] 3 All ER 562

Re Lipinski’s Will Trusts [1976] Ch 235

Re Shaw [1957] 1 All ER 745

Re Thompson [1933] All ER Rep 805

Re Wood [1949] Ch. 498

Saunders v Vautier (1841) Cr & Ph 240

Twinsectra Ltd v Yardley and others [2002] 2 AC 164

C.E.F. Rickett, ‘Unincorporated Associations and Their Dissolution’ (1980) 39(1) CLJ 88 John Gray, ’Gifts for a Non-
Charitable Purpose’ (1902) 15(7) HLR 509

Mark Powlowski and Jo Summers, ‘Private purpose trusts - a reform proposal’ (2007) (Sep/Oct) CONVPL 440

Nigel Gravells, ‘Public Purpose Trusts’ (1977) 40 Mod. L. Rev 397

Patrick O'Hagan, ‘Foundations and trusts’ (2009) 23(2) Tru. L.I. 80

Rowena Meager, 2009. Purpose Trusts. Rowena Meager's Property Law Blog; Barrister & Property Law Lecturer.
[online] Available at: <http://rowenameager.com/2009/05/29/purpose-trusts/> [Accessed 06/03/2011].

Will Gunston and Andrew Roberston, 2008. The purpose trust [online] (Updated 01 August 2008) Available at:
<http://www.insolvencylawforum.co.uk> [Accessed 04 March 2011].

Note: Authors are Insolvency Barristers, and also write for the Corporate Rescue & Insolvency journal,
according to http://www.dickinson-dees.com/people/Will_Gunston.asp .

D Hayton, Law Relating to Trusts and Trustees (16th edn Butterworths, London 2003)

Encyclopaedia of Forms and Precedents, WILLS AND ADMINISTRATION (VOLUME 42(1) (2010)) 1(A)(7)(D) para 70.2

FW Maitland and others, Equity: A Course of Lectures (2nd edn University Press, Cambridge 1949)

G Keeton and LA Sheridan, A Case-Book on Equity and Trusts (2nd edn Professional Books Limited, London 1974)

Page 7 of 8
LA32920
081546286
Why did the Law of England and Wales originally prohibit most private purpose trusts?
Is this prohibition still effective today?

G Moffat, Trusts Law Text and Materials (3rd edn Butterworths, London 1999)

G Watt, Trusts and Equity (4th edn Oxford University Press, 2010)

Halsbury's Laws of England, CHARITIES (VOLUME 8 (2010) 5TH EDITION)

Halsbury's Laws of England, GIFTS (VOLUME 52 (2009) 5TH EDITION)

Halsbury's Laws of England, TRUSTS (VOLUME 48 (2007 REISSUE))

JG Riddall, The Law of Trusts (5th edn Butterworths, London 1996)

LA Sheridan, The Law of Trusts (12th edn Barry Rose Law Publishers, Chichester 1993)

RA Pearce, J Stevens and W Barr, The Law of Trusts and Equitable Obligations (5th edn Oxford University Press, 2010)

S Scott-Hunt and H Lim, Feminist perspectives on Equity and Trusts (Cavendish, London 2001)

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