Trusts

Trusts

Trusts

Introduction

The purpose trust effect is that such intended trusts are void for the court cannot give effect to a trust which it cannot supervise. There is no beneficiary with a locus standi capable of enforcing such trust. In consequence, a resulting trust arises in favour of the donor or settlor on the failure of a non-charitable purpose trust. Re Astor's Settlement Trust [1952] Ch. 534. In this case, Lord Astor purported to create a trust for 'the maintenance of good understanding between nations and the preservation of the independence and integrity of newspapers'. The court held that the trust was void for uncertainty on the grounds that the means by which the trustees were to attain the stated aims were unspecified and the absence of a person who was entitled as of right to enforce the trust. In other words, a trust creates rights in favour of beneficiaries and imposes correlative duties on the trustees. If there are no persons with the power to enforce such rights, then equally there can be no duties imposed on trustees.

This rule is subject to a number of exceptions to be considered later.

Background

There are a number of common reasons why private purpose trusts fail. The list is not exhaustive but pitfalls which a settlor should avoid are (a) the lack of a beneficiary principle, (b) uncertainty of objects and (c) the infringement of the perpetuity rule.

(a)Lack of beneficiaries:

A trust is mandatory in nature. The courts have always jealously guarded the rights and interests of the beneficiaries under trusts. But such rights may only be protected if the beneficiary has a locus standi to enforce the same. Purposes cannot initiate proceedings against the trustees.

per Grant M R in Morice v Bishop of Durham (1804) 10 Ves. 522.

"There must be somebody in whose favour the court can decree performance."

On the other hand, with charitable purpose trusts, the Attorney General as parens patriae is charged with the duty of enforcing public trusts. No public official is required to enforce private trusts.

(b)Uncertainty:

As a corollary to the above mentioned rule, it is obvious that the rights of the beneficiaries will be illusory unless the court is capable of ascertaining to whom those rights belong. Thus, as a second ground for the decision in Re Astor, the trust failed for uncertainty.

per Roxburgh J in Re Astor

"If an enumeration of purposes outside the realm of charities can take the place of an enumeration of beneficiaries, the purposes must be stated in phrases which embody definite concepts and the means by which the trustees are to try to attain them must also be prescribed with a sufficient degree of certainty."

A case which illustrates this principle is Re Endacott [1960] Ch. 232. A testator transferred his residuary estate to the Devon Parish Council "for the purpose of providing some useful memorial to myself". The court held that no out-and-out gift to the Council was created but the testator intended to impose an obligation in the nature of a trust on the Council ...