Soton Equity and Trusts - alastairhudson.com

(C)
Alternative interpretations of the beneficiary principle
Reading: Hudson, section 4.2
It is important to understand that whereas the traditional principle continues in effect, there
have nevertheless been alternative analyses accepted by some courts of ostensibly similar
factual circumstances. Your role here is to understand the effect of applying these various
approaches to factual circumstances, who wins and who loses in such circumstances, and
why different courts might take different approaches.
1) Interpreting what is ostensibly a purpose trust as being a trust for the benefit of
persons
**Re Denley’s Trust Deed [1969] l Ch. 373 (trust “directly or indirectly for the benefit of
individuals” = people trust and therefore valid.):
I think there may be a purpose or object trust, the carrying out of which
would benefit an individual or individuals, where that benefit is so indirect or
intangible or which is otherwise so framed as not to give those persons any
locus standi to apply to the court to enforce the trust, in which case the
beneficiary principle would, as it seems to me, apply to invalidate the trust,
quite apart from any question of uncertainty or perpetuity. Such cases can
be considered if and when they arise. The present is not, in my judgment,
of that character … Where, then, the trust, though expressed as a purpose,
is directly or indirectly for the benefit of an individual or individuals, it seems
to me that it is in general outside the mischief of the beneficiary principle.
2) Interpret the power to be something other than a trust
a) Transfer interpreted to be a gift
**Re Lipinski’s W.T. [1976] Ch. 235, Oliver J:-
There would seem to me to be, as a matter of common sense, a clear
distinction between the case where a purpose is prescribed which is clearly
intended for the benefit of ascertained or ascertainable beneficiaries,
particularly where those beneficiaries have the power to make the capital
their own, and the case where no beneficiary at all is intended (for instance,
a memorial to a favourite pet) or where the beneficiaries are
unascertainable: as in the case, for instance, of In re Price [1943] Ch. 422.
If a valid gift may be made to an unincorporated body as a simple accretion
to the funds which are the subject matter of the contract which the
members have made inter se - and Neville Estates Ltd. v. Madden [1962]
Ch. 832 and In re Recher's Will Trusts [1972] Ch. 526 show that it may - I
do not really see why such a gift, which specifies a purpose which is within
the powers of the association and of which the members of the association
are the beneficiaries, should fail.
Cocks v Manners (1871) LR 12 Eq 574 (similar facts to Leahy but different interpretation,
trust held by Mother Superior deemed to be gift in favour of individual nuns)
b) Transfer interpreted to be for other purposes
Re Osoba [1979] 2 All ER 393 – (“for the maintenance and training of my daughter up to
university …” interpreted as a gift to the three women mentioned in the instrument)
Re Abbott Fund [1900] 2 Ch 326 – (trust for the maintenance of old ladies – surplus funds on
heir death held on resulting trust – i.e. impossible purpose = resulting trust)
c) Use of the principle in Saunders v Vautier
Re Bowes [1896] 1 Ch 507 – (use of Saunders v Vautier to allow human beneficiaries to displace
settlor’s stated intention)
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