Trusts Law

Lecture Handout

Michaelmas Term

Week 6

2022/23
Reading
Essential

Garton J, Probert R, and Bean G, Moffat’s Trusts Law (7th edition, Cambridge, 2020) Chapter 4
pp.219-230; Chapter 5 pp.284-8; Chapter 14

Cases

*Morice v Bishop of Durham (1804) 9 Ves 399

*Leahy v AG for New South Wales [1959] AC 457 (PC)

*Re Astor’s Settlement Trusts [1952] Ch 534 (HC)

*Pettingall v Pettingall (1842) 11 LJ Ch 176

*Mussett v Bingle [1876] WN 86

Earl Mountbatten of Burma Statue Appeal Trust (1981)

Re Dean (1889) 41 Ch D 552 (HC)

*Re Endacott [1960] Ch 232 (CA)

*Re Denley [1969] 1 Ch 673

Conservative and Unionist Central Office v Burrell [1982] 1 WLR 522

Neville Estates Ltd v Madden [1962] Ch 832

*Re Lipinski [1977] 1 All ER 33

Re Grant's WT [1979] 3 All ER 359

*In the matter of the Horley Town Football Club [2006] EWHC 2386

Cocks v Manners [1871] LR 12 Eq 574

*marked cases are imperative for the understanding of this aspect of trusts law

Further

Hayton D J (2001) ‘Developing the Obligation Characteristic of the Trust’ 117 Law Quarterly Review
96 (available via Westlaw).

Pawlowski M and Summers J (2007) ‘Private Purpose Trusts - a Reform Proposal’ Conveyancer and
Property Lawyer 440 (available via Westlaw).
The Beneficiary Principle and Purpose Trusts
Purpose Trusts
 Where a trust is expressed as created for a purpose, there are three reasons why it may fail:
i. There must be someone who can enforce the trust, so that the court can control it (the
beneficiary principle);
ii. The trust must comply with the rules against perpetuities (it must not be intended to go
on for ever and ever);
iii. The trust must be sufficiently certain.
 As a general rule, trusts for purposes will fail.

The Beneficiary Principle

Morice v Bishop of Durham (1804) 9 Ves 399

at 405, per Sir William Grant MR:

‘Every ....... trust must have a definite object. There must be someone in whose favour the court can
decree performance.’

Bequest to the Bishop upon trust for "such objects of benevolence and liberality as the Bishop of
Durham in his own discretion shall most approve of."

Bowman v Secular Society [1917] AC 406 (HL) at 441, per Lord Parker:

‘A trust to be valid must be for the benefit of individuals.’

 For a trust to be valid, it must be for the benefit of people, not just for the carrying out of
some purpose. For a more modern restatement of the beneficiary principle see:
Leahy v AG for New South Wales [1959] AC 457 (PC)

at 478-9, per Viscount Simonds:

‘A gift can be made to persons (including a corporation) but it cannot be made to a purpose or to an
object: so also a trust may be created for the benefit of persons as cestuis que trust but not for a
purpose or object unless the purpose or object be charitable. For a purpose or object cannot sue, but,
if it be charitable, the Attorney- General can sue to enforce it.’

 The rationale for the beneficiary principle is that without a legal person who has an interest
in seeing that the trust is carried out as it should be, it will be impossible to ensure proper
administration of the trust by the trustees.

Re Astor’s Settlement Trusts [1952] Ch 534 (HC)

This case is a good example of the beneficiary principle in practice:

Viscount Astor created a trust, the terms of which were that the income was to be applied for the
‘maintenance ... of good understanding ... between nations,’ ‘the preservation of the independence
and integrity of newspapers,’ ‘the control publication ... financing or management of any
newspapers,’ and ‘the protection of newspapers ... from being absorbed or controlled… [in ways]
inconsistent with the highest integrity or independence.’

It was accepted that these purposes were non-charitable.

Roxburgh J held: the trust was invalid on two different grounds.

Firstly, it violated the beneficiary principle. He explained the reasons for the beneficiary principle as
follows (at 541-2):

‘… if the purposes are not charitable, great difficulties arise both in theory and 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.’

Secondly, the trust would, in any event, have failed on the grounds of uncertainty (at 547):

‘If (contrary to my view) an enumeration of purposes outside the realm of charities can take the place
of an enumeration of beneficiaries, the purposes must, in my judgment, 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.’

He then concluded (at 549) by saying that both of these grounds had

‘their origin in a single principle, namely, that a court of equity does not recognize as valid a trust
which it cannot both enforce and control. This seems to me to be good equity and good sense.’

Exceptions to the Beneficiary Principle

 The most significant exception to the beneficiary principle (alluded to above in Roxburgh J’s
judgment in Re Astor’s Settlement Trusts and Viscount Simonds in Leahy v AG for New South
Wales) is the trust for charitable purposes. Charitable purpose trusts are often referred to as
trusts for ‘public purposes’ as opposed to trusts for ‘private purposes.’ We will deal with
trusts for charitable purposes over the next couple of lectures.
Exceptions to the beneficiary principle have also been made in a group of cases which were labelled
‘concessions to human weakness or sentiment’ by Underhill (approved by Roxburgh J in Re Astor’s
Settlement Trusts). This label reflects the fact that there is no principled basis for upholding these
trusts. For this reason they are also known as ‘anomalous exceptions’ to the beneficiary principle.
‘Anomalous exceptions’ to the beneficiary principle – Trust of Imperfect Obligation

The 4 trusts of imperfect obligation

i) The Erection or Maintenance of Tombs, Graves or Monuments
Trimmer v Danby (1856) 25 LJ Ch 424

The testator bequeathed £1,000 for the erection of a monument to his memory in St Paul’s
Cathedral. This was upheld as valid.

Mussett v Bingle [1876] WN 86

The testator bequeathed £300 to erect a monument to his first wife’s husband and £200 to provide
for its upkeep.

Held: the £300 to erect a monument to his first wife’s husband was upheld as a valid trust. However,
the £200 for the upkeep of the monument could not be upheld as a valid trust because it violated
the perpetuity period.

Pirbright v Salwey [1896] WN 86

The testator bequeathed £800 for the upkeep of a burial enclosure of his child in a churchyard ‘for as
long as the law permitted.’

Held: The trust was valid for a period of 21 years from the testator’s death (the perpetuity period).

Re Hooper [1932] 1 Ch 38 (HC)

The testator left £1000 to his executors to use ‘so far as they legally can do so’ for the upkeep of
certain graves, a vault, certain monuments, in particular cemeteries and churchyards.

Held: the trust was valid for a period of 21 years from the date of the testator’s death.

ii) The Care of Specific Animals

 Trusts for the care of animals generally (rather than specific animals or specific groups of
animals) are capable of being charitable. For an example of this see Re Wedgwood [1915] 1
Ch 113 (see lecture on charities).
 In this context we are concerned with trusts for the maintenance and care of specific
animals or specific groups of animals.
Pettingall v Pettingall (1842) 11 LJ Ch 176

A trust for the upkeep of the testator’s favourite black mare was upheld.
Mitford v Reynolds (1848) 16 Sim 105

By his will the testator bequeathed the remainder of his property to charity ‘after deducting the
annual amount that will be requisite to defray the keep of my horses’. There is no discussion in the
report of the case about this aspect of the case but the report tells us that ‘the order directed the
costs of all parties to be taxed, and made provision for the maintenance of the testator’s horses.’

Re Dean (1889) 41 Ch D 552 (HC)

A testator gave his horses, ponies and hounds to his trustees and charged his freehold estates with
an annual payment of £750 for a period of 50 years for the upkeep of the animals, should they live
that long.

North J upholding the trust for a period of fifty years if the animals should live that long, relying on
both Mitford v Reynolds and the monuments cases stated (pp556-7):

‘Then it is said, that there is no cestui que trust who can enforce the trust, and, that the Court will not
recognise a trust unless it is capable of being enforced by someone. I do not assent to that view.
There is not the least doubt that a man may if he pleases, give a legacy to trustees, upon trust to
apply it in erecting a monument to himself, either in a church or in a churchyard, or even in
unconsecrated ground…

Is there then anything illegal or obnoxious to the law in the nature of the provision, that is, in the fact
that it is not for human beings, but for horses and dogs? It is clearly settled by authority that a
charity may be established for the benefit of horses and dogs, and, therefore, the making of a
provision for horses and dogs, which is not a charity, cannot of itself be obnoxious to the law,
provided, of course, that it is not to last for too long a period.’

The case is seen as problematic in that North J appears to reject the beneficiary principle entirely.
The drawing of an analogy with a charitable trust for animals is misleading because in the case of
charitable trusts (‘public trusts’) the Attorney General has always had power to enforce them on
behalf of the public. This case is also generally considered to be incorrectly decided to the extent
that the trust was held to be valid for a 50 year period (if the animals should live that long), and
consequently offends the rule against perpetuities. The perpetuity rule requires that a non-
charitable trust must not last beyond the period of ‘lives in being’ plus 21 years. The correct
approach to the question of the perpetuity rule in this context was laid down in:

Re Kelly [1932] IR 255 (Irish Case)

The testator left £100 sterling ‘to his executors and trustees for the purpose of expending £4 sterling
on the support of each of my dogs per year’

Held: there was a valid trust for 21 years succeeding the death of the testator, provided any of the
dogs lived so long (not a trust for the life of the dogs).
Meredith J dismissed the idea that the ‘measuring life’ could be that of an animal (which was a
possible basis for the outcome in Re Dean):

‘If the lives of the dogs or other animals could be taken into account in reckoning the maximum
period of “lives in being and twenty-one years afterwards” any contingent or executor interest might
be properly limited, so as only to vest within the lives of specified carp, or tortoises, or other animals
that might live for over a hundred years, and for twenty-one years afterwards, which, of course, is
absurd. “Lives” means human lives. It was suggested that the last of the dogs could in fact not outlive
the testator by more than twenty-one years. I know nothing of that. The Court does not enter into
the question of a dog’s expectation of life. In point of fact neighbours’ dogs and cats are unpleasantly
long-lived; but I have no knowledge of their precise expectation of life …… there can be no doubt that
“lives” means lives of human beings, not of animals or trees in California.’

Despite Meredith J’s reluctance to entertain the question of animals’ life expectancy, there have
been cases where courts have taken judicial notice of an animal’s life expectancy (see e.g.: Re Haines
(1952) The Times, 7 November)

iii) The Saying of Masses for the Dead

 Until the early twentieth century trusts for the saying of masses for private individuals were
held to be void on the basis that they were for ‘superstitious uses’ (contrary to the Statute of
Chantries 1547). This position changed in:
Bourne v Keane [1919] AC 815 (HL)

It was held that such trusts were capable of being valid. The HL did not determine the question,
though, whether such trusts were capable of being charitable (under the head of advancement of
religion: see later lecture on charities).

It was finally settled in Re Hetherington that such trusts could be charitable:

Re Hetherington [1990] Ch 1(HC)

The testatrix, who was a devout Roman Catholic, left money for the saying of masses for the repose
of the souls of herself and certain family members.

Held: This would amount to a valid trust for a charitable purpose provided the masses were
celebrated in public (see later lecture on charities).

There are some suggestions that trusts for the saying of masses could be valid as anomalous
exception purpose trusts. See, for example:

Re Hetherington [1990] Ch 1 (HC),

at 9, per Sir Nicholas Browne-Wilkinson VC:

‘There was considerable argument before me whether the decision in Bourne v. Keane binds me to
hold that a trust for Masses is a valid trust. That conclusion might have been reached either on the
basis that a trust for Masses is a valid charitable trust or on the basis that a trust for Masses is one of
that anomalous class of cases where a trust for a non-charitable purpose is valid’

If that is correct, then a trust for the saying of masses in private could be valid even though it would
not have charitable status because of the lack of ‘public benefit.’

iv) Promotion and Furtherance of Fox-Hunting

Re Thompson [1934] Ch 342 (HC)

The testator had left money to his friend Lloyd to be applied by him in such manner as he should in
his absolute discretion think fit towards the promotion and furtherance of fox-hunting.

This was upheld. Clauson J made a Pettingall order requiring Lloyd to give an undertaking to apply
the money towards the object expressed in the testator’s will and, in case he should apply the
money otherwise than for this object, giving the residuary legatees leave to apply to the court.

NB: Despite the ban introduced by the Hunting Act 2004, this last anomalous exception may still be
of relevance as hunting is exempted from the statutory prohibition in certain defined circumstances
(See Hunting Act 2004, Sch. 1).

 These exceptions are a closed class, meaning they will not be extended
Re Endacott [1960] Ch 232 (CA)

Both Lord Evershed MR and Harman LJ stressed that the scope of the anomalous exceptions cases
ought not to be extended.

According to Lord Evershed, at 246, to do so

‘would be to validate almost limitless heads of non-charitable trusts ….. so long only as the question
of perpetuities did not arise; and, in my judgment, that result would be out of harmony with the
principles of our law.’

Harman LJ explained, at 250-1, that the anomalous exceptions cases were:

‘not really to be satisfactorily classified, but are perhaps merely occasions when Homer has nodded,
at any rate these cases stand by themselves and ought not to be increased in number, nor indeed
followed, except where the one is exactly like another. Whether it would be better that some
authority now should say those cases were wrong, this is perhaps not the moment to consider.’

 Some further examples of invalid purpose trusts include:

Re Astor's ST [1952] Ch 534.

Trust: "... the maintenance of good understanding, sympathy and co-operation between nations, the
preservation of the independence and integrity of newspapers; the protection of newspapers from
being absorbed by combines or being tied by finance or otherwise to special ... views".

Re Shaw [1957] 1 WLR 729.

George Bernard Shaw had left money on trust for 21 years for research into a 40 letter alphabet to
replace our present alphabet and for the translation of a play into the new alphabet.

Re Endacott [1960] Ch 232, CA.

T left approximately £2,000 to the North Tawton Devon Parish Council for the purpose of providing
some “useful memorial to myself.”

 Juridical Status — The juridical status of this type of trust is peculiar. On the one hand, the
trust is obviously valid. On the other hand, the lack of a beneficiary to enforce the trust
means that the trust is unenforceable. These trusts are therefore called ‘trusts of imperfect
obligation.’ The result is that the trustees cannot be made to apply the fund for the
stipulated purpose. The court can, however, prevent the trustees from misapplying the trust
property by making a ‘Pettingall Order.’ This requires the trustees to give an undertaking to
carry out the purpose and interested parties (those persons who would take the property if
the trust were to fail or who would be entitled to any surplus after the purpose had been
carried out) are given leave to apply to the court if the trustees apply the property outside of
the stipulated purpose.
 Anomalous Exceptions and the Rule against Perpetuities — Although trusts of imperfect
obligation are exempt from the beneficiary principle, it is important to note that they remain
subject to the rules against capriciousness and perpetuity.
Trusts for People / Trusts for Purposes
A question of construction
 Trust for a purpose?
Re The Trusts of the Abbott Fund [1900] 2 Ch 326

A fund was raised for the maintenance and support of two deaf and dumb old ladies. The trust could
have been understood as being an express private trust, with the beneficiaries being the two ladies.
However, the trustees had a wide discretion as to how to use the money. Consequently, the court
understood the trust as being for the purpose of benefitting the ladies, rather than for the ladies
themselves. It was valid since they were in a position to enforce it.

The case itself concerns the disposition of the remaining funds when the sisters died. On their death
the purpose failed, and the money returned on resulting trust to the donees.

 Trust for people?

Re Andrew's Trusts [1905] 2 Ch 48

A fund was established for the education of children of a deceased clergyman. An accompanying
letter showed that the contributions were made “for or towards their education; ... as being
necessary to defray the expenses of all, and that solely in the matter of education”. Once their
education was complete, the question arose of the disposal of the surplus. Kekewich J. decided the
children were entitled to equal shares.

Re Osoba [1979] 2 All ER 393

A testator left his residue “for the training of my daughter up to University grade.” When this
university education was complete, the other children of the testator claimed the remaining money.
The Court of Appeal found that the testator’s intention had been to make an absolute gift to his
daughter, and the reference to education was merely an expression of motive. Therefore the
daughter was entitled to the whole of the property, and would have been even if she had not gone
to university.

Re Bowes [1896] 1 Ch. 507

Trust to plant trees on a settled estate. The money belonged to the owners of the estate absolutely.

 A question of construction when broader purposes are specified or members of an

association may benefit:
Trust for purposes:

Re Astor's ST [1952] Ch 534

 Re Shaw [1957] 1 WLR 729

Re Endacott [1960] Ch 232

Trusts for people: direct or indirect benefit to individuals

Re Denley [1969] 1 Ch 673

Land was given on trust to be used as a sports ground primarily for the benefit of employees of a
named company for twenty one years from the death of the last survivor of a group of named
individuals. The trustees also had the power to allow the facilities to be used by other people.
Although the trust was for a purpose, the use and enjoyment, it directly or indirectly benefitted
individuals so was valid. Such a trust would not fail for want of a beneficiary.

Per Goff J at 383:

“I think there may be a purpose or object trust, the carrying out of which would benefit an individual
or individuals, where the 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 judgement, of that character, and it will be seen that ... the trust deed expressly
states that, subject to any rules and regulations made by the trustees, the employees of the company
shall be entitled to the use and enjoyment of the land. Apart from this possible exception, in my
judgement the beneficiary principle ... is confined to purpose or object trusts which are abstract or
impersonal. The objection is not that the trust is for a purpose or object per se, but that there is no
beneficiary ... Where, then, the trust, although expressed as a purpose, is directly or indirectly for the
benefit of an individual or individual, it seems to me that it is in general outside the mischief of the
beneficiary principle.”

 Note that under the Denley principle the trust is valid, and the trustees must uphold the
purpose.
 The key point is that the court interpreted the trust as benefitting people, and so it was valid
as there was somebody in whose favour the court could enforce the trust

Compliance with the rules against perpetuity

a) The rule against remoteness of vesting — This will not usually cause a purpose trust which
benefits people to fail because the Perpetuities and Accumulations Act 2009 allows one to
wait and see what happens and to close the class if necessary at the end of the perpetuity
period (125 years).
b) The rule against inalienability ("the rule against perpetual trusts") — A private trust will be
void if the income is tied up for a purpose beyond the perpetuity period. The Perpetuities
and Accumulations Act 2009 cannot be used to save a trust for a private purpose.

Certainty
 Morice v Bishop of Durham [1804] 9 Ves Jr 399. C.A. : "benevolence" "liberality"
 Re Astor's ST [1952] Ch 534. e.g "integrity of the press"
 Re Endacott [1960] Ch 232. C.A. "useful" (memorial)
“Social Experiments”

 Re Astor's ST [1952] Ch 534 – social experiments like the establishment, maintenance

and improvement of good understanding sympathy and co-operation between nations, the
‘preservation of the independence and integrity of newspapers and the encouragement of
the adoption and maintenance by newspapers of fearless educational and constructive
policies,’ ‘promotion of the freedom independence and integrity of the press’

 McCaig v University of Glasgow (No 2) 1906 SLT 600. — Trust to erect artistic towers and
statues of relatives.
 McCaig's Trustees v. Kirk Session of United Free Church of Lismore 1915 SLT 152. — Bronze
statues of relatives and testatrix.

Is there a tension between “two competing aspects of public policy (the desire to avoid dispositions
which have no useful purpose and the need to preserve the testator's freedom to dispose of his
property as he wishes)”?

 See M. Pawlowski and J. Brown, “Testamentary Trusts and the Rule Against Capricious
Purposes: an Underlying Rationale” [2012] Trust Law International 109.
Gifts to Unincorporated Associations
 Companies are legal persons, etc. can hold property or be beneficiaries.
 An unincorporated association however is generally a non-commercial club or society, like a
sports club or book group. Such an association is not a person, it cannot hold property.
 Money given to such a group would not be owned by anybody. Equity may provide a remedy
in holding the money on trust for members, but that would likely be a purpose.
 But this distinction is not always understood. See Leahy v AG for New South Wales [1959]
AC 457, PC, Viscount Simonds observed that and people see clubs etc. as a “continuing entity
and, however inaccurately, as something other than an aggregate of its members."
 In determining whether a gift to an unincorporated association is valid, there are various
constructions the court can use, as appropriate.
Definition:

Conservative and Unionist Central Office v Burrell [1982] 1 WLR 522

Per Lawton LJ at 525:

“two or more persons bound together for one or more common purposes, not being business
purposes, by mutual undertakings each having mutual duties and obligations, in an organisation
which has rules which identify in whom control of it and its funds rests and on what terms and which
can be joined or left at will. The bond of union between the members of an unincorporated
association has to be contractual”

Five ways of property holding for unincorporated associations

Neville Estates Lted v Madden [1962] Ch 832

Per Cross J at 849:

The question of construction and effect of gifts to or in trust for unincorporated associations was
recently considered by the Privy Council in Leahy v A-G for New South Wales. The position, as I
understand it, is as follows. Such a gift may take effect in one or other of three quite different ways.

In the first place, it may, on its true construction, be a gift to the members of the association at the
relevant date as joint tenants, so that any member can sever his share and claim it whether or not he
continues to be a member of the association.

Secondly, it may be a gift to the existing members not as joint tenants, but subject to their respective
contractual rights and liabilities towards one another as members of the association. In such a case a
member cannot sever his share. It will accrue to the other members on his death or resignation, even
though such members include persons who became members after the gift took effect. If this is the
effect of the gift, it will not be open to objection on the score of perpetuity or uncertainty unless there
is something in its terms or circumstances or in the rules of the association which precludes the
members at any given time from dividing the subject of the gift between them on the footing that
they are solely entitled to it in equity.
Thirdly, the terms or circumstances of the gift or the rules of the association may show that the
property in question is not to be at the disposal of the members for the time being, but is to be held
on trust for or applied for the purposes of the association as a quasi-corporate entity. In this case the
gift will fail unless the association is a charitable body. If the gift is of the second class, i.e., one which
the members of the association for the time being are entitled to divide among themselves, then,
even if the objects of the association themselves are charitable, the gift would not, I think, be a
charitable gift. If, for example, a number of persons formed themselves into an association with a
charitable object – say the relief of poverty in some district – but it was part of the contract between
them that, if a majority of the members so desired, the association should be dissolved and its
property divided between the members at the date of dissolution, a gift to the association as part of
its general funds would not, I conceive, be a charitable gift”

 Out of this, five distinct methods of property holding can be identified:

i) Charitable trust
ii) Non-charitable purpose trust
iii) For members at the time of the transfer
iv) On trust for present or future members
v) For members subject to their existing contractual rights

Gift on trust for a charitable purpose

 If the gift is for a charitable purpose, this will form a charitable trust

Gifts on trust for a non-charitable purpose

 Where the purpose is private: this type of trust is likely to be void because of the beneficiary
principle, perpetuity or uncertainty. e.g. Re Astor's ST [1952] Ch 534
Leahy v AG for New South Wales [1959] AC 457, PC

An Australian testator provided in his will that his property, known as Elmslea, should be held upon
trust for an Order of Catholic nuns. This was held not to be charitable, or for identifiable individuals
as the Order was dispersed all over the world and the property was one house. The trust was void.

Although Re Denley did not involve an unincorporated association, there is no reason it could not be
applied to save a gift in such a situation.

For members at the time of transfer

 In this situation, the members at the time of transfer are joint tenants, either taking
absolutely or as beneficiaries.
 They can sever their share at any time, and it is not dependant on them continuing to be
members.
 There is no problem of lack of beneficiaries or of perpetuity.
 However, this is unlikely to be what a settlor intended, and occurrences of this sort are rare.
It is most applicable where the settlor has used the association as short hand for naming all
the members, and most applicable in cases of small groups, such as a book club.
 Any rule of association which prevents members severing their share would make this
analysis unsuitable.
As Vinelott J observed in Re Grant's WT, this construction is used where:
 "... the association is used in effect as a convenient label … of the class which it is intended to take …
So, for instance, a testator might give a … share of residue to a … social club of which he had been a
member … Cases within this category are relatively uncommon."

On trust for present and future members

 To avoid the present members of an association being able to take their share absolutely at
the time of transfer, a gift may be specified as to present and future members.
 This has traditionally infringed the perpetuity rule, but may not after the Perpetuities and
Accumulations Act 2009
 Such a trust would still suffer the limitation that each member would retain an interest even
if they ceased to be a member, and this is unlikely to be what the settlor intended.

For members subject to their existing contractual rights

 This is the preferred construction, sometimes referred to as the ‘contract holding theory’.
 Under this construction the gift is held according to the rules of the association.
 This requires something that looks like a contract, such as a constitution.
 This means the property is available to all members, including future members.
 The members cannot sever their interest at will, and members who leave will lose their
interest. New members will gain an interest.
Neville Estates v Madden [1962] Ch. 832

Per Cross J at 849:

“it may be a gift to the existing members not as joint tenants, but subject to their respective
contractual rights and liabilities towards one another as members of the association. In such a case a
member cannot sever his share. It will accrue to the other members on his death or resignation, even
though such members include persons who became members after the gift took effect.”

Re Lipinski [1977] 1 All ER 33

Property left on trust for a sports and social club for the Hull Judeans (Maccabi) Association, an
unincorporated association for Jewish children. But was it a trust for a purpose because the testator
stated that the trust was in memory of his late wife and that the money was to be used solely for
constructing or improving club buildings? This was held to be a valid trust for the members of the
association.

Per Oliver J at 246:

“At first sight ... there appears to be a difficulty in arguing that the gift is to members of the
association subject to their contractual right inter se when there is a specific direction or limitation
sought to be imposed upon these contractual rights as to the manner in which trhe subject matter of
the gift is to be dealt with. This, says counsel, is a ‘pure purpose trust’ and is invalid on that ground,
quite apart from any question of perpetuity. I am not sure, however, that it is sufficient merely to
demonstrate that a trust is a ‘purpose’ trust ...
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 contrasct which the members made inter se ... 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. Why are not the beneficiaries able to
enforce the trust or, indedd, in the exercise of their contractual rights, to terminate the trust for their
own benefit? Where the done association is itself the beneficiary of the prescribed purpose, there
seems to me to be the strongest argument in common sense for saying that the gift should be
construed as an absolute one within the second category – the more so where, if the purpose is
carried out, the members can by appropriate action vest the resulting property in themselves, for
here the trustees and the beneficiaries are the same persons.”

 However, in order to use the contractual analysis, it is necessary that the rules allow the
members to deal with the property (or that the rules can be amended to allow the members
to deal with the property).
Re Grant's WT [1979] 3 All ER 359 held not valid

T left all his property to a local Labour party committee for the benefit of a named local constituency
party.

The rules of the local constituency party stated that they were subject to alteration if changes were
agreed at the Labour Conference or by the National Executive Committee. Any property belonging to
the constituency party could not be dealt with without obtaining the approval of the National
Executive Committee.

St Andrew's (Cheam) Lawn Tennis Club Trust, Re; Philippe v Cameron

held not valid
St. Andrews (Cheam) Lawn Tennis Club Trust [2012] EWHC 1040, at para. [62]

Lawn tennis club for churchgoers. The rules prevented the members of the club from dividing the
land (or sale proceeds if sold) between them and the members could not amend those rules without
the consent of the Church.

But note:

In the matter of the Horley Town Football Club [2006] EWHC 2386

The club had been existence for many years but, since 1990, membership had been extended to
include temporary members (visiting teams, friends and supporters).

Other possible constructions

 An inter vivos gift may be construed as a transfer of property to an agent: see Conservative
and Unionist Central Office v Burrell [1982] 2 All ER 1;
 There may be a power (rather than a trust) to appoint for a purpose. This is valid if it is
sufficiently certain and limited to the perpetuity period: there is no need for beneficiaries as
those entitled in default can sue. However courts have refused to treat trusts as powers in
order to get round the beneficiary principle: see Re Shaw and Re Endacott.