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Beneficiary Principle

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QUESTION “There must be somebody in whose favour the court can decree performance”
Discuss the principle enunciated in the above statement and the exceptions thereof with the aid of appropriate case law

“There must be somebody in whose favour the court can decree performance”
INTRODUCTION
In order for a trust to be valid, there needs to be an identifiable beneficiary who can either be an individual or a company . If for instance there is no beneficiary, and consequently the trust is for the achievement of some abstract purpose then the trust is to be considered as void. In the words of Lord Grant MR in the case of Morice v. Bishop of Durham :
“There can be no trust, over the exercise of which this court will not assume control... if there can be clear, but for uncertain objects, the property… is indisposed of… Every… [Non-charitable] trust must have a definite object. There must be somebody in whose favour the court can decree performance.
The rationale of the principle is to ensure the courts ability to administer the trust. Moreover in the case of Re Endacott it was said, in relation to the beneficiary principle, that ‘no principle has greater sanction and authority’ in the law of trust other that requiring the existence of a beneficiary. It is essential for validity. For instance in the case of Re Astor , a trust for the establishment , maintenance and improvement of good understanding, sympathy, and co-operation between nations was held void because they are not for the benefit of ascertained or ascertainable individuals.
Basis of the beneficiary principle
The conscience of a trustee can only be controlled if there are beneficiaries who can bring the trustees to court where the trustees have failed to perform their obligations in the trust. One would say the court only requires at least one beneficiary in whose favour a particular court can decree performance.
The case of Saunders v. Vautier requires that some property be held on trust for some person as beneficiary such that the beneficiary acquires a proprietary right in the trust property. It is considered that it is the beneficiaries’ proprietary right in the trust property that gives the beneficiary the locus standi to petition the court if the trustee fails to perform their duties.
Capricious Purpose Trust
A capricious purpose trust will fail as was held in the case of Brown v. Burdett . It is considered unlawful to dedicate a large sum of the estate to objects of no utility, which have no other purpose or use other than that of perpetuating at great cost, and in absurd manner the idiosyncrasies of an eccentric’s testator. In the case of M’Caig v. University of Glasgow, it was stated by Lord Kyllachy that it is bound to fail because it also lacks perpetuity period.
EXECEPTIONS
1. Trust of Imperfect Obligations
It is commonly referred to as “trusts of Anomalous and exceptional cases.” Basically, courts have over the years not struck down trusts that do not have human object. They are described as those of imperfect obligations since there is no one to enforce the trust.
This can include those of taking care of pet or other animals , family graves and monuments , or even to have their masses after death. These trusts are only subject to perpetuity period, however in the case of Pettingall v. Pettingall it was held that a trust existed as a valid trust, though the lack of perpetuity period was ignored by the court. One can however note that the willingness of a judicial court to allow trust as “concessions to human weakness” seem to have disappeared in modern times. In Re Endacott a testator left property on trust “for purpose of providing some peaceful memorial “, as per Lord Harman LJ “theses cases stand by themselves and are not to be increased in numbers , nor indeed followed except where one is like another.”
2. Rule in Re Denley
In this case a settler conveyed land to trustees “to be maintained and used… for purpose (purpose 0of a recreation of a sports ground primarily for benefit of employees of a named company (individuals indirectly benefited) and secondly for benefit of such persons if any, as the trustees may allow the use of the same.” Goff J said that there are acceptable where though expressed as a purpose trust, is directly or indirectly for the benefit of an individual or individuals; it seems to me that it is outside the mischief of the beneficiary principle.
This rule sets out those special kinds of purpose trust which actually benefit individuals directly or indirectly may be upheld by the court. The rule seeks to eliminate purpose trusts of an abstract or impersonal nature, so that any purpose that may be accomplished with certainty which does thereby confer a benefit directly or indirectly on human beneficiaries should not be declared void.
The rule in Re Denley-type trust should not infringe the rule against perpetuities that is they must not last longer than the perpetuity period .
3. Unincorporated associations
A settler may attempt to give property to unincorporated associations such as a gardening club which on the face of it may appear to fall foul of the beneficiary principle. The issue is that an incorporated association does not have legal personality and therefore, cannot be beneficiaries in a trust.
The case of, Leahy v. The Attorney-General for New South Wales Lord Viscount Simmond stated that “ a gift can be made to persons including corporations but it cannot be made to a purpose or an object, a trust may be created for benefit of persons as cestui que trust but not for purpose or object are charitable, for a purpose or object cannot sue”
Moreover there needs to be an existence of some contractual relationship between the members of the association (either as joint tenants, or in common) before it can be regarded as an incorporated association in law. To be valid, the;
I. The donation must be construed as a gift to the present members of the association as joint tenants or tenants in common that is only to individuals
II. Possibly it can be construed in a manner that the gift is to present members of the association but subject matter is to be dealt with the contract which binds the members. In Re Horley Town Football Club ,donation of a sports ground to a football club to be used for sports was construed as a gift to members of the club subject to their contractual rights towards each other as members
III. It is construed as a donation on trust or gift for individuals (either as tenants in common or joint) but for present or future members , however in this instance the danger of perpetuity lacks.
IV. It can be saved from voidness under the rule in Re Denely Principle that is if the trust directly or indirectly confers a benefit to a group of persons, it may be valid if it is limited to a period of perpetuity as held in Re Lipinski .
V. A valid donation can be made via a mandate . The settler gives a, mandate to the treasurer of the group to use the donation in a particular way on behalf of the donor, in which the mandate becomes irrevocable if it is used.
This issue is sorted by construing gifts to it not as gift of trust but as gifts to the individual members of the association who will then use the funds to carry out the functions of the association .
4. CHARITABLE TRUST
To qualify as a charitable trust, it must;
I. Must be charitable in nature that is it falls within a charitable purpose
II. It requires to satisfy the public benefit test that is a beneficial to community and must not be confined to such a small section of society as to deny the elements of public participation or is without a nexus between the donor and done.
A Charitable trust will not fail for uncertainty of object, as long as the trust instrument shows a clear intention to devote the property to a trust, it is immaterial that the particular mode in which the intention is to be carried into effect is left uncertain.
In Mills v. Farmer , it was held that a settler may simply direct the property to be applied for charitable purposes, or for such purposes a trustee may select. There is also the use of schemes for supplying specific objects.
Why the Law objects to Purpose Trust
The rule against perpetuity states that a trust cannot exist forever, it must have a beginning [must vest] and it must end. A purpose essentially can last forever and hence is prima facie void as being in breach of the rule. The main rules are;
I. Rule against remoteness of vesting mainly applying to contingent interest for instance to the first of my sons to become solicitor is void unless it is certain to vest if at all. A draftsman ought to state a perpetuity period for instance 80 years for it to be valid.
II. Rule against inalienability that applies to trust of non-charitable purposes will be void if at the outset the capital is not alienable within common law perpetuity period. “Wait and see’ period renders the trust void.
III. Rule against accumulations provide statutory provisions for which a trust income can be accumulated.

REFERENECES

Alastair Hudson, G. T. (2010). The Law of Trusts (2nd Edition ed.). New York: Oxford University Press.
Bray, J. (2006). Equity and Trusts (1st Edition ed.). (J. Martin, & C. Turner, Eds.) London: Oxford University Press.
Burns, E. H., & Virgo, G. J. (2008). Maudsley & Burn's (7th Edition ed.). New York: Oxford University Press.
Clements, R., & Abass, A. (2011). Equity and Trusts (2nd edition ed.). New York: Oxford University Press.
Megarry, R. E., & Baker, P. V. (2010). Snell's Principles of Equity (25th Edition ed.). London: Sweet & Maxwell Ltd.
Warner-Reed, E. (2011). Equity and Trusts. London: Pearson Publishers Ltd.
Watt, G. (2010). Equity & Trusts Law (2nd Edition ed.). New York: Oxford University Press.
Watt, G. (2005). Todd & Watts (5th Edition ed.). New York: Oxford University Press.
Watt, G. (2010). Trusts and Equity (4th Edition ed.). London: Oxford University Press.

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