Equity - Semester Two Week Nine Trusts for Purposes Beneficiary Principle A trust must be for the benefit of persons or a charitable purpose. If the trust is for a non charitable purpose, it is invalid. Morice v Bishop of Durham The testator list property with the Bishop of Durham as trustee, who could choose matters of benevolence and liberal purposes. The court found this invalid, and that it was not for charitable purposes exclusively because benevolence had a wider meaning than charitable. The court must be able to control the trust and there must be someone who is able to enforce the trust. In relation to charitable truss, the AG is the person who can enforce. The beneficiary principle has been followed in Australia in Leahy v A-G (NSW). Non Charitable Trusts Re Astors Settlement The trust was for the improvement of understanding between nations, and the preservation of newspapers. It was held that this was invalid as it was not a charitable purpose, and not for individuals. The objects were also too uncertain. Trusts for Persons/Purposes In Re Denley Trusts money was left on trust for the maintenance of sports grounds for the employees of a company. It was held that it was valid. The court distinguished pure purpose trusts from those which directly or indirectly benefit individuals (the latter is OK). The court in this case could control the trust, and the individuals would have had locus standi. This has not been accepted in Australia. Unincorporated Associations These are groups associated for a purpose. E.g. Sports Clubs, P&F, Churches, Trade Unions. These have no separate entity from their members and are therefore not a company. Prima Facia, a gift on trust for them breaches the beneficiary principle as it is not a trust for a company, and if it is a gift for purposes, it will most likely fail. However a distribution to an unincorporated association is OK if: * It is construed as a trust for purposes of an association which are charitable. * It is construed as a gift for the present members. This is rebuttable however. Leahy V AG (NSW) "For such orders of nuns of the Catholic Church or Christian Bros as my trustee shall select" This was not a charitable trust as it may include non-charitable orders. The court will look at: * The form of the Gift * The membership * The subject matter * The nature of the association. * Here it was to the order itself, and not het nuns/bros thereof. The membership of these was uncertain. The subject matter was a farm. An association cannot be would up also. The gift was found to have failed. Bacon v Pianta "For the communist party for its sole use" The court approved of the criteria from Leahy v AG. The term "its sole use" was not to the members. The membership was a large and fluctuating group, and not a gift to each and every member. The court was unsure as toe the nature of the association, and the presumption was rebutted. It is a long standing principle of law that political purposes are not charitable. Alternative Approaches Contract Theory Present members hold the gift subject to the association rules or contractual obligations inter-se. Neville Estates v Madden. In Re Goodson, a gift to the "Loyal Orange Institution" was found to be valid. A gift to individual members was subject to their control to use it for the association. This approach has not been supported Elizabethan Theatre Trust Case. A theory that the individuals indirectly benefit from the gift to the association has also not been followed - Re Denley Trusts. In Queensland, the Succession Act, S.63 states that if a gift is left for an unincorporated association, it shall be construed as in augmentation of the general funds. Re Lovell - a gift for a Masonic lodge which would have been invalid under general law, is valid, but now could only be used for this association. Purpose Trusts - Exceptions Anomalous purpose trusts are acceptable - especially: * For the upkeep of the testators tomb or monument. * For the maintenance of the testators animals. These are unenforceable, only permissive. The categories are unlikely to be extended. Charitable Purposes The term charitable has a legal meaning. The accepted starting point is the Statute of Elizabeth - Charitable Uses Act. Section 103 of the Trusts Act Qld provides that the repeal of the Charitable Uses Act 1601 will not affect the meaning of charity. The general question is whether the cause is within the meaning, spirit or intendment of the preamble to the Charitable Uses Act. In Pemsels Case Lord McNaughton gave four heads of charity. Relief of Poverty "Relief of aged, impotent and poor people" - not a conjunctive term . LeCras v Perpetual Trustees A trust was set up to provide money for a private (expensive) hospital. It was argued that this was not for charitable purposes, but for the rich sick. The court found that the term must be read disjunctively. Look for an intention to relieve poverty - which does not mean absolute destitution. The courts are willing to imply a gift is for use of relieving poverty. In Re Niyozi's Will the court found that a trust for the establishment of a working mans hostel was within the meaning, as the term hostel was sufficient to denote poverty. In Re Drummond a trust to provide for the holiday expenses of a company's employees was not within the meaning as holidays did not denote poverty. Advancement of Education Education is used in the wide sense. The courts look for a dissemination or imparting of knowledge. Student associations, and even law reporting associations have been found to be valid. Incorporated Council for Law Reporting v AG. Education does not include pure research that does not serve to increase useful knowledge. In Re Shaw money was left to research if the alphabet could be changed to 40 letters. Not permitted. However gifts for scientific "pure research" will generally provide future knowledge and will be valid - Taylor v Taylor. Trusts for pure sport are not valid unless associated with schooling - IRC v McMullan. S.103(2) does validate some of these. Advancement of Religion The meaning of religion was discussed in Church of the New Faith v Commissioner of Payroll Tax, and it was found that it involved: * Belief in a supernatural being, thing or principle. * A code of conduct required to give effect to that belief. The meaning of advancement includes providing for priests etc... and the maintenance of churches. Intercessory prayer, or orders which involve self denial and do no works for the community are not valid. Donations to orders which are missionary, educationary, charitable etc... are valid. Gilmor v Coates established that religious orders must also benefit the community for them to be valid. Other Purposes Beneficial to the Community The purposes must both benefit the community and be within the spirit of the preamble. Incorporated Council for Law Reporting Qld v A-G (Qld) found that the incorporation, a non profit organisation that produced law reports was clearly of benefit to the community, and fell with the preamble, as the legal system is socially fundamental. In Chester v RNA a trust for breeding racing pigeons was not valid. Public Works, the Protection of Animals (eg RSPCA) and similar are valid. Individual pets are not charitable, nor are political parties, and trusts to try to change the law, as they are not beneficial to society - McGovern v Amnesty International. Amnesty was a political purpose, and therefore not valid. Pure sport is not valid, but see S.103(2). In IRC v Baddeley a trust setting up facilities for recreational and social purposes was held invalid. The provision of recreational facilities is charitable where in the interest of social welfare. Improving the conditions of life for persons intended to benefit and either those persons have need, or benefits the public at large, is valid. Mixed Purposes Under S.104 Trusts Act where there are more than one purpose, the section serves to sever the non charitable purposes. Where there are compendious purposes (eg Leahy's Case) it will be read as if it can only be used for charitable purposes. Meaning of Public Benefit Benefit - see Gilmore v Coates. Public means that the whole public should benefit - i.e. the trust must benefit the public or a section of the public. FCT v Thompson states that provided that anyone can join the specified group, a group trust is OK. An association which admits members of the public based on an arbitrary test is not public.