GIFTS TO UNINCORPORATED ASSOCIATIONS

By

SALLY DENNIS

B.A., Lady Margaret H a l l , Oxford, 1980

LL.B., U n i v e r s i t y o f V i c t o r i a , 1983

A THESIS SUBMITTED IN PARTIAL FULFILMENT OF

THE REQUIREMENTS FOR THE DEGREE OF

MASTER OF LAWS

in

THE FACULTY OF GRADUATE STUDIES

(Department o f Law)

We a c c e p t t h i s t h e s i s as conforming

t o the r e q u i r e d standard

THE UNIVERSITY OF BRITISH COLUMBIA

October 1983

©Sally Dennis, 1983

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In p r e s e n t i n g t h i s t h e s i s i n p a r t i a l f u l f i l m e n t o f t h e
r e q u i r e m e n t s f o r an advanced degree a t t h e U n i v e r s i t y
o f B r i t i s h C o l u m b i a , I agree t h a t t h e L i b r a r y s h a l l make
i t f r e e l y a v a i l a b l e f o r r e f e r e n c e and s t u d y . I f u r t h e r
agree, t h a t p e r m i s s i o n f o r e x t e n s i v e c o p y i n g o f t h i s t h e s i s
f o r s c h o l a r l y purposes may be g r a n t e d by t h e head o f my
department o r by h i s o r h e r r e p r e s e n t a t i v e s . It is
understood that copying or p u b l i c a t i o n of t h i s t h e s i s
f o r f i n a n c i a l g a i n s h a l l n o t be a l l o w e d w i t h o u t my w r i t t e n
permission.

Department o f LAW

The U n i v e r s i t y o f B r i t i s h Columbia
1956 Main Mall
Vancouver, Canada
V6T 1Y3

Date OCTOBER 1983

DE-6 (3/81)
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ABSTRACT

An u n i n c o r p o r a t e d a s s o c i a t i o n i s a strange phenomenon. As a

matter o f f a c t , i t undoubtedly e x i s t s and engages i n as wide a range

of t r a n s a c t i o n s as any l e g a l p e r s o n . As a matter o f law, however, i t

has no e x i s t e n c e s e p a r a t e and a p a r t from t h a t o f i t s c o n s t i t u e n t mem-

bers. I t i s consequently i n c a p a b l e o f e i t h e r b e a r i n g l i a b i l i t i e s o r

enjoying r i g h t s . In p a r t i c u l a r , i t cannot be a donee o r l e g a t e e i n

i t s own r i g h t , nor can i t be a b e n e f i c i a r y under a t r u s t . Yet g i f t s ,

both by way o f i n t e r v i v o s d i s p o s i t i o n and l e g a c y , and both, d i r e c t l y

and on t r u s t , a r e c o n t i n u a l l y made i n favour o f u n i n c o r p o r a t e d associ-

ations. I f t h e purposes p u r s u e d by an u n i n c o r p o r a t e d a s s o c i a t i o n are

c h a r i t a b l e a g i f t made t o i t w i l l be v a l i d . I f i t s purposes a r e n o t

c h a r i t a b l e , however, t h e f a t e o f t h e g i f t is- u n c e r t a i n . This thesis

examines t h e c u r r e n t law on n o n - c h a r i t a b l e g i f t s made t o an u n i n c o r p o r a t e d

association, c o n c l u d e s t h a t i t i s i n an u n s a t i s f a c t o r y s t a t e and

suggests a l e g a l a n a l y s i s by r e f e r e n c e t o which such, g i f t s can be

h e l d t o be v a l i d .

The courts o f t h e common law j u r i s d i c t i o n s o f t h e U n i t e d Kingdom,

Canada, A u s t r a l i a and New Zealand have developed no less- than n i n e

d i f f e r e n t p o s s i b l e ways o f a n a l y s i n g a gift f o r the purposes o f an

unincorporated association. None i s s a t i s f a c t o r y . The g i f t may be

held t o be t o t a l l y i n e f f e c t i v e or, i f e f f e c t i v e , t h e r e i s no assurance,

t h a t t h e purposes o f t h e a s s o c i a t i o n w i l l i n f a c t be c a r r i e d o u t .

A gift f o r the purposes o f an u n i n c o r p o r a t e d a s s o c i a t i o n operates

s a t i s f a c t o r i l y only i f i t ensures t h a t t h e donated p r o p e r t y i s used f o r

 ii i

those purposes and not f o r the p e r s o n a l purposes o f the members o f the

association. Prima f a c i e a t r u s t on those terms would a c h i e v e t h i s

result. However, t h i s i s not the case because o f a major deficiency

i n the law of t r u s t s . The c u r r e n t law espouses the so-called 'bene-

f i c i a r y p r i n c i p l e ' under which no non-charitable t r u s t i s v a l i d unless

i t has human b e n e f i c i a r i e s . The result i s that i t i s impossible to

make a g i f t to an u n i n c o r p o r a t e d a s s o c i a t i o n by way of a t r u s t to

further i t s purposes.

On examination o f the 'beneficiary principle', the conclusion i s

reached t h a t i t has no s o l i d foundation i n authority. While i t i s

based upon the undoubtedly sound p r i n c i p l e t h a t a t r u s t must be subject

t o enforcement, i t r e p r e s e n t s an extremely r e s t r i c t i v e view o f the manner

i n which the need f o r e n f o r c e a b i l i t y can be satisfied. I t i s argued

t h a t a b r o a d e r v i e w p o i n t i s both p o s s i b l e and acceptable. The 'bene-'.

ficiary principle' should be r e p l a c e d by the 'control principle'. The

'control principle' stands f o r the p r o p o s i t i o n t h a t a t r u s t for non-

charitable purposes can be adequately c o n t r o l l e d by a b r o a d range

of individuals, and not only d i r e c t b e n e f i c i a r i e s . With t h i s principle

as i t s s t a r t i n g p o i n t , t h i s t h e s i s propounds the Control Analysis

o f g i f t s t o u n i n c o r p o r a t e d a s s o c i a t i o n s whereby g i f t s on trust for the

purposes o f the association are r e c o g n i s e d as e n f o r c e a b l e by its

members and are therefore v a l i d .

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TABLE OF CONTENTS

Abstract i i

PART ONE - INTRODUCTION TO UNINCORPORATED ASSOCIATIONS 1

Chapter

I. The Scope o f t h e T h e s i s 4

II. The L e g a l Dilemma - U n i n c o r p o r a t e d Associations 12

PART TWO - GIFTS TO UNINCORPORATED ASSOCIATIONS ,' 26

Chapter

I. Absolute G i f t Analysis 33

II. Contract Analysis 51

III. The B u r r e l l T h e o r i e s o f Donation 79

IV. G i f t s t o Unincorporated A s s o c i a t i o n s on T r u s t 102

PART THREE - THE CONTROL ANALYSIS 175

Chapter

I. The C o n t r o l P r i n c i p l e 183

II. The C o n t r o l A n a l y s i s and N o n - C h a r i t a b l e Purpose T r u s t s .. 197

III. The C o n t r o l A n a l y s i s and G i f t s t o Unincorporated

Associations 233

Selected Bibliography 254

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PART ONE

INTRODUCTION TO UNINCORPORATED ASSOCIATIONS

 - 2

In the common law j u r i s d i c t i o n s o f Great B r i t a i n , Canada, A u s t r a l i a

and New Zealand, i t i s n o t p o s s i b l e t o make a d i r e c t d o n a t i o n o f funds t o

an u n i n c o r p o r a t e d a s s o c i a t i o n . Yet, a l t h o u g h no r e g i s t e r o r s i m i l a r r e c o r d

i s kept t o r e c o r d the number o f u n i n c o r p o r a t e d a s s o c i a t i o n s i n e x i s t e n c e a t

any p a r t i c u l a r time, i t i s more l i k e l y than not t h a t every a d u l t person

r e s i d i n g w i t h i n those j u r i s d i c t i o n s belongs t o a t l e a s t one u n i n c o r p o r a t e d

a s s o c i a t i o n , whose purposes are f u r t h e r e d i n the main by v o l u n t a r y d o n a t i o n .

The f a i l u r e o f the law t o d e a l adequately w i t h the common phenomenon o f

donation t o such a s s o c i a t i o n s i s t h e r e f o r e rendered a l l the more u n f o r t u n a t e

by the s i z e o f the problem.

T h i s i s n o t t o say t h a t e f f o r t s have not been made from time t o time

t o u t i l i s e p r i n c i p l e s o f t r u s t s law, p r o p e r t y law and the law o f c o n t r a c t s

to p r o v i d e s o l u t i o n s t o the d i f f i c u l t y . Many a n a l y s e s have been attempted

o f the l e g a l , framework w i t h i n which g i f t s t o u n i n c o r p o r a t e d a s s o c i a t i o n s

take e f f e c t , and i t i s w i t h these attempts t h a t P a r t Two o f t h i s thesis

deals. However, i t w i l l be demonstrated t h a t none o f these p r o v i d e s a

t o t a l l y s a t i s f a c t o r y s o l u t i o n which ensures t h a t the donated funds actually

enure t o the b e n e f i t o f the intended u n i n c o r p o r a t e d a s s o c i a t i o n . The law

requires re-analysis. T h e r e f o r e P a r t Three p r e s e n t s a p r o p o s a l f o r r e f o r m

of the law o f g i f t s t o u n i n c o r p o r a t e d a s s o c i a t i o n s which endeavours t o r i d

the law o f a l o n g s t a n d i n g anomaly. I t does so by r e a p p r a i s i n g the p r i n c i p l e

o f t r u s t s law known as the ' b e n e f i c i a r y p r i n c i p l e ' and s u g g e s t i n g a

feasible alternative.

The t o p i c s , d e a l t with i n P a r t One are p r e l i m i n a r y , in. n a t u r e . The

purpose o f Chapter I i s t o c l a r i f y the scope o f the t h e s i s . This o b j e c t i v e

i s a c h i e v e d i n a n e g a t i v e manner by emphasising those matters which, though

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o f a r e l a t e d n a t u r e , are not c e n t r a l to the t h e s i s and which w i l l not

therefore be discussed further. Chapter I I w i l l c o n s i d e r the n a t u r e o f an

u n i n c o r p o r a t e d a s s o c i a t i o n and will illustrate the problems which are

caused by i t s p e c u l i a r s t a t u s , both g e n e r a l l y and i n respect to g i f t s in

particular. The discussion w i l l be n e i t h e r d e t a i l e d nor l e n g t h y because

the purpose o f i t s i n c l u s i o n here i s merely t o p r o v i d e a background t o the

main body o f the thesis .

* * * * * * * * * *
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I. THE SCOPE OF THE THESIS

1. Introduction

This t h e s i s deals only with the s p e c i f i c t o p i c o f the donation of

funds, by e i t h e r a member or an o u t s i d e r , to a n o n - p r o f i t - m a k i n g , non-

charitable, unregistered, unincorporated association. A number o f t o p i c s

are e x c l u d e d from i t s scope. In p a r t i c u l a r , i t does not d e a l w i t h the

question o f the d i s p o s i t i o n o f donated funds i n the event o f d i s s o l u t i o n o f

the a s s o c i a t i o n . Nor does i t d e a l w i t h the i s s u e s t h a t a r i s e when a donor

a n t i c i p a t e s the problems consequent upon donation and attempts t o evade them

by d r a f t i n g techniques. It will t h e r e f o r e be u s e f u l t o be s p e c i f i c at the

o u t s e t about the i s s u e s t h a t are e x c l u d e d from d i s c u s s i o n .

T h i s chapter has a two-fold aim : firstly, to prepare the ground f o r

the s u b s t a n t i v e a n a l y s i s o f the t o p i c of g i f t s to u n i n c o r p o r a t e d associ-

a t i o n s ; and, secondly, to demonstrate how the l e g a l problems caused by

g i f t s which f a l l w i t h i n the d e f i n i t i o n can be avoided by keeping outside

its scope.

2. Incorporated Bodies

T h i s t h e s i s i s not concerned w i t h e i t h e r the g e n e r a l issue of the

l e g a l s t a t u s o f , nor the p a r t i c u l a r i s s u e of g i f t s made t o , incorporated

bodies.
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(i) Corporate S t a t u s

If an a s s o c i a t i o n wishes to have i t s own legal personality separate

from t h a t o f i t s c o n s t i t u e n t members, i t can do so by incorporating. On

2
compliance w i t h the requirements o f the applicable legislation , a company

can be formed whose memorandum o f a s s o c i a t i o n s t i p u l a t e s the purposes o f the

3
association. Alternate methods are by p r i v a t e A c t o f P a r l i a m e n t or Royal

Charter . The most s u i t a b l e type o f company f o r a n o n - p r o f i t - m a k i n g

association i s the company l i m i t e d by guarantee i n which members are not

s h a r e h o l d e r s as such but are g u a r a n t o r s o f funds i n the event o f the company

b e i n g wound up w i t h i n s u f f i c i e n t funds to meet i t s l i a b i l i t i e s . Alter-

n a t i v e l y , the a s s o c i a t i o n can be incorporated s p e c i f i c a l l y i n the manner

s t i p u l a t e d by l e g i s l a t i o n such as the B r i t i s h Columbia S o c i e t y Act ~*.

The advantages o f i n c o r p o r a t i o n are many. The a s s o c i a t i o n and the

persons w i t h which i t d e a l s enjoy the b e n e f i t o f i t s h a v i n g f u l l legal

personality. I t can therefore sue and be sued, a c q u i r e and deal with

p r o p e r t y i n i t s own name, borrow funds, and so on. Most s i g n i f i c a n t l y for

p r e s e n t purposes, i t can a l s o be the r e c i p i e n t o f donations i n i t s own right.

I t has perpetual existence and i t s c o n s t i t u t i o n becomes p u b l i c .

However, the disadvantages o f i n c o r p o r a t i o n are a l s o numerous.

Although some s t a t u t e s make c o n c e s s i o n s f o r c e r t a i n types of non-profit-

6

making companies , an incorporated a s s o c i a t i o n has to comply w i t h a

m u l t i t u d e o f f o r m a l i t i e s and i s closely regulated i n the d e t a i l e d conduct

of i t s a f f a i r s . For example, i t s name and objects and changes t h e r e i n must

be approved, the f a c t of i t s i n c o r p o r a t i o n must be certified, i t s accounts

must be p u b l i s h e d , i t must have r e g i s t e r e d o f f i c e s , i t must h o l d annual

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general meetings, a u d i t o r s must be a p p o i n t e d , r e g i s t e r s o f i t s members,

d i r e c t o r s and o f f i c e r s must be k e p t p u b l i c , and so on.

A l l t h i s involves the e x p e n d i t u r e o f funds and time, and often the

h i r i n g o f lawyers and accountants. Although i t would n e a t l y s o l v e the prob-

7

lem o f making d o n a t i o n s to the a s s o c i a t i o n , incorporation xs t h e r e f o r e not

the i d e a l s o l u t i o n f o r the m a j o r i t y of a s s o c i a t i o n s , the s i z e and aims o f

which do not j u s t i f y the u n a v o i d a b l e expense and 'red tape'. Numerous

u n i n c o r p o r a t e d a s s o c i a t i o n s e x i s t to which funds are r e g u l a r l y donated, and

it i s w i t h them t h a t t h i s t h e s i s deals.

( i i ) Quasi-Corporate Status

I f c e r t a i n types o f a s s o c i a t i o n comply w i t h s p e c i f i c statutory

requirements, though not incorporated, they are deemed t o p o s s e s s t h e i r

own l e g a l i d e n t i t y f o r c e r t a i n purposes. The association acquires

statutory recognition and various privileges. The phenomenon which emerges

can be termed a 'quasi-corporation' i n t h a t i t has many o f the usual

a t t r i b u t e s of corporations, l i k e the p o s s e s s i o n o f a name i n which i t may

sue or be sued, and the power (independently of i t s members) to hold

property f o r the purposes d e f i n e d by i t s objects and constitution. Illus—

8
t r a t i o n s xn England, f o r example, are r e g i s t e r e d F r x e n d l y S o c i e t i e s ,
9 10
building societxes and trade unxons

However, a g a i n r e g i s t r a t i o n i s not the ideal solution for a l l associ-

ations. In the f i r s t place, only c e r t a i n categories o f s o c i e t y can become

f r i e n d l y s o c i e t i e s , b u i l d i n g s o c i e t i e s or trade unions. Secondly, r e g i s -

tration involves numerous f o r m a l i t i e s and extensive r e g u l a t i o n of the

 7. -

society's constitution, i n t e r n a l a f f a i r s and f i n a n c e s . This thesis there-

fore deals only with unregistered, unincorporated associations.

I f a donation weve made t o a duly i n c o r p o r a t e d o r r e g i s t e r e d associ-

a t i o n , none o f t h e problems which a r e encountered i n the common law and which

t h i s t h e s i s d i s c u s s e s and attempts t o s o l v e would a r i s e . The matter would

be governed t o t a l l y by s t a t u t e .

3. Non-Charitable

I f a donor s p e c i f i e s purposes f o r h i s g i f t which a r e e x c l u s i v e l y

c h a r i t a b l e i n nature, o r i f t h e g i f t i s made t o a c h a r i t a b l e institution

to f u r t h e r i t s purposes, the l e g a l problems and i s s u e s a r e t o t a l l y different

from those which a r i s e i n the c o n t e x t o f n o n - c h a r i t a b l e g i f t s . The law o f

c h a r i t i e s , both case law and s t a t u t e 1 1

, i s a d i s t i n c t area o f l e g a l

l e a r n i n g and p r a c t i c e . S i n c e c h a r i t a b l e purposes are considered of p a r t i c -

u l a r v a l u e t o s o c i e t y , g i f t s f o r purposes which s a t i s f y t h e l e g a l definition

o f c h a r i t a b l e a r e accorded a number o f c o n c e s s i o n s which f a c i l i t a t e their

v a l i d i t y and s h o r t - c u t t h e l e g a l problems encountered with non-charitable

gifts. C h a r i t a b l e donations a r e a l s o encouraged by numerous f i s c a l advan-

tages not enjoyed by donations p f a n o n - c h a r i t a b l e nature, and a r e i m p l e -

mented and a d m i n i s t e r e d by s t a t e - f u n d e d b o d i e s .

Throughout t h i s t h e s i s , o n l y g i f t s o f a n o n - c h a r i t a b l e n a t u r e w i l l be

discussed
 - 8 -

4. Donation, not Dissolution

The aim o f t h i s t h e s i s i s to a n a l y s e the l e g a l framework w i t h i n which

the d o n a t i o n o f funds to an unincorporated a s s o c i a t i o n can take e f f e c t .

The discussion therefore d e a l s p r i n c i p a l l y with the initial act of donation,

but there w i l l i n e v i t a b l y be some s p i l l - o v e r i n t o a d i s c u s s i o n o f the

method o f p r o p e r t y - h o l d i n g within the a s s o c i a t i o n a f t e r the gift takes

effect. However, there i s a f u r t h e r s t e p i n the h i s t o r y o f donated funds :

t h e i r a l l o c a t i o n when the a s s o c i a t i o n i s d i s s o l v e d and t h e r e are surplus

funds r e m a i n i n g . The t o p i c of d i s s o l u t i o n of unincorporated associations

w i l l not be discussed because the d e s t i n a t i o n o f funds on d i s s o l u t i o n o f an

association i s d i c t a t e d i n the main by t h e i r o r i g i n a l source and method o f

donation. I f the law c o n c e r n i n g donations were c l a r i f i e d (as t h i s : . t h e s i s

proposes to do), the law c o n c e r n i n g d i s s o l u t i o n would l i k e w i s e become c l e a r .

The problems which are encountered on d i s s o l u t i o n a r i s e o n l y because the

mechanism o f o r i g i n a l d o n a t i o n was not a n a l y s e d a t the time o f d o n a t i o n . It

i s submitted t h a t the s t a r t i n g place f o r r e s o l v i n g the problems s h o u l d there-

f o r e be the law o f d o n a t i o n and i t i s to t h a t t o p i c t h a t t h i s t h e s i s i s

13
restricted

5. Straightforward Donation

I t w i l l be assumed throughout t h i s t h e s i s t h a t the donor, i g n o r a n t of

the problems which he i s thereby c a u s i n g , simply makes a straightforward

d o n a t i o n to a s p e c i f i e d u n i n c o r p o r a t e d a s s o c i a t i o n f o r i t s purposes. It

w i l l be assumed t h a t he makes no attempt, v i a conveyancing or o t h e r devices,

to a n t i c i p a t e and f o r e s t a l l the difficulties which a s t r a i g h t f o r w a r d gift

w i l l meet i n the current s t a t e o f the law.

 - 9 -

On the o t h e r hand, a donor who i s w e l l - a c q u a i n t e d w i t h the c u r r e n t

law on g i f t s t o u n i n c o r p o r a t e d a s s o c i a t i o n s might s p e c i f i c a l l y d r a f t h i s

g i f t w i t h the p i t f a l l s i n mind. F o r example, he might e x p r e s s l y g i v e the

funds t o the c u r r e n t members o f t h e u n i n c o r p o r a t e d a s s o c i a t i o n on the con-

d i t i o n t h a t they use them f o r the purposes o f the u n i n c o r p o r a t e d a s s o c i a t i o n

w i t h a d i v e s t i n g c l a u s e i n the deed i n the event t h a t the funds a r e n o t so

used, the funds then r e v e r t i n g t o a named person o r body. In o t h e r words,

14

the members merely have a determinable i n t e r e s t i n the funds . Alter-

natively, the g i f t might be made i n f a v o u r o f a c h a r i t y , b u t c o n d i t i o n a l

upon the performance o f a r e q u e s t t h a t a p r o p o r t i o n o f the funds be used

15

f o r the purposes o f an u n i n c o r p o r a t e d a s s o c i a t i o n . In t h i s manner, the

u n i n c o r p o r a t e d a s s o c i a t i o n b e n e f i t s from the d o n a t i o n as much as i f i t had

had the l e g a l c a p a c i t y i t s e l f t o be the donee.

For t h e purposes o f t h i s t h e s i s , however, i t i s assumed t h a t the donor

merely s p e c i f i e s t h a t the g i f t i s t o go t o a named u n i n c o r p o r a t e d a s s o c i a t i o n

In any p a r t i c u l a r i n s t a n c e , he may w e l l c o n f e r i n t e r e s t s on o t h e r b o d i e s and

persons, b u t i t w i l l be assumed t h a t they i n no way i n f l u e n c e the o p e r a t i o n

o f what he i n t e n d s t o be a s t r a i g h t f o r w a r d g i f t t o the a s s o c i a t i o n .

6. Conclusion

To r e p e a t , t h e r e f o r e , the aim o f t h i s t h e s i s i s t o analyse the c u r r e n t

and proposed common law on g i f t s t o the r e s i d u a r y c l a s s o f n o n - p r o f i t - m a k i n g ,

unincorporated, unregistered, non-charitable associations. D i s c u s s i o n and

a n a l y s e s o f o t h e r t o p i c s w i l l have t o be sought elsewhere.

* * * * * * * * * *
 - 10 -

FOOTNOTES : CHAPTER I

1. A s i g n i f i c a n t amount o f academic comment has a l r e a d y accumulated on

the t o p i c . See g e n e r a l l y , Ford, U n i n c o r p o r a t e d N o n - P r o f i t A s s o c i a t i o n s
(Oxford : Clarendon, 1959) ; S t o l j a r , Groups and E n t i t i e s (Canberra :
A u s t r a l i a n N a t i o n a l U n i v e r s i t y P r e s s , 1973) ; L l o y d , The Law of
U n i n c o r p o r a t e d A s s o c i a t i o n s (London : Sweet & Maxwell, 1938).

2. U n i t e d Kingdom Companies A c t 1948, 11 & 12 Geo.VI, c.38 ; i n A u s t r a l i a ,

f o r example, Western A u s t r a l i a A s s o c i a t i o n s I n c o r p o r a t i o n A c t 1895-1969
and Companies A c t 1961, No.82 ; i n Canada, f o r example, B r i t i s h
Columbia S o c i e t y A c t , R.S.B.C. 1979, c.390 ; New Zealand I n c o r p o r a t e d
S o c i e t i e s A c t 1908-1976. See g e n e r a l l y , H o r s l e y , Law and A d m i n i s t -
r a t i o n o f A s s o c i a t i o n s i n A u s t r a l i a (Sydney : B u t t e r w o r t h s , 1976),
pp 1-55 ; G a l l i n s , Guide t o the I n c o r p o r a t i o n and O p e r a t i o n o f a
S o c i e t y i n B r i t i s h Columbia (Vancouver : Community L e g a l A s s i s t a n c e
S o c i e t y , 1975) ; S i e v e r s , "The D i s s o l u t i o n of N o n - P r o f i t A s s o c i a t i o n s " ,
(1981) 7 Mon.L.R.141, pp 159-164.

3. The o l d e s t A u s t r a l i a n c o r p o r a t e a s s o c i a t i o n , the Royal Benevolent

S o c i e t y of New South Wales, was c r e a t e d i n t h i s f a s h i o n i n 1813.

4. For example, the Royal H o r t i c u l t u r a l S o c i e t y i n the U n i t e d Kingdom.

5. Supra.; f o o t n o t e 2.

6. For example, Queensland R e l i g i o u s E d u c a t i o n a l and C h a r i t a b l e

I n s t i t u t i o n s A c t 1861, No.19.

7. I n c o r p o r a t i o n was the s u g g e s t i o n o f the Goodman Committee on C h a r i t y

Law and V o l u n t a r y O r g a n i s a t i o n s , 19 76, para.24.

8. U n i t e d Kingdom F r i e n d l y S o c i e t i e s A c t 1974, c.46. See, F u l l e r , The

Law o f F r i e n d l y S o c i e t i e s , 4th.ed. (London : Stevens, 1926) f o r
background l e g i s l a t i o n and p r i n c i p l e s .

9. U n i t e d Kingdom B u i l d i n g S o c i e t i e s A c t s 1874-1962 ; New Zealand

B u i l d i n g S o c i e t i e s A c t 1965, No.22.

10. U n i t e d Kingdom Trade Union and Labour R e l a t i o n s A c t 1974, c.52,

p a r t i e s . 2 , and see, Bonsor v. Musicians' Union [1956] A.C.104;
[1955] 3 A l l E.R.518 ; Electrical, Electronic, Telecommunication and
Plumbing Union v. Times Newspapers Ltd. [1980] 3 W.L.R.98; [1980]
1 A l l E.R.1097. In Canada, f o r example, B r i t i s h Columbia Labour
Code, R.S.B.C.1979, c.212, and see, Teamsters, Local 2l3 V. Therien
(1960), 22 D.L.R.(2d) 1 ; Trade Unions A c t , R.S.C1970, c.T-11, s.6.
In A u s t r a l i a , f o r example, South A u s t r a l i a I n d u s t r i a l C o n c i l i a t i o n
and A r b i t r a t i o n A c t 1972, No.125. See a l s o , U n i t e d Kingdom I n d u s t r i a l
and P r o v i d e n t S o c i e t i e s A c t 1965, c.12 ; New Zealand I n d u s t r i a l and
P r o v i d e n t S o c i e t i e s A c t 1908, No.81. And see, R e g i s t r y o f F r i e n d l y
S o c i e t i e s , Guide to the Law o f I n d u s t r i a l and P r o v i d e n t S o c i e t i e s
(London : H.M.S.O., 1978).
 - 11 -

11. See g e n e r a l l y , P i c a r d a , The Law and P r a c t i c e r e l a t i n g t o C h a r i t i e s

(London : B u t t e r w o r t h s , 1977) ,- Hanbury & Maudsley, Mo de rn Equ i t y ,
11th.ed., eds. R. H. Maudsley & J . E. M a r t i n (London : Stevens, 1981),
pp 444-514 ; Waters, Law o f T r u s t s i n Canada (Toronto : C a r s w e l l ,
1974), pp 419-550.

12. Note t h a t a p o p u l a r s u g g e s t i o n f o r reform has been a new d e f i n i t i o n o f

' c h a r i t y ' t o encompass many c u r r e n t l y n o n - c h a r i t a b l e purposes. This
would a s s i s t many g i f t s f o r u n i n c o r p o r a t e d a s s o c i a t i o n s whose purposes
f a l l w i t h i n the new d e f i n i t i o n . See, G r a v e l l s , " P u b l i c Purpose
T r u s t s " , (1977) 40 Mod.L.R.397 ; Royal Commission on T a x a t i o n o f
P r o f i t s and Income, R a d c l i f f e Commission Report, (1955) Cmnd.9474, c.7;
Cross, "Some Recent Developments i n the Law o f C h a r i t y " , (1956)
72 L.Q.R.187. See a l s o , N o r t h e r n I r e l a n d C h a r i t i e s A c t 1964, c.33,
s.24.

13. There i s an e x t e n s i v e body o f r e c e n t academic comment on the t o p i c o f

d i s s o l u t i o n of unincorporated a s s o c i a t i o n s . See, S i e v e r s , op.cit.
supra, f o o t n o t e 2 ; A t k i n , " U n i n c o r p o r a t e d A s s o c i a t i o n s -
D i s t r i b u t i o n o f Surplus A s s e t s on D i s s o l u t i o n " , (1978) 8 N.Z.U.L.R.
217; Green, "The D i s s o l u t i o n o f U n i n c o r p o r a t e d N o n - P r o f i t A s s o c i a t i o n s ' ,
(.1980) 43 Mod.L.R.626. See a l s o , Re William Derby & Sons Ltd. Sick &
Benevolent Fund. [1971] 1 W.L.R.973; [1971] 2 A l l E.R.1196 ; Cunnaok V.
Edwards [1896] 2 Ch.679; 65 L.J.Ch.801 ,- Re Bucks. Constabulary
. Widows and Orphans Fund (No.2) [1979] 1 W.L.R.936; [19.79] 1 A l l E.R.
623 ; Re West Sussex Constabulary's Widows' Children and Benevolent
Fund Trust [1971] C h . l ; [1970] 2 W.L.R.848 ; Tierney v. Tough [1914]
1 lr.R.142 ; Re Printers and Transferrers Amalgamated Trades Protec-
tion Society [1899] 2 Ch.184; 68 L.J.Ch.537; .47 W.R.619 ,• Re Sick and
Funeral Society of St.John's Sunday School, Golcar [1972] 2 w.L.R.962;
[1973] Ch.51 ; [1972] 2 A l l E.R.439.

14. See, Re Chardon [1928] Ch.464; 97 L.J.Ch.289. But note t h a t the

r e v e r t e r i s s u b j e c t t o the r u l e a g a i n s t p e r p e t u i t i e s : U n i t e d Kingdom
P e r p e t u i t i e s and Accumulations A c t 1964, c.55, s.12. The g i f t must
t h e r e f o r e e x p r e s s l y l i m i t the d u r a t i o n o f the a s s o c i a t i o n ' s b e n e f i t
to the p e r p e t u i t y p e r i o d .

15. Re Tyler [1891] 3 Ch.252; 60 L.J.Ch.686. Cf. Re Dalziel [1943] Ch.

277; 112 L.J.Ch.353; [1943] 2 A l l E.R.656.
 - 12 -

II. THE LEGAL DILEMMA - UNINCORPORATED ASSOCIATIONS

1. The F a c t u a l E x i s t e n c e and L e g a l Nature o f an U n i n c o r p o r a t e d Association

As a matter o f f a c t , i t i s evident t h a t u n i n c o r p o r a t e d a s s o c i a t i o n s do

exist. S p e c i f i c examples a r e Amnesty I n t e r n a t i o n a l \ the I n t e r n a t i o n a l

2 3
Amateur A t h l e t i c Foundation and the N a t i o n a l Front , w h i l s t most s o c i a l

clubs, gardening s o c i e t i e s , p o l i t i c a l p a r t i e s , r e l i g i o u s groups and s p o r t s

associations are a l s o u n i n c o r p o r a t e d a s s o c i a t i o n s . Even trade unions were

a t one time merely u n i n c o r p o r a t e d a s s o c i a t i o n s , whose f a c t u a l existence

4
c o u l d n o t be i g n o r e d :

By forming and s u p p o r t i n g f i n a n c i a l l y and p h y s i c a l l y

t h e i r own trade o r g a n i s a t i o n s , i n d i v i d u a l workers
t r a n s c e n d themselves as i n d i v i d u a l s and r a i s e them-
s e l v e s t o the power o f a new s o c i a l and economic
force The trade u n i o n i s , i n the s o c i a l ,
economic and p o l i t i c a l sense, a r e a l t h i n g , a
separate f a c t u a l e n t i t y .

The existence i n f a c t o f e n t i t i e s which a r e u n i n c o r p o r a t e d a s s o c i a t i o n s i s

5 6
undeniable and i s even acknowledged by s t a t u t e . Therefore i t i s hardly

s u r p r i s i n g t h a t donors name u n i n c o r p o r a t e d a s s o c i a t i o n s as the i n t e n d e d r e -

cipients of their gifts.

However, as a matter o f law, the " f a c t u a l e n t i t y " r e p r e s e n t e d by the

7

u n i n c o r p o r a t e d a s s o c i a t i o n i s an " a r t i f i c i a l and anomalous c o n c e p t i o n "

An u n i n c o r p o r a t e d a s s o c i a t i o n has no l e g a l p e r s o n a l i t y o f i t s own and i s n o t

an e n t i t y a t a l l . I t i s merely an aggregate o f i n d i v i d u a l s who have chosen

to a s s o c i a t e t o g e t h e r i n terms o f time, energy and p r o p e r t y t o pursue a

8

common purpose , and the a s s o c i a t i o n has no l e g a l e x i s t e n c e beyond t h a t o f

its c o n s t i t u e n t members. Thus the a s s o c i a t i o n ' s name i s merely "a c o n v e n i -

ent means o f r e f e r r i n g i n c o n v e r s a t i o n t o the persons composing t h e s o c i e t y "

 - 13 -

I t does not represent a d i s t i n c t l e g a l person.

Many d e f i n i t i o n s have been attempted from time t o time o f the term

'unincorporated a s s o c i a t i o n ' i n an e f f o r t t o c l a r i f y i t s s t a t u s w i t h i n the

l e g a l system. For example :

[T]WO or more persons bound t o g e t h e r f o r one or more

common purposes, not b e i n g b u s i n e s s purposes, by mutual
u n d e r t a k i n g s , each h a v i n g mutual d u t i e s and o b l i g a t i o n s ,
i n an o r g a n i s a t i o n which has r u l e s which i d e n t i f y i n
whom c o n t r o l o f i t and i t s funds r e s t s and on what terms
and which can be j o i n e d o r l e f t a t w i l l .

I t must be emphasised t h a t the above d e f i n i t i o n was f o r m u l a t e d i n the spec-

ific context of a p a r t i c u l a r taxing statute and i s f o r t h a t reason somewhat

restrictive i n i t s view o f the type o f arrangement caught by the legis-

lation ^ . I t n e v e r t h e l e s s makes two important p o i n t s . Firstly, the unin-

corporated association i s a non-profit-making notion, not a commercial

enterprise. I t s members a s s o c i a t e t o g e t h e r f o r the common p u r s u i t o f an

i d e a l o r o b j e c t i v e which, though i t may involve the e x p e n d i t u r e of funds,

i n c i d e n t a l p r o f i t s and ownership o f p r o p e r t y , does not contemplate gain.

Secondly, an unincorporated association, though not an e n t i t y i n i t s own

r i g h t , i s n e v e r t h e l e s s more than a merely i n f o r m a l group o f people who

happen to spend time t o g e t h e r . Some degree o f f o r m a l i t y and organisational

structure i s n e c e s s a r y t o d i s t i n g u i s h the true unincorporated association

from the s o c i a l gathering or groups such as families.

It i s possible to enumerate a t l e a s t s i x c h a r a c t e r i s t i c s o f an unin-

12
corporated association :

[T]here are s i x c h a r a c t e r i s t i c s which are e i t h e r

e s s e n t i a l or normal c h a r a c t e r i s t i c s o f an u n i n -
corporated a s s o c i a t i o n . They are : ( i ) there must
be members o f the a s s o c i a t i o n ; ( i i ) there must be a
c o n t r a c t b i n d i n g the members i n t e r se; ( i i i ) there
w i l l n o r m a l l y be some c o n s t i t u t i o n a l arrangement f o r
 - 14 -

meetings o f members and f o r the appointment o f

committees and o f f i c e r s ; (iv) a member w i l l n o r m a l l y
be f r e e t o j o i n o r l e a v e t h e a s s o c i a t i o n a t w i l l ;
(v) the a s s o c i a t i o n w i l l n o r m a l l y c o n t i n u e i n e x i s t e n c e
i n d e p e n d e n t l y o f any change t h a t may o c c u r i n the com-
p o s i t i o n o f the a s s o c i a t i o n ; and ( v i ) there must as a
matter o f h i s t o r y have been a moment i n time when a
number o f persons combined o r banded t o g e t h e r t o form
the a s s o c i a t i o n .

I t i s submitted t h a t compliance w i t h requirement (vi) s h o u l d n o t be seen as

e s s e n t i a l b e f o r e an u n i n c o r p o r a t e d a s s o c i a t i o n i s c o n s i d e r e d t o e x i s t i n

practice. I t i s l i k e l y t h a t many undoubtedly e x i s t e n t a s s o c i a t i o n s were

c r e a t e d g r a d u a l l y , and developed from what were merely i n f o r m a l arrangements

o r i g i n a l l y i n t o t r u e a s s o c i a t i o n s a t no i d e n t i f i a b l e "moment i n time". How-

ever, a t l e a s t three o f the o t h e r c h a r a c t e r i s t i c s l i s t e d above warrant some

d i s c u s s i o n i n o r d e r t o c l a r i f y the nature o f the average unincorporated

association.

In the f i r s t p l a c e , one must agree t h a t "there must be members o f the

a s s o c i a t i o n " who are themselves l e g a l persons. The u n i n c o r p o r a t e d associ-

a t i o n i t s e l f i s n o t r e c o g n i s e d a t law as a l e g a l p e r s o n d i s t i n c t and separate

from i t s members. Without them, t h e r e f o r e , i t can n o t enjoy even a v i c a r i -

ous e x i s t e n c e .

As a second requirement, the members must be bound t o some s o r t o f

13

multi-partite contract of association which s e r v e s t o take them o u t s i d e

the realm o f a p u r e l y i n f o r m a l group o f i n d i v i d u a l s . I t indicates their

serious i n t e n t i o n to enter i n t o l e g a l r e l a t i o n s . The terms o f t h i s c o n t r a c t

are the r u l e s o f the a s s o c i a t i o n and t o g e t h e r form i t s c o n s t i t u t i o n and t h e

ground-plan f o r i t s continuous e x i s t e n c e . They a r e normally w r i t t e n b u t

14

can be rendered e f f e c t i v e by customary usage . E v i d e n t l y the e x t e n t t o

which an a s s o c i a t i o n i s governed and r e g u l a t e d by a f o r m a l c o n s t i t u t i o n will

 - 15 -

vary a c c o r d i n g to i t s l e v e l of s o p h i s t i c a t i o n . Generally speaking, the

rules w i l l s p e c i f y the purposes f o r which the a s s o c i a t i o n has been formed,

which are almost u n l i m i t e d . There are statutory prohibitions i n the a r e a o f

15

conspiracy and p u b l i c order , and r u l e s which are i l l e g a l because they are

contrary to s t a t u t e or p u b l i c p o l i c y , o r i n r e s t r a i n t o f t r a d e ^ will be

d e n i e d l e g a l f o r c e , but o t h e r w i s e the members of an a s s o c i a t i o n enjoy con-

t r a c t u a l freedom i n f o r m u l a t i n g their rules. The r u l e s w i l l a l s o normally

make p r o v i s i o n f o r p r o c e d u r a l matters such as the admission o f members, the

termination o f membership, the v a r i a t i o n o f r u l e s , the h o l d i n g o f meetings

and the everyday management o f the association's affairs. In the absence of

an express p r o v i s i o n i n the c o n s t i t u t i o n which s t i p u l a t e s o t h e r w i s e ,

the
17
r u l e s can be a l t e r e d o n l y by the unanimous agreement of a l l members , though
18
i n c e r t a i n c i r c u m s t a n c e s mere acquiescence may be s u f f i c i e n t

Thirdly, since the membership o f many a s s o c i a t i o n s i s l a r g e , and even

geographically dispersed, the r u l e s o f an a s s o c i a t i o n o f t e n p r o v i d e f o r the

appointment of committees and o f f i c e r s , who not o n l y perform the day-to-day

administrative t a s k s o f the a s s o c i a t i o n , but a l s o r e p r e s e n t the association's

members as t h e i r agents i n t h e i r d e a l i n g s w i t h the o u t s i d e world. Above

all, to the e x t e n t t h a t the members themselves co-own the 'association'

19

property , subject to the r u l e s o f the association, title i s often held

on t h e i r behalf by a p p o i n t e d committee members as t r u s t e e s . In t h i s manner,

conveyancing i s rendered f a r more p r a c t i c a b l e and c o n v e n i e n t by the existence

o f a s m a l l number o f i d e n t i f i e d , named p e r s o n s .

T h e r e f o r e i t can be seen t h a t many u n i n c o r p o r a t e d a s s o c i a t i o n s have

a complex s t r u c t u r e , w i t h committees, r u l e s , t r u s t e e s , and so on. However,

no amount o f a d m i n i s t r a t i v e machinery and c o n s t i t u t i o n a l d e t a i l of t h i s

 - 16 -

nature can d e t r a c t from o r obscure the b a s i c f a c t t h a t the a s s o c i a t i o n

itself i s n o t h i n g more than the sum o f i t s members. I t i s no more capable

o f b e a r i n g l e g a l r i g h t s and o b l i g a t i o n s i n i t s own name than an animal o r

tree.

2. The L e g a l Problems Caused by U n i n c o r p o r a t e d A s s o c i a t i o n s

As compared w i t h the case o f c o r p o r a t e b o d i e s which have a c q u i r e d

l e g a l p e r s o n a l i t y and c a p a c i t y by v i r t u e o f s t a t u t e , when i t comes t o u n i n -

c o r p o r a t e d a s s o c i a t i o n s t h e r e i s no d i s t i n c t a r e a o f law, known as 'associ-

a t i o n law' as such. S i n c e an u n i n c o r p o r a t e d a s s o c i a t i o n has no more c a p a c i t y

o r l e g a l e x i s t e n c e than the i n d i v i d u a l s by whom i t was c r e a t e d o r c o n t i n u e d ,

the l e g a l problems caused by i t s f a c t u a l l y d i s t i n c t i d e n t i t y , which induces

people t o t r e a t i t as though i t did e x i s t , have t o be s o l v e d u s i n g the

o r d i n a r y l e g a l p r i n c i p l e s which govern those i n d i v i d u a l s . As one commen-

20
t a t o r has s a i d , the consequence i s :

[A]n i n e v i t a b l e c h a r a c t e r i s t i c o f t h e law on u n i n -
corporated associations. Commencing w i t h the premise
t h a t u n i n c o r p o r a t e d a s s o c i a t i o n s a r e not j u r i s t i c
persons, thus h a v i n g no independent l e g a l i d e n t i t y ,
the law i s f o r c e d t o d e a l i n an haphazard manner
w i t h the problems thrown up by the p r a c t i c a l r e a l i t i e s .
The approach i s haphazard because the f a c t u a l l y d i s -
t i n c t s i t u a t i o n has t o be encompassed w i t h i n r u l e s and
p r i n c i p l e s which have been developed t o d e a l w i t h
o t h e r f a c t u a l l y d i s t i n c t s i t u a t i o n s , such as t r u s t s
and c o n t r a c t s .

21

The p o i n t can be i l l u s t r a t e d by a b r i e f d i s c u s s i o n o f f o u r examples , in

a d d i t i o n t o the p r i n c i p a l example o f donations to unincorporated associ-

a t i o n s w i t h which the body o f t h i s t h e s i s d e a l s .

(i) C o n t r a c t u a l L i a b i l i t y
 - 17 -

In the area o f c o n t r a c t law, an u n i n c o r p o r a t e d a s s o c i a t i o n cannot

i t s e l f be a c o n t r a c t i n g p a r t y because i t has no c o n t r a c t u a l capacity.

Therefore whenever an a s s o c i a t i o n p u r p o r t s t o buy a n y t h i n g , employ anyone

or e n t e r i n t o any o t h e r type o f c o n t r a c t , r e s o r t has t o be had t o the law o f

agency t o f i x r e s p o n s i b i l i t y on the a s s o c i a t i o n ' s i n d i v i d u a l members. As

22

mentioned above , the r u l e s may e x p r e s s l y confer general a u t h o r i t y on

specific committee members t o e n t e r into contracts on the a s s o c i a t i o n ' s

behalf. Every i n d i v i d u a l member i m p l i e d l y concurs i n t h i s authorisation

when he s u b s c r i b e s and becomes c o n t r a c t u a l l y bound by the r u l e s . In t h i s

manner, the ' a s s o c i a t i o n ' funds can be reached t o compensate the a g g r i e v e d

outside contracting parties. However, i f no g e n e r a l authority i s provided

for by the r u l e s , the p e r s o n a l liability o f any p a r t i c u l a r member, who

purports to enter i n t o c o n t r a c t u a l r e l a t i o n s on b e h a l f o f the remainder o f

the members o f the a s s o c i a t i o n and i n i t s name can be determined o n l y by

the p r i n c i p l e s o f t h e law o f agency r e l a t i n g t o the e x t e n t of h i s authority

23

so t o a c t

(ii) L i a b i l i t y i n Tort

S i m i l a r l y , i n the law o f t o r t , the wrongs o f i n d i v i d u a l members can

be imputed t o the a s s o c i a t i o n ' s membership i n g e n e r a l o n l y through the law
of vicarious l i a b i l i t y . The a s s o c i a t i o n i t s e l f cannot be h e l d l i a b l e i n
24
t o r t , s i n c e i t has no c a p a c i t y t o commit l e g a l wrongs

(iii) Procedural Difficulties

Having succeeded i n e s t a b l i s h i n g the s u b s t a n t i v e l i a b i l i t y (or

entitlement) o f an u n i n c o r p o r a t e d a s s o c i a t i o n through i t s i n d i v i d u a l
 - 18 -

members, one then d i s c o v e r s t h a t the a s s o c i a t i o n ' s l a c k o f l e g a l capacity

25

a l s o causes problems o f a p r o c e d u r a l nature . However, a l l the common law

j u r i s d i c t i o n s w i t h which t h i s t h e s i s d e a l s have p r o c e d u r a l devices which

o p e r a t e to p r e v e n t u n i n c o r p o r a t e d a s s o c i a t i o n s from s e t t i n g up t h e i r legal

i n c a p a c i t y to evade l i a b i l i t y , and "to f a c i l i t a t e the b r i n g i n g o f a c t i o n s

26
a g a i n s t u n i n c o r p o r a t e d aggregates of p e r s o n s " . In p a r t i c u l a r , i t i s
p o s s i b l e f o r r e p r e s e n t a t i v e p r o c e e d i n g s t o be brought by and a g a i n s t
27

unincorporated associations . Two or more o f i t s members can sue or be

sued i n t h e i r names, on t h e i r own b e h a l f and on b e h a l f o f a l l o t h e r members

o f the a s s o c i a t i o n , p r o v i d e d t h a t c e r t a i n requirements are carefully met.

The o p e r a t i o n and p i t f a l l s o f r e p r e s e n t a t i v e a c t i o n s a g a i n s t the

members o f an u n i n c o r p o r a t e d a s s o c i a t i o n as r e p r e s e n t a t i v e defendant, i n an

e f f o r t to render the a s s o c i a t i o n i t s e l f e f f e c t i v e l y r e s p o n s i b l e , can be

28

demonstrated by the case o f Roche V. Sherrington . There, the plaintiff

was an ex-member o f an i n t e r n a t i o n a l u n i n c o r p o r a t e d a s s o c i a t i o n c a l l e d Opus

Dei which, b e i n g an u n i n c o r p o r a t e d a s s o c i a t i o n , had no l e g a l existence apart

from the members o f which i t was composed. The p l a i n t i f f t h e r e f o r e sued

two members of the a s s o c i a t i o n i n t h e i r r e p r e s e n t a t i v e c a p a c i t y as represen-

t i n g the e n t i r e p r e s e n t membership, wherever they may be. He claimed that

the a s s o c i a t i o n was l i a b l e t o repay c e r t a i n sums o f money which he had paid

to Opus Dei d u r i n g h i s membership and which he a l l e g e d had been p r o c u r e d by

undue i n f l u e n c e . The c o u r t would have found i n h i s f a v o u r on the substantive

i s s u e but i t s t r u c k out the s u i t on p r o c e d u r a l grounds because i t was not

p r o p e r l y c o n s t i t u t e d as a r e p r e s e n t a t i v e a c t i o n . The p r i n c i p a l reason was

29
as f o l l o w s :
[T]he p r e s e n t membership o f Opus Dei i s by [no] means
the same as i t was a t the r e s p e c t i v e dates when the
r e l e v a n t payments were made. I t i s common ground t h a t
the p r e s e n t membership must i n c l u d e many persons who
 - 19 -

were not members a t those d a t e s . In these circum-

s t a n c e s i t has to be asked on what grounds a person
who became a member o f Opus Dei a f t e r the date o f a
r e l e v a n t payment by the p l a i n t i f f c o u l d p o s s i b l e be
p e r s o n a l l y l i a b l e i n e q u i t y to make repayment t o the
plaintiff.

A l l persons covered by a r e p r e s e n t a t i v e a c t i o n must have the same r i g h t s ,

o r same l i a b i l i t y and same defences as t h e i r named r e p r e s e n t a t i v e . In the

p r e s e n t case, on the f a c t s , members a t d i f f e r e n t dates, o f d i f f e r e n t sex and

i n d i f f e r e n t c o u n t r i e s would have s e p a r a t e defences a g a i n s t the s u i t , and

t h e r e f o r e d i d not have a common i n t e r e s t i n d e f e n d i n g the p r o c e e d i n g s . The

plaintiff c o u l d have avoided t h i s problem had he s p e c i f i c a l l y excepted

those members who d i d not share a common i n t e r e s t w i t h the s e l e c t e d represen-

tatives. The i n c o n v e n i e n c e , and n e c e s s i t y f o r p r e c i s e i n f o r m a t i o n and fore-

s i g h t when s u i n g an u n i n c o r p o r a t e d a s s o c i a t i o n are apparent.

(iv) Occupation

The f o u r t h i l l u s t r a t i o n o f the l e g a l problems caused by an u n i n c o r -

porated a s s o c i a t i o n ' s lack of p e r s o n a l i t y involves i t s l i a b i l i t y for rates

(or p r o p e r t y t a x e s ) , based on i t s o c c u p a t i o n of premises. As a matter of

f a c t , i t i s obvious t h a t u n i n c o r p o r a t e d a s s o c i a t i o n s occupy premises in

o r d e r to f u r t h e r t h e i r purposes. A s s o c i a t i o n s h a b i t u a l l y use p o s t a l add^

r e s s e s as m a i l i n g addresses and a d v e r t i s e the premises as t h e i r own and i n

t h e i r own names. N e v e r t h e l e s s , as a matter o f law, the u n i n c o r p o r a t e d

a s s o c i a t i o n can occupy n o t h i n g and t h i s causes problems f o r r a t i n g author-

i t i e s who attempt t o a s s e s s and c o l l e c t r a t e s . Two examples from r e c e n t

cases w i l l demonstrate the p o i n t .

In i?. v. Brighton Justices, ex parte Howard , an. u n i n c o r p o r a t e d

 - 20 -

a s s o c i a t i o n known as L o c a l A i d appeared t o be the o c c u p i e r o f premises

f o r which i t was a c c o r d i n g l y a s s e s s e d t o r a t e s . However, as L o r d Lance,C.J.

31

put i t , " L o c a l A i d c o u l d n o t occupy a n y t h i n g , because i t was a n o n e n t i t y " .

The r a t i n g a u t h o r i t y n e v e r t h e l e s s managed t o e s t a b l i s h t h e i r c l a i m a g a i n s t

a member o f the a s s o c i a t i o n who they found t o be i t s e f f e c t i v e controller :

32

" h i s was the hand on the t i l l e r " . He was t h e r e f o r e h e l d personalty liable

as the c o n s t r u c t i v e t r u s t e e by conduct o f the u n i n c o r p o r a t e d a s s o c i a t i o n and

t h e r e f o r e l i a b l e on c o n t r a c t s he e n t e r e d i n t o on the a s s o c i a t i o n ' s b e h a l f .

He was i n f a c t imprisoned f o r eighty-two days f o r f a i l u r e t o pay the r a t e s

due.

i n Verrall v. Hackney London Borough Council , however, the s i t u -

a t i o n was n o t q u i t e as s i m p l e . In t h a t case, the r a t i n g a u t h o r i t y a s s e s s e d

a prominent member and o f f i c e r o f t h e N a t i o n a l F r o n t t o r a t e s due i n r e s p e c t

o f premises used and, as a matter o f f a c t , o c c u p i e d by the N a t i o n a l F r o n t ,

which i s an u n i n c o r p o r a t e d a s s o c i a t i o n . Counsel f o r the r a t i n g a u t h o r i t y

34
had argued as f o l l o w s :

[w]here one can s a y t h a t although a p a r t i c u l a r a s s o c i -

a t i o n i s u n i n c o r p o r a t e d , and thus n o t a l e g a l e n t i t y ,
but both i t and i t s members are c l e a r l y i d e n t i f i a b l e ,
then every such member i s p r o p e r l y t o be d e s c r i b e d as i n
b e n e f i c i a l o c c u p a t i o n o f premises used f o r the purposes
o f the a s s o c i a t i o n and thus l i a b l e f o r g e n e r a l r a t e s i f
the n e c e s s a r y f o r m a l i t i e s are complied w i t h .

In o t h e r words, every member o f an u n i n c o r p o r a t e d a s s o c i a t i o n can become

personally l i a b l e f o r i t s r a t e s , simply b y v i r t u e o f h i s c o n t r a c t o f member-

35
ship. The c o u r t d i s a g r e e d , and h e l d :

[T]he N a t i o n a l F r o n t was and i s an u n i n c o r p o r a t e d

a s s o c i a t i o n and as such we do not t h i n k i t c o u l d occupy
anything Most u n i n c o r p o r a t e d a s s o c i a t i o n s , such
as c l u b s o r c h a r i t i e s , have t r u s t e e s , o r a committee,
l e g a l persons w i t h funds a v a i l a b l e t o pay the r a t e s
which i t i s r e c o g n i s e d w i l l have t o be p a i d . I t i s
these persons who, as a matter o f law, u s u a l l y occupy
 - 21 -

the premises which a r e used f o r the purposes o f t h e i r

"club o r c h a r i t y and a r e l i a b l e as such o c c u p i e r s f o r
the g e n e r a l r a t e s . In our o p i n i o n , however, the
u n i n c o r p o r a t e d a s s o c i a t i o n which, speaking l o o s e l y ,
they run, can never be the o c c u p i e r o f those o r any
premises [ l ] t f o l l o w s t h a t the mere f a c t t h a t
a person i s a 'member' o f an u n i n c o r p o r a t e d a s s o c i -
a t i o n i s i n s u f f i c i e n t m a t e r i a l on which t o base a
f i n d i n g t h a t t h a t person i s the o c c u p i e r o f premises
used f o r the purposes o f the u n i n c o r p o r a t e d a s s o c i -
a t i o n , e i t h e r himself alone, s t i l l l e s s j o i n t l y with
the a s s o c i a t i o n .

The member had t h e r e f o r e been wrongly a s s e s s e d t o r a t e s . Consistently with

the Brighton Justices case, the d e c i s i o n demonstrates t h a t the a s s o c i a t i o n ' s

inability to 'occupy' as a matter o f law has t o be circumvented by assessing

its trustees o r committee members. The p o s i t i o n o f r a t i n g a u t h o r i t i e s i s

not an e n v i a b l e one i n t h a t the i d e n t i t y o f such persons w i l l not necessar-

i l y be a matter o f p u b l i c r e c o r d i n any p a r t i c u l a r c a s e . Furthermore, the

case l e a v e s u n s o l v e d the problem which w i l l a r i s e when an a s s o c i a t i o n has

no trustees at a l l .

(v) G i f t s

In g e n e r a l , the making o f a g i f t i s the s i m p l e s t of transactions. It

may be made inter vivos o r by w i l l , and i n e i t h e r case by a d i r e c t t r a n s f e r

to t h e i n t e n d e d b e n e f i c i a r y o r i n d i r e c t l y , u s i n g a trust. The r u l e s f o r

e s t a b l i s h i n g the c a p a c i t y o f a donor t o g i v e and o f a donee t o r e c e i v e a r e

simple ^ . 3
Even i n the case o f l a n d , the f o r m a l i t i e s t h a t must be o b s e r v e d " ^

to e f f e c t a gratuitous t r a n s f e r o f ownership a r e n o t e x c e s s i v e l y complicated.

However, when the s p e c i f i e d r e c i p i e n t o f a g i f t i s an u n i n c o r p o r a t e d

association, the appearance o f s i m p l i c i t y i s d e c e p t i v e . The a s s o c i a t i o n i t -

s e l f i s not a l e g a l e n t i t y and so cannot be a donee, and a g i f t by way o f

 - 22 -

trust, s u p e r f i c i a l l y a t t r a c t i v e though i t may be, i s not an answer t o

the problem i n the current s t a t e o f the law because the association

cannot be a beneficiary either.

3. Conclusion

In sum, i t can be seen t h a t the p e c u l i a r s t a t u s o f an unincorporated

a s s o c i a t i o n causes many problems. The contrast between i t s f a c t u a l e x i s -

tence as an e n t i t y and i t s lack of separate l e g a l p e r s o n a l i t y enables i t

to c r e a t e l e g a l problems by o c c u p y i n g premises, e n t e r i n g into contracts,

and so on, but p r e v e n t s the l e g a l system from p r o v i d i n g any satisfactory

solutions. As w i l l be demonstrated i n P a r t Two, nowhere i s the problem

more acute than i n the area of g i f t s to unincorporated associations.

* * * * * * * * * *
FOOTNOTES : CHAPTER I I

1. See, McGovern v. Attorney-General [1981] 3 A l l E . R . 4 9 3 .

2. See, Reel v. Holder [1981] 1 W.L.R.1226; [1981] 3 A l l E.R.321.

3. See, Verrall v. Hackney London Borough Council [1983] 2 w.L.R.202;

[1983] 1 A l l E.R.277.

4. G r u n f e l d , Modern Trade Union Law (London : Sweet & Maxwell, 1966),

pp 37-38.

5. See a l s o , S t o l j a r , Groups and E n t i t i e s (Canberra : Australian

N a t i o n a l U n i v e r s i t y P r e s s , 1973), pp 59-60.

6. F o r example, U n i t e d Kingdom I n t e r p r e t a t i o n A c t 1889, 52 & 53 V i c t . ,

c.63, s.19 ; U n i t e d Kingdom Income and C o r p o r a t i o n Taxes A c t 1970,
c.10, s.526(5) .

7. Leahy v. Attorney-General for New South Wales [1959] A.c.457; [1959]

2 W.L.R.722; [1959] 2 A l l E.R.300. Per V i s c o u n t Simonds [1959] 2
A l l E.R.300 a t 306.

8. See, R i c k e t t , " U n i n c o r p o r a t e d A s s o c i a t i o n s and t h e i r D i s s o l u t i o n " ,

(1980) 39 Camb.L.J.88, pp 88-89.

9. Per Warrington, L . J . i n Bloom v. National Federation of Discharged and

Demobilised Sailors and Soldiers (1918), 35 T.L.R.50 a t 51.

10. Per Lawton,L.J. i n Conservative Central Office v. Burrell [1982] 1

W.L.R.522; [1982] 2 A l l E.R.I a t 4.

11. See f u r t h e r , infra, pp 80-82.

12. Per V i n e l o t t , J . , p a r a p h r a s i n g c o u n s e l i n Conservative Central Office

V. Burrell. [1980] 3 A l l E.R.42 a t 58. See a l s o , S t o l j a r , op.cit.
supra, f o o t n o t e 5, pp 38-40 ; R i c k e t t , "Mr. J u s t i c e V i n e l o t t on
U n i n c o r p o r a t e d A s s o c i a t i o n s and G i f t s f o r N o n - C h a r i t a b l e Purposes",
(1982) 12 V.U.W.L.R.l, pp 14-16.

13. See, Green, "The D i s s o l u t i o n o f U n i n c o r p o r a t e d N o n - P r o f i t A s s o c i a t i o n s

(1980) 43 Mod.L.R.626, pp 629, 631//. Cf. O'Connor, " A c t i o n s a g a i n s t
V o l u n t a r y A s s o c i a t i o n s and the L e g a l System", (1977) 4 Mon.L.R.87,
pp 96-101 ; S t o l j a r , op.cit.supra, f o o t n o t e 5, pp 43-50 ; Baxt, "The
Dilemma o f the U n i n c o r p o r a t e d A s s o c i a t i o n " , (1973) 47 A.L.J.305, p 307
See also,- infra, pp 71-72.

14. Lewis v. Heffer [1978] 1 W.L.R.1061; [1978] 3 A l l E.R.354 ; Abbott v.

Sullivan [1952] 1 K.B.189; [1952] 1 A l l E.R.226.

15. For example, t r a d e unions were i l l e g a l because they were a s s o c i a t i o n s

g u i l t y o f r e s t r a i n t o f t r a d e , u n t i l they were l e g i t i m i s e d by s t a t u t e .
 - 24 -

Other examples are U n i t e d Kingdom Unlawful Oaths A c t s 1797m 37 G e o . I l l ,

c.123 and 1812, c.104, which p r o h i b i t e d the t a k i n g o f oaths t o be a
member o f a s e d i t i o u s s o c i e t y ; U n i t e d Kingdom S e d i t i o u s Meetings A c t
1817, 57 G e o . I l l , c.19, which p r o h i b i t e d meetings i n Westminster f o r
c e r t a i n p o l i t i c a l purposes.

16. For example, Strick V. Swansea Tin-Plate (1887), 36 Ch.D.558 a t 562.

17. Reel V. Holder, supra, f o o t n o t e 2 ; John V. Rees [1969] 2 W.L.R.1294;

[1969]2 A l l E.R.274. Cf. Abbatt v. Treasury Solicitor [1969] 1 w.L.R.
1575; [1969] 1 A l l E.R.52.

18. Re Sick & Funeral Society of St. John's Sunday School, Golcar [1972]
2 W.L.R.962; [1973] Ch.51; [1972] 2 A l l E.R.439 ; Re William Derby
&. Sons Ltd. Sick & Benevolent Fund [1971] 1 w.L.R.973; [1971] 2 A l l
E.R.1196.

19. There i s some academic debate c o n c e r n i n g the nature o f members'

ownership : see, Green, op.cit.supra, f o o t n o t e 13 ; A t k i n , "Unin-
c o r p o r a t e d A s s o c i a t i o n s - D i s t r i b u t i o n o f S u r p l u s A s s e t s on D i s s o l u t i o n " ,
(1978) 8 N.Z.U.L.R.217, pp 231-233. See a l s o , infra, pp 57-59.
Cf. S t o l j a r , op. cit. supra, f o o t n o t e 5, pp 44-49 ,- Ford, U n i n c o r p o r a t e d
N o n - P r o f i t A s s o c i a t i o n s (Oxford : Clarendon, 1959), pp 5-7.

20. R i c k e t t , op.cit.supra, f o o t n o t e 12, p 13.

21. See a l s o , Baxt, op.cit.supra, footnote 13.

22. Supra, p 15.

23. See, F l e t c h e r , " U n i n c o r p o r a t e d A s s o c i a t i o n s and C o n t r a c t : The

Development o f Committee L i a b i l i t y and the Unresolved I s s u e s " ,
(1979) 11 U.Queensland L.J.53 ; K e e l e r , " C o n t r a c t u a l A c t i o n s f o r
Damages a g a i n s t U n i n c o r p o r a t e d B o d i e s " , (1971) 34 Mod.L.R.615 ;
S t o l j a r , op.cit.supra, f o o t n o t e 5, pp 53-59.

24. See, L l o y d , The Law o f U n i n c o r p o r a t e d A s s o c i a t i o n s (London : Sweet &

Maxwell, 1938), pp 133-165.

25. A member w i s h i n g to sue h i s own a s s o c i a t i o n encounters similar

problems. See, O'Connor, op.cit.supra, f o o t n o t e 13.

26. London Association for Protection of Trade v. Greenlands Ltd. [1916]

2 A.C.15; [1916-1917] A l l E.R.Rep.452. Per L o r d A t k i n s o n [1916] 2
A.C.15 a t 30.

27. F o r example, U n i t e d Kingdom Rules o f the Supreme Court Order 15, Rule
12 ; and see, Commissioners of Sewers of the City of London v.
Gellatly (1876), 3 Ch.D.610 ,- Harrison v. Marquis of Abergavenny
(1886-1887), 3 T.L.R.324 ; Jarrott V. Ackerley (1916), 85 L.J.Ch.135 ;
Smith v. Cardiff Corporation [1954] 1 Q.B.210; [1953] 2 A l l E.R.1373.
See, S t o l j a r , "The R e p r e s e n t a t i v e A c t i o n - The Modern P o s i t i o n " ,
(1957) 4 U.W.A.L.R.58. In Canada, f o r example, see B r i t i s h Columbia
Supreme C o u r t Rules, Rule 5(11).
 - 25 -

28. [1982] 2 A l l E.R.426.

29. Per S l a d e , J . , ibid a t 433.

30. [1980] R.A.222.

31. Ibid., a t 225.

32. Ibid a t 228.

33. [1983] 2 W.L.R.202; [1983] 1 A l l E.R.277.

34. [1983] 1 A l l E.R.277 a t 284-285.

35. Per May,L.J., ibid a t 285.

36. See, V a i n e s , P e r s o n a l P r o p e r t y , 5th.ed., eds. E. L. G. T y l e r & N. E .

Palmer (London : B u t t e r w o r t h s , 1973), pp 299-300.

37. See, Megarry & Wade, The Law o f Real P r o p e r t y , 4th.ed. (London :
Stevens, 1975), pp 476-489, pp 542-597.
 - 26 -

PART TWO

G I F T S TO UNINCORPORATED ASSOCIATIONS
 - 27 -

The aim o f P a r t Two i s t w o - f o l d . Itwill expound, a n a l y s e and a s s e s s

the v a r i o u s methods whereby g i f t s t o u n i n c o r p o r a t e d a s s o c i a t i o n s can be con-

s t r u e d as t a k i n g e f f e c t i n the c u r r e n t s t a t e o f the law, and i t w i l l demon-

strate that, f o r one reason o r another, none o f these methods i s t o t a l l y

satisfactory. In t h i s way, P a r t Two p r e p a r e s the ground f o r P a r t Three,

which o f f e r s an a l t e r n a t i v e a n a l y s i s which i s demonstrably s u p e r i o r t o

any discussed i n the pages which follow.

P a r t One e s t a b l i s h e d t h a t an u n i n c o r p o r a t e d a s s o c i a t i o n cannot i t -

s e l f be t h e r e c i p i e n t o f a g i f t because i t e n j o y s no e x i s t e n c e independently

o f i t s members. Y e t p e o p l e continue t o donate funds t o u n i n c o r p o r a t e d

associations. Therefore, having e s t a b l i s h e d from an examination o f t h e

intended r e c i p i e n t association's s t r u c t u r e , c o n s t i t u t i o n and mode o f

operation t h a t i t i s i n d e e d an u n i n c o r p o r a t e d , u n r e g i s t e r e d , non-charitable

a s s o c i a t i o n , any c o u r t b e f o r e which the f a t e o f t h e g i f t i s p r e s e n t e d i s

f a c e d w i t h a problem. Over t h e y e a r s , the common law has a r r i v e d a t a t

l e a s t n i n e d i f f e r e n t i n t e r p r e t a t i o n s o f the mechanism whereby a g i f t t o an

u n i n c o r p o r a t e d a s s o c i a t i o n can, t o a l e s s e r o r g r e a t e r degree, take e f f e c t .

The o b j e c t o f most o f them i s t o circumvent the problem posed by t h e u n i n -

corporated association's lack of l e g a l p e r s o n a l i t y . They attempt t o do so

by p e r m i t t i n g the g i f t t o take e f f e c t i n f a v o u r o f persons who do have t h e

r e c o g n i t i o n o f t h e law, w h i l s t imposing upon them c o n s t r a i n t s o f v a r i o u s

degrees o f e f f e c t i v e n e s s i n an e f f o r t t o d i v e r t t h e b e n e f i t o f t h e d o n a t i o n

to the u n i n c o r p o r a t e d a s s o c i a t i o n i n q u e s t i o n . The v a r i o u s methods a r e

as f o l l o w s :-

i. An a b s o l u t e gift t o the members o f t h e u n i n -

corporated a s s o c i a t i o n "S

ii. A gift t o the members o f t h e u n i n c o r p o r a t e d

 - 28 -

a s s o c i a t i o n which takes effect subject to a duty,

i m p o s e d o n t h e members b y t h e i r c o n t r a c t o f mem-

bership of the unincorporated a s s o c i a t i o n , t o use

the funds f o r the purposes o f the a s s o c i a t i o n ;

i i i . A gift t o t h e members o f t h e u n i n c o r p o r a t e d associ-

ation, s u b j e c t t o a mandate a r r a n g e m e n t between

3

the donor and those members ;

iv. A gift t o t h e members o f t h e a s s o c i a t i o n u n d e r a n d

in accordance with t h e terms o f a c o n t r a c t between

4

the d o n o r a n d t h e members ;

v. A gift t o t h e members o f t h e u n i n c o r p o r a t e d associ-

ation, subject to a general equitable obligation

owed b y them t o t h e d o n o r ~* ;

vi. A gift on t r u s t f o r the present members o f t h e

unincorporated association;

vii. A gift on t r u s t f o r the present and f u t u r e members

of the unincorporated association;

viii. A gift on t r u s t f o r the unincorporated associ-

ation o f which i t s members a r e t h e f a c t u a l bene-

. . . . 6

ficiaries ;

ix. A gift on t r u s t f o r the purposes o f the unin-

corporated a s s o c i a t i o n .

All b u t one o f t h e above methods o f i n t e r p r e t i n g a gift t o an unincorporated

association will be d i s c u s s e d i n t u r n , t h o u g h n o t e x a c t l y i n t h e s e q u e n c e

used above. The e x c e p t i o n i s the case of the g i f t on t r u s t f o r the present

members o f t h e a s s o c i a t i o n . This w i l l not receive separate treatment as

a distinct topic but w i l l i n s t e a d be d i s c u s s e d c o n c u r r e n t l y w i t h , but i n

less detail than, the other situations which involve a trust o f some k i n d .
 - 29 -

As one progresses down t h e list of methods which are available for

interpreting the l e g a l framework o f a gift to an unincorporated associ-

ation, two trends are perceptible. On the one hand, there i s a movement

from the analysis which least achieves the donor's aim of conferring benefit

on an unincorporated association (method i ) to the analysis which would

achieve i t almost to the letter (method i x ) . On the o t h e r hand, from method

i to method i x , one's l i k e l i h o o d o f success i n law correspondingly dimin-

ishes. This i s because, as one moves down t h e list, one encounters two

problems. Firstly, analyses i to v (inclusive) involve increasingly fic-

tional and strained interpretations of the s i t u a t i o n which obtains. Then,

as one attempts analyses v i to ix ( i n c l u s i v e ) , the law as i t currently

stands t h r o w s more a n d more l e g a l o b s t a c l e s i n the way of success. It is

the combined e f f e c t of the two trends that makes no one analysis totally

satisfactory.

Which o f the above methods a court will s e l e c t i n any particular case

of an attempted gift to an unincorporated association is principally a

question of interpretation. Evidently the most significant consideration

in resolving the question i s the s p e c i f i c wording of the gift. For example,

generally speaking, none o f analyses i t h r o u g h v, which involve direct

gifts to the members o f the association, is available i f the donor emphatic-

ally declares that his gift i s to take e f f e c t under a trust. However, in

interpreting the e f f e c t of a gift, i t s wording i s often ignored by the

courts so no h a r d and fast rules can be formulated.

Furthermore, more o f t e n than not no indication i s given at a l l in the

wording of the gift as to i t s intended legal framework, no doubt because

the majority of donors are unaware o f the problem of an unincorporated

 - 30 -

association's lack o f separate legal personality. Indeed, i t c a n be

assumed i n each o f t h e c h a p t e r s which follow that the g i f t i n question i s

simply " f o r t h e XYZ A s s o c i a t i o n " . The i s s u e i s i n no way p r e j u d i c e d by

specific or detailed instructions. I n such a case, a l l nine o f t h e above

approaches are reasonably open o f any p a r t i c u l a r g i f t , and a choice has t o

be made.

It i s submitted that the court's choice may b e , a n d a p p a r e n t l y is,

made b y a s k i n g o n e o f two i n i t i a l questions. On t h e o n e h a n d , a court may

ask : what d i d t h e donor intend? The most p r o b a b l e response, after con-

sideration o f t h e donor h i m s e l f , the nature o f the association and t h e

relationship between the donor and the a s s o c i a t i o n , w o u l d be t h a t t h e donor

intended to further a continuing group e n t e r p r i s e . In order to carry out

such an i n t e n t i o n , the g i f t must t a k e effect, i fa t a l l , under analyses viii

or ix. The c o n s e q u e n c e f o r the g i f t i n the current state o f t h e law would

most likely be t h a t i t would fail.

On t h e o t h e r hand, a court may i n s t e a d ask as i t s i n i t i a l question :

did t h e donor intend the g i f t to fail? The o b v i o u s answer must s u r e l y be

that the donor d i d n o t i n t e n d hisgift to f a i l . The c o u r t then has another

choice t o make. I t may c h o o s e t o be u n s y m p a t h e t i c t o the donor's predicament

and utilise a construction of the g i f t which, w i l l inevitably lead to i t s

failure. I f i t chooses t o make a s y m p a t h e t i c response to the g i f t , however,

it will attempt t o p u t u p o n i t a n i n t e r p r e t a t i o n which, w i l l render i t valid.

These v a r i o u s choices involve a large element o f j u d i c i a l subjectivity.

It i s possible that they are tacitly made w i t h o n e e y e o n w h e t h e r t h e

particular gift i n question deserves t o take e f f e c t , and whether the

 - 31 -

p a r t i c u l a r a s s o c i a t i o n and i t s a c t i v i t i e s are worthy o f sympathy.

Apparently t h e r e i s no one s i n g l e a n a l y s i s which alone i s the c o r r e c t

i n t e r p r e t a t i o n of a p a r t i c u l a r g i f t .

The a n a l y s e s w i l l now be d i s c u s s e d . In each, s i g n i f i c a n t advantages

and disadvantages o f the a n a l y s i s w i l l be p o i n t e d out so t h a t the r e l a t i v e

m e r i t s o f each can be a s s e s s e d as a mechanism t o e f f e c t the d o n a t i o n o f

funds t o an u n i n c o r p o r a t e d association.

* * * * * * * * * *
 - 32 -

FOOTNOTES : PART TWO, INTRODUCTORY COMMENTS

1. The A b s o l u t e G i f t A n a l y s i s , infra, PP 33-50.

2. The C o n t r a c t A n a l y s i s , infra, PP 51-78.

3. The Mandate Theory, infra, pp 82-88.

4. The C o n t r a c t u a l U n d e r t a k i n g Theory, infra, PP 88-91.

5. The Suspended B e n e f i c i a l Ownership Theory, infra, PP 91-95.

6. The Denley A n a l y s i s , infra,PP 132-150.

 - 33 -

I. ABSOLUTE GIFT ANALYSIS

1. Introduction

X makes a bequest "to the B l a c k s h i r e A s s o c i a t i o n f o r the S h e l t e r o f

S t r a y Animals, f o r the f u r t h e r a n c e of i t s purposes". Assume t h a t the

A s s o c i a t i o n i s a non-charitable unincorporated a s s o c i a t i o n and that i t s

purposes i n c l u d e the care o f abandoned p e t s , the o p e r a t i o n of an adoption

s e r v i c e f o r such animals and the p r o t e c t i o n of the people i n Blackshire

from a n i m a l - r i d d e n streets. I t i s funded e n t i r e l y through v o l u n t a r y

contribution. I t i s e v i d e n t t h a t the A s s o c i a t i o n i t s e l f i s i n c a p a b l e of

r e c e i v i n g the d o n a t i o n i n i t s own right. In the eyes of the law, i t does

not e x i s t . In c e r t a i n c i r c u m s t a n c e s , n e v e r t h e l e s s , the c o u r t s have upheld

the d o n a t i o n . They have e x p l a i n e d t h a t i t takes e f f e c t as an absolute

g i f t t o the members o f the a s s o c i a t i o n who are i n e x i s t e n c e a t the date of

X's death and who are under no l e g a l o b l i g a t i o n to a p p l y the funds t o the

care of animals or t o any o t h e r a s s o c i a t i o n purpose.

There are two major steps i h the r e a s o n i n g t h a t permit the Absolute

Gift Analysis. F i r s t l y , the words " f o r the f u r t h e r a n c e of the purposes [of

the a s s o c i a t i o n ] " are d i s r e g a r d e d and s t r i p p e d of l e g a l e f f e c t . They are

presumed to s t a t e merely the motive f o r making the d o n a t i o n . Secondly, i t

i s assumed t h a t the naming o f the a s s o c i a t i o n i s simply a method o f de-

f i n i n g the c l a s s o f i n t e n d e d r e c i p i e n t s . They are i d e n t i f i e d by reference

to t h e i r membership of the a s s o c i a t i o n . The a u t h o r i t y f o r the use o f these

two presumptions w i l l be d i s c u s s e d b e f o r e t h e i r combined e f f e c t i s con-

sidered.
 - 34 -

2. The Re Sanderson Principle

There i s respectably ancient authority 1

f o r the view that i f a fund

is given to a person f o r a purpose, the f u l f i l m e n t of which would substan-

tially exhaust the fund, the person takes absolutely, unconstrained by

any limitation on the use t o w h i c h he puts the money. Purposes which would

satisfy the test include general b e n e f i t , maintenance, training for a trade

and education . The presumption i s rebutted where t h e purpose i s only one

of the stated reasons f o r the gift, indicating that the benefit intended to

accrue to the r e c i p i e n t i s more l i m i t e d .

An a u t h o r i t a t i v e statement of the p r i n c i p l e i s found in Re Sanderson's

4 5
Trust , where t h e Vice-chancellor, S i r W. Page Wood, e x p l a i n e d :

I f a g r o s s sum be g i v e n , o r i f t h e w h o l e i n c o m e o f
t h e p r o p e r t y be g i v e n , a n d a s p e c i a l p u r p o s e be
assigned f o r t h a t g i f t , t h i s Court always regards
the g i f t as a b s o l u t e , and the p u r p o s e m e r e l y as
t h e m o t i v e o f t h e g i f t , and t h e r e f o r e h o l d s t h a t
t h e g i f t t a k e s e f f e c t as t o t h e w h o l e sum o r t h e
w h o l e i n c o m e , a s t h e c a s e may be.

In that case, surplus funds from a bequest to a legatee remaining after

his d e a t h were h e l d not to be the absolute property of his estate, but

fell i n t o the residue of his benefactor's estate. The b e q u e s t was made

on t r u s t to apply "the whole or any part" of the fund f o r the "maintenance

attendance and comfort" of the legatee. On construction of these words,

it was held that, although the s t a t e d p u r p o s e s were e x h a u s t i v e in nature,

only a portion of the f u n d was dedicated to them, so the legatee was not

absolutely entitled. The presumption of an absolute gift was therefore

rebutted.

The p r i n c i p l e o f Re Sanderson was applied r e c e n t l y by the Chancery

 - 35 -

Division and the Court o f Appeal o f England i n Re Osoba . The difficulty

in that c a s e was c a u s e d i n t h e m a i n b y t h e f o l l o w i n g clause o f Mr. Osoba's

will :

I b e q u e a t h t o my w i f e a l l t h e r e n t s f r o m my l e a s e -
h o l d p r o p e r t y ... f o r h e r m a i n t e n a n c e a n d f o r t h e
t r a i n i n g o f my d a u g h t e r A b i o l a up t o U n i v e r s i t y
g r a d e a n d f o r t h e m a i n t e n a n c e o f my a g e d m o t h e r
p r o v i d e d my w i f e i s r e s i d e n t i n N i g e r i a .

When t h e t e s t a t o r died, h i s m o t h e r was a l r e a d y dead and h i s daughter was

about ten years o l d . Five years later, the t e s t a t o r ' s widow d i e d , and

five years after that, when p r o c e e d i n g s w e r e commenced, the daughter had

completed her u n i v e r s i t y studies. I t therefore appeared t h a t a l l the pur-

poses specified i n the w i l l had e i t h e r failed o r been achieved. Had t h e

c l a u s e been c o n s t r u e d as s e t t i n g up a p u r p o s e trust, therefore, the funds

would have fallen into residue. The C o u r t o f A p p e a l h e l d unanimously,

however, that t h e b e q u e s t was a n a b s o l u t e gift to the three beneficiaries

as joint tenants. T h e r e b e i n g no e v i d e n c e o f a c t u a l or intended severance,

the d a u g h t e r was e n t i t l e d , as s o l e survivor under jus accresoendi principles,

to t h e whole bequest.

In the circumstances, despite the f a c t that the purpose of Abiola's

university e d u c a t i o n was finite and, a s t h e e v e n t s which t r a n s p i r e d had

proved, not exhaustive o f the bequest, the p r i n c i p l e established i n theo l d

7
c a s e s was a p p l i e d . To r e q u o t e t h e dietum in Re Sanderson :

I f a g r o s s sum b e g i v e n , o r i f t h e w h o l e i n c o m e o f
t h e p r o p e r t y b e g i v e n , a n d a s p e c i a l p u r p o s e be
a s s i g n e d f o r t h a t g i f t , t h i s Court always regards
the g i f t as a b s o l u t e , and t h e p u r p o s e m e r e l y as
the motive o f t h e g i f t , and t h e r e f o r e h o l d s t h a t
t h e g i f t t a k e s e f f e c t a s t o t h e w h o l e sum o r
t h e w h o l e i n c o m e , a s t h e c a s e may b e .

8
Of this, Goff,L.J. said :

[l]t i s not a rule o f law, b u t , i n t h e absence o f

 - 36 -

c o n t e x t , t o w h i c h o f c o u r s e i t must y i e l d , o r p e r h a p s
very s p e c i a l circumstances, i t i s a long established
and o f t a p p l i e d p r i n c i p l e w h i c h I w o u l d n o t s e e k
t o w h i t t l e away.

9
The p r i n c i p l e was restated by Buckley,L.J. i n the following terms :

I f a t e s t a t o r has g i v e n the whole o f a f u n d , w h e t h e r

o f c a p i t a l o r income, t o a b e n e f i c i a r y , whether
d i r e c t l y o r t h r o u g h t h e medium o f a t r u s t e e , he i s
r e g a r d e d , i n the a b s e n c e o f any contra-indication,
as h a v i n g m a n i f e s t e d an i n t e n t i o n t o b e n e f i t t h a t
person to the f u l l extent of the subject-matter,
n o t w i t h s t a n d i n g t h a t he may h a v e e x p r e s s l y stated
t h a t t h e g i f t i s made f o r a p a r t i c u l a r p u r p o s e ,
w h i c h may p r o v e t o be i m p o s s i b l e o f p e r f o r m a n c e
o r w h i c h may n o t e x h a u s t t h e s u b j e c t - m a t t e r .

The reference to the purpose i s treated merely as a statement of the tes-

10
t a t o r ' s motive i n making the gift. In o t h e r words :

The s p e c i f i e d p u r p o s e i s r e g a r d e d as of less sig-

n i f i c a n c e t h a t the d i s p o s i t i v e a c t .

In the Osoba c a s e , the court felt that there were sufficient indications

from the circumstances to conclude that Mr. Osoba had intended his daughter

to take absolutely. One s i g n i f i c a n t feature was that the education of

someone who was only five y e a r s o l d when t h e will was drafted (as Abiola

was) was a p u r p o s e which, w o u l d be considered likely to deplete the fund

substantially. Secondly, provision f o r one's e d u c a t i o n (like one's main-

tenance) confers an "extensive and continuing benefit" ^ equivalent to an

absolute gift. Thirdly, the b e q u e s t was of the whole fund, which indi-

cated that the t e s t a t o r had not contemplated any surplus.

This analysis i s readily applicable to the case of a gift for the

general or s p e c i f i e d purposes of an unincorporated association. If i t

appears from the w o r d i n g and circumstances of the gift that the donor

intended the association to derive a continuing benefit from the fund and

that f u l f i l m e n t of.the s t a t e d purpose would s u b s t a n t i a l l y exhaust the fund,

 - 37 -

the s t a t e d purpose can be d i s r e g a r d e d . Rather than creating a trust for

the f u l f i l m e n t o f those purposes, the statement o f purpose i s seen merely

as explaining the donor's motive. According to Re Sanderson, the a s s o c i -

12

ation takes absolutely. F o r example, in Re Ogden , a bequest to political

bodies, some o f w h i c h w e r e u n i n c o r p o r a t e d associations, "having as their

objects ... t h e p r o m o t i o n o f L i b e r a l p r i n c i p l e s i n p o l i t i c s " took e f f e c t

as an a b s o l u t e gift t o them. Lord Tomlin explained the p r i n c i p l e that

governs such cases :

[A] g i f t t o a c o r p o r a t i o n , o r a v o l u n t a r y a s s o c i a t i o n
of persons, f o r t h e g e n e r a l purposes o f such c o r -
p o r a t i o n o r a s s o c i a t i o n i s an a b s o l u t e gift.

The statement that the g i f t was f o r the promotion o f L i b e r a l p r i n c i p l e s

was considered t o b e o f no l e g a l effect. I t was m e r e l y a statement o f the

characteristic i d e n t i f y i n g the bodies t o be s e l e c t e d a n d o f t h e t e s t a t o r ' s

14
motxve i n making the bequest

However, i twill be r e c a l l e d t h a t the a s s o c i a t i o n itself can n o t be

the r e c i p i e n t of the g i f t . I t h a s no l e g a l existence independently of i t s

members. Therefore i t i s evident that Re Sanderson's p r i n c i p l e alone i s of

little assistance i n facilitating a gift t o an u n i n c o r p o r a t e d association.

It does n o t e x p l a i n who are the r e c i p i e n t s o f the g i f t . A further principle,

which c a n combine i n operation with that of Re Sanderson, i s required to

salvage the g i f t .

3. The Re Smith Principle

For the sake o f convenience, the second p r i n c i p l e w i l l be r e f e r r e d t o

as the p r i n c i p l e i n Re Smith ^, though, i t e x i s t e d as p a r t o f t h e common l a w

before the date o f t h a t decision. In Re Smith, a bequest of residue " f o r

 - 38 -

the s o c i e t y o r i n s t i t u t i o n known as the F r a n c i s c a n F r i a r s o f Clevedon ...

absolutely" was h e l d v a l i d even though the Franciscan F r i a r s was an unin-

c o r p o r a t e d body w i t h no capacity o f i t s own to r e c e i v e gifts. Joyce,J.

stated the reason f o r t h i s c o n c l u s i o n i n the following terms 1 6

:

[A] bequest to any u n i n c o r p o r a t e d s o c i e t y o r a s s o c i -

a t i o n not c h a r i t a b l e i s good because, and o n l y
because, i t i s t r e a t e d as b e i n g and i s a bequest
to the s e v e r a l members o f such s o c i e t y or a s s o c i -
a t i o n , who can spend the money as they p l e a s e .

The gift took e f f e c t as one t o the i n d i v i d u a l F r i a r s who were a l i v e a t

the date o f the t e s t a t o r ' s death, absolutely.

The s i t u a t i o n i s the inverse o f t h a t found i n company law. There,

except i n c e r t a i n c i r c u m s t a n c e s , one must not ' p i e r c e the corporate veil'

t o look beyond the legal fiction to the constituent i n d i v i d u a l s because

the company i s a l e g a l p e r s o n i n i t s own r i g h t , s e p a r a t e and distinct from

its shareholders. In the case o f an u n i n c o r p o r a t e d a s s o c i a t i o n , one has

no c h o i c e but to look beyond the a s s o c i a t i o n to i t s c o n s t i t u e n t persons

17

because the a s s o c i a t i o n has no l e g a l i d e n t i t y or existence of i t s own

The gift therefore takes e f f e c t as one to the members of the association

i n existence a t the date of an -inter vivos d i s p o s i t i o n or, i f testamentary,

a t the date of the t e s t a t o r ' s death. A g a i n , however, as w i t h the p r i n c i p l e

In Re Sanderson, this construction i s open t o r e b u t t a l by the circum-

s t a n c e s o f the case.

4. The P r i n c i p l e s Combined

The combined e f f e c t o f the p r i n c i p l e i n Re Sanderson and the p r i n c i p l e

18
i n Re Smith can be s t a t e d as follows :

[A] g i f t to an a s s o c i a t i o n formed f o r [the a t t a i n -

 - 39 -

merit o f p o l i t i c a l o b j e c t s ] may, i f the a s s o c i a t i o n

b e u n i n c o r p o r a t e d , be u p h e l d as an a b s o l u t e g i f t
t o i t s members.

The statement o f p u r p o s e s and the fact t h a t the stated recipient is an

association are ignored, and the gift i s construed as a gift to i t s con-

s t i t u e n t members a b s o l u t e l y .

An early case i n which this r e s u l t was achieved was Cocks V.

19

Manners . There, a bequest f o r the general purposes of a Dominican

c o n v e n t was upheld as an absolute gift to the e x i s t i n g members o r nuns.

Applying t h e Re Sanderson principle, i t can be seen t h a t the statement

of the purpose f o r the gift was ignored so t h a t no trust f o r those pur-

p o s e s was interposed. Combined w i t h this, the principle a l s o seen at

work in Re Smith was put into operation. That i s to say, the reference

to the c o n v e n t was t r e a t e d merely as a method o f d e f i n i n g and identifying

its members a s the intended recipients of the funds. Together, the two

principles of construction enabled the gift f o r the p u r p o s e s o f the

association to take effect as an absolute gift to i t s members.

The most recent, detailed explanation of this analysis currently

available i s provided by Viscount Simonds i n Leahy V. Attorney-General for

20

New South Wales . This w i l l now be utilised as the vehicle for dis-

cussion and criticism o f the combined e f f e c t of the two principles, other-

wise called the A b s o l u t e Gift A n a l y s i s , as a method o f validating

donations to unincorporated associations.

 - 40 -

5. Leahy v. Attorney-General for New South Wales

Mr. Leahy was a wealthy and generous A u s t r a l i a n who wanted the

C a t h o l i c Church to b e n e f i t from h i s wealth a f t e r h i s death. Unfortunately,

he e x p r e s s e d t h i s a p p a r e n t l y straightforward d e s i r e i n the following clause

of h i s w i l l :

As to my p r o p e r t y known as 'Elmslea' s i t u a t e d a t
Bungendore ... upon t r u s t f o r such o r d e r o f nuns
o f the C a t h o l i c Church or the C h r i s t i a n B r o t h e r s
as my e x e c u t o r s and t r u s t e e s s h a l l s e l e c t and ...
the s e l e c t i o n o f the o r d e r o f nuns o r b r o t h e r s as
the case may be t o b e n e f i t under t h i s c l a u s e o f
my w i l l s h a l l be i n the s o l e and a b s o l u t e d i s -
c r e t i o n o f my s a i d e x e c u t o r s and t r u s t e e s .

T h i s c l a u s e p r e s e n t e d s e v e r a l problems. One p o s s i b l e construction of the

t e r m i n o l o g y used was t h a t i t imposed t r u s t s f o r the purpose o f b e n e f i t i n g

the r e l i g i o u s o r d e r s . However, i t had been e s t a b l i s h e d i n the High C o u r t

o f A u s t r a l i a i n t h i s case, and not l a t e r c h a l l e n g e d , t h a t the terms were

not used by Mr. Leahy i n t h e i r s t r i c t canonical sense. The r e s u l t was that

"order o f nuns" i n the w i l l was h e l d to i n c l u d e both c o n t e m p l a t i v e and non-

contemplative orders. T h i s meant t h a t the g i f t was not e n t i r e l y c h a r i t a b l e :

i t had a m i x t u r e o f c h a r i t a b l e and non-charitable elements. Normally, a

t r u s t f o r mixed c h a r i t a b l e and non-charitable purposes would f a i l . New

21

South Wales, however, had a statute which would save the g i f t , but which

would d e l e t e a l l n o n - c h a r i t a b l e elements from i t s terms. The r e s u l t of

f i n d i n g the e x i s t e n c e o f a t r u s t and applying the s t a t u t e would be that no

d i s t r i b u t i o n o f funds c o u l d be made t o any contemplative, non-charitable

order. The e x e c u t o r s o f the w i l l , not wanting such a r e s u l t , argued t h a t

another c o n s t r u c t i o n o f the c l a u s e was p o s s i b l e whereby a l l o r d e r s ,

i n c l u d i n g c o n t e m p l a t i v e , would b e n e f i t as intended- from the testator's

generosity. They argued the A b s o l u t e G i f t Analysis.

 - 41 -

The J u d i c i a l Committee o f the P r i v y C o u n c i l d e d i c a t e d t h e l a r g e r

p a r t o f i t s o p i n i o n t o d i s c u s s i n g t h i s a n a l y s i s but reached the con-

c l u s i o n t h a t the e x e c u t o r s ' argument f a i l e d i n the c i r c u m s t a n c e s . The

a n a l y s i s would i n v o l v e two s t e p s . Firstly, the r e f e r e n c e t o o r d e r s o f

nuns (which a r e u n i n c o r p o r a t e d a s s o c i a t i o n s ) would be i n t e r p r e t e d merely

as a means o f d e f i n i n g and i d e n t i f y i n g the i n d i v i d u a l nuns who were i n -

22

tended to benefit . The u n i n c o r p o r a t e d a s s o c i a t i o n i t s e l f would be

i n c a p a b l e o f r e c e i v i n g t h e funds i n i t s own name. Secondly, any i n d i -

c a t i o n t h a t the donees were not t o take as a b s o l u t e donees would be

23
ignored . V i s c o u n t Simonds c l a r i f i e d t h i s t o mean " a b s o l u t e both i n
24
q u a l i t y o f e s t a t e and i n freedom from r e s t r i c t i o n "

I t i s i n t e r e s t i n g t o note t h a t the P r i v y C o u n c i l s t a t e d t h a t the

A b s o l u t e G i f t A n a l y s i s o f g i f t s t o u n i n c o r p o r a t e d a s s o c i a t i o n s was a
25 26
"fundamental p r o p o s i t i o n " . V i s c o u n t Simonds f o r m u l a t e d i t as f o l l o w s :

In law, a g i f t t o [an u n i n c o r p o r a t e d ] s o c i e t y
s i m p l i c i t e r ( i . e . , where ... n e i t h e r the circum-
s t a n c e s o f the g i f t n o r the d i r e c t i o n s g i v e n n o r
the o b j e c t s e x p r e s s e d impose on the donee the
c h a r a c t e r o f a t r u s t e e ) i s n o t h i n g e l s e than a
g i f t t o i t s members a t the date o f the g i f t as
j o i n t t e n a n t s o r tenants i n common.

In o t h e r words, the prima facie c o n s t r u c t i o n o f the c l a u s e i n the w i l l was

t h a t those i n d i v i d u a l nuns b e l o n g i n g t o the o r d e r s s e l e c t e d by the e x e c u t o r s

who were a l i v e and members o f the o r d e r a t the date o f Mr. Leahy's death

c o u l d r e c e i v e the g i f t a b s o l u t e l y and d i s p o s e o f i t as they wished. No

doubt, i n the c i r c u m s t a n c e s , they would f e e l m o r a l l y o b l i g a t e d t o d i v e r t

the g i f t t o b e n e f i t the Church o r the o r d e r . Indeed, many would be

f u r t h e r o b l i g a t e d t o do so by vows o f p o v e r t y . N e v e r t h e l e s s , t h e r e would

be no legal compulsion f o r them t o do otherwise than pay the proceeds into

t h e i r p e r s o n a l bank accounts.
 - 42 -

However, the P r i v y C o u n c i l went on t o p o i n t o u t t h a t the prima

facie construction c o u l d be r e b u t t e d by a wide range o f c o n s i d e r a t i o n s :

for example, the terms o f the w i l l , the nature o f the unincorporated

a s s o c i a t i o n , the a s s o c i a t i o n ' s o r g a n i s a t i o n and r u l e s , the subject-matter

o f the g i f t . In t h i s case, V i s c o u n t Simonds concluded t h a t t h e evidence

o f r e b u t t a l i n t h i s manner was overwhelming i n the c i r c u m s t a n c e s . The

27 28
A b s o l u t e G i f t A n a l y s i s c o u l d n o t be u t i l i s e d . He concluded :

[Hjowever l i t t l e the t e s t a t o r understood the e f f e c t

i n law o f a g i f t t o an u n i n c o r p o r a t e d body o f
persons by t h e i r s o c i e t y name, h i s i n t e n t i o n was
to c r e a t e a t r u s t n o t merely f o r the b e n e f i t o f
the e x i s t i n g members o f the s e l e c t e d o r d e r b u t
f o r i t s b e n e f i t as a c o n t i n u i n g s o c i e t y and f o r
the f u r t h e r a n c e o f i t s work.

The will c o u l d n o t be c o n s t r u e d as making an a b s o l u t e g i f t and the t r u s t

it had s e t up f a i l e d , c h i e f l y on the ground o f p e r p e t u i t y . The g i f t had

to be s a l v a g e d by u s i n g the s t a t u t o r y p r o v i s i o n , w i t h the consequence t h a t

the n o n - c h a r i t a b l e orders o f nuns were e l i m i n a t e d from the scope o f the

gift, which then o p e r a t e d i n f a v o u r o f the non-contemplative o r d e r s o f

nuns o n l y .

I t i s i n s t r u c t i v e t o examine the c i r c u m s t a n c e s which V i s c o u n t Simonds

considered rebutted the prima facie Absolute G i f t A n a l y s i s . They were

f o u r i n number.

(i) B e n e f i t t o a Group

The f i r s t was the wording o f the c l a u s e , whereby the t e s t a t o r had

i n d i c a t e d t h a t h i s i n t e n t i o n was t o b e n e f i t a group as a whole and n o t the

29 30
i n d i v i d u a l s comprising it . Some commentators have argued that this

c o n c l u s i o n was c o r r e c t , p a r t i c u l a r l y i n view o f t h e p e c u l i a r l y 'group'

 - 43 -

nature o f C a t h o l i c orders. On the o t h e r hand, the A b s o l u t e G i f t Analysis

could nevev be e f f e c t i v e i f t h i s circumstance were accorded s i g n i f i c a n c e

i n every c a s e . The v e r y o b j e c t o f the a n a l y s i s i s t o s a l v a g e g i f t s t o

associations, a l l o f which are c h a r a c t e r i s e d by group a c t i v i t y o f some

s o r t o r another. No doubt the t e s t a t o r ' s true i n t e n t i o n was t o b e n e f i t

the group r a t h e r than i t s members i n d i v i d u a l l y but, i n view o f t h e im-

p o s s i b i l i t y o f e f f e c t i n g t h i s i n the c u r r e n t s t a t e o f the law, i t must

s u r e l y be conceded t h a t the s a l v a g e c o n s t r u c t i o n whereby the i n d i v i d u a l

members b e n e f i t i s c l o s e r t o the t e s t a t o r ' s i n t e n t i o n than t o t a l failure

o f h i s bequest. Following the t e s t a t o r ' s i n t e n t i o n s t o o c l o s e l y as an

aid to construction would mean t h a t every g i f t t o an a s s o c i a t i o n would

fail and the A b s o l u t e G i f t A n a l y s i s would always be r e b u t t e d , thus l o s i n g

31

the 'prisma facie status a c c o r d e d i t by V i s c o u n t Simonds himself

T h e r e f o r e , i t i s submitted t h a t , i n the absence o f v e r y c l e a r words t o the

contrary, the mention o f an a s s o c i a t i o n o r o t h e r group should n o t o f i t s e l f

foreclose use o f the A b s o l u t e G i f t Analysis.

(ii) S i z e o f the Group

Secondly, V i s c o u n t Simonds p o i n t e d o u t t h a t the members o f C a t h o l i c

o r d e r s a l i v e a t the t e s t a t o r ' s death may be v e r y numerous and may be d i s -

32

t r i b u t e d world-wide . Two i n t e r p r e t a t i o n s are p o s s i b l e o f t h i s statement.

On the one hand, he might have meant t h a t large membership r e b u t t e d the

presumption o f an a b s o l u t e g i f t t o the members. In c r i t i c i s m o f t h i s , i t

i s s u b m i t t e d t h a t the v a l i d i t y o f a g i f t t o an a s s o c i a t i o n should not

depend on the s i z e o f i t s membership f o r many reasons. In the f i r s t place,

courts do n o t u s u a l l y a t t a c h importance t o d i f f i c u l t i e s i n the a d m i n i s t -

r a t i o n o f a g i f t by those r e s p o n s i b l e t h e r e f o r when c o n s i d e r i n g its

 - 44 -

33
validity . In the second p l a c e , the P r i v y C o u n c i l had no evidence that
34
the membership was e x t r a o r d i n a r i l y l a r g e , and even c i t e d Re Clarke

with approval, i n which, a p p a r e n t l y , the a s s o c i a t i o n had o v e r two thousand

35

members . F i n a l l y , i f the P r i v y C o u n c i l was concerned t h a t the s i z e o f

the membership was r e l e v a n t i n t h a t i t would mean t h a t each i n d i v i d u a l

c o u l d o n l y r e c e i v e a nominal share, s u r e l y i t would have d i s c u s s e d o r

r e q u e s t e d evidence t o t h i s e f f e c t . Furthermore, s i n c e the c o u r t ' s con-

cern touches problems w i t h subsequent d e a l i n g s w i t h the donated funds, i t

appears t o t a l l y i r r e l e v a n t t o the i n i t i a l v a l i d i t y o f the bequest and

c o u l d produce a r b i t r a r y r e s u l t s .

The second p o s s i b l e i n t e r p r e t a t i o n i s t h a t V i s c o u n t Simonds was p o i n t -

ing o u t t h a t the r e c i p i e n t s would be f o r the most p a r t unknown t o the donor

36

i n such a case . Again, as w i t h t h e f i r s t c r i t e r i o n d i s c u s s e d above

(group b e n e f i t ) , t o emphasise such a problem i s t o emphasise the c o u r t ' s

perception o f t h e i n t e n t i o n o f the donor. I f the c o u r t p e r c e i v e s the

donor's i n t e n t i o n as b e i n g t o b e n e f i t each i n d i v i d u a l member, the p e r c e p -

t i o n i s m i s c o n c e i v e d , s i n c e the donor's true i n t e n t i o n i s t o b e n e f i t the

association. Once t h i s i s r e c o g n i s e d , i t i s apparent t h a t the i d e n t i t y

o f the i n d i v i d u a l members i s i r r e l e v a n t .

(iii) S u b j e c t - M a t t e r o f the G i f t

A t h i r d f a c t o r considered s i g n i f i c a n t by the P r i v y C o u n c i l was the

subject-matter o f the g i f t . The J u d i c i a l Committee a p p a r e n t l y assumed t h a t

nuns and monks c o u l d n o t be i n t e n d e d t o become the owners o f g r a z i n g

property and a homestead. Assuming f o r the sake o f argument t h a t i t eould

be a r e l e v a n t f a c t o r i n c h o o s i n g between the A b s o l u t e G i f t A n a l y s i s and a

 - 45 -

t r u s t f o r the association, s u r e l y the s u b j e c t - m a t t e r would be no more

s u i t a b l e f o r the purposes o f the l a t t e r than f o r the former. However

t h i s may be, the Privy Council d i d not launch i n t o a d e t a i l e d enquiry

on s u i t a b i l i t y so the c r i t e r i o n appeared to be l i t t l e more than neutral

in the decision. I t i s a l s o suggested t h a t no weight s h o u l d have been

a t t a c h e d t o the p o i n t s i n c e the p r o p e r t y c o u l d have been s o l d and the

proceeds p a i d to the nuns anyway.

(iv) C a p a c i t y o f the Recipients

In r e b u t t i n g the presumption t h a t the g i f t should be construed as

an a b s o l u t e g i f t to the members o f the association, the P r i v y Council

r e f e r r e d to the p o s s i b i l i t y t h a t the members o f the o r d e r s would not have

the capacity to receive the gift. I f t h i s was an a l l u s i o n to the fact

t h a t most nuns and monks take vows o f p o v e r t y (as mentioned above), t h i s

s h o u l d have supported the A b s o l u t e G i f t A n a l y s i s , as a d e v i c e of i n d i r e c t l y

fulfilling the testator's intentions, rather than have r e b u t t e d it. The

vows o f p o v e r t y and o t h e r moral o b l i g a t i o n s t o which nuns and monks are

bound would no doubt compel the r e c i p i e n t s t o devote t h e i r g i f t for the

b e n e f i t o f the order. A f t e r a l l , the J u d i c i a l Committee had e x p r e s s e d con-

cern t h a t the t e s t a t o r ' s i n t e n t i o n was t o b e n e f i t the group a c t i v i t y , and

t h i s i n t e n t i o n c o u l d be i n d i r e c t l y f u l f i l l e d i n t h i s manner. Furthermore,
37
two cases c i t e d w i t h a p p r o v a l i n Leahy were Cocks V. Manners and Re

38

Smith i n which g i f t s to Dominican s i s t e r s and Franciscan monks r e s -

p e c t i v e l y , both o f whom take vows o f p o v e r t y , were v a l i d a t e d under the

Absolute G i f t A n a l y s i s . In each case i t was assumed t h a t c o n t r a c t s and

other obligations ( i n c l u d i n g moral) t a k i n g e f f e c t outside the w i l l could

not a f f e c t the v a l i d i t y o f bequests made by i t .

 - 46 -

In summary, t h e r e f o r e , i t i s submitted t h a t the c o n c l u s i o n reached

by V i s c o u n t Simonds was p r o b a b l y i n c o r r e c t i n the c i r c u m s t a n c e s . Indeed,

39

one commentator has even suggested t h a t the P r i v y C o u n c i l was d e l i b e r -

ately expressing i t s h o s t i l i t y to g i f t s to unincorporated associations,

s i n c e i t seemed t o s e l e c t as r e l e v a n t those very f a c t o r s most l i k e l y t o

deny v a l i d i t y t o them. What i s more important, however, i s t h e i m p l i c a t i o n

t h a t the above d i s c u s s i o n has f o r t h e success o f the A b s o l u t e G i f t Analysis

i n general. I f the P r i v y C o u n c i l ' s treatment o f the c i r c u m s t a n c e s which

c o u l d rebut the a b s o l u t e g i f t presumption were adopted so t h a t the above

considerations became canons o f c o n s t r u c t i o n , s u c c e s s f u l i n v o c a t i o n of the

A b s o l u t e G i f t A n a l y s i s would be v e r y r a r e . Any i n d i c a t i o n t h a t b e n e f i t t o

a group a c t i v i t y was i n t e n d e d o r t h a t t h e s t a t u s o r number o f the i n d i v i d u a l

members was i n some way i n c o n s i s t e n t with r e c e i p t o f the p a r t i c u l a r b e n e f i t

would rebut i t s use. The.result i n Leahy c o u l d o n l y be a v o i d e d by d r a f t i n g

a g i f t s p e c i f i c a l l y and e x p r e s s l y t o the i n d i v i d u a l members o f t h e a s s o c i -

a t i o n which one hoped t o b e n e f i t .

6. Conclusion

The above s u g g e s t i o n h i g h l i g h t s the major and o v e r r i d i n g d i s -

advantage o f the A b s o l u t e G i f t A n a l y s i s . The i n d i v i d u a l members take

the bequest o r inter vivos g i f t absolutely "both i n q u a l i t y o f e s t a t e

40

and i n freedom from r e s t r i c t i o n " . There i s no guarantee whatsoever

t h a t the money w i l l be spent o r used a c c o r d i n g t o the t e s t a t o r ' s o r

donor's wishes. The members take the funds as co-owners and they can

sever t h e i r shares a t any time, even after l e a v i n g the a s s o c i a t i o n .

Recognition o f t h i s e v e n t u a l i t y used t o i n f l u e n c e the c o u r t s i n t h a t

they were f a r more l i k e l y t o adopt the A b s o l u t e G i f t A n a l y s i s i n

 - 47 -

s i t u a t i o n s where t h e members were a t l e a s t under a moral o b l i g a t i o n t o

41
f u r t h e r the o b j e c t s o f the a s s o c i a t i o n o f which they were members

In the absence o f moral o b l i g a t i o n , however, the donor has no guarantee

42
whatsoever t h a t the a s s o c i a t i o n w i l l r e c e i v e one penny o f h i s money

In r e c o g n i t i o n o f these major d e f e c t s , the A b s o l u t e G i f t Analysis

i s no l o n g e r given s e r i o u s c o n s i d e r a t i o n i n cases on d o n a t i o n s t o u n i n -

corporated associations. Most o f the r e c e n t cases on the s u b j e c t merely

43

mention the a n a l y s i s i n p a s s i n g . Itsunreliability and f a i l u r e t o

a c h i e v e the aims o f the donor, even i n a l i m i t e d form, have apparently

been recognised.

* * * * * * * * * *
FOOTNOTES : CHAPTER I

1. F o r example, Barlow V. Grant ( 1 6 8 4 ) , 1 V e r n . 2 5 5 ; 2 3 E . R . 4 5 1 ,-

Hanson v. Graham ( 1 8 0 1 ) , 6 V e s . J r . 2 3 9 ; 3 1 E . R . 1 0 3 0 ,- Leake v.
Robinson ( 1 8 1 7 ) , 2 M e r . 3 6 3 ; 3 5 E . R . 9 7 9 ; Cope v. Wilmot, c i t e d
i n note t o Thompson V. Thompson ( 1 8 4 4 ) , 1 C o l l . 3 8 1 ; 6 3 E . R . 4 6 4 ,-
Barton v. Cooke ( 1 8 0 0 ) , 5 V e s . J r . 4 6 1 ; 3 1 E . R . 6 8 2 ; Lewes V.
Lewes ( 1 8 4 8 ) , 1 6 S i m . 2 6 6 ; 6 0 E . R . 8 7 6 ; Noel V. Jones ( 1 8 4 8 ) ,
16 Sim.309; 60 E.R.893.

2. Barlow v. Grant, supra, f o o t n o t e 1.

3. Presant & Presant v. Goodwin ( 1 8 6 0 ) , 1 Sw. & T r . 5 4 4 , - 164 E.R.852 ;

In re Andrew's Trust [1905] 2 Ch.48.

4. (1857), 3 K.& J . 4 9 7 ; 69 E.R.1206.

5. Ibid 6 9 E.R.1206 at 1 2 0 8 .

6. [1979] 1 W.L.R.247; [1979] 2 A l l E.R.393

7. Supra, p 34.

8. [1979] 2 A l l E.R.393 at 3 9 7 .

9. [1979] 2 A l l E.R.393 at 4 0 2 .

10. Per B u c k l e y , L . J . , ibid.

11. Per G o f f , L . J . , ibid at 398.

12. [1933] Ch.678; 102 L.J.Ch.226; [1933] A l l E.R.Rep.720.

13. [1933] Ch.678 at 6 8 1 .

14. See a l s o , Re Turkington [1937] 4 A l l E.R.501.

15. Re Smith [1914] 1 Ch.937; 8 3 L.J.Ch.687.

16. [1914] 1 Ch.937 at 9 4 8 .

17. The same i s t r u e w i t h g i f t s t o a p a r t n e r s h i p i n the p a r t n e r s h i p

name : the g i f t . i s c o n s t r u e d a t common law as t a k i n g e f f e c t f o r
the b e n e f i t o f the i n d i v i d u a l p a r t n e r s : Maugham V. Sharpe (1864),
1 7 C.B.CN.S.) 4 4 3 a t 4 6 3 - 4 ; 1 4 4 E . R . 1 7 9 a t 1 8 7 ; Wray V. Wray [ 1 9 0 5 ]
2 Ch.349.

18. Bowman V. The Secular Society [1917] A.C.406; 8 6 L . J . C h . 5 6 8 , per

Lord Parker [ 1 9 1 7 ] A.C.406 a t 4 4 2 .

19. (1871), L.R.12 E q . 5 7 4 ; 40 L.J.Ch.640; 1 9 W.R.1055.

20. [1959] A.C.457; [1959] 2 W.L.R.722; [1959] 2 A l l E.R.300.

 - 49 -

21. New South Wales Conveyancing A c t 1919-1954, s.37D.

22. The Re Smith p r i n c i p l e : supra, pp 37-38.

23. The Re Sanderson p r i n c i p l e : supra, pp 34-37.

24. [1959] 2 A l l E.R.300 a t 307.

25. Ibid a t 306.

26. Ibid.

27. See the s i m i l a r c o n c l u s i o n reached by the High C o u r t o f A u s t r a l i a

i n Bacon V. Pianta (1966), 114 C.L.R.634.

28. [1959] 2 A l l E.R.300 a t 312.

29. Ibid a t 311.

30. F o r example, L o v e l l , " N o n - C h a r i t a b l e Purpose T r u s t s - F u r t h e r

R e f l e c t i o n s " , (1970) 34 Conv.(N.S.)77, p 92.

31. See, K e e l e r , "Devises and Bequests t o U n i n c o r p o r a t e d B o d i e s " ,

(1963-1966) 2 A d e l a i d e L.Rev.336, p 344.

32. [1959] 2 A l l E.R.300 a t 311.

33. F o r example, McPhail V. Doulton [1971] A . C 4 2 4 ; [1970] 2 W.L.R.1110;

[1970] 2 A l l E.R.228, per L o r d W i l b e r f o r c e [1970] 2 A l l E.R.228 a t 247.

34. [1901] 2 Ch.110; 70 L.J.Ch.631; 49 W.R.628.

35. K e e l e r , op.cit.supra, f o o t n o t e 31, p 346.

36. See, Re Ray's Will Trusts [1936] Ch.520; 105 L.J.Ch.257; [1936] 2
A l l E.R.93 a t 98-99.

37. Supra, f o o t n o t e 19.

38. Supra, f o o t n o t e 16.

39. McKay, "Re L i p i n s k i and G i f t s t o U n i n c o r p o r a t e d A s s o c i a t i o n s " ,

(1977) 9 V.U.W.L.R.I, p 2.

40. Per V i s c o u n t Simonds, supra, f o o t n o t e 24.

41. F o r example, Cocks V. Manners , supra, f o o t n o t e 19 : Dominican

s i s t e r s had taken vows o f p o v e r t y and were bound by r e l i g i o u s
c o n v i c t i o n to use the d o n a t i o n f o r a s s o c i a t i o n purposes. Cf.
Re Amos [1891] 3 Ch.159 : trade union members d i d n o t take under
the A b s o l u t e G i f t A n a l y s i s ; no moral o b l i g a t i o n t o f u r t h e r the
trade union's o b j e c t s . S i m i l a r l y , Re Clifford [1912] 1 Ch.29; 81
L.J.Ch.220 ; Morrow V. M'Conville (1883), 11' L.R.Ir.Eq.236 ;
Bacon v. Pianta, supra, f o o t n o t e 27.
 - 50 -

42. A t one time, a f u r t h e r o b j e c t i o n t o the A b s o l u t e G i f t A n a l y s i s

was t h a t i t was i m p o s s i b l e t o c o n v i c t an a s s o c i a t i o n member f o r
embezzlement o f a s s o c i a t i o n funds because i t would be a defence
f o r the member to say t h a t he was merely d i s p o s i n g o f h i s own
property. T h i s was so u n t i l the passage o f the Larceny and
Embezzlement A c t 1868, 31 & 32 V i c t . , c.116 under which a prima
facie g u i l t y member c o u l d be h e l d l i a b l e d e s p i t e h i s co-ownership.

43. F o r example, Neville Estates v. Madden [1962] Ch.832; [1961] 3

W.L.R.999; [1961] 3 A l l E.R.769 a t 778 ; Re Recher's Will Trusts
[1972] Ch.526; [1971] 3 W.L.R.321; [1971] 3 A l l E.R.401 a t 404 ;
Re Lipinski's Will Trusts [1976] Ch.235; [1976] 3 w.L.R.522; [1977]
1 A l l E.R.33 a t 41 Re Grant's Will Trusts[1980]
; 1 w.L.R.360;
[1980] 3 A l l E.R.359 a t 364. A l l d i s c u s s e d , infra, pp 52-66.
 -SI-

II . CONTRACT ANALYSIS

1. Introduction

A second a n a l y s i s which has found p o p u l a r i t y i n the c o u r t s in

r e c e n t y e a r s as an e x p l a n a t i o n o f the mechanism whereby donations to

unincorporated a s s o c i a t i o n s take e f f e c t i s c a l l e d , f o r the sake o f con-

v e n i e n c e i n d i s c u s s i o n , the C o n t r a c t Analysis.

Assume t h a t X makes a g i f t "to the Fairways G o l f Club", which i s a

non-charitable unincorporated a s s o c i a t i o n , incapable of r e c e i v i n g the

d o n a t i o n i n i t s own r i g h t because i t l a c k s l e g a l e x i s t e n c e . According to

the most s t r a i g h t f o r w a r d v e r s i o n o f the C o n t r a c t A n a l y s i s , the d o n a t i o n i s

achieved i n the f o l l o w i n g manner. An o u t r i g h t t r a n s f e r o f the funds takes

place from X to the c u r r e n t members o f the G o l f Club. As i n the case o f the

Absolute G i f t Analysis from the p o i n t o f view o f p r o p e r t y law the mem-

b e r s become the l e g a l co-owners of the funds. However, when they j o i n e d

the G o l f C l u b each member became ( e i t h e r e x p r e s s l y o r by implication) a

party to a membership c o n t r a c t and i t i s i n i t s emphasis on the e f f e c t of

t h i s c o n t r a c t t h a t the C o n t r a c t Analysis differs from the A b s o l u t e Gift

Analysis. As a matter o f c o n t r a c t law, the members o f the G o l f Club are

c o n t r a c t u a l l y bound to d i v e r t a l l funds t h a t they r e c e i v e from donors such

as X i n a manner s p e c i f i e d by the terms o f the membership c o n t r a c t . In

one way or another, the c o n t r a c t a s s u r e s t h a t the funds are used f o r the

Club's purposes. The members are thus r e s t r a i n e d from a s s e r t i n g t h e i r

ownership r i g h t s over donations so t h a t the i n t e n t i o n o f X to b e n e f i t the

Golf Club i t s e l f is fulfilled.

 Re Reciter's Will Trusts i s the o n l y case i n which the Contract

A n a l y s i s has h i t h e r t o been a p p l i e d d i r e c t l y . I t has t h e r e f o r e been se-

l e c t e d to i l l u s t r a t e the manner i n which the c o u r t s i n t e r p r e t and utilise

it. A more d e t a i l e d e x p o s i t i o n o f the l e g a l framework of the Contract

A n a l y s i s , and i t s advantages and d i s a d v a n t a g e s , w i l l then follow.

2. Re Recher's Will Trusts

In so f a r as they are r e l e v a n t t o the d i s c u s s i o n , the f a c t s i n Re

Recher were as follows. The London and P r o v i n c i a l A n t i - V i v i s e c t i o n Society

was a well-established, well-organised, non-charitable, unincorporated

association. I t had permanent headquarters and s t a f f , a membership o f

n e a r l y t h r e e hundred members, o f f i c e r s , a committee and a written constit-

ution. The r u l e s s t i p u l a t e d t h a t a l l S o c i e t y funds were h e l d by trustees

on what may be c a l l e d an 'administrative t r u s t ' t o h o l d o r spend according

t o the d i r e c t i o n s o f the committee who had absolute d i s c r e t i o n i n the

matter, p r o v i d e d t h a t they a c t e d " f o r the p r o t e c t i o n and advancement of the

i n t e r e s t s o f the S o c i e t y " . The main o b j e c t s o f the S o c i e t y , as d e t a i l e d i n

i t s c o n s t i t u t i o n , were "to secure the t o t a l a b o l i t i o n o f the p r a c t i c e

commonly c a l l e d ' V i v i s e c t i o n ' i n which i s i n c l u d e d the i n o c u l a t i o n of

animals f o r e x p e r i m e n t a l purposes", and "to advocate the humane treatment

of animals g e n e r a l l y " . Of p a r t i c u l a r i n t e r e s t was the r u l e t h a t " E l e c t i o n

to Membership s h a l l be taken as conclusive proof of assent t o the Rules f o r

the time b e i n g o f the S o c i e t y " . In o t h e r words, every member was bound,

by h i s c o n t r a c t o f a s s o c i a t i o n and membership w i t h the S o c i e t y , to respect

the p r o p e r t y - h o l d i n g arrangements o u t l i n e d above, whereby a l l S o c i e t y funds

were h e l d by the committee f o r S o c i e t y purposes.

 The t e s t a t r i x made a bequest to the S o c i e t y i n her w i l l . However,

the London and P r o v i n c i a l A n t i - V i v i s e c t i o n S o c i e t y as such had in fact

ceased to e x i s t even b e f o r e the w i l l had been d r a f t e d . I t had joined

f o r c e s w i t h another a n t i - v i v i s e c t i o n s o c i e t y which was subsequently i n c o r -

porated. In the p r o c e s s , the o r i g i n a l S o c i e t y was d i s s o l v e d and the

membership c o n t r a c t s were t e r m i n a t e d . As a r e s u l t o f t h i s t u r n o f events,

the bequest u l t i m a t e l y f a i l e d and the d e c i s i o n of Brightman,J. i n Re

Reciter was to t h a t e f f e c t . Nevertheless, Brightman,J. d e d i c a t e d h a l f of

h i s w r i t t e n reasons i n the case t o the q u e s t i o n o f the v a l i d i t y or other-

wise o f the bequest, on the h y p o t h e s i s t h a t the S o c i e t y had not gone through

the t r a n s f o r m a t i o n and d i s s o l u t i o n o u t l i n e d above. In o t h e r words, he

assumed t h a t the London and P r o v i n c i a l A n t i - V i v i s e c t i o n S o c i e t y had still

been i n e x i s t e n c e a t the date the w i l l came i n t o e f f e c t i n o r d e r to

a n a l y s e the e f f e c t i v e n e s s o f a g i f t to i t .

The judge was f a c e d w i t h the argument t h a t the l e g a l e f f e c t o f a g i f t

t o an u n i n c o r p o r a t e d a s s o c i a t i o n c o u l d o n l y be i n t e r p r e t e d i n t h r e e ways,

a l l o f which would o p e r a t e t o i n v a l i d a t e the bequest i n question.

The first i n t e r p r e t a t i o n discussed in Re Recher was the Absolute

3
G i f t A n a l y s i s which has a l r e a d y been e x p l a i n e d i n this thesis . It may

be r e c a l l e d t h a t the overwhelming disadvantage o f t h a t a n a l y s i s i s t h a t

the members o f the a s s o c i a t i o n are a b s o l u t e l y e n t i t l e d t o the funds as

co-owners t h e r e o f . In the p r e s e n t case, Brightman,J. assumed t h a t i t

c o u l d not have been the i n t e n t i o n o f the t e s t a t r i x t h a t her funds be dealt

w i t h i n such a manner, s i n c e the aim, s h a r e d by h e r s e l f and the Society,

o f the a b o l i t i o n o f v i v i s e c t i o n , would i n no way be f u r t h e r e d thereby. He

4
t h e r e f o r e r e j e c t e d i n summary f a s h i o n such an i n t e r p r e t a t i o n of the g i f t :
 - 54 -

[T]he g i f t ... i s n o t a g i f t t o the persons who

were the members o f the London and P r o v i n c i a l
S o c i e t y a t the t e s t a t r i x ' s death, as j o i n t t e n a n t s
or as tenants i n common b e n e f i c i a l l y , so as t o
e n t i t l e any member to a d i s t r i b u t i v e share. I t
would be absurd to suppose t h a t the t e s t a t r i x
i n t e n d e d , as soon as t h e g i f t f e l l i n t o p o s s e s s i o n ,
t h a t any such member s h o u l d be e n t i t l e d , as o f
r i g h t , t o demand an a l i q u o t share.

I t i s i n t e r e s t i n g t o note how d i f f e r e n t t h i s approach i s from t h a t adopted

by the P r i v y C o u n c i l i n Leahy v. Attorney-General for New South Wales 5

.

There, the A b s o l u t e G i f t A n a l y s i s was seen as the prima facie construction

of a gift t o an u n i n c o r p o r a t e d a s s o c i a t i o n , s u b j e c t t o r e b u t t a l by the

p a r t i c u l a r circumstances. In Re Recher, the emphasis has s h i f t e d .

Brightman,J. regarded the prima facie presumption t o be t h a t the A b s o l u t e

G i f t A n a l y s i s was not a p p l i c a b l e .

As the law s t o o d when Re Recher was decided, two o t h e r interpretations

were a v a i l a b l e o f g i f t s t o u n i n c o r p o r a t e d a s s o c i a t i o n s - t h a t i s , a g i f t

on t r u s t f o r p r e s e n t and f u t u r e members, o r a n o n - c h a r i t a b l e purpose trust

for the purposes o f t h e a s s o c i a t i o n - and these w i l l be d i s c u s s e d i n t h i s

t h e s i s i n due course 6
. F o r the time b e i n g , s u f f i c e i t t o say t h a t n e i t h e r

would have v a l i d a t e d the bequest t o the S o c i e t y i n the p r e s e n t c a s e . As

i t was, however, Brightman,J. reviewed the circumstances and wording o f

the bequest, and concluded t h a t n e i t h e r i n t e r p r e t a t i o n was d i c t a t e d thereby

anyway.

Having d e c i d e d t h a t none o f the above three i n t e r p r e t a t i o n s was

a p p l i c a b l e t o the bequest, Brightman,J. then went on t o e x p l a i n the f o u r t h

possibility. T h i s was the C o n t r a c t A n a l y s i s , which had been h i n t e d a t i n

7
Leahy v. Attorney-General for NeW South Wales 7 and e x p l a i n e d , though, n o t
8
a p p l i e d , by C r o s s , J . i n Neville Estates V. Madden . Brightman,J.
 - 55 -

e x p l a i n e d the o p e r a t i o n o f the C o n t r a c t A n a l y s i s i n the f o l l o w i n g terms

In the case o f a d o n a t i o n which i s n o t accompanied

by any words which p u r p o r t t o impose a t r u s t , i t
seems t o me t h a t the g i f t takes e f f e c t i n f a v o u r
of the e x i s t i n g members o f t h e a s s o c i a t i o n as an
a c c r e t i o n t o the funds which a r e the s u b j e c t - m a t t e r
of t h e c o n t r a c t which such members have made i n t e r
se, and f a l l s t o be d e a l t w i t h i n p r e c i s e l y the
same way as the funds which the members themselves
have s u b s c r i b e d . So, i n the case o f a l e g a c y .
In the absence o f words which p u r p o r t t o impose a
t r u s t , the l e g a c y i s a g i f t t o the members bene-
f i c i a l l y , n o t as j o i n t t e n a n t s o r as t e n a n t s i n
common so as t o e n t i t l e each member t o an immediate
d i s t r i b u t i v e share, b u t as an a c c r e t i o n t o the funds
which a r e the s u b j e c t - m a t t e r o f t h e c o n t r a c t which
the members have made i n t e r s e .

In o t h e r words, the c u r r e n t members o f the London and P r o v i n c i a l Anti-

V i v i s e c t i o n S o c i e t y would be t h e r e c i p i e n t s o f the g i f t b u t , superimposed

on t h i s p r o p e r t y t r a n s f e r would be c o n t r a c t u a l r e s t r i c t i o n s , as c o n t a i n e d

i n t h e i r c o n t r a c t o f membership, which would l i m i t t h e i r f u t u r e dealings

with i t . Assuming t h a t a l l members r e s p e c t e d the r u l e s s e t o u t i n the

S o c i e t y ' s c o n s t i t u t i o n , d e a l i n g s w i t h the fund would be l i m i t e d t o those

which p r o t e c t e d and advanced the i n t e r e s t s o f the S o c i e t y . The i n t e r n a l

mechanism whereby t h i s would be a c h i e v e d was s t i p u l a t e d i n the r u l e s t o

which each member was c o n t r a c t u a l l y bound. The members would transfer

the fund t o the t r u s t e e s who would h o l d them under an ' a d m i n i s t r a t i v e

t r u s t ' , a l o n g w i t h a l l o t h e r S o c i e t y p r o p e r t y , a w a i t i n g i n s t r u c t i o n s from

the committee as t o t h e i r disposition.

Brightman,J. acknowledged t h a t the C o n t r a c t A n a l y s i s was, i n e f f e c t ,

a compromise, a "half-way house" 1 0

. From the p o i n t o f view o f p r o p e r t y

law, the members take immediate i n t e r e s t s i n the funds as co-owners, just

as i n the case o f the A b s o l u t e G i f t A n a l y s i s . In t h i s way the problems

caused by the c e r t a i n t y , p e r p e t u i t y and b e n e f i c i a r y r e q u i r e m e n t s o f g i f t s

 - 56 -

on t r u s t are a v o i d e d . At the same time, the problem o f the Absolute

G i f t A n a l y s i s i s minimised by the superimposed c o n t r a c t u a l o b l i g a t i o n s

o f membership which p r e v e n t members from t a k i n g ' a b s o l u t e l y ' and enable

funds to devolve t o s u c c e s s i v e members i n whatever manner i s p r o v i d e d by

the r u l e s . Brightman,J. was q u i t e happy w i t h the compromise between the

two a l t e r n a t i v e s p r e s e n t e d by the mechanism o f the t r u s t on the one hand,

and the A b s o l u t e G i f t A n a l y s i s on the o t h e r . Of the argument t h a t only

these two extremes were a v a i l a b l e as e x p l a n a t i o n s o f g i f t s to unincorporated

associations he said :

I f the argument were c o r r e c t i t would be d i f f i c u l t ,

i f not i m p o s s i b l e , f o r a p e r s o n t o make a s t r a i g h t -
forward d o n a t i o n , whether i n t e r v i v o s o r by w i l l ,
to a c l u b or o t h e r n o n - c h a r i t a b l e a s s o c i a t i o n which
the donor d e s i r e s t o b e n e f i t . This conclusion
seems t o me c o n t r a r y to common sense.

I t was t h e r e f o r e on the b a s i s o f "common sense", r a t h e r than good auth-

13

ority , t h a t the Contract Analysis came i n t o being as an explanation

i n c e r t a i n c i r c u m s t a n c e s o f the s u c c e s s f u l d o n a t i o n of funds to an unin-

corporated association.

Brightman,J. concluded t h a t , had the London and Provincial Anti-

V i v i s e c t i o n S o c i e t y been i n e x i s t e n c e a t the date o f the death o f the

testatrix, the bequest to i t would have been v a l i d a t e d by the Contract

Analysis. The bequest would have o p e r a t e d as- a l e g a c y to the members- o f

the s o c i e t y a t t h a t time as an a c c r e t i o n to t h e i r funds as a s o c i e t y ,

s u b j e c t to the membership c o n t r a c t i n e f f e c t inter se which would have

l i m i t e d use o f S o c i e t y funds t o the o b j e c t s and aims o f the Society. In

the r e s u l t , however, the bequest f a i l e d because the S o c i e t y had itself

p r e d e c e a s e d the testatrix.
 - 57 -

3. Step-by-Step O p e r a t i o n o f the C o n t r a c t A n a l y s i s

Re Reehev l e f t many problems u n s o l v e d and many q u e s t i o n s unan-

swered i n r e l a t i o n t o the C o n t r a c t A n a l y s i s . Furthermore, subsequent

14

cases on the t o p i c have, i f a n y t h i n g , confused the t a s k o f i s o l a t i n g

and e x p l a i n i n g the v a r i o u s elements o f the a n a l y s i s . The d i s c u s s i o n

which f o l l o w s i s t h e r e f o r e based l a r g e l y on s p e c u l a t i o n , a i d e d both by

the bare o u t l i n e which Re Redhev formulated and by g e n e r a l l e g a l principles.

(i) Step One : The P r o p e r t y T r a n s f e r

According t o the C o n t r a c t A n a l y s i s , when a donor makes a g i f t t o

an u n i n c o r p o r a t e d a s s o c i a t i o n , p r o p e r t y i s t r a n s f e r r e d from the donor t o

15

the c u r r e n t members i n good s t a n d i n g o f the a s s o c i a t i o n . The same i s

t r u e whether the g i f t i s made from an e x t e r n a l b e n e f a c t o r , o r i s a sub-

s c r i p t i o n o r c o n t r i b u t i o n made by an i n t e r n a l member. The t r a n s f e r may

take p l a c e i n one o f two ways, depending p r i n c i p a l l y on the wording o f

the gift.

In the f i r s t p l a c e , as i n Re Reehev itself, the t r a n s f e r may be

e f f e c t e d by t h e conveyance o f l e g a l t i t l e t o the members. They take the

p r o p e r t y by way o f a b s o l u t e co-ownership and become f u l l y e n t i t l e d to i t .

In the eyes o f a p r o p e r t y lawyer, the members own the donated p r o p e r t y i n

t h e i r own r i g h t . There b e i n g no r e s t r i c t i o n on t h e i r t i t l e (such as con-

d i t i o n s subsequent), they can d e a l w i t h the p r o p e r t y as they wish. Should

a member t r a n s f e r h i s share t o a t h i r d p a r t y , as a matter o f p r o p e r t y law,

the t r a n s f e r i s good and no one can c h a l l e n g e the t h i r d p a r t y ' s owner-

ship. There i s n o t h i n g s p e c i a l about the nature o f the members' owner-

 - 58 -

ship : they a r e normal co-owners, and most l i k e l y h o l d the p r o p e r t y as

t e n a n t s i n common.

The second p o s s i b l e method whereby the t r a n s f e r may take p l a c e from

the donor t o the members i s through a t r u s t , d e c l a r e d by the donor o r

implied from the wording o f t h e g i f t , f o r the c u r r e n t members o f the a s s o c i -

ation. Such a t r u s t s a t i s f i e s the c e r t a i n t y , p e r p e t u i t y and b e n e f i c i a r y

17

requirements fora valid trust. The s e l e c t e d t r u s t e e s need n o t necess-

arily be a s s o c i a t i o n members themselves. Whoever they are, they h o l d legal

title t o the p r o p e r t y w h i l s t b e n e f i c i a l ownership i s h e l d by a l l the c u r r e n t

members i n good s t a n d i n g o f the a s s o c i a t i o n . As such, the members a r e

equitable co-owners o f t h e p r o p e r t y and can, as a.group, t e r m i n a t e the

t r u s t i f they choose, thus a c q u i r i n g l e g a l t i t l e . As a matter o f p r o p e r t y

law, they a r e the e f f e c t i v e owners o f the p r o p e r t y . T h i s p o s s i b i l i t y was

18
recognised by O l i v e r , J . i n the case o f Be Lipinski 's Will Trust :
I f a v a l i d g i f t may be made t o an u n i n c o r p o r a t e d
body as a simple a c c r e t i o n t o the funds which a r e
the s u b j e c t - m a t t e r o f the c o n t r a c t which the
members have made i n t e r se ... I do n o t r e a l l y
see why such a g i f t , which s p e c i f i e s a purpose
which i s w i t h i n the powers o f the u n i n c o r p o r a t e d
body and o f which the members o f t h a t body a r e
the b e n e f i c i a r i e s , should f a i l . Why a r e n o t the
b e n e f i c i a r i e s a b l e t o e n f o r c e the t r u s t o r , indeed,
i n the e x e r c i s e o f t h e i r c o n t r a c t u a l r i g h t s , t o
t e r m i n a t e the t r u s t f o r t h e i r own b e n e f i t ?

In the Lipinski case, the t e s t a t o r attempted t o make a bequest o f r e s i d u -

ary estate t o a non-charitable, unincorporated a s s o c i a t i o n , the H u l l

Judeans (Maccabi) A s s o c i a t i o n , w i t h the f u r t h e r d i r e c t i o n t h a t t h e money

be used t o c o n s t r u c t o r improve the a s s o c i a t i o n ' s b u i l d i n g s . I t was h e l d

t h a t the bequest was v a l i d , a l t h o u g h the e x a c t b a s i s f o r the d e c i s i o n i s

19

unclear and the case can be s e v e r e l y c r i t i c i s e d f o r i t s lack of p r e c i s -

20
ion . Nevertheless, i t i s apparent from the above-quoted passage t h a t
 - 59 -

O l i v e r , J . contemplated the p o s s i b i l i t y t h a t the C o n t r a c t Analysis may

apply to e x p l a i n a g i f t f o r the purposes o f an a s s o c i a t i o n which o p e r a t e s

via a t r u s t f o r i t s c u r r e n t members and i t i s submitted t h a t he was

correct i n this contemplation.

Whether the p r o p e r t y t r a n s f e r i s e f f e c t e d by an a b s o l u t e conveyance

o f t i t l e OT v i a a t r u s t , the next s t e p i n the C o n t r a c t Analysis operates

in e x a c t l y the same way.

(ii) Step Two : The Contract

Step One i n the C o n t r a c t A n a l y s i s merely t r a n s f e r s t i t l e i n the

donated funds t o the donees from the donor who then drops out o f the pic-

ture. I f the a n a l y s i s stopped here, i t would achieve l i t t l e more than the

Absolute G i f t Analysis i n t h a t i t would p r o v i d e no l e g a l guarantee what-

ever t h a t the donor's i n t e n t i o n t o b e n e f i t an u n i n c o r p o r a t e d association

would be achieved. I t would have t o depend on the e x i s t e n c e i n the members

o f some sense o f moral duty t o d i v e r t t h e i r p r o p e r t y to the association's

benefit. Step Two t h e r e f o r e endeavours to c r e a t e legal r i g h t s and duties

c i r c u m s c r i b i n g the ownership o f the members. I t i n v o l v e s the recognition

o f c o n t r a c t u a l terms which r e g u l a t e the members' ownership i n a l l r e s p e c t s .

More than one method o f a c h i e v i n g t h i s i s a v a i l a b l e w i t h i n the ambit o f

the C o n t r a c t Analysis. The a c t u a l method used i n i n t e r p r e t i n g any partic-

u l a r d o n a t i o n w i l l depend p r i n c i p a l l y on the s t r u c t u r a l and c o n s t i t u t i o n a l

d e t a i l s o f the a s s o c i a t i o n i n q u e s t i o n . Each a c h i e v e s e s s e n t i a l l y the same

result.

a) Implied Contract
 - 60 -

The f i r s t method e n t a i l s r e c o g n i t i o n o f an embryonic form o f ' a s s o c i -

21 22
a t i o n law' . I t i s generally acknowledged t h a t the u n i n c o r p o r a t e d

association i s a c o n s e n s u a l arrangement and t h a t i t s members a r e the p a r t i e s

t o a m u l t i - p a r t i t e membership c o n t r a c t e n t e r e d i n t o on admission t o mem-

23

bership . The terms o f t h i s c o n t r a c t a r e both express and i m p l i e d . The

former a r e found i n the a s s o c i a t i o n ' s c o n s t i t u t i o n , i f any, t o which each

member on j o i n i n g consents t o be bound. The l a t t e r a r e f o r m u l a t e d as a

matter o f necessary i m p l i c a t i o n from the nature o f an a s s o c i a t i o n . Thus,

even i f an a s s o c i a t i o n has no w r i t t e n c o n s t i t u t i o n o r i f the c o n s t i t u t i o n

which i t does have c o n t a i n s no p r o v i s i o n s dealing expressly w i t h the t o p i c

o f donated funds, i t i s submitted t h a t Step Two o f the C o n t r a c t Analysis

can n e v e r t h e l e s s o p e r a t e .

Property t r a n s f e r r e d t o the members qua a s s o c i a t i o n members under

Step One i s s u b j e c t e d t o the i m p l i e d terms o f the. membership contract.

S i n c e the v e r y o b j e c t o f t h e i r a s s o c i a t i n g t o g e t h e r i s t o f u r t h e r and

p e r p e t u a t e the purposes f o r which the a s s o c i a t i o n was c r e a t e d , certain

terms which g i v e e f f e c t t o t h i s o b j e c t are r e a d i l y i m p l i e d i n the c o n t r a c t

which they have e n t e r e d i n t o inter se. In p a r t i c u l a r , i t i s i m p l i e d l y

s t i p u l a t e d that, a l t h o u g h each member becomes the co-owner o f a l l ' a s s o c i -

a t i o n ' p r o p e r t y as a matter o f p r o p e r t y law, as a matter o f c o n t r a c t law,

the p r o p e r t y can o n l y be used f o r a s s o c i a t i o n purposes. Above a l l , each

member i s bound by an i m p l i e d contractual o b l i g a t i o n t o t r a n s f e r h i s share

in ' a s s o c i a t i o n ' p r o p e r t y t o the o t h e r members when he t e r m i n a t e s h i s

membership. I n t h i s manner, the member i s r e s t r i c t e d i n the e x e r c i s e of h i s

proprietary rights.

b). Express C o n t r a c t
 - 61 -

Step Two i s e v i d e n t l y more s t r a i g h t f o r w a r d i f the terms o f the

membership c o n t r a c t a r e e x p r e s s . Of course, the members o f each unin-

corporated a s s o c i a t i o n have t o t a l freedom t o s t i p u l a t e whatever r u l e s

they c o n s i d e r appropriate. F o r the purposes o f d i s c u s s i o n , therefore,

some g e n e r a l i s a t i o n i s necessary and i t i s proposed t o c o n s i d e r only

two b a s i c models f o r the express i n t e r n a l p r o p e r t y - h o l d i n g arrangements

o f an a s s o c i a t i o n .

I n t e r p o s i t i o n o f an ' A d m i n i s t r a t i v e Trust' In the f i r s t p l a c e , i t is

common, p a r t i c u l a r l y i n l a r g e r u n i n c o r p o r a t e d a s s o c i a t i o n s , t o f i n d the

existence o f one o r more a p p o i n t e d o r e l e c t e d committees which represent

the i n t e r e s t s o f members o f t h e a s s o c i a t i o n both i n i t s d e a l i n g s with the

outside world, and i n t e r n a l l y . Such an arrangement i s c o n v e n i e n t and

practicable. I t i s a l s o common f o r the r u l e s o f an a s s o c i a t i o n t o s t i p u l a t e

that a l l 'association' property must be h e l d by c e r t a i n committee members

on trust, to be d e a l t w i t h as d i r e c t e d from time t o time e i t h e r by

24

another committee o r the membership a t l a r g e . I f t h i s i s the case,

the C o n t r a c t Analysis o f funds donated t o the u n i n c o r p o r a t e d a s s o c i a t i o n

o p e r a t e s as f o l l o w s . P r o p e r t y i n the donated funds i s t r a n s f e r r e d t o the

c u r r e n t members i n good s t a n d i n g o f t h e a s s o c i a t i o n , as e x p l a i n e d i n Step

One. The members a r e bound by t h e i r c o n t r a c t o f membership t o d e a l with

their proprietary i n t e r e s t s as s p e c i f i e d i n the r u l e s . In t h i s instance,

each member i s t h e r e f o r e under a c o n t r a c t u a l o b l i g a t i o n t o t r a n s f e r h i s

i n t e r e s t i n the funds t o the r e l e v a n t committee members. The committee

members a r e l i k e w i s e bound t o d e a l w i t h the t r a n s f e r r e d funds, o f which they

are co-owners, as the r u l e s d i c t a t e . In o r d e r t o a v o i d committing a b r e a c h

of contract, therefore, they must d e c l a r e themselves t r u s t e e s o f the funds

and h o l d them under the ' a d m i n i s t r a t i v e trust'.

 - 62 -

Ownership by Members E x p r e s s l y L i m i t e d by t h e Rules The second model

i l l u s t r a t i n g the i n t e r n a l property-holding arrangements o f an u n i n -

corporated a s s o c i a t i o n does not i n v o l v e committees o r 'administrative

trusts'. Instead, t h e r u l e s may simply and e x p r e s s l y s t i p u l a t e that

each member, w h i l s t r e t a i n i n g ownership over t h e p r o p e r t y , must utilise

any i n t e r e s t he may h o l d i n t h a t p r o p e r t y f o r t h e purposes o f the

association. They may p r o h i b i t any d i v i s i o n o f funds between the

members f o r t h e i r own purposes, f o r example.

Such p r o v i s i o n s have caused two p a r t i c u l a r problems f o r the

v a l i d i t y of g i f t s . Each problem w i l l be s t a t e d and i l l u s t r a t e d by

reference t o case law, and i t w i l l be submitted i n each case t h a t the

a l l e g e d problem i s based on f a l l a c i o u s r e a s o n i n g . I t w i l l be concluded

t h a t express r e s t r i c t i o n s on t h e ownership o f funds by members o f an

unincorporated a s s o c i a t i o n a r e i r r e l e v a n t t o the v a l i d i t y o f a g i f t t o

i t under the C o n t r a c t Analysis.

The first problem was i d e n t i f i e d by C r o s s , J . i n the case o f

25
Neville Estates V. Madden as a p r o v i s o t o the s u c c e s s f u l use o f the

Contract Analysis of g i f t s to unincorporated associations :

[A g i f t t o an u n i n c o r p o r a t e d a s s o c i a t i o n ] may be
a g i f t t o the e x i s t i n g members not as j o i n t t e n a n t s ,
but s u b j e c t t o t h e i r r e s p e c t i v e c o n t r a c t u a l r i g h t s
and l i a b i l i t i e s towards one another as members o f
the a s s o c i a t i o n . I n such a case a member cannot
sever h i s share. I t w i l l accrue t o t h e other
members on h i s death o r r e s i g n a t i o n , even though
such members i n c l u d e persons who became members
a f t e r the g i f t took e f f e c t . I f t h i s i s the e f f e c t
of t h e g i f t , i t w i l l not be open t o o b j e c t i o n on
the s c o r e o f p e r p e t u i t y , u n l e s s t h e r e i s something
i n i t s terms o r i n the r u l e s o f t h e a s s o c i a t i o n
which, p r e c l u d e s the members a t any g i v e n time from
d i v i d i n g t h e s u b j e c t o f the g i f t between them on
the f o o t i n g t h a t they are s o l e l y e n t i t l e d t o i t i n
equity.
 - 63 -

In o t h e r words, the court was of the opinion that an express stip-

ulation i n the rules of an unincorporated a s s o c i a t i o n which restricted

the members' o w n e r s h i p o f 'association' property w o u l d mean t h a t any

gift to that a s s o c i a t i o n would v i o l a t e the rule against perpetuities.

26

This r e s u l t may be illustrated by Came V. Long where a testator

devised h i s mansion to the Penzance P u b l i c Library ( w h i c h was an unin-

corporated association) for i t s use, b e n e f i t , m a i n t e n a n c e and support.

The rules of the association stipulated that the L i b r a r y had to remain

in existence and i t s property undivided f o r as long as i t had ten

members. Lord Campbell,L.C. explained the e f f e c t of t h e s e r u l e s on the

27
validity of the gift :
I f t h e d e v i s e had b e e n i n f a v o u r o f t h e e x i s t i n g
members o f t h e s o c i e t y , a n d t h e y h a d b e e n a t l i b e r t y
t o d i s p o s e o f t h e p r o p e r t y as t h e y m i g h t t h i n k f i t ,
t h e n i t might, I t h i n k , have been a l a w f u l d i s -
p o s i t i o n and not t e n d i n g t o a p e r p e t u i t y . But
l o o k i n g to the language o f the r u l e s o f t h i s s o c i e t y ,
I t i s c l e a r t h a t t h e l i b r a r y Was i n t e n d e d t o be a
p e r p e t u a l i n s t i t u t i o n , a n d t h e t e s t a t o r m u s t be
p r e s u m e d t o h a v e known w h a t t h e r e g u l a t i o n s w e r e .

28

The bequest failed for perpetuity . I t had v i o l a t e d the law's pro-

scription against remoteness of vesting embodied i n the rule against

perpetuities.

By way of criticism, i t i s submitted that the rule against per-

petuities is irrelevant in this context. As was seen i n the discussion

29

of S t e p One above , there i s no possibility that property interests

might vest outside the perpetuity period. As a matter of property law,

they are vested at o n c e and subsequent contractual restrictions can

not change the situation. The rule against p e r p e t u i t i e s i s not triggered

30
by the Contract Analysis .
 - 64 -

The second problem which c o u r t s have p e r c e i v e d t h e r u l e s o f an

a s s o c i a t i o n t o pose i n the c o n t e x t o f t h e C o n t r a c t A n a l y s i s i s demon-

31

s t r a t e d i n the r e c e n t case o f Re Grant's Will Trusts . In b r i e f , i t

i s assumed t h a t , i f t h e r u l e s o f an u n i n c o r p o r a t e d a s s o c i a t i o n i n d i c a t e

t h a t i t s members a r e never t o be p e r m i t t e d t o r e c e i v e and d i v e r t f o r

p e r s o n a l use t h e i r i n t e r e s t s i n ' a s s o c i a t i o n ' p r o p e r t y , the donor c o u l d

not have i n t e n d e d the g i f t t o operate under the C o n t r a c t A n a l y s i s . In

Re Grant t h e t e s t a t o r had been an a c t i v e member o f the Labour P a r t y i n

his l i f e t i m e so he d e v i s e d a l l h i s p r o p e r t y on h i s death t o the l o c a l

c o n s t i t u e n c y Labour P a r t y f o r the b e n e f i t o f i t s h e a d q u a r t e r s . The

l o c a l P a r t y was an u n i n c o r p o r a t e d a s s o c i a t i o n w i t h a c o m p l i c a t e d and

d e t a i l e d c o n s t i t u t i o n which r e g u l a t e d the i n t e r n a l mechanism whereby

' a s s o c i a t i o n ' p r o p e r t y was h e l d . One o f i t s r u l e s s t i p u l a t e d t h a t the

a s s o c i a t i o n ' s members and committee had t o a c c e p t any a l t e r a t i o n t o i t s

c o n s t i t u t i o n which the n a t i o n a l Labour P a r t y chose t o make.

I t was argued by t h e proponents o f the v a l i d i t y o f t h e bequest

t h a t the g i f t s h o u l d take e f f e c t i n accordance w i t h the C o n t r a c t A n a l y s i s

so t h a t the members would take a b s o l u t e i n t e r e s t s i n the donated fund

but be bound c o n t r a c t u a l l y t o d e a l with, them as s t i p u l a t e d by the r u l e s

r e g u l a t i n g t h e h o l d i n g o f p r o p e r t y w i t h i n the a s s o c i a t i o n . In t h i s

manner, the g i f t would be v a l i d and t h e l o c a l P a r t y would b e n e f i t as-

i n t e n d e d by t h e t e s t a t o r .

V i n e l o t t , J . r e j e c t e d the argument and r e f u s e d t o i n t e r p r e t the

bequest i n accordance w i t h the C o n t r a c t A n a l y s i s . He gave the f o l l o w i n g

32
reason :

I t must, as I see i t , be a necessary c h a r a c t e r i s t i c

of any g i f t [ v a l i d a t e d by use o f t h e C o n t r a c t A n a l y s i s ]
 - 65 -

t h a t the members o f the a s s o c i a t i o n can by an

a p p r o p r i a t e m a j o r i t y ( i f the r u l e s so p r o v i d e ) ,
o r a c t i n g unanimously i f they do n o t , a l t e r t h e i r
r u l e s so as t o p r o v i d e t h a t the funds, o r p a r t
of them, s h a l l be a p p l i e d f o r some new purpose,
of even d i s t r i b u t e d amongst the members f o r t h e i r
own b e n e f i t .

In o t h e r words, the members must be a b l e t o govern the d e s t i n a t i o n o f

the funds they h o l d and t o d i v i d e them amongst themselves b e f o r e a c o u r t

will utilise the C o n t r a c t A n a l y s i s t o e x p l a i n and v a l i d a t e a g i f t t o the

association. i n the p r e s e n t case, the members d i d n o t c o n t r o l t h e p r o p e r t y

themselves, i n t h a t an e x t e r n a l body - t h e n a t i o n a l Labour P a r t y - c o u l d

a l t e r the r u l e s . The c o u r t t h e r e f o r e u t i l i s e d the r u l e s i n the a s s o c i a t i o n ' s

c o n s t i t u t i o n concerning ' a s s o c i a t i o n ' p r o p e r t y as a t o o l o f c o n s t r u c t i o n

of the g i f t . They were open t o the p o s s i b i l i t y o f b e i n g a l t e r e d ex-

t e r n a l l y , w i t h t h e r e s u l t t h a t i f t h e members were c o n s t r u e d as h o l d i n g

i n t e r e s t s i n t h e funds, s u b j e c t t o those r u l e s , the funds c o u l d be

d i v e r t e d away from t h e a s s o c i a t i o n which was i n t e n d e d t o be b e n e f i t e d .

S i n c e t h e t e s t a t o r was w e l l - a c q u a i n t e d w i t h t h e content o f the r u l e s , t h e

c o u r t concluded t h a t he c o u l d not have i n t e n d e d h i s bequest t o be i n t e r -

p r e t e d i n any manner which would p e r m i t t h i s r e s u l t , which i n c l u d e d the

Contract A n a l y s i s .

Two o b s e r v a t i o n s s h o u l d be made i n c r i t i c i s m o f t h e c o u r t ' s l i n e o f

r e a s o n i n g in Re Grant. Firstly, any r e l i a n c e on the c o u r t ' s p e r c e p t i o n

of t h e donor's i n t e n t i o n i n r e l a t i o n t o h i s g i f t is artificial. The

true i n t e n t i o n o f the donor o f funds t o an u n i n c o r p o r a t e d a s s o c i a t i o n i s

not t o b e n e f i t the members i n any way, but t o promote t h e a s s o c i a t i o n .

No donor 'intends to t r a n s f e r h i s funds t o the members, even with, the s a f e -

guards o f the C o n t r a c t Analysis-. Furthermore, the C o n t r a c t A n a l y s i s was

f o r m u l a t e d as a s a l v a g e d e v i c e t o p e r m i t the c o u r t s t o manoeuvre t h e i r
 - 66 -

way a r o u n d the problem o f an u n i n c o r p o r a t e d association's lack of legal

personality. As such, i t s aim i s t o evade an anomaly i n t h e law, n o t t o

honour a donor's i n t e n t i o n s , however perceived.

The second c r i t i c i s m w h i c h may b e l e v e l l e d a t a court's u s e o f an

association's c o n s t i t u t i o n as a t o o l o f c o n s t r u c t i o n i s that the con-

stitution i s a contractual arrangement. I t s t e r m s c a n n o t be c a r v e d i n

stone or absolutely and f o r e v e r entrenched. Therefore no t e r m w h i c h pro-

h i b i t s members from severing their shares i n 'association' property is

inviolable. The members c a n a t a n y t i m e cast o f f the contractual fetters

on their ownership o f ' a s s o c i a t i o n ' funds. Thus, in Re Grant itself,

the members o f t h e l o c a l Party had v o l u n t a r i l y subjected themselves t o

the external c o n t r o l o f the national Labour Party by e n t e r i n g into a

contractual term t o t h a t effect. They could j u s t as v o l u n t a r i l y have

dissociated themselves from the n a t i o n a l Party by v a r y i n g t h e terms o f

t h e i r membership contract.

In sum, i t i s submitted that the express r u l e s o f an unincorporated

association should not influence a court's decision t o use o r not t o use

the Contract Analysis as a matter o f i n t e r p r e t a t i o n . In Re Grant had

the court espoused the Contract Analysis, t h e b e q u e s t would have been

valid. Instead the court decided that the r u l e s precluded such a result

and held that the g i f t was i n t e n d e d to operate as a n o n - c h a r i t a b l e pur-

33
pose t r u s t , which failed . In t h i s regard, Re Grant i s an e x t r e m e l y
34
unsatisfactory decision
 - 67 -

(iii) Step Three : Misapplication of Funds

The discussion of S t e p s One and Two has demonstrated that the role

of property law and i t s g o v e r n i n g p r i n c i p l e s i n the Contract Analysis is

completed once the transfer of the donated f u n d s has been e f f e c t e d . The

law of contract then takes over. T h u s i f any of the members u t i l i s e s the

funds other t h a n as s t i p u l a t e d i n the rules of the a s s o c i a t i o n , he commits

a breach of contract. The donor, not being a party to that contract

(unless he i s himself a member o f the unincorporated a s s o c i a t i o n ) , has no

remedy against him. Only the other p a r t i e s to the association contract,

the members, h a v e a c a u s e o f a c t i o n and i t sounds s o l e l y i n c o n t r a c t . The

only other possibility i s to r e s o r t to the law of restitution.

It i s possible to regard the s i t u a t i o n as being parallel to the tra-

ditional view of the legal p o s i t i o n of the grantor of a l i c e n c e over land.

Traditionally, i f the owner i n f e e simple, f o r example, of a p l o t of land,

Y, granted a licence to a l i c e n s e e , X, to play c r i c k e t on the land on

Sundays i n r e t u r n for consideration, the existence of the l i c e n c e was merely

a matter of contract law. I t d i d not a f f e c t Y's proprietary rights over

his land i n any way. However, i f he v i o l a t e d the terms o f the licence and

prevented X from p l a y i n g c r i c k e t by selling the land to a developer, X

35

would only have a c o n t r a c t u a l remedy a g a i n s t Y . Likewise, the remedy

of other members o f an unincorporated association (X) i f one member (Y).

absconded with funds donated to the a s s o c i a t i o n w o u l d be to b r i n g an

action i n damages f o r b r e a c h : o f contract, or to apply e i t h e r f o r an in-

junction to r e s t r a i n that breach, o f contract or f o r an order of specific

performance.
 - 68 -

4. Advantages o f t h e C o n t r a c t Analysis

The o v e r r i d i n g advantage o f the C o n t r a c t A n a l y s i s i s that the i n t e r -

p r e t a t i o n o f a g i f t t o an u n i n c o r p o r a t e d a s s o c i a t i o n as o p e r a t i n g within

i t s framework w i l l i n most cases r e s u l t i n the v a l i d i t y o f the g i f t . The

troublesome requirements o f t r u s t s law need not be s a t i s f i e d ; the range o f

purposes f o r which the i n t e n d e d r e c i p i e n t a s s o c i a t i o n e x i s t s i s as broad

36

as t h e c o n t r a c t u a l freedom o f i t s members ; the a n a l y s i s i s f l e x i b l e t o

the p a r t i c u l a r i n t e r n a l c o n s t i t u t i o n a l arrangement o f t h e r e c i p i e n t a s s o c i -

ation. The a n a l y s i s o p e r a t e s t o v a l i d a t e both testamentary and intev

vivos gifts, and d o n a t i o n s from both e x t e r n a l b e n e f a c t o r s and the a s s o c i -

a t i o n 's own members.

Although t h e a n a l y s i s can n o t a b s o l u t e l y guarantee t h a t t h e i n t e n t i o n s

37

o f the donor w i l l be f u l f i l l e d , i f . h e chooses h i s a s s o c i a t i o n c a r e f u l l y

and s e l e c t s one w i t h a r e c o r d of s t a b i l i t y and even a c o n s t i t u t i o n w i t h a

rigorous amending formula, he w i l l improve the chances o f h i s funds b e i n g

utilised t o b e n e f i t the a s s o c i a t i o n as a c o n t i n u i n g enterprise. However,

even the p o t e n t i a l f o r change ( w i t h i n r e a s o n a b l e l i m i t s ) by contractual

v a r i a t i o n which the C o n t r a c t A n a l y s i s p r e s e n t s may serve a u s e f u l purpose

from t h e p o i n t o f view o f p u b l i c p o l i c y , so t h a t one need n o t view the major

weakness o f the a n a l y s i s as u n q u a l i f i e d l y u n d e s i r a b l e . A f t e r a l l , the

members o f an a s s o c i a t i o n , who change i t s r u l e s and o b j e c t s from time t o

time, may be s e n s i t i v e t o c u r r e n t needs i n s o c i e t y and may t h e r e f o r e per-

form a contemporaneously u s e f u l s o c i a l f u n c t i o n . I t i s n o t an i n e v i t a b l e

r e s u l t o f the C o n t r a c t A n a l y s i s t h a t funds w i l l s t a g n a t e i n t h e c o f f e r s

of associations which have o u t l i v e d t h e i r u s e f u l n e s s o r which have

anachronistic aims.
 - 69 -

5. Disadvantages o f t h e C o n t r a c t Analysis

I t i s suggested t h a t the p r i n c i p a l disadvantages o f the C o n t r a c t

38

Analysis are t h r e e i n number

(i) No L e g a l Guarantee

If h i s g i f t i s i n t e r p r e t e d as t a k i n g e f f e c t i n accordance w i t h the
C o n t r a c t A n a l y s i s , the donor does not enjoy the b e n e f i t o f t h e type o f
s t r o n g guarantee o f performance which c h a r a c t e r i s e s g i f t s which operate
39
w i t h i n the l e g a l framework o f a v a l i d t r u s t . In the f i r s t p l a c e , he
may s p e c i f y a purpose i n the terms o f h i s g i f t which i s narrow and more

l i m i t e d i n scope than the g e n e r a l purposes f o r which t h e r e c i p i e n t a s s o c i -

40
ation exists . Thus, i n t h e example used a t the v e r y b e g i n n i n g o f t h i s
41

discussion , X may s p e c i f y t h a t h i s g i f t i s " f o r t h e Fairways G o l f Club

f o r the purpose o f f u n d i n g c o m p e t i t i v e tournaments". The Club's r u l e s

meanwhile p e r m i t the whole range o f both s o c i a l and s p o r t i n g activities

a s s o c i a t e d w i t h t h e game o f g o l f . In such a case, even due compliance by

a l l members, w i t h t h e terms o f t h e i r a s s o c i a t i o n c o n t r a c t may n o t n e c e s s a r i l y

promote one s i n g l e tournament. The s p e c i f i e d purpose has no l e g a l f o r c e

under the C o n t r a c t Analysis and i s i n t e r p r e t e d as merely s t a t i n g the motive

f o r the d o n a t i o n . In e f f e c t , the donor has t o take the a s s o c i a t i o n and i t s

c o n s t i t u t i o n as he f i n d s them.

In the second p l a c e , there i s no" guarantee t h a t even the g e n e r a l

purposes s t i p u l a t e d i n the a s s o c i a t i o n ' s c o n s t i t u t i o n w i l l be imple-

mented. Damages f o r breach o f c o n t r a c t o b t a i n e d by the a s s o c i a t i o n

membership a g a i n s t a delinquent member who m i s a p p l i e d funds would

 - 70 -

probably be n o m i n a l i n quantum a n d t h e r e f o r e of l i t t l e deterrent force.

Furthermore, they would c e r t a i n l y provide neither the donor n o r the a s s o c i -

ation itself with a true remedy f o r t h e n o n - f u l f i l m e n t o f t h e terms o f

the gift.

E v e n more s e r i o u s , however, i s the disadvantage that, just a s t h e two

parties t o an o r d i n a r y bipartite contract can vary or terminate i t by

mutual assent, so a l s o c a n t h e members o f a n a s s o c i a t i o n v a r y or terminate

their multi-partite contract. This can occur by unanimous agreement o r

even by a m a j o r i t y vote i f t h e r u l e s i n t h e a s s o c i a t i o n ' s c o n s t i t u t i o n so

42

provide .. Brightman,J. recognised the existence of this problem i n Re

43
Reehev and s a i d :
T h e r e w o u l d b e no l i m i t t o t h e t y p e o f v a r i a t i o n o r
termination t o which a l l might agree. T h e r e i s no
p r i v a t e t r u s t or t r u s t f o r c h a r i t a b l e purposes or
o t h e r t r u s t t o h i n d e r t h e p r o c e s s 44.

The price of avoiding the complications o f t r u s t s law i s t h e l o s s o f i t s

defining characteristic : the guarantee o f performance. Thus i f X's gift

to the Golf Club i s construed as t a k i n g e f f e c t under the Contract Analysis,

the f u n d s may w e l l be u t i l i s e d to finance the construction o f a shopping

centre on t h e s e v e n t e e n t h and e i g h t e e n t h fairways i f t h e members f o r the

time being resolve to introduce this a s one o f t h e o b j e c t s f o r which the

association exists. Furthermore, t h e members may e v e n d e c i d e t o w i n d up

the a s s o c i a t i o n and d i v i d e i t s a s s e t s amongst t h e m s e l v e s . Since the only

legal arrangement i n existence i s a c o n t r a c t b e t w e e n t h e members, no

third party, such as t h e donor, could intervene. His generosity may

therefore e n d up f i n a n c i n g a member's new p a i r o f g o l f s h o e s f o r use a t a

rival golf club. The n a t u r e o f an a s s o c i a t i o n and i t s r u l e s c a n e n s u r e

a continuing b e n e f i t t o t h e a s s o c i a t i o n from donated.funds to a certain

extent only f o r as l o n g as the a s s o c i a t i o n exists.

 ( i i ) The Search f o r a Contract

The existence o f a l e g a l l y enforceable c o n t r a c t between the members

o f an u n i n c o r p o r a t e d a s s o c i a t i o n i s c r u c i a l f o r the purposes o f the C o n t r a c t

Analysis. P a r t i c u l a r l y when the a s s o c i a t i o n i n q u e s t i o n has no w r i t t e n ,

c o n s t i t u t i o n a l membership document, the C o n t r a c t Analysis runs i n t o prob-

lems. The e x i s t e n c e of contractual r i g h t s and o b l i g a t i o n s uniformly

a p p l i c a b l e t o a l l members has t o be i m p l i e d a c c o r d i n g t o what i s r e a s o n a b l e

i n the c i r c u m s t a n c e s and t a k i n g i n t o account e s t a b l i s h e d p r a c t i c e , t h e

45

general n a t u r e o f t h e a s s o c i a t i o n and i t s a c t i v i t i e s . The u n c e r t a i n t y

inherent i n t h i s p r o c e s s c a s t s doubt on the a v a i l a b i l i t y o f the C o n t r a c t

Analysis i n a l l cases o t h e r than those i n v o l v i n g e s t a b l i s h e d and organised

a s s o c i a t i o n s whose founding members have f o r m u l a t e d w r i t t e n membership

terms. In the absence o f a w r i t t e n c o n t r a c t o f some k i n d , a court i s likely

to refuse to interpret a g i f t as t a k i n g e f f e c t under the C o n t r a c t Analysis.

However, even when a w r i t t e n c o n s t i t u t i o n does e x i s t , i t may be

difficult t o e s t a b l i s h the c r e a t i o n o f a c o n t r a c t every time a member j o i n s

an a s s o c i a t i o n . Presumably when a member a p p l i e s f o r admission t o an a s s o c i -

a t i o n , he thereby o f f e r s t o be bound by i t s e x i s t i n g r u l e s and t h i s o f f e r

i s i m p l i e d l y a c c e p t e d by a l l the o t h e r members as a body when the

46
a p p l i c a t i o n i s approved . One commentator has attempted t o e x p l a i n t h e
47
arrangement m the f o l l o w i n g manner :

The c o n t r a c t o f a s s o c i a t i o n i s a complex m u l t i -
p a r t i t e t r a n s a c t i o n , w i t h o f f e r and acceptance b l u r r e d
by members j o i n i n g t h e i r s o c i e t y a t d i f f e r e n t times,
p o s s i b l y w i t h o u t even h a v i n g any knowledge o f one
another's e x i s t e n c e o r i d e n t i t y . The problem o f
e x p l a i n i n g e x a c t l y how i t i s t h a t a l l members can
have a t t a i n e d a m u l t i l a t e r a l c o n t r a c t u a l a c c o r d
i s p e r p l e x i n g , b u t n o t i n s o l u b l e . What i s r e q u i r e d
i s a r e c o g n i t i o n t h a t the o f f e r and acceptance i n
 - 72 -

these cases are open-ended. When an a s s o c i a t i o n

i s formed, there i s i m p l i e d i n t o each member's
c o n t r a c t a s t a n d i n g o f f e r to p r o s p e c t i v e a p p l i c a n t s
t o j o i n on those terms which those e x i s t i n g members
have a c c e p t e d .

Particularly i n the case o f a l a r g e or p h y s i c a l l y d e c e n t r a l i s e d organis-

a t i o n , the problems posed i n t h i s c o n t e x t by a l a r g e membership, most o f

whom are unaware of the e x i s t e n c e and i d e n t i t y of the o t h e r s , tempt one

t o conclude t h a t the e x i s t e n c e o f the m u l t i - p a r t i t e c o n t r a c t necessary f o r

48
the s u c c e s s f u l use of the C o n t r a c t Analysis i s a fiction

Indeed, some commentators would go even f u r t h e r and would deny the

f e a s i b i l i t y o f the e n t i r e C o n t r a c t A n a l y s i s because o f the problem o f i n -

venting a l e g a l l y enforceable membership c o n t r a c t . For example, S t o l j a r

a s s e r t s t h a t the s t r u c t u r e o f an u n i n c o r p o r a t e d a s s o c i a t i o n c o n s i s t s of

49
merely p e r s o n a l and de facto relationships :

Not j u s t because o f the p r o c e d u r a l d i f f i c u l t i e s

t h a t c o n t r a c t might here cause, or because there
would be too many c o n t r a c t s t o be r e c o g n i s e d , o r
because the law would r e f u s e to have such c o n t r a c t s
s p e c i f i c a l l y performed. The c o n t r a c t u a l e x p l a n a t i o n
f a i l s on r a t h e r more fundamental grounds. For ...
the r e a l p o i n t about the r u l e s i s t h a t they are
designed as i n s t r u c t i o n s or as a ground-plan f o r the
continuous r u n n i n g o f the a s s o c i a t i o n , not t o
create p r i v a t e l e g a l r i g h t s .

I f one were t o agree w i t h the above p o i n t of view, one would be compelled

to conclude t h a t the C o n t r a c t Analysis can not satisfactorily validate

g i f t s to u n i n c o r p o r a t e d associations. In response, however, i t may be ob-

served t h a t the C o n t r a c t Analysis at l e a s t presents a workable, though

fictitious, l e g a l framework t o e x p l a i n an o t h e r w i s e i n e x p l i c a b l e phen-

omenon : the s u c c e s s f u l d o n a t i o n o f funds to u n i n c o r p o r a t e d associations.

I t was formulated as a s a l v a g i n g device and was intended t o do no more

than to improve an u n s a t i s f a c t o r y anomaly i n the law.

 (iii) F i c t i t i o u s Aspects o f the C o n t r a c t Analysis

The problem ( d i s c u s s e d above) o f i n v e n t i n g a l e g a l l y enforceable

c o n t r a c t i s n o t the o n l y f i c t i t i o u s aspect o f the C o n t r a c t Analysis.

S e v e r a l more a r e r e a d i l y d i s c o v e r a b l e , which t o g e t h e r s t r i k e a t the con-

c e p t u a l and p r a c t i c a b l e soundness o f the a n a l y s i s . The problem w i l l be

i l l u s t r a t e d b r i e f l y by mentioning two examples.

In t h e f i r s t p l a c e , i f t h e members t o g e t h e r own the p r o p e r t y , should

they n o t be p e r s o n a l l y t a x a b l e on the t r a n s a c t i o n and any income a r i s i n g

from i t s investment? Without going i n t o any d e t a i l s o f t a x a t i o n law, i n

p r a c t i c e members o f an u n i n c o r p o r a t e d a s s o c i a t i o n are not assessed per-

s o n a l l y on ' a s s o c i a t i o n ' p r o p e r t y . Nevertheless, i t has been suggested

in some r e c e n t cases on an a s s o c i a t i o n ' s l i a b i l i t y f o r vates t h a t the

50

members may indeed be a s s e s s e d p e r s o n a l l y . However, i t i s p o s s i b l e

t h a t such l i a b i l i t y r e s u l t s from some p e r c e i v e d agency r e l a t i o n s h i p betwee

a p a r t i c u l a r member and the a s s o c i a t i o n i t s e l f , than from a r e c o g n i t i o n o f

the member's ownership o f ' a s s o c i a t i o n ' property.

The e f f e c t i v e n e s s o f the C o n t r a c t A n a l y s i s i n a c h i e v i n g t h e donor's

aim o f b e n e f i t i n g an a s s o c i a t i o n depends t o a g r e a t e x t e n t on an ongoing

p r o c e s s whereby c u r r e n t members' i n t e r e s t s i n the p r o p e r t y w i l l be t r a n s -

f e r r e d i n p a r t o r i n f u l l t o f u t u r e members as they j o i n . To be o p e r a t i v e

such a p r o c e s s n o r m a l l y i n v o l v e s t h a t c e r t a i n f o r m a l i t i e s , r e q u i r e d by

both, p r o p e r t y law and the law o f c o n t r a c t s , be complied w i t h . F o r example

if t h e members o f an u n i n c o r p o r a t e d a s s o c i a t i o n r e c e i v e donated property

as t h e b e n e f i c i a r i e s o f a t r u s t i n t h e i r favour, as e x p l a i n e d i n the l a t t e

p a r t o f the d i s c u s s i o n o f Step One o f the C o n t r a c t Analysis when t h e

 - 74 -

c u r r e n t members d i e o r r e s i g n from t h e a s s o c i a t i o n and i m p l i e d l y transfer

t h e i r i n t e r e s t s i n accordance w i t h the terms o f t h e i r c o n t r a c t , a dis-

p o s i t i o n of subsisting equitable i n t e r e s t s has taken p l a c e . U n l e s s such

. . . . . . 52

a d i s p o s i t i o n i s made i n w r i t i n g , s t a t u t e renders i t v o i d . Is i t not

u n r e a l i s t i c t o assume t h a t members i n such a s i t u a t i o n i n p r a c t i c e d i s p o s e

of t h e i r i n t e r e s t s i n 'association' property i n writing? Yet i n p r a c t i c e

u n i n c o r p o r a t e d a s s o c i a t i o n s do h o l d property.

6. Conclusion

One i s compelled t o conclude t h a t the C o n t r a c t Analysis does not

realistically e x p l a i n the mechanism whereby u n i n c o r p o r a t e d associations

a c t u a l l y r e c e i v e and h o l d donated p r o p e r t y , although i n theory i t holds

many a t t r a c t i o n s . I t permits courts to authorise the s u c c e s s f u l donation

o f funds t o u n i n c o r p o r a t e d a s s o c i a t i o n s . As such, i t serves a u s e f u l p u r -

pose, b u t i t s r o l e must be r e c o g n i s e d as b e i n g l i m i t e d t o t h a t o f a

salvaging device. I t s e t s up a framework which a p p a r e n t l y succeeds i n

achieving a r e s u l t which i s otherwise a l l b u t i m p o s s i b l e i n the c u r r e n t

s t a t e o f the law : the d o n a t i o n o f funds t o an u n i n c o r p o r a t e d association,

w i t h a l i m i t e d assurance t h a t the a s s o c i a t i o n i t s e l f w i l l b e n e f i t thereby.

However, the s u c c e s s o f the a n a l y s i s i s e n t i r e l y s u p e r f i c i a l .

* * * * * * * * * *
 - 75 -

FOOTNOTES : CHAPTER I I

1. Supra, pp 33-50.

2. [1972] Ch.526; [1971] 3 W.L.R.321; [1971] 3 A l l E.R.401, h e r e a f t e r

r e f e r r e d t o as Re Recher.

3. Supra, pp 33-50.

4. [1971] 3 A l l E.R.401 a t 406.

5. [1959] A.C.457; [1959] 2 W.L.R.722; [1959] 2 A l l E.R.300. Discussed

supra, pp 40-46.

6. Infra, pp 102-163.

7. Supra, 300 a t 306.

f o o t n o t e 5 [1959] 2 A l l E.R.

8. [1962] Ch.832; [1961] 3 W.L.R.999; [1961] 3 A l l E.R.769 a t 778.

9. [1971] 3 A l l E.R.401 a t 408.

10. Ibid.

11. Infra, pp 123-127, pp 152-158.

12. [1971] 3 A l l E.R.401 a t 408.

13. The cases c i t e d were : In re Clarke [1901] 2 Ch.110; 70 L.J.Ch.631,

which was i r r e l e v a n t t o the p r e s e n t t o p i c because the g i f t took e f f e c t
on trust f o r the purposes o f the Corps o f Commissioners ; Re Ray 's
Will Trust [1936] Ch.520 a t 524, a dictum which, was a g a i n i r r e l e v a n t
because i t deals w i t h g i f t s on t r u s t i n g e n e r a l terms ; Leahy V.
Attorney-General for Hew South Wales, .supra, f o o t n o t e 5 [1959] 2 A l l
E.R.300 a t 307, which was a d i s c u s s i o n o f the A b s o l u t e G i f t A n a l y s i s ;
and Neville Estates v. Madden, supra, f o o t n o t e 8 [1961] 3 A l l E.R.
769 a t 778, i n which C r o s s , J . ' s statements were not o n l y obiter, b u t
were a l s o themselves t o t a l l y unsupported by a u t h o r i t y . In sum, none
o f the a l l e g e d a u t h o r i t i e s was d i r e c t l y on p o i n t .

14. For example, Re Lipinski's Will Trusts [1976] Ch.235; [1976] 3 W.L.R.
522; [1977] 1 A l l E.R.33 ; Re Grant's Will Trusts [1980] 1 W.L.R.
360; [1979] 3 A l l E.R. 359: h e r e a f t e r r e f e r r e d t o as Re Grant.

15. An a l t e r n a t i v e view i s t h a t the p r o p e r t y i s t r a n s f e r r e d t o t h e

t r u s t e e s o f the a s s o c i a t i o n . See f u r t h e r , infra, p 61.

16. Cf. Ford, U n i n c o r p o r a t e d N o n - P r o f i t A s s o c i a t i o n s (Oxford : C l a r e n d o n ,

1959), pp 5-8 ; K e e l e r , "Devises and Bequests t o U n i n c o r p o r a t e d
Bodies", (.1963-1966) 2 A d e l a i d e L.Rev.336, pp 352-356 ; M o r r i s &
Leach, The Rule A g a i n s t P e r p e t u i t i e s , 2d.ed.(London : Stevens, 1962) ,
p 315.
 - 76 -

17. Discussed.passim, infra, pp 152-158.

18. Supra, f o o t n o t e 14 [1977] 1 A l l E.R.33 a t 43.

19. See, Re Lipinski, supra, f o o t n o t e 14 [1977] 1 A l l E.R.33 a t 46.

20. Cf. I n s a l l , " G i f t s t o U n i n c o r p o r a t e d A s s o c i a t i o n s " , (1977) N.Z.L.J.

489 : "Re L i p i n s k i i s a v e r y important case i n t h a t i t s t a t e s
c l e a r l y and unambiguously f o r the f i r s t time t h a t there can be a
v a l i d t r u s t f o r the purposes o f an a s s o c i a t i o n " , p 495. See a l s o ,
G r a v e l l s , " G i f t s t o U n i n c o r p o r a t e d A s s o c i a t i o n s - Where There's a
W i l l There's a Way", (1977) 40 Mod.L.R.231.

21. See a l s o , Green, "The D i s s o l u t i o n o f U n i n c o r p o r a t e d N o n - P r o f i t

A s s o c i a t i o n s " , (1980) 43 Mod.L.R.626, pp 627-629.

22. D i s c u s s e d , supra, pp 14-15.

23. F o r f u r t h e r d i s c u s s i o n o f t h i s t o p i c , see infra, pp 71-72.

24. Such was the arrangement i n Re Recher, supra, f o o t n o t e 2 ; Re

Lipinski, supra, f o o t n o t e 14 ; and Re Grant, supra, f o o t n o t e 14.

25. Supra, f o o t n o t e 8 [1961] 3 A l l E.R.769 a t 778-779.

26. (1860), 2 De G.F.& J.75; 29 L.J.Ch.503; 45 E.R.550.

27. Ibid 2 De G.F.& J.75 a t 79-80.

28. See a l s o , Thomson v. Shakespear (1*860), 1 De G.F.& J.399; 29 L.J.Ch.

276; 45 E.R.413 ; Re Button (1878), 4 Ex.D.54 ; Re Nottage [1895] 2
Ch.649; 64 L.J.Ch.695 ; Maoaulay v. 0'Donnell [1943]Ch.435n. Cf.
Re Drummond [1914] 2 Ch.90; 83 L.J.Ch.817.

29. Supra, pp 58-59.

30. One might argue t h a t the concern caused by express r e s t r i c t i o n s i n

the r u l e s i s not the r u l e a g a i n s t p e r p e t u i t i e s , but r a t h e r the e x i s -
tence o f i m p e r m i s s i b l e c o n d i t i o n s a t t a c h e d t o t i t l e . I t i s not easy
to d e r i v e such an argument from the cases d i s c u s s e d here, but even i f
such an argument were made, the g i f t would n e v e r t h e l e s s v a l i d l y take
place. In o t h e r words, i f an a s s o c i a t i o n ' s r u l e s a t t a c h e d c o n d i t i o n s
to the members' t i t l e , the c o n d i t i o n s i n q u e s t i o n would be v o i d . The
g i f t would be v a l i d and members would take t i t l e , c l e a r of the
c o n d i t i o n s , e x a c t l y as a l r e a d y d i s c u s s e d i n Step One.

31. Supra, f o o t n o t e 14. See a l s o , infra, PP 97-98.

32. Ibid [1979] 3 A l l E.R.359 a t 366.

33. Infra, PP 105-131.

34. See a l s o the c r i t i c i s m s v o i c e d i n the f o l l o w i n g : Green, "'Love's

Labours L o s t ' : A Note on Re Grant's W i l l Trusts",'(1980) 43 Mod.L.R.
459 ; T e t t e n b o r n , " L e g a c i e s and L o c a l Labour P a r t i e s " , (1980) 130
 - 77 -

N.L.J.532 ; R i c k e t t , "Mr. J u s t i c e V i n e l o t t on U n i n c o r p o r a t e d A s s o c i -
a t i o n s and G i f t s f o r N o n - C h a r i t a b l e Purposes", (1982) 12 V.U.W.L.R.1,
pp 6-13.

35. For example, Wood V. Leadbitter (1845), 13 M.& W.838; 14 L.J.Ex.161;

53 E.R.351.

36. Terms which are i l l e g a l because they are c o n t r a r y to s t a t u t e , or

p u b l i c p o l i c y or i n r e s t r a i n t o f t r a d e w i l l not be l e g a l l y e n f o r c e -
able. But of. on the one hand, the i m p o s s i b i l i t y o f s e t t i n g up a
trust f o r a p o l i t i c a l purpose ( i n f r a , p l l 3 ) ; and, on the o t h e r hand,
the Re Grant case, f o r example, supra, f o o t n o t e 14.

37. See, supra, pp 69-70.

38. Since Step One o f the C o n t r a c t A n a l y s i s i n v o l v e s the same p r o c e s s as

t h a t found i n the Absolute G i f t A n a l y s i s (supra,pp^33-50 ), the
same f a c t o r s may operate to r e b u t the a v a i l a b i l i t y o f the C o n t r a c t
A n a l y s i s i n any p a r t i c u l a r case (supra, pp 42-46). However, the
same c r i t i c i s m s t o t h i s approach apply as were v o i c e d i n r e l a t i o n t o
the Absolute G i f t A n a l y s i s (supra, ibid) .

39. Infra, P P 102-174.

40. I t i s assumed here t h a t a c o u r t i s n e v e r t h e l e s s w i l l i n g t o use the

C o n t r a c t A n a l y s i s and i g n o r e the p o s s i b l e c r e a t i o n o f a t r u s t .

41. Supra, p 51.

42. Reel V. Holder [1981] 1 W.L.R.1226; [1981] 3 A l l E.R.321 p a r t i e . a t

325 ; John v. Rees [1969] 2 W.L.R.1294; [1969] 2 A l l E.R.274 ; Re
Kaiapoi Woollen Mills Employees' Welfare Society (1976), u n r e p o r t e d ,
C h r i s t c h u r c h . (N.Z.) R e g i s t r y , No.A 211/74, p a r t i e . a t 9. Cf. Abbatt
V. Treasury S o l i c i t o r [1969]1 W.L.R.1575; [1969] 1 A l l E.R.52 ;
Baker, "Case Comment", (.1970) 86 L.Q.R.18 ; Innes V. Wylie (1844),
1 Car.s Kir.257; 174 E.R.800 ; Amalgamated Society of Engineers v.
Jones (.1913)., 29 T.L.R.484.

43. Supra, footnote 2 [1971] 3 A l l E.R.401.

44. Note t h a t the ' a d m i n i s t r a t i v e t r u s t ' c o u l d be t e r m i n a t e d by a

change i n the r u l e s which c r e a t e d i t .

45. F o r example, Abbott V. Sullivan [1952] 1 K.B.189; [1952] 1 A l l E.R.

226 : a p u r e l y customary arrangement.

46. S i m i l a r to the m u l t i p a r t i t e arrangement i n The Satanita [1895] P.

248; a f f i r m e d sub nom. Clarke v. Dunraven [1897] A.C.59.

47. Green, op.cit. supra, footnote 21, p 629.

48. See a l s o , O'Connor, " A c t i o n s a g a i n s t V o l u n t a r y Associations and

the L e g a l System", (1977) 4 Mon.L.R.87, p 97.

49. S t o l j a r , Groups and E n t i t i e s (Canberra : A u s t r a l i a n N a t i o n a l

U n i v e r s i t y P r e s s , 1973), p 43. See a l s o , Baxt, "The Dilemma
 - 78 -

o f the U n i n c o r p o r a t e d A s s o c i a t i o n " , (1973) 47 A.L.J.305, p 307.

50. F o r example, see Verrall v. Hackney London Borough Council [1983]

2 W.L.R.202 a t 213 ; R. v. Brighton Justices, ex parte Howard
[1980] R.A.222 a t 225. D i s c u s s e d , supra, pp 19-21.

51. Supra, pp 58-59.

52. U n i t e d Kingdom Law o f P r o p e r t y A c t 1925, 15 & 16 Geo.V, c.20,

s.53(l)(c). See a l s o , New Zealand P r o p e r t y Law Amendment A c t
1980, No.131, s.2 ; i n Canada, see, f o r example, B r i t i s h Columbia
S t a t u t e o f Frauds, R.S.B.C.1979, c.393, s.2.
 - 79 -

III. THE BURRELL THEORIES OF DONATION

1. Introduction

For reasons which w i l l be e x p l a i n e d i n due course, i t i s o n l y by

d i n t o f i n f e r e n c e and conjecture t h a t the case which most r e c e n t l y d e a l t

w i t h the t o p i c o f d o n a t i o n s to u n i n c o r p o r a t e d associations i s of sig-

n i f i c a n c e to t h i s t h e s i s . Consequently, l e s s time w i l l be spent on

a n a l y s i n g i t s t h e o r i e s than on the o t h e r s which are d i r e c t l y and auth-

o r i t a t i v e l y r e l e v a n t and therefore discussed i n some d e t a i l , both p r i o r

and subsequent to t h i s chapter. The case i s Conservative and Unionist

Central Office v. Burrell (Inspector of Taxes) 1

, a d e c i s i o n o f the English

C o u r t o f Appeal, a f f i r m i n g the o p i n i o n o f V i n e l o t t , J . i n the Chancery

Division.

Each c o u r t d i s c u s s e d the i s s u e o f d o n a t i o n o f funds f o r s p e c i f i e d

purposes and expounded t h e o r i e s on the mechanisms whereby such d o n a t i o n s

can be e f f e c t i v e . The r e s p e c t i v e t h e o r i e s o f the two courts d i f f e r e d sub-

s t a n t i a l l y and, moreover, are open to more than one i n t e r p r e t a t i o n .

Neither c o u r t used i t s t h e o r y t o e x p l a i n the d o n a t i o n o f funds specifically

to u n i n c o r p o r a t e d associations. Nevertheless, the aim o f t h i s chapter i s

to evaluate the e f f e c t i v e n e s s and v a l u e o f these t h e o r i e s as a l t e r n a t i v e

analyses o f d o n a t i o n s to u n i n c o r p o r a t e d associations. The conclusions

reached w i l l be : firstly, t h a t the t h e o r i e s themselves are dubious;

s e c o n d l y , t h a t they are o f l i m i t e d u s e f u l n e s s i n the c o n t e x t of g i f t s to

unincorporated a s s o c i a t i o n s ; and thirdly, t h a t they are n e i t h e r v i a b l e

nor s u p e r i o r a n a l y t i c a l t o o l s t o the mechanisms a l r e a d y , and presently

to be, discussed. In sum, they do n o t p r o v i d e a s a t i s f a c t o r y s o l u t i o n to

 - 80 -

the problem a t hand, but to omit d i s c u s s i o n o f them would n e v e r t h e l e s s

be t o p r e s e n t an incomplete view o f the topic.

2. The Burrell case

Under the U n i t e d Kingdom Income and C o r p o r a t i o n Taxes A c t ,

"companies" a r e l i a b l e to pay a c o r p o r a t i o n tax which i s charged at a

h i g h e r r a t e than p e r s o n a l income t a x . S u b s e c t i o n 526(5) o f the same A c t

3
i s an i n t e r p r e t a t i o n p r o v i s i o n which d e f i n e s "company" as f o l l o w s :

'[Cjompany' means ... any body c o r p o r a t e or unin-

corporated association, but does not i n c l u d e a
p a r t n e r s h i p , a l o c a l a u t h o r i t y or a l o c a l a u t h o r i t y
a s s o c i a t i o n ...

Under t h i s d e f i n i t i o n , the C o n s e r v a t i v e P a r t y was a s s e s s e d as an u n i n -

c o r p o r a t e d a s s o c i a t i o n t o c o r p o r a t i o n tax f o r the y e a r s 1972 to 1976,

d u r i n g which i t had a c q u i r e d s u b s t a n t i a l investment income and interest.

The P a r t y c h a l l e n g e d the assessment and the f i n d i n g t h a t i t was an unin-

4
corporated a s s o c i a t i o n

The Court of Appeal agreed w i t h V i n e l o t t , J . a t f i r s t i n s t a n c e i n

h o l d i n g t h a t the C o n s e r v a t i v e P a r t y was not an u n i n c o r p o r a t e d a s s o c i a t i o n

f o r the purposes o f the Income and C o r p o r a t i o n Taxes A c t . Lawton,L.J.

• 5
o f f e r e d the f o l l o w i n g d e f i n i t i o n o f an u n i n c o r p o r a t e d a s s o c i a t i o n :

I t i s a g a i n s t [the above] s t a t u t o r y background :that

a meaning has t o be g i v e n to the words ' u n i n c o r p o r a t e d
association'. I t i s s u f f i c i e n t l y l i k e a 'company'
f o r i t to be p u t i n the c h a r g i n g s e c t i o n w i t h i n the
ambit o f t h a t word. The i n t e r p r e t a t i o n s e c t i o n
makes i t c l e a r t h a t the word 'company' has- a meaning
e x t e n d i n g beyond a body c o r p o r a t e but not as f a r as-
a p a r t n e r s h i p or l o c a l a u t h o r i t y . I i n f e r ' t h a t by
' u n i n c o r p o r a t e d a s s o c i a t i o n ' i n this- c o n t e x t
P a r l i a m e n t meant two o r more persons bound t o g e t h e r
f o r one o r more common purposes-, not b e i n g business-
purposes, by mutual u n d e r t a k i n g s , each h a v i n g mutual
 - 81 -

d u t i e s and o b l i g a t i o n s , i n an o r g a n i s a t i o n which has

r u l e s which i d e n t i f y i n whom c o n t r o l o f i t and i t s
funds r e s t s and upon what terms and which can be
joined or l e f t at w i l l . The bond o f union between
the members o f an u n i n c o r p o r a t e d a s s o c i a t i o n has
to be c o n t r a c t u a l .

I t i s important t o observe t h a t the c o u r t c o n f i n e d i t s o p i n i o n on the

d e f i n i t i o n o f an u n i n c o r p o r a t e d a s s o c i a t i o n , and the C o n s e r v a t i v e Party's

compliance o r otherwise w i t h t h a t d e f i n i t i o n , t o the s p e c i f i c s t a t u t o r y

context. The c o u r t h e l d - b u t o n l y f o r the purposes o f t h e t a x i n g s t a t u t e -

t h a t t h e C o n s e r v a t i v e P a r t y was not an u n i n c o r p o r a t e d a s s o c i a t i o n . I t

w i l l be submitted t h a t the P a r t y must n e v e r t h e l e s s be an u n i n c o r p o r a t e d

a s s o c i a t i o n i n the general sense o f the term and t h a t the Burrell case

demonstrates the e x i s t e n c e o f two types o f u n i n c o r p o r a t e d a s s o c i a t i o n :

one type t h a t i s s u f f i c i e n t l y c l o s e i n s t r u c t u r e and o p e r a t i o n t o a com-

pany t o be taxed as such under the E n g l i s h A c t ; another type which en-

compasses a l l o t h e r u n i n c o r p o r a t e d a s s o c i a t i o n s .

Both the C o u r t o f Appeal and the Chancery D i v i s i o n reviewed the

complex c o n s t i t u t i o n a l and s t r u c t u r a l d e t a i l s o f the c o m p o s i t i o n o f the

Conservative Party. In p a r t i c u l a r , Lawton,L.J. examined the f o l l o w i n g

features o f the Conservative Party : the i n d i r e c t methods- whereby mem-

b e r s h i p may be a t t a i n e d ; the complex c o n t r a c t u a l l i n k s between the

P a r t y ' s v a r i o u s organs.; the l a c k o f a r e a d i l y i d e n t i f i a b l e rule-making

body; and the absence o f a s p e c i f i c o c c a s i o n when the o r i g i n a l a s s o c i a t i o n

6
c o n t r a c t was made which f i r s t brought the P a r t y i n t o e x i s t e n c e . In sum :

In my judgment, however v i a b l e such a body [as

the C o n s e r v a t i v e P a r t y ] may be as a p o l i t i c a l move-
ment, i t l a c k s the c h a r a c t e r i s t i c s o f an u n i n c o r p o r a t e d
a s s o c i a t i o n f o r the purposes o f t h e t a x i n g s t a t u t e s .

In o t h e r words, the C o n s e r v a t i v e P a r t y was n o t an ' u n i n c o r p o r a t e d associ-

a t i o n ' w i t h i n s u b s e c t i o n 526(5) o f the Income and C o r p o r a t i o n Taxes A c t ,

 - 82 -

and t h e r e f o r e not a 'company' w i t h i n t h a t s t a t u t e ' s c h a r g i n g s e c t i o n , and

the assessment to c o r p o r a t i o n tax had been made i n e r r o r . Such was the

ratio decidendi o f the BUTT ell case and a l l o t h e r d i s c u s s i o n was purely

obiter.

3. The Burrell Theories of Donation

Had the C o n s e r v a t i v e P a r t y been h e l d t o be an u n i n c o r p o r a t e d associ-

a t i o n i n the l i m i t e d sense d i s c u s s e d above, the c o u r t would have had no

difficulty i n e x p l a i n i n g how donations are r e c e i v e d and p r o p e r t y i s h e l d

7
by i t . Brightman,L.J. e x p l a i n e d :

I f the p a r t y i s r i g h t l y d e s c r i b e d as an u n i n c o r p o r a t e d
a s s o c i a t i o n w i t h an i d e n t i f i a b l e membership bound
t o g e t h e r by i d e n t i f i a b l e r u l e s ... no problem a r i s e s .
In t h a t event, d e c i d e d cases say t h a t the c o n t r i b u t i o n
takes e f f e c t i n f a v o u r o f the members o f the u n i n -
c o r p o r a t e d a s s o c i a t i o n known as the C o n s e r v a t i v e
P a r t y as an a c c r e t i o n t o the funds which are the
s u b j e c t matter of the c o n t r a c t which such members
have made i n t e r se.
g

In o t h e r words, the C o n t r a c t A n a l y s i s would have been r e a d i l y available

to e x p l a i n the mechanism and consequences o f d o n a t i o n t o the P a r t y f o r

P a r t y purposes. The a v a i l a b i l i t y o f such a s t r a i g h t f o r w a r d e x p l a n a t i o n

of the P a r t y ' s f u n d - h o l d i n g was used by the Crown t o support i t s argu-

ment t h a t i t was an u n i n c o r p o r a t e d a s s o c i a t i o n i n the f i r s t p l a c e . The

Crown argued t h a t t h e r e was no o t h e r f e a s i b l e e x p l a n a t i o n o f how an organ-

i s a t i o n such as the C o n s e r v a t i v e P a r t y r e c e i v e d and owned funds in practice.

By c o n t r a s t , both V i n e l o t t , J . i n the Chancery D i v i s i o n and Brightman,L.J.

i n the Court o f Appeal i n the Burrell case managed t o come up w i t h other

a n a l y s e s o f the l e g a l n a t u r e o f a d o n a t i o n t o the C o n s e r v a t i v e Party.

(i) I r r e v o c a b l e Mandate
 - 83 -

In the C o u r t o f Appeal, Brightman,L.J. propounded the 'irrevocable

9

mandate t h e o r y ' . He explained t h a t when a donor g i v e s funds to the

t r e a s u r e r of an " o r g a n i s a t i o n " t o be a p p l i e d f o r the purposes o f that

organisation, a mandate arrangement i s . c r e a t e d which becomes i r r e v o c a b l e

when the funds are mixed w i t h the o t h e r o r g a n i s a t i o n funds a l r e a d y held

by the t r e a s u r e r . In o t h e r words, p r o p e r t y i n the funds i s t r a n s f e r r e d

once and f o r a l l to the t r e a s u r e r . He i s authorised to use them i n the

manner s t i p u l a t e d and "the c o n t r i b u t o r has no l e g a l r i g h t t o r e q u i r e the

mixed fund to be unscrambled f o r h i s b e n e f i t "

As a matter o f p r o p e r t y law, therefore, i t appears t h a t l e g a l title

i s t r a n s f e r r e d to the r e c i p i e n t t r e a s u r e r who becomes a b s o l u t e l y entitled

to the funds. Presumably he would be t a x e d p e r s o n a l l y on income from the

funds. Presumably, a l s o , he i s f r e e and able from the p o i n t o f view o f

property law to t r a n s f e r h i s i n t e r e s t to others and d i v e r t the funds away

from the purposes s t i p u l a t e d i n the mandate. One i s reminded o f the

Absolute G i f t Analysis ^ of g i f t s to unincorporated associations-. As

Brightman,L.J. e x p l a i n e d , however, h i s theory differs significantly from

12
the A b s o l u t e G i f t A n a l y s i s , w i t h i t s a t t e n d a n t disadvantages , i n the
13
following respect :

[T]he c o n t r i b u t o r has no r i g h t to demand h i s con-

t r i b u t i o n back, once i t ' h a s been mixed w i t h . o t h e r
money under a u t h o r i t y o f the c o n t r i b u t o r .....
T h i s does not mean, however, t h a t a l l c o n t r i b u t o r s
l o s e a l l r i g h t s once t h e i r cheques are cashed, w i t h
the absurd r e s u l t t h a t the t r e a s u r e r or o t h e r o f f i c e r s
can run o f f with, the mixed fund w i t h impunity. I
have no doubt t h a t any c o n t r i b u t o r has a remedy
a g a i n s t the r e c i p i e n t ( i . e . the t r e a s u r e r , or the
o f f i c i a l s - a t whose d i r e c t i o n the t r e a s u r e r acts);
to r e s t r a i n or make good a m i s a p p l i c a t i o n o f the
mixed fund except so f a r as- i t may appear on o r d i n a r y
a c c o u n t i n g p r i n c i p l e s t h a t the p l a i n t i f f ' s own
c o n t r i b u t i o n was- spent b e f o r e the t h r e a t e n e d o r
actual misapplication. In the l a t t e r event the
 - 84 -

mandate g i v e n by the c o n t r i b u t o r w i l l not have

been breached.

Brightman,L.J. d i d not e x p l a i n the nature o f the i r r e v o c a b l e mandate.

The mandate - which o r i g i n a t e d i n the c i v i l law o f Rome and Scotland -

is an i m p l i e d c o n t r a c t u a l arrangement between the donor and the recipient

whereby a s p e c i e s o f g r a t u i t o u s b a i l m e n t i s c r e a t e d . The contract provides

for the t r a n s f e r o f the funds so t h a t the t r a n s f e r e e can u t i l i s e them f o r

a s t i p u l a t e d purpose. Furthermore, as J o w i t t ' s D i c t i o n a r y o f E n g l i s h Law

14
says :

A mandatary [ i . e . the r e c i p i e n t / t r a n s f e r e e ] i n c u r s
t h r e e o b l i g a t i o n s : t o do the a c t which i s the o b j e c t
o f the mandate, and w i t h which he i s charged; to
b r i n g t o i t a l l the care and d i l i g e n c e t h a t i t r e q u i r e s ;
and to render an account of h i s doings t o the man-
dator.

The remedies a g a i n s t the r e c i p i e n t o f the fund f o r i t s m i s a p p l i c a t i o n include

an a c t i o n f o r damages f o r breach o f c o n t r a c t and an a c t i o n f o r money had

and received, c o u p l e d w i t h an a c c o u n t . No doubt the c o n t r i b u t o r could

apply f o r an i n j u n c t i o n to r e s t r a i n a threatened breach o f mandate. It

i s p o s s i b l e , however, t h a t an a p p l i c a t i o n f o r s p e c i f i c performance would

be denied, s i n c e the essence o f a mandate i s a c o n t r a c t f o r s e r v i c e s o f a

personal nature.

The s i m i l a r i t y between the I r r e v o c a b l e Mandate Theory and the Contract

15

Analysis i s striking. In each case, p r o p e r t y i s transferred absolutely

but the t r a n s f e r e e i s constrained by contractual o b l i g a t i o n s to deal with

the p r o p e r t y i n a s p e c i f i e d way. In each case, an a c t i o n f o r b r e a c h o f

c o n t r a c t i s the remedy a v a i l a b l e t o d e t e r or compensate f o r m i s a p p l i c a t i o n .

The Irrevocable Mandate Theory t h e r e f o r e s u f f e r s a l l the disadvantages o f the

C o n t r a c t A n a l y s i s enumerated i n the p r e c e d i n g chapter 1 6

, such as the diffi-
 - 85 -

c u l t y of inventing contracts i n c e r t a i n circumstances. However, i t a l s o

s u f f e r s a d d i t i o n a l drawbacks which stem from an important d i s s i m i l a r i t y

between the two a n a l y s e s . In the case o f the C o n t r a c t A n a l y s i s , the

c o n t r a c t i s i m p l i e d from the nature o f membership o f an a s s o c i a t i o n and

s u b s i s t s between members : the donor moves out o f the p i c t u r e entirely.

By c o n t r a s t , the I r r e v o c a b l e Mandate Theory demands the i m p l i c a t i o n o f

a c o n t r a c t between the r e c i p i e n t o f funds and the donor h i m s e l f . Brightman,

17
L . J . r e c o g n i s e d the u n f o r t u n a t e consequence of t h i s aspect of h i s theory :

The o n l y problem which might a r i s e i n p r a c t i c e under

the mandate t h e o r y would be the case o f an attempted
bequest t o the C e n t r a l O f f i c e funds, o r t o the
t r e a s u r e r s t h e r e o f , o r t o the [ C o n s e r v a t i v e P a r t y ] ,
s i n c e no agency c o u l d be s e t up a t the moment o f
death between a t e s t a t o r and h i s chosen agent.
A d i s c u s s i o n o f t h i s problem i s o u t s i d e the scope
o f t h i s a p p e a l and, a l t h o u g h I t h i n k t h a t the
answer i s not d i f f i c u l t t o f i n d , I do not wish
to p r e j u d g e i t .

In o t h e r words, the I r r e v o c a b l e Mandate Theory o n l y p r o v i d e s a ready sol-

u t i o n i n the case o f •inter vivos g i f t s t o an " o r g a n i s a t i o n " f o r i t s purposes.

One can o n l y s p e c u l a t e on the answer Brightman,L.J. would have g i v e n t o

the problem o f a testamentary d o n a t i o n . Presumably i t would i n v o l v e the

i m p l i c a t i o n o f a c o n t r a c t w i t h the t e s t a t o r ' s e s t a t e . In response t o t h i s ,

two submissions a r e made : f i r s t l y , that'.the s o l u t i o n i s h a r d l y satis-

f a c t o r y or r e a l i s t i c , and b e t r a y s a somewhat f i c t i t i o u s element o f the

whole I r r e v o c a b l e Mandate Theory; s e c o n d l y , t h a t the suggested s o l u t i o n i s

i n c o n s i s t e n t w i t h the nature o f the mandate arrangement which i s n o r m a l l y

p e r s o n a l t o the o r i g i n a l c o n t r a c t i n g p a r t i e s . Indeed, Brightman,L.J. him-

s e l f was aware o f t h i s l a t t e r f a c t when he p o i n t e d out a second drawback

o f the I r r e v o c a b l e Mandate Theory. Q u i t e a p a r t from the problem posed by

bequests he r e c o g n i s e d a p o t e n t i a l d i f f i c u l t y even i n the case o f inter

.^18
VVVOS g i f t s :
 - 86 -

A complaining c o n t r i b u t o r might encounter problems

under the law o f c o n t r a c t a f t e r a change o f the
o f f i c e h o l d e r t o whom h i s mandate was o r i g i n a l l y
given. Perhaps o n l y the o r i g i n a l r e c i p i e n t can
be sued f o r the m a l p r a c t i c e s o f h i s s u c c e s s o r s .

Brightman,L.J. n e v e r t h e l e s s dismissed the p r a c t i c a l s i g n i f i c a n c e o f this

problem as a merely " p r o c e d u r a l intricacy".

Despite the d i s a d v a n t a g e s of the I r r e v o c a b l e Mandate Theory,

Brightman,L.J. and the o t h e r judges o f the Court o f Appeal who expressed

concurrence i n h i s o p i n i o n were content that i t s a t i s f a c t o r i l y explained

the l e g a l framework w i t h i n which the C o n s e r v a t i v e P a r t y h e l d and adminis-

t e r e d i t s donated funds. In t h e i r o p i n i o n , when a donor g i v e s money t o the

P a r t y , an i m p l i e d c o n t r a c t comes i n t o e x i s t e n c e which a u t h o r i s e s the donee

to take a b s o l u t e t i t l e t o the funds, but d i r e c t s him - on p a i n o f an a c t i o n

f o r breach, o f c o n t r a c t - to use them f o r the purposes o f the Party.

( i i ) Revocable Mandate

Throughout the course o f i t s d e c i s i o n , the C o u r t o f Appeal made no

19

r e f e r e n c e t o the o p i n i o n o f V i n e l o t t , J . i n the c o u r t below other than

to a f f i r m h i s h o l d i n g t h a t the C o n s e r v a t i v e P a r t y was not an unincorporated

a s s o c i a t i o n f o r the purposes o f the Income and C o r p o r a t i o n Taxes A c t . In

espousing the I r r e v o c a b l e Mandate Theory n e i t h e r a p p r o v a l nor disapproval

was expressed by the a p p e l l a t e c o u r t o f his d i s c u s s i o n o f the legal

nature of a donation f o r s p e c i f i e d purposes.

In f a c t , V i n e l o t t , J . mentioned h i s own v a r i e t y o f the Mandate

20

Theory . He used as the v e h i c l e f o r h i s d i s c u s s i o n the example o f an'

e x p l o r e r who " i n v i t e [ s ] s u b s c r i p t i o n s t o a fund to f i n a n c e an expedition

to e x p l o r e some unexplored a r e a o f the w o r l d " . He o f f e r e d the follow-

ing a n a l y s i s as a p o s s i b l e i n t e r p r e t a t i o n o f the l e g a l s i t u a t i o n i n such

22
a case :

[T]he s u b s c r i b e r s would remain the b e n e f i c i a l

owners o f the money s u b s c r i b e d , the e x p l o r e r
h a v i n g no more than a r e v o c a b l e mandate'to use
them f o r the s t a t e d purpose.

In o t h e r words, ownership and p o s s e s s i o n o f the funds are s e p a r a t e d . Un-

like the case o f the i r r e v o c a b l e mandate, i t appears t h a t the donor r e t a i n s

ownership o f the p r o p e r t y and i s t h e r e f o r e presumably t a x a b l e on income

t h e r e f r o m u n t i l the funds are spent f o r the s p e c i f i e d purpose, and title

i s t r a n s f e r r e d from the donor t o a t h i r d p a r t y . Meanwhile the e x p l o r e r

has merely the r i g h t t o h o l d and use the funds under the terms o f an

i m p l i e d c o n t r a c t between h i m s e l f and the owner t o t h a t e f f e c t u n l e s s and

u n t i l the mandate c o n s t i t u t e d thereby i s revoked.

By way o f comparison w i t h the I r r e v o c a b l e Mandate Theory, i t is

p o i n t e d out t h a t the p o s i t i o n o f the donor i s both more and l e s s f a v o u r -

a b l e than t h a t o f the donor who i s c o n s t r u e d as h a v i n g c r e a t e d an i r -

r e v o c a b l e mandate. The advantage t o the donor o f the r e v o c a b l e over the

i r r e v o c a b l e mandate i s t h a t he r e t a i n s more c o n t r o l over the funds, and

can change h i s mind a t any time b e f o r e the funds are a c t u a l l y used, and

revoke the mandate. The disadvantage, however, o f h i s r e t e n t i o n o f

ownership i s t h a t he i s s t i l l t a x a b l e on income a r i s i n g from, o r d i s -

p o s i t i o n s o f , the p r o p e r t y . Otherwise, the l i m i t a t i o n s and drawbacks o f

t h i s t h e o r y as an a n a l y s i s o f the l e g a l framework o f d o n a t i o n s f o r s p e c i -

f i e d purposes are the same as those s u f f e r e d by the Court o f Appeal's

I r r e v o c a b l e Mandate Theory. Above a l l , i t i s a p p l i c a b l e o n l y w i t h diffi-

c u l t y t o d o n a t i o n s o f a testamentary n a t u r e .
 - 88 -

Indeed, as i f i n recognition of the limited scope of h i s theory,

Vinelott,J. d i d not develop h i s suggestion i n any detail. He merely

mentioned the possibility of a revocable mandate i n passing. He then

w e n t on to expound another theory, of which a t least two i n t e r p r e t a t i o n s

are p o s s i b l e , each o f which w i l l now be discussed i n turn.

(iii) Contractual Undertaking

The Crown h a d argued i n the Burrell case t h a t i f the Conservative

Party d i d not r e c e i v e and hold donations as an unincorporated associ-

ation under the Contract A n a l y s i s , t h e r e were o n l y two other analyses

available of the legal mechanism whereby a d o n a t i o n to the Party could

take effect. In counsel f o r the C r o w n ' s v i e w , either the Party treasur-

23

ers held the f u n d s on an invalid non-charitable purpose t r u s t , or

either they or the Party leader himself were t h e absolute owners o f a l l

donations. Vinelott,J. r e j e c t e d the

c o n t e n t i o n t h a t t h e s e were t h e o n l y
24
possible a l t e r n a t i v e s i n the f o l l o w i n g terms :
[ T ] h e d i l e m m a on w h i c h t h i s a r g u m e n t r e s t s i s ...
i n my o p i n i o n a f a l s e o n e . I t i s simply not the
c a s e t h a t t h e l e g a l owner o f p r o p e r t y m u s t a l w a y s
h o l d t h e p r o p e r t y on some e f f e c t i v e t r u s t o r be
t h e b e n e f i c i a l owner o f i t [A] s i t u a t i o n i n
which the b e n e f i c i a l ownership o f p r o p e r t y which
i s n o t h e l d b y t r u s t e e s o n some e f f e c t i v e t r u s t
i s l e f t i n s u s p e n s e c a n ... b e p r o d u c e d b y c o n t r a c t
a n d may p o s s i b l y a r i s e i n o t h e r circumstances.

The last sentence of this quotation i s extremely troublesome and, as

25

m e n t i o n e d above , no a s s i s t a n c e can be derived from the Court of Appeal's

opinion w h i c h makes no reference whatever to the reasoning of Vinelott,J.

One interpretation o f V i n e l o t t , J . ' s words l e a d s to a result which,

does not differ substantially from Brightman,L.J.'s Irrevocable Mandate

 - 89 -

26
Theory, d i s c u s s e d above . That i s to say, i t i s p o s s i b l e to read

V i n e l o t t , J . ' s judgment as propounding a theory whereby, a l t h o u g h no

mandate as such i s c r e a t e d , the donor o f p r o p e r t y and i t s r e c i p i e n t are

bound c o n t r a c t u a l l y . As a matter o f p r o p e r t y law, the donee i s absolute

owner o f the t r a n s f e r r e d p r o p e r t y but he i s r e s t r i c t e d by the terms o f an

i m p l i e d c o n t r a c t w i t h the donor to u t i l i s e i t i n a c e r t a i n manner. In

the event t h a t funds are m i s a p p l i e d , the donor has r e t a i n e d no proprietary

i n t e r e s t i n them which he can a s s e r t a g a i n s t the donee : h i s remedy sounds

solely i n contract.

This Contractual Undertaking i n t e r p r e t a t i o n o f V i n e l o t t , J . ' s theory

i s supported by two factors. In the f i r s t place, some o f the terminology

he uses i n e x p l a i n i n g h i s t h e o r y i s contractual i n nature. For example,

2 7

he says :
I t appears to me t h a t i f someone i n v i t e s s u b s c r i p -
t i o n s on the r e p r e s e n t a t i o n t h a t he w i l l use the
fund s u b s c r i b e d f o r a p a r t i c u l a r purpose, he under-
takes to use the fund f o r t h a t purpose and no o t h e r
and to keep the s u b s c r i b e d fund and any a c c r e t i o n s
t o i t ( i n c l u d i n g any income earned by i n v e s t i n g
the fund pending i t s a p p l i c a t i o n i n pursuance o f
the s t a t e d purpose) separate from h i s own moneys.

As w i l l be mentioned below, he a l s o speaks of the "remedy o f specific

28
performance", mentions " c o n s i d e r a t i o n f o r [a] contractual undertaking"
29
and "the i m p l i c a t i o n o f contractual undertakings"

A second reason f o r r e a d i n g V i n e l o t t , J . ' s theory d o n a t i o n as i n -

v o l v i n g a c o n t r a c t u a l r e l a t i o n s h i p between donor and donee i s t h a t i t em-

bodies a v i a b l e , recognised and u n d i s p u t e d l e g a l concept. The same can not

be s a i d f o r the a l t e r n a t i v e i n t e r p r e t a t i o n which w i l l be discussed presently.

 - 90 -

V i a b l e as the C o n t r a c t u a l U n d e r t a k i n g Theory may be as a matter o f

law, however, i t i s n e v e r t h e l e s s h i g h l y u n s a t i s f a c t o r y as a general

s o l u t i o n to the problem o f d o n a t i o n s o f funds f o r s p e c i f i e d purposes. To

b e g i n with, i t cannot be denied t h a t i t s u f f e r s the p r i n c i p a l drawback

already observed o f the two Mandate T h e o r i e s . In the words o f V i n e l o t t , J .

[ l ] n the case o f a testamentary g i f t t h e r e i s no

room f o r the i m p l i c a t i o n o f any c o n t r a c t between
the t e s t a t o r and the persons who are to r e c e i v e
the bequest.

As mentioned above, i t i s c o n c e i v a b l e , but unlikely, that a contract could

be i m p l i e d between the donor's e s t a t e and the donee. Otherwise, the

theory i s a v a i l a b l e o n l y to e x p l a i n inter vivos donations f o r s p e c i f i e d

purposes. Another a s p e c t o f the same problem i s t h a t the donor and donee

may be one and the same p e r s o n . For example, i f the member of an unin-

corporated a s s o c i a t i o n i s a l s o i t s t r e a s u r e r who r e c e i v e s funds on the

association's behalf, under the C o n t r a c t u a l Undertaking Theory t h a t

member's s u b s c r i p t i o n must become impressed w i t h a c o n t r a c t between the

member as donor and h i m s e l f as donee.

A second problem i s t h a t o f d i s c o v e r i n g the e x i s t e n c e of implied con

t r a c t s between the p a r t i e s t o a d o n a t i o n . In p a r t i c u l a r , i n o r d e r to be

l e g a l l y enforceable, a c o n t r a c t must have been e n t e r e d i n t o w i t h the inten

tion o f e n t e r i n g i n t o l e g a l r e l a t i o n s and must be accompanied by consid-

eration. One i s s t r u c k by the a r t i f i c i a l i t y o f i n t e r p o s i n g a contract

between g r a t u i t o u s donors and donees.

The t h i r d problem stems from the f a c t t h a t the donor g i v e s up a l l

p r o p r i e t a r y i n t e r e s t i n h i s funds. I f the r e c i p i e n t chooses not t o apply

them f o r the s p e c i f i e d purpose i n accordance w i t h the terms o f the implied

 - 91 -

contract, the donor has no guarantee t h a t h i s t r u e i n t e n t i o n s w i l l be

fulfilled. Damages f o r b r e a c h o f c o n t r a c t might be recoverable i n such

a case a l t h o u g h the donor may be awarded nominal damages o n l y . However,

the remedies o f s p e c i f i c performance, c o m p e l l i n g due a p p l i c a t i o n o f funds

i n accordance w i t h the c o n t r a c t terms, and injunction, preventing their

misapplication, are a l s o a v a i l a b l e i n l i m i t e d c i r c u m s t a n c e s , as V i n e l o t t , J .

explamed :

I can see no reason why i f the purpose i s s u f f -

i c i e n t l y w e l l d e f i n e d , and i f the o r d e r would
not n e c e s s i t a t e c o n s t a n t and p o s s i b l y i n e f f e c t i v e
s u p e r v i s i o n by the c o u r t , the c o u r t should not
make an o r d e r d i r e c t i n g [the r e c i p i e n t o f donated
funds] to apply the s u b s c r i b e d fund and any
a c c r e t i o n s to i t f o r the s t a t e d purpose.

V i n e l o t t , J . e x p r e s s e d the o p i n i o n t h a t h i s example o f an e x p l o r e r who

r e c e i v e s s u b s c r i p t i o n s t o f i n a n c e an e x p e d i t i o n would not satisfy the

above c r i t e r i a . The only other p o s s i b i l i t y , i f the s u b s c r i b e r s had

32
s u f f i c i e n t information to seek r e l i e f i n time, would be an i n j u n c t i o n :

[ A ] p a r t from the p o s s i b l e remedy o f s p e c i f i c p e r -

formance I can see no reason why the c o u r t s h o u l d
not r e s t r a i n the r e c i p i e n t o f such a fund from
a p p l y i n g i t (or any a c c r e t i o n s t o i t such as i n -
come o f investments made w i t h i t ) o t h e r w i s e than
i n pursuance o f the s t a t e d purpose.

A g a i n , however, t h e r e are r e s t r i c t i o n s on the a v a i l a b i l i t y of i n j u n c t i v e

r e l i e f and i t i s e s s e n t i a l l y a d i s c r e t i o n a r y remedy.

The r e c i p i e n t ' s ownership o f the funds i s t h e r e f o r e hedged about by

c o n t r a c t u a l l i m i t a t i o n s of l i m i t e d e f f e c t i v e n e s s i n guaranteeing that

the funds reach the d e s t i n a t i o n i n t e n d e d by t h e i r donor.

(iv) Suspended B e n e f i c i a l Ownership

It i s evident from the c r i t i c i s m s i t e r a t e d above t h a t V i n e l o t t , J . ' s

 - 92 -

t h e o r y might become more a c c e p t a b l e i f i t can operate w i t h o u t the

n e c e s s i t y o f i m p l y i n g a c o n t r a c t between donor and donee. Each o f the

t h r e e problems w i t h the C o n t r a c t u a l U n d e r t a k i n g Theory i s t r a c e a b l e t o

the f a c t t h a t i t i s o p e r a t i n g w i t h i n the framework o f c o n t r a c t law r a t h e r

than p r o p e r t y law. An a n a l y s i s which p u t more emphasis on the l a t t e r

might be more s u c c e s s f u l i n a c h i e v i n g the donor's aim. The Suspended

B e n e f i c i a l Ownership Theory i s an i n t e r p r e t a t i o n o f V i n e l o t t , J . s j u d g -
1

ment which attempts t o do e x a c t l y that.

The c r u c i a l sentence i n V i n e l o t t , J . ' s e x p o s i t i o n o f h i s t h e o r y ran

33
as f o l l o w s :

[A] s i t u a t i o n i n which the b e n e f i c i a l ownership o f

p r o p e r t y which i s not h e l d by t r u s t e e s on some
e f f e c t i v e t r u s t i s l e f t i n suspense can a l s o be
produced by c o n t r a c t and may possibly arise in
other circumstances.

The f i r s t i n t e r p r e t a t i o n o f V i n e l o t t , J . ' s meaning o f f e r e d above emphasised

the c o n t r a c t u a l method o f impeding a donee's ownership o f donated funds.

The second i n t e r p r e t a t i o n , on the o t h e r hand, emphasises the p r o p e r t y

concepts i n the above-quoted sentence. I t may be r e c a l l e d t h a t V i n e l o t t , J .

was f a c e d w i t h the argument t h a t b e n e f i c i a l ownership o f the C o n s e r v a t i v e

P a r t y funds must be i n the r e c i p i e n t o f those funds e i t h e r as a t r u s t e e

or as a b s o l u t e owner. The C o n t r a c t u a l U n d e r t a k i n g i n t e r p r e t a t i o n merely

m o d i f i e d the l a t t e r a l t e r n a t i v e by the s u p e r i m p o s i t i o n o f c o n t r a c t u a l

restraints. The second i n t e r p r e t a t i o n , however, o f f e r s a t r u e alter-

native : the n o t i o n o f suspended b e n e f i c i a l ownership. In o t h e r words,

the donee o f the funds h o l d s bare l e g a l t i t l e and i s d e n i e d b e n e f i c i a l

ownership o f them; b e n e f i c i a l ownership, b e i n g v e s t e d i n no-one a t a l l ,

a p p a r e n t l y hovers u n t i l t h e funds a r e d u l y u t i l i s e d i n accordance w i t h

34
the s p e c i f i e d purpose. In the meantime, the f o l l o w i n g s i t u a t i o n obtains
 - 93 -

[T]he r e c i p i e n t o f the fund i s c l e a r l y n o t the

b e n e f i c i a l owner o f i t and ... the income o f i t i s
not p a r t o f h i s t o t a l income f o r t a x purposes.
E q u a l l y , w h i l s t the purpose remains unperformed and
capable o f performance t h e s u b s c r i b e r s a r e c l e a r l y
not the b e n e f i c i a l owners o f the fund o r o f the
income ( i f any) d e r i v e d from i t . I f the s t a t e d
purpose proves i m p o s s i b l e t o a c h i e v e o r i f t h e r e
i s any s u r p l u s remaining a f t e r i t has been accom-
p l i s h e d there w i l l be an implied obligation to
r e t u r n the fund and any a c c r e t i o n s t h e r e t o t o the
s u b s c r i b e r s i n p r o p o r t i o n t o t h e i r o r i g i n a l con-
t r i b u t i o n s , save t h a t a p r o p o r t i o n o f the fund
r e p r e s e n t i n g s u b s c r i p t i o n s made anonymously o r
i n c i r c u m s t a n c e s i n which the s u b s c r i b e r s r e c e i v e
some b e n e f i t ( f o r i n s t a n c e , by s u b s c r i p t i o n t o
a w h i s t d r i v e o r r a f f l e ) might then devolve as
bona v a c a n t i a .

35

One commentator has argued t h a t the " i m p l i e d o b l i g a t i o n " , f a r from

being c o n t r a c t u a l i n nature (as suggested by the f i r s t i n t e r p r e t a t i o n

o f f e r e d above), i s " r a t h e r a type o f g e n e r a l e q u i t a b l e o b l i g a t i o n im-

posed as a remedy t o d e a l w i t h an o t h e r w i s e d i f f i c u l t i f not i m p o s s i b l e

situation" . According t o t h i s view, the donee o f funds i s under a

"general equitable o b l i g a t i o n " to deal with them as d i r e c t e d , which i s

owed t o the donors i f they a r e a l i v e and i d e n t i f i a b l e , t o t h e i r estates

i f they a r e dead, and t o the Crown i f t h e donors are i d e n t i f i a b l e .

F u r t h e r advantages argued f o r t h i s t h e o r y o f donation by way o f suspended

b e n e f i c i a l ownership coupled w i t h an e q u i t a b l e o b l i g a t i o n a r e s a i d t o

be t h a t t h e r e i s no l i m i t t o the d u r a t i o n o f t h e d e d i c a t i o n o f p r o p e r t y

for the s p e c i f i e d purposes and t h a t the scope o f purposes which can be

. . 37
b e n e f i t e d thereby i s u n l i m i t e d

I d e a l as the a n a l y s i s and i t s consequences may sound, the o b j e c t i o n s

to t h i s i n t e r p r e t a t i o n o f V i n e l o t t , J . ' s t h e o r y are many. In the f i r s t

place, the n o t i o n o f suspended b e n e f i c i a l ownership a t t h e l e a s t i s un-

supported, o r , more l i k e l y , p r o h i b i t e d by a u t h o r i t y . The precedent quoted

 - 94 -

38

by V i n e l o t t , J . t o support h i s concept were cases on the meaning o f

b e n e f i c i a l ownership i n a s p e c i a l f i s c a l s t a t u t o r y c o n t e x t and p r o v i d e

l i t t l e b a c k i n g f o r h i s cause. Furthermore, the whole concept o f the

r e s u l t i n g t r u s t i s founded on a fundamental p r i n c i p l e which V i n e l o t t , J .

appears t o have o v e r l o o k e d . T h i s i s t h a t t h e r e can never be suspended

b e n e f i c i a l ownership : a b s o l u t e t i t l e i s either effectively transferred,

or any b e n e f i c i a l i n t e r e s t which comes i n t o e x i s t e n c e r e v e r t s back t o the

purported transferor. The most c l e a r a u t h o r i t y f o r t h i s p r o p o s i t i o n can

be found i n the House o f L o r d s ' d e c i s i o n i n Vandervell V. Inland Revenue

39
Commtsstoners where L o r d R e i d e x p l a i n e d the b a s i s o f the r e s u l t i n g t r u s t
40
d o c t r i n e i n the f o l l o w i n g manner :
The b a s i s o f the r u l e i s , I t h i n k , t h a t the bene-
f i c i a l i n t e r e s t must b e l o n g t o o r be h e l d f o r
somebody : so, i f i t was not t o b e l o n g t o the
donee o r be h e l d by him i n t r u s t f o r somebody,
i t must remain w i t h the donor.
41
And L o r d W i l b e r f o r c e emphasised t h a t :

The e q u i t a b l e , o r b e n e f i c i a l i n t e r e s t ... can-

not remain i n the a i r .

The t h e o r y o f Suspended B e n e f i c i a l Ownership expounded by V i n e l o t t , J . as

a s a t i s f a c t o r y a n a l y s i s o f the l e g a l framework w i t h i n which a d o n a t i o n

such as t h a t f o r the purposes o f the C o n s e r v a t i v e P a r t y can take effect

c u t s d i r e c t l y a c r o s s the g r a i n o f h i t h e r t o accepted c o n c e p t u a l analysis.

A second o b j e c t i o n t o the suggested i n t e r p r e t a t i o n of V i n e l o t t , J . ' s

t h e o r y o f d o n a t i o n i s r e c o g n i s e d by i t s main s u p p o r t e r as b e i n g not merely

its " l a c k o f p e d i g r e e " as d i s c u s s e d above, but a l s o " i t s apparent

42

width" . The g e n e r a l , e q u i t a b l e o b l i g a t i o n has no f o u n d a t i o n i n a u t h -

o r i t y and i s a p p a r e n t l y o f a p u r e l y r e m e d i a l n a t u r e , t o be i m p l i e d when-

ever the e q u i t y o f the s i t u a t i o n demands i t . F a r from b e i n g an advantage

 - 95 -

43
o f the a n a l y s i s , i t i s submitted t h a t i t i n t r o d u c e s a f a r from accep-

table l e v e l of uncertainty and d i s c r e t i o n t o an area o f the law that

already requires clarification.

I t i s suggested' by way of c o n c l u s i o n t h a t the Suspended B e n e f i c i a l

Ownership Theory i s the l e s s s a t i s f a c t o r y o f the two i n t e r p r e t a t i o n s of

V i n e l o t t , J . s d i s c u s s i o n o f d o n a t i o n s f o r s p e c i f i e d purposes.
1
Further-

more, i t may be r e c a l l e d t h a t the d i s c u s s i o n was p u r e l y obiter, was in

no way recognised as o f v a l u e by the C o u r t o f Appeal and apparently has

not a t t r a c t e d a t t e n t i o n from any subsequent t r i b u n a l .

4. The Burrell Case and G i f t s to U n i n c o r p o r a t e d Associations

The o b j e c t o f the d i s c u s s i o n thus f a r has been to e x p l a i n the four

t h e o r i e s o f d o n a t i o n o f f e r e d d i r e c t l y and by way of inference from the

Burrell litigation, and to demonstrate t h e i r r e s p e c t i v e weaknesses and

limitations. Each o f the four analyses can e x p l a i n the l e g a l framework

o f a s u c c e s s f u l d o n a t i o n o n l y i n l i m i t e d c i r c u m s t a n c e s , but discussion of

them has not been t o t a l l y i n v a i n . Provided that i t i s recognised that

none o f the t h e o r i e s i s the i d e a l explanation o f all gifts for specified

purposes, the c o n t r i b u t i o n o f the Burrell litigation to the law o f dona-

tions i s h e l p f u l . I t experimented i n the area and attempted to expand

the t r a d i t i o n a l c o n c e p t u a l frameworks w i t h i n which the courts'had hitherto

worked.

I t may be r e c a l l e d t h a t the d i s c u s s i o n o f the v a r i o u s theories i n

the Burrelt case was predicated on a f i n d i n g t h a t the C o n s e r v a t i v e Party

was not an u n i n c o r p o r a t e d association. On t h i s one might base an argument

 - 96 -

t h a t the t h e o r i e s are i n a p p l i c a b l e to e x p l a i n the l e g a l b a s i s of g i f t s for

the purposes o f such a s s o c i a t i o n s . However, i t i s suggested t h a t three

propositions are a v a i l a b l e t o r e f u t e such an argument and show t h a t the

t h e o r i e s are a v a i l a b l e to e x p l a i n not o n l y d o n a t i o n s i n g e n e r a l , b u t also

gifts specifically f o r the purposes o f u n i n c o r p o r a t e d a s s o c i a t i o n s . In

appropriate (though q u a l i f i e d ) c i r c u m s t a n c e s , one or o t h e r o f them can

e x p l a i n and therefore validate a g i f t f o r an u n i n c o r p o r a t e d a s s o c i a t i o n ,

where o t h e r a n a l y s e s , such as the Contract Analysis or the A b s o l u t e Gift

A n a l y s i s , have failed.

Firstly, as has already been mentioned, the sense i n which 'unin-

corporated a s s o c i a t i o n ' was b e i n g u t i l i s e d i n the Burrell litigation was

specialised. I t was r e s t r i c t e d to the s p e c i f i c c o n t e x t o f the t e c h n i c a l ,

f i s c a l l e g i s l a t i o n under c o n s i d e r a t i o n . Thus, i n the Burrell cases, i t

was d e c i d e d t h a t , as a m a t t e r o f s t a t u t e law, the Conservative Party was

not an u n i n c o r p o r a t e d a s s o c i a t i o n . I t does not f o l l o w , however, t h a t the

Party i s not such an a s s o c i a t i o n i n o t h e r l e g a l c o n t e x t s . Since t h e r e is

no such g e n e r a l l e g a l e n t i t y as an u n i n c o r p o r a t e d a s s o c i a t i o n , the issue

o f whether o r not one e x i s t s f o r common law purposes must be approached from

a p r a c t i c a l and r e a l i s t i c standpoint, founded on f a c t s alone. Looking a t

the C o n s e r v a t i v e P a r t y i n t h i s manner, how e l s e can i t s factual existence

be explained i f not as an u n i n c o r p o r a t e d association?

Secondly, the t h e o r i e s d i s c u s s e d above are i n no way l i m i t e d by

conceptual necessity t o the s i t u a t i o n o f a g i f t by one i n d i v i d u a l to

another f o r a b s t r a c t purposes. Each a n a l y s i s i s e q u a l l y a p p l i c a b l e to the

s i t u a t i o n where a donor g i v e s funds to an a s s o c i a t i o n f o r i t s purposes.

As i n a l l the o t h e r a n a l y s e s d i s c u s s e d i n t h i s t h e s i s , the association

 - 97 -

i t s e l f obviously can not be the r e c i p i e n t o f the funds. I t must t h e r e -

f o r e be decided as a m a t t e r o f c o n s t r u c t i o n and i n t e r p r e t a t i o n o f the gift

and i t s c i r c u m s t a n c e s whether the i n t e n d e d donees are the association's

o f f i c e r s o r i t s members. Once t h i s has been r e s o l v e d , the p a r t i c u l a r theory

s e l e c t e d to e x p l a i n the mechanism o f d o n a t i o n o p e r a t e s e x a c t l y i n the same

manner as f o r a g i f t t o an i n d i v i d u a l . Thus, the I r r e v o c a b l e Mandate

Theory, f o r example, can be extended to the case o f u n i n c o r p o r a t e d associ-

a t i o n s i n the g e n e r a l sense o f the word. Indeed, Brightman,L.J. i n the

C o u r t of Appeal t a l k e d i n terms o f a g i f t to an " o r g a n i s a t i o n " which took

44
e f f e c t v i a a t r a n s f e r to i t s treasurer

Thirdly, V i n e l o t t , J . c l e a r l y and e x p r e s s l y contemplated the appli-

c a t i o n o f h i s theory (however i n t e r p r e t e d ) to g i f t s t o unincorporated

a s s o c i a t i o n s , a l t h o u g h he recognised t h a t i t c o u l d o n l y succeed i f the gift

took e f f e c t inter vivos. In the case o f a testamentary g i f t , r e s o r t would

have t o be had, i n his opinion, to the a n a l y s e s d i s c u s s e d i n the preceding

45
chapters :

A testamentary g i f t t o a named s o c i e t y which i s not

an i n c o r p o r a t e d body must f a i l u n l e s s i t can be con-
s t r u e d as a g i f t to the members of an u n i n c o r p o r a t e d
a s s o c i a t i o n e i t h e r as j o i n t tenants [Absolute G i f t
A n a l y s i s ] o r as an a c c r e t i o n t o the funds o f the
a s s o c i a t i o n t o be a p p l i e d i n accordance w i t h i t s
r u l e s (commonly w i t h a view t o the f u r t h e r a n c e o f
i t s o b j e c t s ) [ C o n t r a c t A n a l y s i s ] . But i n the
case o f a testamentary g i f t t h e r e i s no room f o r
the i m p l i c a t i o n o f any c o n t r a c t between the t e s -
t a t o r and the persons who are t o r e c e i v e the bequest.
In the case o f an i n t e r v i v o s s u b s c r i p t i o n the i n -
t e n t i o n o f the s u b s c r i b e r can be g i v e n e f f e c t by
the i m p l i c a t i o n o f c o n t r a c t u a l u n d e r t a k i n g s o f
the k i n d I have d e s c r i b e d .

Indeed V l n e l o t t , J . r e t r o a c t i v e l y e x p l a i n e d a statement he made concerning

46
inter vivos.gifts i n the e a r l i e r case o f Re Grant's Will Trusts ,

where a bequest to a c o n s t i t u e n c y Labour P a r t y f a i l e d , on the b a s i s of

 - 98 -

his Contractual U n d e r t a k i n g Theory. One commentator has even extracted

the f o l l o w i n g passage from Re Grant as a statement o f V i n e l o t t , J . ' s

theory, as a p p l i e d to an u n i n c o r p o r a t e d a s s o c i a t i o n , " i n i t s embryonic

form" :

[ s j u b s c r i p t i o n s by members o f the Chertsey and

Walton CLP must be taken as made on terms t h a t
they w i l l be a p p l i e d by the g e n e r a l committee
i n accordance w i t h the r u l e s f o r the time b e i n g ,
i n c l u d i n g any m o d i f i c a t i o n s imposed by the annual
p a r t y c o n f e r e n c e or the NEC.

V i n e l o t t , J . then went on to s t a t e t h a t the funds would r e v e r t to the sub-

s c r i b e r s on r e s u l t i n g t r u s t on d i s s o l u t i o n o f the p a r t y , and i t was this

statement which he r e t r o a c t i v e l y amended i n the Burrell case to incorporate

his new theory. Of course, i t i s a l s o p o s s i b l e t o read the above quotation

as merely r e i t e r a t i n g the o p e r a t i o n o f the C o n t r a c t A n a l y s i s which V i n e l o t t , J .

had j u s t been d i s c u s s i n g .

In sum, one can s a f e l y conclude t h a t each o f the Burrell theories of

d o n a t i o n i s a p p l i c a b l e i n the c o n t e x t of a g i f t f o r the purposes o f an unin-

corporated association. However, i f a c o u r t chose (as a matter o f con-

s t r u c t i o n o f the g i f t and i t s r e l e v a n t s u r r o u n d i n g circumstances) to es-

pouse e i t h e r the I r r e v o c a b l e Mandate Theory, o r the Revocable Mandate

Theory, o r the Implied Contractual U n d e r t a k i n g Theory, the g i f t would be

v a l i d and e f f e c t i v e only i n the case o f an inter vivos donation. In

each case, a c o n t r a c t would be i m p l i e d between the donor and e i t h e r an

officer (or o f f i c e r s . ) o r members o f the a s s o c i a t i o n . One o f the terms o f

t h i s c o n t r a c t would be a promise on the p a r t o f the donee o r donees t o

utilise the donated funds f o r a s t i p u l a t e d purpose. In the absence o f

express l i m i t a t i o n s i n the terms of the gift, the i m p l i e d s t i p u l a t e d p u r -

pose would be the general objects o f the a s s o c i a t i o n . Testamentary gifts,

 - 99 -

on the o t h e r hand, would f a i l . Furthermore, even i n the case o f inter

vivos gifts, the donor's guarantee t h a t the s p e c i f i e d purposes w i l l be

c a r r i e d out would be founded merely on p e r s o n a l c o n t r a c t u a l remedies.

P r o p r i e t a r y remedies a g a i n s t the funds themselves would n o t be available.

Should a c o u r t choose t o espouse the Suspended Beneficial Ownership

Theory, i t i s s u b m i t t e d t h a t a g i f t f o r an u n i n c o r p o r a t e d a s s o c i a t i o n would

take e f f e c t i n the f o l l o w i n g manner. F a c t o r s such as the wording o f the

g i f t and the s t r u c t u r e o f the a s s o c i a t i o n would d i c t a t e whether members

o r r e p r e s e n t a t i v e o f f i c e r s o f the a s s o c i a t i o n were the a c t u a l donees o f

the donated funds. They would h o l d bare l e g a l t i t l e t o them and would be

under a g e n e r a l e q u i t a b l e o b l i g a t i o n t o u t i l i s e them i n the specified

manner. In case o f m i s a p p l i c a t i o n , presumably the donor o r h i s e s t a t e

would have locus standi to invoke the c o u r t ' s r e m e d i a l j u r i s d i c t i o n over

the m a t t e r . I t has been suggested, however, t h a t any a p p l i c a t i o n o f the

t h e o r y ' s proposed framework f o r g i f t s f o r s p e c i f i e d purposes - whether t o

d o n a t i o n s i n g e n e r a l , o r to those f o r u n i n c o r p o r a t e d a s s o c i a t i o n s i n

p a r t i c u l a r - would be l e g a l l y u n a c c e p t a b l e .

* * * * * * * * * *
 - 100 -

FOOTNOTES : CHAPTER I I I

1. [1982] 1 w.L.R.522; [1982] 2 A l l E.R.I, a f f i r m i n g Conservative and

Unionist Central Office v. B u r r e l l [Inspector of Taxes) [1980] 3 A l l
E.R.42; [1980] T.R.143 : h e r e a f t e r r e f e r r e d t o as "the Burrell case".
See, R i c k e t t , " M r . J u s t i c e V i n e l o t t on U n i n c o r p o r a t e d A s s o c i a t i o n s
and G i f t s f o r N o n - C h a r i t a b l e Purposes", (1981) 12 V.U.W.L.R.I.

2. 1970, c.10, s.238 (1) .

3. Italics added.

4. Both c o u r t s o f f e r e d d e f i n i t i o n s and l i s t s o f c h a r a c t e r i s t i c s o f u n i n -
corporated associations. I n t e r e s t i n g as these a r e and i n s t r u c t i v e as
they might be t o a n a l y s e , t h i s p o r t i o n o f the case i s d e a l t w i t h i n
b r i e f outline, only. The reason f o r t h i s apparent o m i s s i o n i s t h a t t h i s
t h e s i s i s w r i t t e n throughout on t h e h y p o t h e s i s t h a t an u n i n c o r p o r a t e d
a s s o c i a t i o n (whatever i t may be) does e x i s t . See supra, pp 13-16.

5. [1982] 1 W.L.R.522 a t 525.

6. Ibid a t 527.

7. Ibid a t 529.

8. Supra, pp 51-78.

9. [1982] 1 W.L.R.522 a t 529.

10. Ibid.

11. Supra, pp 33-50.

12. Supra, pp 46-47.

13. [1982] 1 W.L.R.522 a t 529.

14. J o w i t t & Walsh., J o w i t t ' s D i c t i o n a r y o f E n g l i s h Law, 2nd.ed., ed.

J . Burke (London : Sweet & Maxwell), p 1140.

15. Supra, pp 51-78.

16. Supra, pp 69-74.

17. [1982] 1 W.L.R.522 a t 530.

18. Ibid.

19. Supra, f o o t n o t e 1.

20. See a l s o , Gray, " G i f t s f o r a N o n - C h a r i t a b l e Purpose", (1901-1902)

15 Harvard.L.R.509, p 525 ; L l o y d , The Law o f U n i n c o r p o r a t e d
A s s o c i a t i o n s (London : Sweet & Maxwell, 1938), pp 173-174.
 - 101 -

21. [1980] 3 A l l E.R.42 a t 62.

22. Ibid.

23. Infra, p p 105-131.

24. [1980] 3 A l l E.R.42 a t 61.

25. Supra, p 86.

26. Supra, p p 83-86.

27. [1980] 3 A l l E.R.42 a t 62. Italics added.

28. Ibid a t 63.

29. Ibid a t 64.

30. Ibid.

31. Ibid a t 63.

32. Ibid.

3.3. Ibid a t 61.

.34. Ibid a t 63. Italics added.

35. . Rickett, op.cit.supra, footnote 1, p p 22-25.

36. Ibid, p 22.

37. Ibid, p 24.

38. Wood Preservation Ltd. v. Prior (Inspector of Taxes) [1969] 1 W.L.R.

1077; [1969] 1 A l l E.R.364; 45 T a x . c a s . 1 1 2 ; a n d Franklin V.
Commissioners of Inland Revenue (1930) 15 Tax.Cas.464.

39. [1967] 2 A.C.291; [1967] 2 W.L.R.87; [1967] 1 A l l E . R . I .

40. [1967] 1 A l l E . R . I a t 5.

41. Ibid a t 18.

42. Rickett, op.cit.supra, footnote 1, p 23.

43. Cf. f o o t n o t e 42, supra.

44. [1982] 1 W.L.R.522 a t 529. 45. [1980] 3 A l l E.R.42 a t 63-64.

46. [1980] 1 W.L.R.360; [1979] 3 A l l E.R.359 a t 372. D i s c u s s e d supra, p 64.

47. R i c k e t t , " P u r p o s e .Trusts and U n i n c o r p o r a t e d A s s o c i a t i o n s " , (1981)

N.Z.L.R.44, p 46.

48. [1979] 3 A l l E.R.359 a t 371-372.

 - 102 -

IV. G I F T S TO UNINCORPORATED ASSOCIATIONS ON TRUST

I n many i n s t a n c e s , the terminology u s e d b y a d o n o r who w i s h e s t o make

a gift t o an u n i n c o r p o r a t e d association will expressly create a trust under

w h i c h he i n t e n d s h i s donation t o take effect. The m a j o r a l t e r n a t i v e s w h i c h

he may a t t e m p t are as follows : "on t r u s t f o r t h e W A s s o c i a t i o n " ; "on

trust f o r the purposes o f the X Association";"on t r u s t f o r the present

members o f t h e Y A s s o c i a t i o n " "S "on t r u s t f o r t h e p r e s e n t and f u t u r e

members o f t h e Z A s s o c i a t i o n " . However, the terminology used i s never con-

clusive and, j u s t as t h e r e f e r e n c e t o a t r u s t may be d i s r e g a r d e d i n favour

2 3

of the Absolute Gift Analysis or the Contract Analysis , s o may a super-

ficially absolute gift be i n t e r p r e t e d as imposing a trust. It is a l l a

question o f i n t e r p r e t a t i o n and c o n s t r u c t i o n o f numerous factors, including

the circumstances surrounding the g i f t and the wording o f t h e remainder

of t h e deed o r w i l l , i f any, i n an a t t e m p t t o a c h i e v e the perceived in-

tentions o f t h e donor. The f a c t that t h e donor e v i d e n t l y aimed to dedicate

the property subject to a legal, and n o t merely moral, o b l i g a t i o n to the

pursuit o f the expressed purpose i s a weighty consideration i n favour of

implying a trust.

From t h e p o i n t o f view o f t h e donor, the advantages o f h i s g i f t ' s

being analysed as o p e r a t i n g within t h e framework o f a v a l i d trust are

substantial. Firstly, the trustees a r e under a l e g a l obligation to divert

the funds as d i r e c t e d . In this manner t h e d o n o r r e c e i v e s a guarantee that

his wishes w i l l be r e s p e c t e d . The d e s t i n a t i o n o f t h e f u n d s i s n o t a t t h e

whim o f p e r s o n s under a merely moral o b l i g a t i o n t o d e a l with them in a

certain way; n o r s u b j e c t to the p o s s i b i l i t y o f being redirected i n accord-

ance w i t h v a r i e d contractual obligations. Secondly, from t h e t a x p o i n t o f

 - 103 -

view, the donor d i v e s t s h i m s e l f o f a l l ownership o f t h e funds w h i l e

r e t a i n i n g some c o n t r o l , v i a the terms o f t h e t r u s t , over t h e i r utilisation

In o r d e r t o enjoy these advantages, however, the donor's attempts t o

c r e a t e a v a l i d t r u s t must o f course be s u c c e s s f u l . I t i s the theme o f t h i

chapter t h a t , i n the c u r r e n t s t a t e o f t h e law, the d o n a t i o n o f funds t o an

unincorporated a s s o c i a t i o n subject to a v a l i d t r u s t arrangement i s no easy

task. Three r e q u i r e m e n t s , i n p a r t i c u l a r , must f i r s t be s a t i s f i e d :

(i) The o b j e c t s o f the t r u s t must be

defined with certainty;

(ii) The t r u s t must not i n f r i n g e the r u l e

a g a i n s t p e r p e t u i t i e s ; and

(iii) The t r u s t must be e n f o r c e a b l e .

The d i s c u s s i o n which f o l l o w s d e a l s with, t h r e e major s u b - c a t e g o r i e s o f g i f t

on t r u s t f o r an u n i n c o r p o r a t e d a s s o c i a t i o n , each o f which has t o s a t i s f y

all t h r e e o f t h e above requirements i n o r d e r t o be v a l i d .

The f i r s t i s the non-charitable purpose trust which, i f s u c c e s s f u l ,

would most n e a r l y a c h i e v e the donor's t r u e aim o f g u a r a n t e e i n g t h a t the

association i t s e l f (not i t s members) d e r i v e s a c o n t i n u i n g b e n e f i t from

the gift. As the law stands a t p r e s e n t , pure purpose t r u s t s are i n v a l i d ,

p r i n c i p a l l y because they do n o t s a t i s f y requirement ( i i i ) . They have no

human b e n e f i c i a r i e s who can ensure due performance by the t r u s t e e s o f the

terms o f the t r u s t . The emphasis on the 'purpose' a s p e c t o f the g i f t i s

f a t a l to i t s v a l i d i t y .

The second sub-category o f g i f t on t r u s t t h e r e f o r e s h i f t s i t s em-

p h a s i s s l i g h t l y away from t h e 'purpose' a s p e c t o f the t r u s t i n an attempt

 - 104 -

to satisfy the third requirement. I f the t r u s t i s a non-abstract purpose

trust, i n that i t has ' f a c t u a l ' b e n e f i c i a r i e s who themselves derive benefit

from the gift, i t can succeed. I t must, o f course, satisfy the other two

requirements a l s o before success i s assured, and i t i s only in limited fact

situations that the slight shift i n emphasis w i l l be sufficient.

The third sub-category represents a total de-emphasis on the 'purpose'

aspect of the gift. I t attempts instead to confer a continuing benefit on

the association by giving the fund to i t s present and future members on

trust. Although t h i s method r e a d i l y s a t i s f i e s the third requirement of

enforceability of the t r u s t , i t causes problems with the rule against per-

petuities (requirement ( i l ) ) and is rarely successful. Above a l l , i t does

not guarantee to the donor that the association's purpose w i l l be furthered.

It w i l l be seen that the law on gifts on trust for unincorporated

associations i s such that legal validity can only be bought a t the price

of sacrificing the donor's true intentions.

The discussion will proceed as follows:

( i ). The case o f the invalid non-charitable pure purpose trust will be

analysed first. The o r i g i n s of the ' b e n e f i c i a r y p r i n c i p l e ' , which dictates

that purpose t r u s t s must fail for lack of enforceability, will be sought.

The historical, and present, reasons for the failure of gifts on trust for

the purposes of unincorporated associations will be critically set out.

(ii) Next, the notion of the valid non-abstract purpose trust will be

investigated. I t s l i m i t e d and as yet uncertain ability to facilitate the

donation of funds t o unincorporated associations will be discussed.

(iii) Finally, the possibility of making d o n a t i o n s on t r u s t to an associ-

 - 105 -

ation's present and f u t u r e members ( i n the hope t h a t t h i s may f u r t h e r the

a s s o c i a t i o n ' s purposes) w i l l be e x p l o r e d . Since the major o b s t a c l e t o the

v a l i d i t y o f such g i f t s i s the r u l e a g a i n s t p e r p e t u i t i e s , some suggestions

w i l l be made whereby the o b s t a c l e s may be overcome.

The aim o f t h i s chapter i n pursuing the above l i n e o f argument i s

two-fold. In the f i r s t p l a c e , i t s e t s out a c r i t i c a l a n a l y s i s o f the current

law on the s u b j e c t o f g i f t s on t r u s t f o r u n i n c o r p o r a t e d associations.

Secondly, and more i m p o r t a n t l y , i t aims t o demonstrate how unsatisfactory

i s the p r e s e n t s t a t e o f a f f a i r s i n t h i s a r e a of the law.

A. Pure Purpose Trusts

1. Introduction

A makes a bequest on t r u s t to f u r t h e r the aims and purposes o f the

Sportstown Rugby F o o t b a l l C l u b . The Club i s an u n i n c o r p o r a t e d association

dedicated to the promotion and o r g a n i s a t i o n of the town's rugy team and

the p r o v i s i o n o f f a c i l i t i e s , b o t h a t h l e t i c and social, f o r the team and i t s

f r i e n d s and supporters. A l t e r n a t i v e l y , A makes a bequest " t o the Sportstown

R.F.C." simpXisCitev and, i n the circumstances, the o n l y reasonable construc-

t i o n which a c o u r t would g i v e o f the g i f t would be one on t r u s t i n the

above terms. For example, the number o f members i n the a s s o c i a t i o n may, in

the o p i n i o n o f the c o u r t , render any other c o n s t r u c t i o n , such as the

4

Absolute G i f t Analysis , impracticable. In e i t h e r case, i t i s evident that

A's i n t e n t i o n i s to p r o c u r e a guarantee t h a t the f r u i t s of h i s generosity

w i l l be enjoyed by the a s s o c i a t i o n i t s e l f , as an e n t i t y , on a long-term

basis. In o r d e r to f u l f i l t h i s i n t e n t i o n , he has s e l e c t e d as the mechanism

 - 106 -

whereby h i s d o n a t i o n w i l l take e f f e c t t h e c r e a t i o n o f a purpose t r u s t i n

favour o f the a s s o c i a t i o n .

In the p r e s e n t s t a t e o f t h e law on the s u b j e c t , since the a c t i -

v i t i e s o f the a s s o c i a t i o n and t h e r e f o r e the nature o f t h e purpose itself

are not c h a r i t a b l e , h i s i n t e n t i o n to b r i n g i n t o being a non-charitable

purpose t r u s t w i l l be f r u s t r a t e d . :This i s because t h e r e i s i n t r u s t s law

a p r i n c i p l e which has been r e f e r r e d t o r e c e n t l y as the ' b e n e f i c i a r y

principle' 6
. According t o t h i s p r i n c i p l e , a t r u s t f o r non-charitable

purposes i s v o i d because a t r u s t must be f o r t h e b e n e f i t o f i n d i v i d u a l s :

i t must have human b e n e f i c i a r i e s who can e x e r c i s e r i g h t s o f c o n t r o l over

the t r u s t e e s . T h i s p r i n c i p l e has s e r i o u s r e p e r c u s s i o n s i n the area o f

unincorporated associations. Such an a s s o c i a t i o n , n o t b e i n g a l e g a l

entity, lacks the capacity i t s e l f t o be t h e b e n e f i c i a r y o f the t r u s t and

the t r u s t i s c o n s t r u e d as one f o r the purposes o f t h e a s s o c i a t i o n , which

therefore l a c k s human b e n e f i c i a r i e s . . Thus, a g i f t on t r u s t f o r Amnesty

International (an u n i n c o r p o r a t e d a s s o c i a t i o n ) f a i l e d r e c e n t l y because o f

7

the 'beneficiary p r i n c i p l e 1
. S i m i l a r l y , A's h y p o t h e t i c a l bequest t o

the Sportstown R.F.C. would fail.

In t h i s s e c t i o n i t w i l l be shown t h a t , u n t i l 1952, t h e r e was no

support i n the cases f o r the ' b e n e f i c i a r y p r i n c i p l e , and t h a t i f t r u s t s

1

for non-charitable purposes were h e l d v o i d i t was e i t h e r because t h e

objects, o f t h e t r u s t were u n c e r t a i n o r because the t r u s t was o f u n l i m i t e d

duration and t h e r e f o r e i n v a l i d as c r e a t i n g a p e r p e t u i t y .
 - 107 -

2. Before 1952 : The Requirement o f C e r t a i n t y and the O r i g i n s o f the

'Beneficiary Principle'

(i) Movice v. The Bishop of Durham

The case o f Movice V. The Bishop of Durham i s taken as the starting

point for this discussion. In t h a t case, a bequest o f the r e s i d u e o f the

p e r s o n a l e s t a t e of the t e s t a t r i x was i n terms o f a t r u s t f o r "such o b j e c t s

o f benevolence and l i b e r a l i t y as the Bishop of Durham [the t r u s t e e ] i n h i s

own d i s c r e t i o n s h a l l most approve o f " . The n e x t - o f - k i n o f the testatrix

a p p l i e d t o have the t r u s t d e c l a r e d v o i d on the ground t h a t i t was not

c h a r i t a b l e and was so vague and i n d e f i n i t e that i t f a i l e d for uncertainty.

They succeeded.

The Master o f the R o l l s , S i r W i l l i a m Grant, f o c u s s e d h i s a t t e n t i o n on

the q u e s t i o n whether the bequest c r e a t e d a v a l i d t r u s t f o r c h a r i t a b l e o b j e c t s .

I f so, any u n c e r t a i n t y o f e x p r e s s i o n c o u l d be r e s o l v e d u s i n g the administ-

r a t i v e machinery s e t up f o r the purpose by the S t a t e i n r e c o g n i t i o n o f the

9

v a l u e of c h a r i t a b l e g i v i n g . I f not, the n o n - c h a r i t a b l e t r u s t , to which

the same l e n i e n c y would not be shown, had to f a i l for uncertainty. The

reason f o r the requirement o f c e r t a i n t y i n such a case was explained i n

the f o l l o w i n g terms :
That i t i s a t r u s t , u n l e s s i t be o f a c h a r i t a b l e
nature, too i n d e f i n i t e to be executed by t h i s
Court, has not been, and cannot be, denied.
There can be no t r u s t , over the e x e r c i s e o f which
t h i s C o u r t w i l l not assume a c o n t r o l ; f o r an
u n c o n t r o l l a b l e power o f d i s p o s i t i o n would be owner-
s h i p , and not t r u s t . I f t h e r e be a c l e a r t r u s t ,
but f o r u n c e r t a i n o b j e c t s , the p r o p e r t y t h a t i s
the s u b j e c t o f the t r u s t , i s undisposed o f , and
the b e n e f i t o f such t r u s t must r e s u l t to those,
to whom the law g i v e s the ownership i n d e f a u l t
 - 108 -

o f d i s p o s i t i o n by the former owner. But t h i s

d o c t r i n e does not h o l d good w i t h r e g a r d t o t r u s t s
f o r c h a r i t y . Every o t h e r t r u s t must have a
d e f i n i t e object. There must be somebody, i n
whose favour the C o u r t can decree performance.

Fundamental t o the t r u s t arrangement i s the requirement t h a t a t r u s t be

s u b j e c t t o the c o n t r o l o f t h e c o u r t s . The t r u s t e e i s l e g a l owner o f the

property and, u n l e s s r e s t r a i n e d and r e g u l a t e d i n h i s d e a l i n g s w i t h i t ,

he might d i v e r t i t t o h i s own use o r f a i l t o perform a l t o g e t h e r . The

o b l i g a t i o n s imposed upon him by t h e terms o f the t r u s t might be ignored.

Therefore e q u i t y w i l l not p e r m i t a t r u s t t o e x i s t u n l e s s the c o u r t s can

p r e v e n t such non-performance. The c o u r t s , however, must first know the

nature o f the t r u s t o b l i g a t i o n s t h a t have been c r e a t e d . I f they a r e n o t

expressed with clarity and c e r t a i n t y , c o n t r o l becomes i m p o s s i b l e : hence,

the requirement o f c e r t a i n t y o f o b j e c t s ^ .

A s i m i l a r a n a l y s i s was o f f e r e d by the L o r d C h a n c e l l o r , Lord Eldon,

12
who a f f i r m e d the d e c i s i o n o f S i r W i l l i a m Grant i n t h i s case :

As i t i s a maxim, t h a t the e x e c u t i o n o f a t r u s t
s h a l l be under the c o n t r o u l o f t h e Court, i t
must be o f such a nature, t h a t i t can be under
t h a t c o n t r o u l ; so t h a t the a d m i n i s t r a t i o n o f i t
can be reviewed by the Court; o r , i f t h e t r u s t e e
d i e s , the Court i t s e l f can execute the t r u s t : a
t r u s t t h e r e f o r e , which, i n case o f m a l a d m i n i s t r a t i o n
c o u l d be reformed; and a due a d m i n i s t r a t i o n
d i r e c t e d ; and then, u n l e s s t h e s u b j e c t and the
o b j e c t s can be a s c e r t a i n e d , upon p r i n c i p l e s ,
f a m i l i a r i n o t h e r cases, i t must be decided,
t h a t t h e Court can n e i t h e r reform m a l a d m i n i s t r a t i o n ,
nor d i r e c t a due a d m i n i s t r a t i o n .

In t h i s i n s t a n c e , " o b j e c t s o f benevolence and l i b e r a l i t y " was an ex-

tremely vague concept. No matter how the t r u s t e e a p p l i e d the funds, no

c o u r t which attempted t o c o n t r o l h i s a d m i n i s t r a t i o n o f t h e t r u s t would

be a b l e t o say w i t h c o n v i c t i o n whether the a p p l i c a t i o n f e l l w i t h i n o r

w i t h o u t t h e terms o f the t r u s t . C o n t r o l would not be p o s s i b l e . The

 - 109 -

trust therefore failed.

I t i s important t o observe t h a t no o b j e c t i o n was v o i c e d t o t h e f a c t

t h a t the t r u s t was a n o n - c h a r i t a b l e purpose t r u s t per se and had no bene-

ficiaries. Uncertainty was t h e only i s s u e once the t r u s t ' s non-charitable

n a t u r e had been a s s e r t e d . Neither c o u r t commented on the l a c k o f human

13
beneficiaries. No ' b e n e f i c i a r y p r i n c i p l e ' was invoked

( i i ) Bowman v. The Secular Society

The next p o i n t i n t h i s h i s t o r i c a l review i s t h e case o f Bowman v. The

14

Secular Society . A t the outset, i t i s submitted t h a t t h e case i n f a c t

had very little t o do w i t h t r u s t s law. Nevertheless, i t cannot be o m i t t e d

from d i s c u s s i o n s i n c e dicta from i t a r e o f t e n c i t e d as a l l e g e d a u t h o r i t y f o r

15
the ' b e n e f i c i a r y p r i n c i p l e ' , the o r i g i n s o f which a r e here b e i n g sought

In Bowman V. The Secular Society, the t e s t a t o r made a bequest o f h i s

residuary e s t a t e t o and f o r the purposes o f t h e S e c u l a r S o c i e t y , which was

not an u n i n c o r p o r a t e d a s s o c i a t i o n , b u t a r e g i s t e r e d company l i m i t e d by

guarantee under the Companies A c t s . The n e x t - o f - k i n o f the t e s t a t o r d i s -

p u t e d the v a l i d i t y o f t h i s g i f t on the ground t h a t t h e s o c i e t y ' s objects

were u n l a w f u l . They f a i l e d . The House o f Lords h e l d t h a t t h e bequest was

valid.

The o b j e c t s o f t h e r e c i p i e n t company (as s t a t e d i n i t s memorandum o f

a s s o c i a t i o n ) which were c h a l l e n g e d by t h e n e x t - o f - k i n , i n c l u d e d the f o l l o w -

ing : "(A) To promote, i n such ways as may from time t o time be determined,

the p r i n c i p l e t h a t human conduct s h o u l d be based upon n a t u r a l knowledge, and

 - 110 -

not upon s u p e r - n a t u r a l b e l i e f , and t h a t human w e l f a r e i n t h i s world is

the proper end o f a l l thought and a c t i o n (C) To promote the s e c u l a r -

i s a t i o n of the S t a t e , so t h a t r e l i g i o u s t e s t s and observances may be

banished from the L e g i s l a t u r e , and Executive, and the J u d i c i a r y (G)

To promote the r e c o g n i t i o n by the S t a t e o f marriage as a p u r e l y c i v i l con-

tract, l e a v i n g i t s r e l i g i o u s s a n c t i o n s t o the judgment and determination

of i n d i v i d u a l c i t i z e n s (H) To promote the r e c o g n i t i o n o f Sunday by

the S t a t e as a p u r e l y c i v i l i n s t i t u t i o n f o r the b e n e f i t o f the people, and

the r e p e a l of a l l S a b b a t a r i a n laws d e v i s e d and o p e r a t i n g i n the i n t e r e s t of

r e l i g i o u s s e c t s , r e l i g i o u s observances, or r e l i g i o u s i d e a s (O) To

do a l l such o t h e r l a w f u l t h i n g s as are conducive or i n c i d e n t a l to the

attainment o f a l l or any o f the above o b j e c t s " .

The House o f Lords h e l d unanimously t h a t , although these objects i n -

volved a d e n i a l of C h r i s t i a n i t y , they were not c r i m i n a l i n nature because

the p r o p a g a t i o n o f a n t i - C h r i s t i a n d o c t r i n e s d i d not c o n s t i t u t e the offence

16

o f blasphemy. Furthermore, a m a j o r i t y o f t h e i r L o r d s h i p s held that the

o b j e c t s were not i l l e g a l on the ground t h a t they p r e v e n t e d the company

from a c q u i r i n g p r o p e r t y by way of a b s o l u t e gift.

In the course o f t h e i r r e s p e c t i v e judgments, L o r d F i n l a y d i d not

mention the law of t r u s t s a t a l l , L o r d Dunedin e m p h a t i c a l l y stated that the

bequest d i d not impose a t r u s t but was an a b s o l u t e g i f t t o the l e g a l entity,

and L o r d Sumner o n l y d i s c u s s e d the q u e s t i o n o f whether a c h a r i t a b l e t r u s t

17
had been c r e a t e d . L o r d Buckmaster concluded h i s o p i n i o n with, the words :

I t i s a mistake t o t r e a t the company as a t r u s t e e ,

f o r i t has no b e n e f i c i a r i e s , and t h e r e i s no
d i f f e r e n c e between the c a p a c i t y i n which i t r e c e i v e s
a g i f t and t h a t i n which i t o b t a i n s payment o f
a debt. In e i t h e r case the money can o n l y be
 - Ill -

u s e d f o r t h e p u r p o s e s o f t h e company, a n d i n
n e i t h e r c a s e i s t h e money h e l d o n t r u s t .

He d i d not elaborate on these statements. I t c a n be seen t h a t the

questions of the v a l i d i t y of non-charitable purpose trusts and the nec-

essity f o r human b e n e f i c i a r i e s were i r r e l e v a n t i n the view o f these judges.

It i s t h e judgment o f L o r d P a r k e r , however, which causes interest and

which has been adopted by the supporters o f the 'beneficiary principle' as

authoritative. In f a c t , L o r d P a r k e r came t o t h e conclusion that the bequest

in q u e s t i o n was an a b s o l u t e gift t o t h e company. The testator had merely

stated h i s motives f o r making t h e d o n a t i o n and had n o t imposed a trust.

Indeed, a trust was unnecessary since the performance of the purposes f o r

which the g i f t was donated would be a l m o s t g u a r a n t e e d by this arrangement,

because they echoed the o b j e c t s o f t h e company a s stated i n i t s memorandum

of association.

Despite this conclusion, L o r d P a r k e r went on to discuss at length,

obitev, what w o u l d have happened i f the bequest had b e e n made on trust.

He began as follows :

[ o ] n t h e f o o t i n g t h a t t h e s o c i e t y 'takes i n t h e
c h a r a c t e r o f t r u s t e e ... i t seems t o me t h a t t h e
trust i s clearly void A trust to be valid
must be for the benefit of i n d i v i d u a l s , w h i c h t h i s
i s c e r t a i n l y n o t , o r m u s t be i n t h a t c l a s s o f
g i f t s f o r the b e n e f i t o f the p u b l i c which the
c o u r t s i n t h i s c o u n t r y r e c o g n i s e as c h a r i t a b l e
i n t h e l e g a l as opposed t o t h e p o p u l a r s e n s e
o f t h a t term. Moreover, i f a t r u s t e e i s g i v e n
a d i s c r e t i o n to apply t r u s t property f o r purposes
some o f w h i c h a r e a n d some a r e n o t c h a r i t a b l e ,
the t r u s t i s v o i d f o r u n c e r t a i n t y .

The clause in italics seems t o be the s o l e mention i n the case o f the

'beneficiary principle'. No authority was cited for it. Nor was i t mat-

erial to h i s Lordship's reasoning or decision. The discussion centred

 - 112 -

i n s t e a d on the i s s u e whether t h e bequest was c h a r i t a b l e o r not. He

concluded not t h a t the t r u s t , had i t e x i s t e d , would have been v o i d f o r

l a c k o f b e n e f i c i a r i e s , b u t t h a t i t s o b j e c t s were e i t h e r too vague and

uncertain t o render i t v a l i d as a c h a r i t a b l e t r u s t , o r were p o l i t i c a l

and therefore non-charitable. The judgment does n o t c o n t a i n any a u t h -

o r i t a t i v e , w e l l - r e a s o n e d statement o f the p r o p o s i t i o n t h a t a n o n - c h a r i t a b l e

purpose t r u s t i s v o i d f o r want o f i n d i v i d u a l b e n e f i c i a r i e s .

Be t h a t as i t may, sometimes an i s o l a t e d dictum by an i l l u s t r i o u s

judge i s taken up and a p p l i e d over and over a g a i n and, although o r i g i n a l l y

it claimed t o s t a t e no fundamental p r i n c i p l e o f law, i t gradually attains

t h i s s t a t u s through t h e c a s e s . The p r o c e s s i s p a r t o f t h e development o f

the common law. I t may t h e r e f o r e be i n s t r u c t i v e t o survey cases t h a t have

a p p l i e d Bowman V. Secular Society, both i n E n g l a n d and throughout the

Commonwealth, j u r i s d i c t i o n s , t o a s c e r t a i n whether o r n o t i t r e a l l y was the

o r i g i n a l source o f t h e ' b e n e f i c i a r y p r i n c i p l e ' .

A t the o u t s e t i t can be s t a t e d by way o f summary t h a t the Bowman case

has been quoted as a u t h o r i t y f o r many p r o p o s i t i o n s but, a p a r t from the

cases s p e c i f i c a l l y d i s c u s s e d hereafter, i t i s not extensively discussed i n

connection with the necessity o f b e n e f i c i a r i e s f o r a v a l i d non-charitable

trust.

19
In the r e c e n t case o f Reg%na V. Lemon , the Court o f Appeal
20
adopted and u t i l i s e d Bowman's d i s c u s s i o n on the o f f e n c e o f blasphemy
21

I t has a l s o been quoted i n England as a u t h o r i t y f o r the p r o p o s i t i o n that,

if a company i s r e g i s t e r e d w i t h a memorandum o f a s s o c i a t i o n which s e t s o u t

the o b j e c t s o f t h e company, n e i t h e r the documents p r e l i m i n a r y to incor-

 - 113 -

p o r a t i o n nor the a c t i o n s o f t h e d i r e c t o r s a f t e r i t s f o r m a t i o n can be

22
r e c e i v e d i n evidence t o determine what the o b j e c t s o f t h e company a r e
23

Similarly, i n New Zealand, i t has been quoted f o r i t s i n t e r p r e t a t i o n o

a statutory p r o v i s i o n that c e r t i f i c a t e s o f incorporation are conclusive

proof t h a t a l l c o n d i t i o n s p r e c e d e n t t o t h e making o f an a l t e r a t i o n t o t h e

r u l e s o f an i n c o r p o r a t e d s o c i e t y have been duly f u l f i l l e d and the c o u r t s

24 •
cannot go behind those certificates

In Canada and A u s t r a l i a , the Bowman case i s c i t e d as a u t h o r i t y f o r

fourth proposition. To quote Davey,J.A. i n t h e B r i t i s h Columbia Court o f

Appeal case o f Roman Catholic Archiepiscopal Corporation of Winnipeg v.

25 . 2 6
Ryan as an example :

[T]he r e a s o n i n g o f L o r d Parker o f Waddington

supports the p r o p o s i t i o n t h a t a g i f t t o a c o r -
p o r a t i o n t o be used f o r some s t i p u l a t e d purposes
embraced w i t h i n t h e c o r p o r a t e o b j e c t s does not
by i m p l i c a t i o n c r e a t e a t r u s t f o r t h a t purpose
any more than a g i f t t o a n a t u r a l p e r s o n t o be
used f o r some purpose b e n e f i t i n g him a l o n e i m p l i e s
a t r u s t c u t t i n g down the a b s o l u t e i n t e r e s t .

Fifthly, t h e Canadian c o u r t s have d e r i v e d from Bowman the g e n e r a l p r i n -

27
ciple t h a t t h e enforcement o f r e l i g i o u s b e l i e f s as such i s not a
28
l e g i t i m a t e concern o f t h e c r i m i n a l law o f t h e realm

Above a l l , Bowman i s renowned f o r i t s a f f i r m a t i o n t h a t a g i f t on

29
trust for p o l i t i c a l objects can n o t be c h a r i t a b l e :

The a b o l i t i o n o f r e l i g i o u s t e s t s , t h e d i s -
e s t a b l i s h m e n t o f t h e Church, [ e t c . ] ... a r e
purely p o l i t i c a l objects. E q u i t y has always
r e f u s e d t o r e c o g n i s e such: o b j e c t s as c h a r i t a b l e
[A] t r u s t f o r t h e a t t a i n m e n t o f p o l i t i c a l
o b j e c t s has always been h e l d i n v a l i d , h o t because
i t i s i l l e g a l , f o r every one i s a t l i b e r t y t o
advocate o r promote by any l a w f u l means a change
i n the law, b u t because t h e Court has no means
o f j u d g i n g whether a proposed change i n t h e law
 - 114 -

w i l l o r w i l l n o t be f o r t h e p u b l i c b e n e f i t ,
and t h e r e f o r e cannot say t h a t a g i f t t o secure
the change i s a c h a r i t a b l e g i f t .
30

T h i s p r i n c i p l e has been a p p l i e d a g a i n and a g a i n and alone has e l e v a t e d

the Bowman case t o t h e s t a t u s o f an important decision.

With a few e x c e p t i o n s , however, i t s s o l i t a r y dictum on the need i n

a non-charitable trust f o r human b e n e f i c i a r i e s has remained o b s c u r e . It

has not e v o l v e d through t h e cases t o become an accepted p r i n c i p l e o f the

common law. I t must t h e r e f o r e be concluded t h a t the source o f t h e 'bene-

f i c i a r y p r i n c i p l e ' i s n o t t r a c e a b l e t o Bowman v. The Secular Society

after a l l .

( i i i ) Re Diplock

One o f the e x c e p t i o n a l i n s t a n c e s i n which L o r d P a r k e r ' s dictum i n

31
Bowman was c i t e d , however, i s worthy o f d i s c u s s i o n . T h i s was In re
32

Diplock where t h e t e s t a t o r ' s w i l l p r o v i d e d , inter alia, t h a t h i s exec-

utors should "apply t h e r e s i d u e f o r such c h a r i t a b l e i n s t i t u t i o n o r i n -

s t i t u t i o n s or other c h a r i t a b l e o r b e n e v o l e n t o b j e c t o r o b j e c t s i n England

as my a c t i n g executors o r executor may i n t h e i r o r h i s a b s o l u t e discretion

select". The bequest f a i l e d f o r u n c e r t a i n t y , and Morice V. The Bishop of

33

Durham and Bowman V. The Secular Society were both c i t e d as d i r e c t auth-

orities. The u n c e r t a i n t y i n h e r e n t i n the phrase " c h a r i t a b l e o r benevolent"

prevented t h e t r u s t from f a l l i n g w i t h i n the l e g a l d e f i n i t i o n o f c h a r i t y so,

as a n o n - c h a r i t a b l e purpose t r u s t , i t also f e l l f o u l o f "a fundamental

34

p r i n c i p l e o f t h e law r e l a t i n g t o t r u s t s " which, przma facie, may sound

l i k e the 'beneficiary p r i n c i p l e ' . No j u s t i f i c a t i o n o r v a l i d a u t h o r i t y

i s g i v e n f o r i t s promotion t o the rank o f "fundamental p r i n c i p l e " . S i r

 - 115 -

W i l f r i d Greene merely e x p l a i n e d i t s rationale :

In o r d e r t h a t a t r u s t may be p r o p e r l y c o n s t i t u t e d ,
there must be a b e n e f i c i a r y . The b e n e f i c i a r y
must be a s c e r t a i n e d o r must be a s c e r t a i n a b l e
The Crown has never assumed the r i g h t t o come to
the Court and ask f o r the e x e c u t i o n of a p h i l a n t h r o p i c
t r u s t ; i t has o n l y assumed the r i g h t to come t o
the Court and ask f o r the e x e c u t i o n o f a c h a r i t a b l e
t r u s t , and a c c o r d i n g l y , i f t h e r e i s a g i f t f o r
p h i l a n t h r o p i c purposes, i t s u f f e r s from the v i c e
o f not having a b e n e f i c i a r y , a s c e r t a i n e d or a s c e r -
t a i n a b l e , i n whose i n t e r e s t the C o u r t can a d m i n i s t e r
the t r u s t .

The p o i n t made above i s t h a t a n o n - c h a r i t a b l e purpose t r u s t appears t o

l a c k an i n - b u i l t mechanism f o r d i r e c t c o n t r o l . : t h a t i s , someone who could

go t o c o u r t and ask t h a t the t r u s t be executed. Yet the Master o f the

R o l l s then proceeded to d e a l o n l y w i t h the c e r t a i n t y a s p e c t o f the problem,

w i t h which t h e r e i s no d i s p u t e . I f a c o u r t does not know what c o n s t i t u t e s

due and v a l i d performance by a t r u s t e e o f the terms o f the t r u s t , the trust

must f a i l for uncertainty. In Re Diploek, i t was impossible to say with

c e r t a i n t y whether any p a r t i c u l a r a p p l i c a t i o n o f funds was or was not within

the terms o f the t r u s t . T h i s was the essence o f the d e c i s i o n . "Benevolent

or c h a r i t a b l e o b j e c t " embodies no d e f i n i t e concept. This being so, the

absence o f a b e n e f i c i a r y was immaterial to the f a i l u r e o f t h i s p a r t i c u l a r

trust. The case t h e r e f o r e does l i t t l e t o e x p l a i n or i l l u s t r a t e the oper-

a t i o n o f the 'beneficiary p r i n c i p l e ' .

T h i s submission i s supported by the a n a l y s i s used by the House o f

Lords on appeal i n t h a t case i n r e a c h i n g the same c o n c l u s i o n 3 6

. Two major

threads of reasoning are d i s c e r n i b l e i n t h e i r Lordships'; judgments.

Firstly, the terms o f a t r u s t must be e x p r e s s e d w i t h c e r t a i n t y so t h a t a

37

c o u r t can e f f e c t i v e l y c o n t r o l a t r u s t e e i n h i s a d m i n i s t r a t i o n o f them

Secondly, a t e s t a t o r may not d e l e g a t e h i s testamentary power to h i s t r u s t e e s

 - 116 -

38
but must specify in clear terms the destination of his funds . Nowhere

can any objection to the bequest on the ground that i t was a purpose trust

be found. There i s no assertion of the 'beneficiary p r i n c i p l e ' as that

term i s used here to denote the alleged requirement of human b e n e f i c i a r i e s

for a valid non-charitable trust. Its source i s therefore still unknown.

( i v ) In Re Wood

39

In ve Wood i s another case t h a t appears at first glance to assert

that there exists i n the law a 'beneficiary p r i n c i p l e ' which operates to

invalidate non-charitable purpose t r u s t s by demanding the presence of human

beneficiaries. Again, however, on closer inspection, i t becomes apparent

that no such assertion i s i n f a c t made. The t e s t a t r i x i n that case directed

trustees t o pay the income o f a "B.B.C. T r u s t F u n d " £.2 per week "towards

the fund of the society, institution or body c o r p o r a t e or incorporate on

behalf of which, an appeal shall have been t r a n s m i t t e d on the Sunday from the

National station of the British Broadcasting Corporation". The bequest

failed. Since the "Week's G o o d C a u s e " was not necessarily charitable, the

b e q u e s t had t o meet a l l the requirements of a valid

non-charitable trust.
40
This i t failed to do. H a r m a n , J . e x p l a i n e d why t h i s was so :
[ A ] g i f t on t r u s t m u s t h a v e a cestui que trust,
a n d t h e r e b e i n g h e r e no cestui que trust the
g i f t must f a i l .

In view of the fact that "cestui que trust" i s normally used synonymously

with "beneficiary", Harman,J.'s judgment has been interpreted as deciding

that the gift failed as a purpose t r u s t per se. However, in truth, the

reason for the bequest's failure was that i t was uncertain and that, as

41
their Lordships had pointed out i n the Viplock case
, this uncertainty
42
could not be c u r e d by delegating one's t e s t a m e n t a r y power :
 - 117 -

I h o l d t h a t t h i s g i f t i s bad because i t i s wholly

u n c e r t a i n and has no object, no cestui que trust,
which is either certain or can be made certain by
the d i r e c t i o n s which the t e s t a t r i x has g i v e n . I t
can o n l y be made c e r t a i n by t h e d e c i s i o n o f some
third party. That i s a d e l e g a t i o n o f testamentary
power which, except i n the case o f a c h a r i t y , i s
not p e r m i t t e d .

In t h i s passage, Harman,J.'s use o f t h e term cestui que trust can be

read as encompassing both human b e n e f i c i a r i e s and impersonal objects.

The case i n no way supports the e x i s t e n c e i n t r u s t s law o f a ' b e n e f i c i a r y

principle . 1
I t i s prepared to permit a n o n - c h a r i t a b l e purpose t r u s t t o

exist, subject to perpetuity rules, provided t h a t t h e purpose i s ex-

p r e s s e d w i t h c l a r i t y and c e r t a i n t y .

(v) Summary

In l i g h t o f t h i s b r i e f h i s t o r i c a l review, i t i s p o i n t e d o u t t h a t no

case was d e c i d e d s o l e l y on the b a s i s o f a r u l e t h a t every non-charitable

t r u s t must have human b e n e f i c i a r i e s . I t i s submitted t h a t , u n t i l 1952, i t

was p o s s i b l e and c o r r e c t t o say t h a t n o n - c h a r i t a b l e purpose t r u s t s i n

g e n e r a l were v a l i d , p r o v i d e d t h a t t h e purpose was d e f i n e d with c e r t a i n t y

and t h a t p u b l i c p o l i c y c o n s i d e r a t i o n s , such as the r u l e a g a i n s t p e r p e t u i t i e s ,

43
had been s a t i s f i e d

3. Before 1952 : T r u s t s f o r N o n - C h a r i t a b l e Purposes, the Rule a g a i n s t

P e r p e t u i t i e s and G i f t s t o U n i n c o r p o r a t e d Associations

I t was on the ground o f t h e r u l e a g a i n s t p e r p e t u i t i e s t h a t most gifts

f o r the n o n - c h a r i t a b l e purposes o f u n i n c o r p o r a t e d a s s o c i a t i o n s were h e l d t o

44
founder . However, one important p o i n t i s apparent from the a u t h o r i t i e s ,
 - 118 -

45
and has been the s u b j e c t o f many l e a r n e d comments . T h i s i s t h a t the

c o u r t s i n t h i s context are not expressly concerned w i t h t h e remoteness o f

v e s t i n g problems w i t h which the r u l e a g a i n s t p e r p e t u i t i e s s t r i c t l y speaking

d e a l s , b u t w i t h a more g e n e r a l n o t i o n o f i n a l i e n a b i l i t y , based on a p u b l i c

policy " t o p r e v e n t t h e m i s c h i e f o f making p r o p e r t y i n a l i e n a b l e , unless f o r

46

o b j e c t s which a r e i n some way u s e f u l o r b e n e f i c i a l t o the community" ,

that i s , w i t h i n the l e g a l d e f i n i t i o n o f ' c h a r i t a b l e ' . Thus, i f the o b j e c t

o f t h e t r u s t i s merely n o n - c h a r i t a b l e , i t i s f e l t t h a t funds must n o t be

withdrawn from commercial u t i l i t y t o s t a g n a t e . I n these circumstances,

the p o l i c y appears t o o v e r r i d e any c o u n t e r v a i l i n g p o l i c y o f g i v i n g e f f e c t

to t h e e x p r e s s e d i n t e n t i o n o f t h e donor.

Most o f t h e cases on t h i s s u b j e c t date from t h e l a t e nineteenth

century and a r e a maze o f confused terminology, d e f e c t i v e r e a s o n i n g and

47

inappropriate cross-references t o the remoteness o f v e s t i n g r u l e . It

i s not proposed t o d i s c u s s them i n any d e t a i l . I n s o f a r as c r y s t a l l i s a t i o n

o f a g u i d i n g p r i n c i p l e i s p o s s i b l e from such a source, i t may be s t a t e d

as f o l l o w s . I f the donor makes i t c l e a r from the terms o f the t r u s t that

the c a p i t a l o f the g i f t i s t o be r e t a i n e d as an endowment f o r t h e a s s o c i a t i o n

indefinitely, the g i f t w i l l f a i l as 'tending to a perpetuity'. One case

where the donor d i d e x a c t l y t h a t , w i t h the r e s u l t t h a t t h e g i f t indeed

48
f a i l e d was Re Clifford . Mr. C l i f f o r d had phrased h i s w i l l as f o l l o w s :
I bequeath, t o the O x f o r d A n g l i n g and P r e s e r v a t i o n
S o c i e t y the sum o f £ 2 0 0 f r e e o f duty, on c o n d i t i o n
t h a t Mr. George Mallam o r the p r e s i d e n t t h e r e o f
f o r the time being, and the committee o f the s o c i e t y
undertake t o i n v e s t and keep the same i n v e s t e d i n
h i s and t h e i r names as c a p i t a l moneys, and t o
apply the income o r d i v i d e n d s t o a r i s e therefrom
to t h e purpose o f r e s t o c k i n g t h e i r waters, o r f o r
such o t h e r purposes as the p r e s i d e n t and committee
f o r the time b e i n g s h a l l r e s o l v e upon.
 - 119 -

The Chancery D i v i s i o n , i n d e c l a r i n g t h e g i f t v o i d , h e l d t h a t an endow-

ment had been e x p r e s s l y created.

To facilitate the success o f h i s g i f t on t r u s t , t h e r e f o r e , t h e know-

ledgeable donor needs t o s p e c i f y e x p r e s s l y t h a t both c a p i t a l and income are

to be made a v a i l a b l e f o r the s p e c i f i e d purpose o r purposes. I t has been

h e l d t h a t one method whereby t h i s can be a c h i e v e d i s the phrase 'on t r u s t

for the a s s o c i a t i o n ' s purposes a b s o l u t e l y ' , o r words t o t h a t e f f e c t . In

Re Ray's Will Trusts 4 9

, C l a u s o n , J . made the f o l l o w i n g comments about
50
use o f t h e word ' a b s o l u t e l y ' i n t h i s c o n t e x t :

' A b s o l u t e l y ' means f r e e o f a f e t t e r o f some k i n d

I t i s r e a l l y s a y i n g : 'This i s n o t t o be
f e t t e r e d by the f a c t t h a t i t i s t o be an endowment
and i s t o be a g i f t o f income o n l y . I t i s t o go
i n t o the funds o f the s o c i e t y and t o be used w i t h o u t
f e t t e r s f o r any purpose f o r which t h e funds o f
the s o c i e t y can be used'.

In the absence o f express words a l o n g these l i n e s , the f a t e o f t h e g i f t

v i s - a - v i s the r u l e a g a i n s t inalienability will depend upon the c o u r t ' s

i n t e r p r e t a t i o n o f t h e g i f t as a whole.

Many o f the a n c i e n t cases c o n s i d e r e d (erroneously, i t will be argued)

t h a t a g i f t on t r u s t t o an a s s o c i a t i o n had t o f a i l f o rperpetuity i f i t was

the a s s o c i a t i o n ' s r u l e s r a t h e r than t h e terms o f the donor's g i f t which i n d -

51

i c a t e d that the property would be rendered i n a l i e n a b l e . Thus a s t i p u -

l a t i o n i n the r e c i p i e n t a s s o c i a t i o n ' s r u l e s t h a t "the i n s t i t u t i o n s h a l l not

be d i s s o l v e d w i t h o u t the consent o f n i n e - t e n t h s i n number o f t h e members

present a t a g e n e r a l meeting" and t h a t "no member, on withdrawing from

this institution ... s h a l l be e n t i t l e d t o c l a i m any share o r i n t e r e s t i n

52

the p r o p e r t y o f the i n s t i t u t i o n " would mean t h a t a g i f t t o t h a t a s s o c i -

ation, taking e f f e c t according t o those rules-, would be v o i d f o r p e r p e t u i t y .

 - 120 -

I t i s submitted t h a t the e r r o r o f t h i s r e a s o n i n g l i e s i n the f a c t

t h a t any a s s o c i a t i o n can change i t s r u l e s v i a i t s members a t any time. An

a s s o c i a t i o n i s c o n t r a c t u a l i n nature. I t i s c r e a t e d by the consensus of

its founding members. S i m i l a r l y , i t s r u l e s are formulated, i t s existence

i s terminated, i t s o p e r a t i o n i s d i c t a t e d and, above a l l , i t s c o n s t i t u t i o n

i s amendable, by the agreement o f i t s members. Thus, f o r example, amend-

ments t o the r u l e s c o u l d render a p r e v i o u s l y i n a l i e n a b l e fund immediately

d i v i s i b l e amongst the members. Any donor takes the r i s k s i n h e r e n t i n the

f a c t t h a t an a s s o c i a t i o n ' s c o n s t i t u t i o n cannot be a b s o l u t e l y entrenched.

I t i s s u b j e c t t o p o s s i b l y f r e q u e n t change. T h e r e f o r e i t s h o u l d not d i c t a t e

the v a l i d i t y o r o t h e r w i s e o f a g i f t . On the o t h e r hand, i f t h e donor s u c c -

e s s f u l l y u t i l i s e s a t r u s t t o e f f e c t the d o n a t i o n , the terms w i t h which he

impresses hisgift a r e f i x e d and b i n d i n g on the t r u s t e e s once and f o r a l l .

They, a l o n e , s h o u l d be r e l e v a n t . Admittedly, i n c e r t a i n s i t u a t i o n s , i t may

be p o s s i b l e t o conclude from t h e f a c t s and c i r c u m s t a n c e s o f the g i f t t h a t

the donor had not o n l y a c q u a i n t e d h i m s e l f w i t h the d e t a i l s o f t h e i n t e n d e d

r e c i p i e n t a s s o c i a t i o n ' s c o n s t i t u t i o n b u t had a l s o i m p l i e d l y i n c o r p o r a t e d

i t s r u l e s i n t o t h e terms o f t h e g i f t upon t r u s t . I t i s submitted, however,

t h a t the c o u r t s i n t h e o l d cases were somewhat over-eager i n arriving at

53
this: i m p l i c a t i o n

In summary, t h e o l d pre-1952 cases show t h a t a g i f t on t r u s t f o r the

n o n - c h a r i t a b l e purposes ( g e n e r a l o r s p e c i f i c ) o f an u n i n c o r p o r a t e d associ-

a t i o n was v a l i d and guaranteed s a t i s f a c t i o n o f t h e donor's wishes, provided

t h a t the t r u s t terms n e i t h e r e x p r e s s l y nor i m p l i e d l y attempted t o s e t up a

5-
p e r p e t u a l endowment f o r the a s s o c i a t i o n by r e s t r i c t i n g use o f t h e c a p i t a l

To take t h e example used a t the v e r y b e g i n n i n g o f t h i s s e c t i o n , a

 - 121 -

bequest by A on t r u s t t o f u r t h e r the aims and purposes o f t h e Sportstown

R.F.C. would be v a l i d i f A had d i e d and any consequent l i t i g a t i o n had gone

to c o u r t b e f o r e 1952, even i f t h e a s s o c i a t i o n i n f a c t chose t o use the i n -

come and keep the c a p i t a l i n t a c t i n d e f i n i t e l y o r i f t h e a s s o c i a t i o n ' s r u l e s

s t i p u l a t e d t h a t t h i s occur, p r o v i d e d A had made no express o r i m p l i e d s t i p u -

l a t i o n i n the g i f t i t s e l f to this effect. The c a p i t a l c o u l d be u t i l i s e d

and thus was n o t ' i n a l i e n a b l e . There would be no tendency t o a p e r p e t u i t y .

4. A f t e r 1952 : Re Astov

55

In 1952, the d e c i s i o n i n Re Astov's Settlement Trusts was handed

down. I t e n u n c i a t e d as a g e n e r a l p r i n c i p l e t h a t a t r u s t f o r n o n - c h a r i t a b l e

purposes without human b e n e f i c i a r i e s i s v o i d . In l i g h t o f t h i s important

development, the case must be a n a l y s e d i n some d e t a i l .

In 1945, s h a r e h o l d e r s i n the c o r p o r a t e p r o p r i e t o r o f The Observer

and o t h e r newspapers d i r e c t e d t r u s t e e s o f t h e s e t t l e d shares t o a p p l y t h e

income towards c e r t a i n n o n - c h a r i t a b l e purposes. These i n c l u d e d "1. The

e s t a b l i s h m e n t maintenance and improvement o f good u n d e r s t a n d i n g sympathy

and c o - o p e r a t i o n between n a t i o n s ... 2. The p r e s e r v a t i o n o f t h e indepen-

dence and i n t e g r i t y o f newspapers and the encouragement o f t h e a d o p t i o n and

maintenance by newspapers o f f e a r l e s s e d u c a t i o n a l and c o n s t r u c t i v e p o l i c i e s .

3. The promotion o f t h e freedom independence and i n t e g r i t y o f t h e P r e s s i n

all its activities 5. The p r o t e c t i o n o f newspapers ... from b e i n g

absorbed o r c o n t r o l l e d by combines o r b e i n g t i e d by f i n a n c e o r o t h e r w i s e t o

s p e c i a l o r l i m i t e d views o r i n t e r e s t s i n c o n s i s t e n t w i t h the h i g h e s t integrity

o r independence 7. The e s t a b l i s h m e n t a s s i s t a n c e o r support o f any

c h a r i t a b l e p u b l i c o r benevolent schemes t r u s t s funds a s s o c i a t i o n s or bodies

 - 122 -

f o r o r i n c o n n e c t i o n w i t h the (a) improvement o f newspapers o r j o u r n a l i s m

or (b) the r e l i e f o r b e n e f i t o f persons (or the f a m i l i e s o r dependents o f

persons) a c t u a l l y o r f o r m e r l y engaged i n j o u r n a l i s m o r i n the newspaper

b u s i n e s s o r any branch thereof or (c) any of the o b j e c t s or purposes ment-

ioned i n t h i s schedule".

The s e t t l o r s s p e c i f i e d the d u r a t i o n o f the t r u s t and t h i s was within

the c o n f i n e s p e r m i t t e d by the r u l e a g a i n s t p e r p e t u i t i e s . A f t e r the e x p i r -

a t i o n o f the p e r i o d , t h e r e was a residuary g i f t i n f a v o u r o f "the younger

o f the two persons who s h a l l a t such end be r e s p e c t i v e l y the warden o f A l l

S o u l s C o l l e g e Oxford and the master o f T r i n i t y C o l l e g e Cambridge o r i f the

younger of them s h a l l d i s c l a i m t h i s b e n e f i t then f o r the o t h e r o f them o r

if either office (of warden o r master) s h a l l be vacant a t such end then f o r

the person who s h a l l h o l d the o t h e r o f f i c e a t such end".

On b e i n g warned o f the p o s s i b i l i t y t h a t the t r u s t s o f the 1945 settle-

ment might f a i l , i n 1951 the s e t t l o r s r e s e t t l e d any i n t e r e s t they might r e -

t a i n by way o f r e s u l t i n g t r u s t i n the s e t t l e d s h a r e s . The t r u s t s of t h i s

second s e t t l e m e n t were c h a r i t a b l e i n nature and t h e i r v a l i d i t y was not

questioned.

The t r u s t s o f the 1945 s e t t l e m e n t , on the o t h e r hand, were c h a l l e n g e d

from two s i d e s and on two grounds. Both the t r u s t e e s o f the 1951 settle-

ment and the A t t o r n e y - G e n e r a l , as the a d m i n i s t r a t i v e body i n charge o f the

enforcement o f c h a r i t a b l e t r u s t s on b e h a l f o f the Crown, had an i n t e r e s t i n

the w e l f a r e of the 1945 settlement. Only the f a i l u r e o f t h i s l a t t e r would

b r i n g i n t o e x i s t e n c e the t r u s t s f o r which, they were r e s p o n s i b l e . They would

be redundant i n the f u t u r e h i s t o r y o f the shares i f the 1945 settlement

 - 123 -

had created v a l i d t r u s t s . They t h e r e f o r e challenged the v a l i d i t y o f the

t r u s t s on two grounds : f i r s t l y , t h a t they were n o n - c h a r i t a b l e trusts for

purposes, n o t i n d i v i d u a l s ; and s e c o n d l y , t h a t they were v o i d f o r u n c e r t a i n -

ty. They succeeded on both counts. I t i s the f i r s t contention w i t h which

we a r e p r i n c i p a l l y concerned i n t h i s s e c t i o n . F o r the sake o f convenience,

therefore, t h e second ground w i l l be d i s c u s s e d i n brief first.

(i) Certainty

I t was contended, and h e l d , t h a t t h e t r u s t s f a i l e d f o r u n c e r t a i n t y o f

objects. A t the o u t s e t , i t i s admitted t h a t the d e c i s i o n i n Re Astov was

c o r r e c t on t h i s p o i n t . Roxburgh,J. s t a t e d the requirement o f c e r t a i n t y f o r

56
the c r e a t i o n o f a v a l i d t r u s t i n the f o l l o w i n g terms :

[T]he purpose must, i n my judgment be s t a t e d i n

p h r a s e s which embody d e f i n i t e concepts, and the
means by which t h e t r u s t e e s are t o t r y t o a t t a i n
them must a l s o be p r e s c r i b e d w i t h a s u f f i c i e n t
degree o f c e r t a i n t y The purposes must be
so d e f i n e d t h a t , i f the t r u s t e e s s u r r e n d e r e d
t h e i r d i s c r e t i o n , the c o u r t c o u l d c a r r y o u t t h e
purposes d e c l a r e d , and n o t a s e l e c t i o n o f them
a r r i v e d a t by e l i m i n a t i n g those which are t o o
u n c e r t a i n t o be c a r r i e d o u t .

As has a l r e a d y been mentioned i n the d i s c u s s i o n o f Movioe V. The Bishop of

57

Duvham , a t r u s t f o r purposes i s v a l i d o n l y i f i t can be s a i d w i t h cer-

t a i n t y t h a t any p a r t i c u l a r u t i l i s a t i o n o f funds i s o r i s not w i t h i n the

58

d e f i n i t i o n o f the purpose t o be b e n e f i t e d . B e f o r e a t r u s t e e can perform

the terms o f a purpose t r u s t o r a c o u r t can c o n t r o l o r c o r r e c t such p e r -

formance, the conceptual c o n t e n t o f the i n t e n d e d purpose must be c l e a r .

It i s here t h a t one f i n d s a major d i f f e r e n c e between t r u s t s f o r

c h a r i t a b l e purposes and t r u s t s f o r n o n - c h a r i t a b l e purposes-. Because c h a r i t y

 - 124 -

i s considered worthy o f s p e c i a l treatment, once a c o u r t has found t h a t the

purposes come w i t h i n the l e g a l d e f i n i t i o n of c h a r i t y , f a i l u r e to s p e c i f y

p a r t i c u l a r c h a r i t a b l e o b j e c t s does not i n v a l i d a t e the t r u s t . This i s

because the s t a t e has e s t a b l i s h e d e l a b o r a t e a d m i n i s t r a t i v e machinery to

59

f a c i l i t a t e the c o n t r o l and due administration of c h a r i t a b l e t r u s t s

Furthermore, the c o u r t s have j u r i s d i c t i o n to e s t a b l i s h schemes f o r the app-

l i c a t i o n of funds f o r c h a r i t a b l e o b j e c t s . Such i s not the case w i t h t r u s t s

for non-charitable objects. The t r u s t i n Re Astor t h e r e f o r e c o u l d not be

saved :
Counsel f o r the t r u s t e e s o f the 1945 settlement
suggested t h a t the t r u s t e e s might apply t o the
c o u r t ex parte f o r a scheme. I t i s not, I t h i n k ,
a mere c o i n c i d e n c e t h a t no case has been found
o u t s i d e the realm o f c h a r i t y i n which the c o u r t
has y e t d e v i s e d a scheme o f ways and means f o r
a t t a i n i n g enumerated t r u s t purposes. I f i t were t o
assume t h i s (as I t h i n k ) n o v e l j u r i s d i c t i o n over
p u b l i c , but not c h a r i t a b l e , t r u s t s , i t would,
I b e l i e v e , n e c e s s a r i l y r e q u i r e the a s s i s t a n c e
o f a c u s t o d i a n o f the p u b l i c i n t e r e s t analogous
t o the A t t o r n e y G e n e r a l i n c h a r i t y cases who
would not o n l y h e l p to formulate schemes but
c o u l d be charged w i t h the duty o f e n f o r c i n g them
and p r e v e n t i n g m a l a d m i n i s t r a t i o n . There i s no
such p e r s o n .

With t h i s i n mind, i t becomes e v i d e n t t h a t the Astor t r u s t had to fail

for uncertainty. I t i s r i d d l e d with statements o f vague i d e a l s , such, as

"the e s t a b l i s h m e n t maintenance and improvement of good u n d e r s t a n d i n g

sympathy and cooperation between n a t i o n s " . Without f u r t h e r g u i d e l i n e s ,

no t r u s t e e c o u l d be sure t h a t any p a r t i c u l a r payment was w i t h i n the terms

o f the trust. Above a l l , the c o u r t s , on b e i n g requested to exercise

c o n t r o l over the t r u s t e e s , would be i n no b e t t e r p o s i t i o n . Effective

c o n t r o l over the t r u s t would be impossible.

(ii) Beneficiary Principle

 - 125 -

The o t h e r ground on which t h e Astov t r u s t f a i l e d was t h a t i t i n -

f r i n g e d the ' b e n e f i c i a r y p r i n c i p l e ' . I n o t h e r words, i t was a n o n - c h a r i t -

a b l e t r u s t f o r purposes, whereas, t o be v a l i d , a n o n - c h a r i t a b l e t r u s t had

t o have human b e n e f i c i a r i e s . Roxburgh,J. e x p l a i n e d t h i s c o n c l u s i o n by

a p p l y i n g t o t r u s t law H o h f e l d i a n - l i k e r e a s o n i n g on the nature of obliga-'

61

tions : every duty i s b a l a n c e d by a c o r r e l a t i v e r i g h t . Therefore, a

t r u s t e e , as pvima facie l e g a l owner o f t r u s t p r o p e r t y , can o n l y be f i x e d

w i t h an e q u i t a b l e o b l i g a t i o n t o d e a l w i t h i t otherwise than as h i s own i f

t h i s o b l i g a t i o n i s balanced by c o r r e l a t i v e r i g h t s i n human b e n e f i c i a r i e s .
62
Roxburgh,J. e x p l a i n e d the s i t u a t i o n as f o l l o w s :
The t y p i c a l case o f a t r u s t i s one ; i n which the
l e g a l owner o f p r o p e r t y i s c o n s t r a i n e d by a c o u r t
o f e q u i t y so t o d e a l w i t h i t as t o g i v e e f f e c t t o
the e q u i t a b l e r i g h t s o f a n o t h e r . These e q u i t a b l e
r i g h t s have been hammered o u t i n t h e p r o c e s s o f
l i t i g a t i o n i n which a c l a i m a n t on e q u i t a b l e grounds
has s u c c e s s f u l l y a s s e r t e d r i g h t s a g a i n s t a l e g a l
owner o r o t h e r p e r s o n i n c o n t r o l o f p r o p e r t y .
Prima f a c i e , t h e r e f o r e , a t r u s t e e would n o t be
expected t o be s u b j e c t t o an e q u i t a b l e o b l i g a t i o n
u n l e s s t h e r e was somebody who c o u l d e n f o r c e a c o r -
r e l a t i v e e q u i t a b l e r i g h t and the nature and e x t e n t
o f t h a t o b l i g a t i o n would be worked o u t i n p r o -
ceedings f o r enforcement.

A t r u s t must be s u b j e c t t o j u d i c i a l control. F o r t h i s undisputed pro-

p o s i t i o n , Movice v. The Bishop of Duvham 6 3

i s one o f many a u t h o r i t i e s .

Roxburgh,J. then d i s c u s s e d cases i n which e q u i t a b l e r i g h t s o f t h i s

nature did e x i s t b u t were l o c a t e d n o t i n b e n e f i c i a r i e s b u t i n remaindermen

and residuary legatees. In those cases, the t r u s t s were upheld as v a l i d ,

64
c o n t r o l l a b l e arrangements, d e s p i t e the absence o f b e n e f i c i a r i e s -

Roxburgh,J. denied t h a t those cases, where "the c o u r t had i n d i r e c t means

65
o f e n f o r c i n g t h e e x e c u t i o n o f the n o n - c h a r i t a b l e purpose" , were r e p -
66
r e s e n t a t i v e o f the law and c a l l e d them "anomalous and e x c e p t i o n a l "
 - 126 -

I t i s submitted t h a t t h i s was t h e c r u c i a l step i n the r e a s o n i n g i n Re

Astor and was p r i m a r i l y r e s p o n s i b l e f o r t h e b i r t h o f the ' b e n e f i c i a r y

principle'. He c o n c l u d e d t h a t the t r u e p r i n c i p l e was t h a t a t r u s t must

have human b e n e f i c i a r i e s . T h i s , he s a i d , was "a p r o p o s i t i o n which t r a c e s

descent from o r through S i r W i l l i a m Grant,M.R. [Morice V. The Bishop of

Durham 6 7
] , through L o r d Parker o f Waddington [Bowman V. The Secular

Society 6 8
] , t o Harman,J. [Ee Wood These cases have a l r e a d y been

discussed i n an attempt so t o t r a c e the descent o f the p r o p o s i t i o n . It

was found t h a t no such p r o p o s i t i o n c o u l d i n f a c t be d e r i v e d from the cases.

P r i o r t o Re Astor, i t was p o s s i b l e t o r e c o n c i l e the "anomalous" cases w i t h

cases l i k e Morice v. The Bishop of Durham. A t r u s t c o u l d be v a l i d despite

the absence o f b e n e f i c i a r i e s , p r o v i d e d t h a t t h e r e was, inter alia, suff-

i c i e n t c e r t a i n t y t o p e r m i t e f f e c t i v e c o n t r o l by t h e c o u r t s . In Re Astor,

however, Roxburgh,J. would n o t a c c e p t t h i s and, without any v a l i d authority,

h e l d t h a t the t r u s t f a i l e d as a purpose t r u s t on the ground t h a t i t was

not f o r the b e n e f i t o f i n d i v i d u a l s .

(iii) Impact on G i f t s f o r U n i n c o r p o r a t e d Associations

A f t e r Ee Astor the ' b e n e f i c i a r y p r i n c i p l e ' stands f o r the p r o p o s i t i o n

that a non-charitable t r u s t i s v a l i d o n l y i f i t has human b e n e f i c i a r i e s who

can e x e r c i s e d i r e c t c o n t r o l over the t r u s t e e s . B e n e f i c i a r i e s , by v i r t u e o f

t h e i r entitlement under the terms o f the t r u s t , have locus standi to i n i t i -

ate p r o c e e d i n g s a g a i n s t the t r u s t e e s , whether w i t h the aim o f p r e v e n t i n g

maladministration o f funds o r o f e n s u r i n g payment t o themselves. Thus the

70

trust i s potentially under t i g h t c o n t r o l . T h i s requirement means t h a t

s e t t l o r s o r t e s t a t o r s must l i m i t the b o u n d a r i e s o f t h e i r g e n e r o s i t y t o

ascertained or ascertainable individuals. Any attempt t o b e n e f i t a non-

 - 127 -

c h a r i t a b l e purpose not expressed o r , indeed, i n e x p r e s s i b l e i n terms o f

i n d i v i d u a l s , w i l l be defeated.

An u n i n c o r p o r a t e d a s s o c i a t i o n i s not an i n d i v i d u a l . Since a t r u s t

f o r an u n i n c o r p o r a t e d a s s o c i a t i o n must t h e r e f o r e take e f f e c t as a t r u s t ,

lacking i n beneficiaries, f o r the purposes (whether s p e c i f i c a l l y limited

o r g e n e r a l ) o f the a s s o c i a t i o n , assuming t h a t those purposes are n o n - c h a r i -

t a b l e , such a t r u s t w i l l l i k e w i s e be defeated.

5. C u r r e n t S t a t u s o f the 'Beneficiary Principle'

I t now becomes n e c e s s a r y t o ask the q u e s t i o n : Given t h a t Re Astov

has n o t been o v e r r u l e d , to what e x t e n t has i t s s p u r i o u s 'beneficiary

p r i n c i p l e ' been a p p l i e d and i n t e g r a t e d i n t o the common law s i n c e 1952?

The answer, i n b r i e f , as the f o l l o w i n g summary w i l l show, i s t h a t the 'bene-

f i c i a r y p r i n c i p l e ' has f i r m l y taken r o o t . Many cases o v e r the l a s t thirty

y e a r s have, i n one way o r another, u t i l i s e d the 'beneficiary principle'

without s p e c i f i c mention o f Re Astov itself; o t h e r s have specifically

71
a t t r i b u t e d i t s modern f o r m u l a t i o n t o Roxburgh,J. i n t h a t case

72
In Re Endaoott , f o r example, a testamentary g i f t of r e s i d u a r y

e s t a t e "to North. Tawton Devon P a r i s h C o u n c i l f o r the purpose o f p r o v i d i n g

some u s e f u l memorial t o the t e s t a t o r " f a i l e d . The purpose d i d not come

w i t h i n the l e g a l d e f i n i t i o n o f c h a r i t y and d i d not meet the requirement of

h a v i n g human b e n e f i c i a r i e s . Counsel f o r the P a r i s h had argued t h a t the

case was a valid, n o n - c h a r i t a b l e purpose t r u s t , w i t h i n the category o f

73

cases which Roxburgh,J. had l a b e l l e d "anomalous" i n Re Astov . The Court

o f Appeal was not impressed by t h i s argument. I t s a p p r o v a l o f Roxburgh,J.'s

 - 128 -

'beneficiary principle' and d i s a p p r o v a l o f t h e v a l i d i t y o f any non-chari-

74
t a b l e purpose trust a r e unambiguous. I n t h e words o f L o r d Evershed :

No p r i n c i p l e p e r h a p s h a s g r e a t e r s a n c t i o n o r
a u t h o r i t y behind i t than the general p r o p o s i t i o n
t h a t a t r u s t by E n g l i s h law, n o t b e i n g a c h a r i t a b l e
t r u s t , i n o r d e r t o be e f f e c t i v e , m u s t h a v e a s -
certained or ascertainable beneficiaries.

75
Similarly, Harman,L.J. :

I applaud t h e orthodox sentiments expressed by

R o x b u r g h , J . i n Re A s t o r ' s S e t t l e m e n t T r u s t s a n d
I t h i n k , a s I t h i n k he d i d , t h a t t h o u g h o n e knows
t h e r e have been d e c i s i o n s a t times which a r e n o t
t o be s a t i s f a c t o r i l y c l a s s i f i e d , b u t a r e p e r h a p s
m e r e l y o c c a s i o n s when Homer h a s n o d d e d , a t a n y r a t e
these cases s t a n d by themselves and ought n o t
t o b e i n c r e a s e d i n number, n o r i n d e e d followed
e x c e p t where t h e one i s e x a c t l y l i k e a n o t h e r .

The court therefore s o l i d l y endorsed the ' b e n e f i c i a r y p r i n c i p l e ' and t h e

76
trust failed

The e n d o r s e m e n t o f t h e Re AstoT decision found i n the e a r l i e r case

77

o f Re Shaw , h o w e v e r , was made w i t h greater reluctance. George Bernard

Shaw h a d i n c l u d e d in hiswill a direction to trustees t o undertake certain

inquiries and s u r v e y s into the f e a s i b i l i t y o f a f o r t y - l e t t e r alphabet and

to transliterate one o f h i s p l a y s . The v a l i d i t y o f t h i s trust was challeng-

ed by t h e r e s i d u a r y legatees under the w i l l . I t was e v i d e n t l y a p u r p o s e

trust, b u t was i t s purpose c h a r i t a b l e , as t h e A t t o r n e y - G e n e r a l

claimed?
78
The court concluded that t h e p u r p o s e was n o t c h a r i t a b l e i n n a t u r e ,
79

firstly because i t could be c o n s t r u e d as p o l i t i c a l i n nature and second-

ly, because i t was n o t p u r e l y f o r t h e advancement o f e d u c a t i o n . Harman,L.J.

concluded that the t r u s t therefore had t o f a i l because i t was a n impersonal

trust f o r a non-charitable purpose : i t h a d n o human b e n e f i c i a r y . He felt

compelled t o f o l l o w Re Astor, b u t was a w a r e o f t h e d e f e c t s o f t h e 'bene-

. . , , 80
ficiary principle' :
 - 129 -

[o]ne cannot have a t r u s t , other than a c h a r i t a b l e

t r u s t , f o r the b e n e f i t , n o t o f i n d i v i d u a l s , b u t o f
objects. The reason has o f t e n been s t a t e d , t h a t the
c o u r t cannot c o n t r o l t h e t r u s t An o b j e c t cannot
complain t o the c o u r t , which, t h e r e f o r e , cannot c o n t r o l
the t r u s t , and, t h e r e f o r e , w i l l n o t a l l o w i t t o con-
tinue. I must c o n f e s s t h a t I f e e l some r e l u c t a n c e t o
come t o t h i s c o n c l u s i o n . I agree a t once t h a t , i f t h e
persons t o take i n remainder a r e u n a s c e r t a i n a b l e , the
c o u r t i s d e p r i v e d o f any means o f c o n t r o l l i n g such
a t r u s t , b u t i f , as here, the persons t a k i n g t h e u l t i -
mate r e s i d u e a r e a s c e r t a i n e d , I do n o t f e e l the f o r c e
of t h i s o b j e c t i o n . They a r e e n t i t l e d t o the e s t a t e
except i n so f a r as i t has been devoted t o the i n d i -
c a t e d purposes, and i n so f a r as i t i s n o t devoted t o
those purposes, the money b e i n g spent i s the money o f
the r e s i d u a r y l e g a t e e s , o r the u l t i m a t e remaindermen,
and they can come t o c o u r t and sue t h e executor f o r a
d e v a s t a v i t , o r t h e t r u s t e e f o r a b r e a c h o f t r u s t , and
thus, though n o t themselves i n t e r e s t e d i n t h e purposes,
enable the c o u r t i n d i r e c t l y t o c o n t r o l them. This
l i n e o f r e a s o n i n g i s not, I t h i n k open t o me.

In o t h e r words, Harman,J. f e l t t h a t the "anomalous" cases d i s c u s s e d and d i s -

c r e d i t e d i n Re Astor represented the t r u e p o s i t i o n . Indirect control v i a

residuary legatees o r remaindermen would, i n h i s view, s u f f i c e t o c r e a t e a

valid trust. Re Astor, however, i n s i s t e d t h a t t h i s was not enough and t h a t

o n l y d i r e c t c o n t r o l v i a human b e n e f i c i a r i e s was s u f f i c i e n t . In Re Shaw,

81
therefore, the ' b e n e f i c i a r y p r i n c i p l e ' p r e v a i l e d again

P a r t i c u l a r l y p e r t i n e n t t o the s u b j e c t - m a t t e r o f t h i s t h e s i s a r e the

post-1952 cases on d o n a t i o n s t o u n i n c o r p o r a t e d a s s o c i a t i o n s where the 'bene-

f i c i a r y p r i n c i p l e ' has been a f f i r m e d . Leahy V. Attorney-General for New

82

South Wales has been s e l e c t e d as an example, even though Re Astor was n o t

i n f a c t c i t e d as a u t h o r i t y . In the Leahy case, the t e s t a t o r made a bequest

of c e r t a i n property o f h i s i n the f o l l o w i n g terms :

As t o my p r o p e r t y known as 'Elmslea' ... and the
whole o f the l a n d s comprising the same and the whole o f
the f u r n i t u r e o c n t a i n e d i n the homestead t h e r e o n u p o n
t r u s t f o r such o r d e r o f nuns o f the C a t h o l i c Church o r
the C h r i s t i a n B r o t h e r s as my e x e c u t o r s and t r u s t e e s
shall select.
 - 130 -

An o r d e r o f nuns c o n s t i t u t e s an u n i n c o r p o r a t e d a s s o c i a t i o n . I t was h e l d

t h a t the t r u s t would have f a i l e d a t common law because i t was a n o n - c h a r i t ^

a b l e purpose t r u s t without human b e n e f i c i a r i e s . I t was saved, however, i n

83

the r e s u l t , by a s t a t u t o r y p r o v i s i o n . The g r e a t e r p a r t o f V i s c o u n t

Simonds' o p i n i o n d e a l t w i t h t h e law o f donations to unincorporated associ-

ations i n general. He e n u n c i a t e d c l e a r l y how t h e ' b e n e f i c i a r y p r i n c i p l e '

had been adopted i n t h i s area and o p e r a t e d t o i n v a l i d a t e g i f t s on t r u s t f o r

84
the purposes o f u n i n c o r p o r a t e d a s s o c i a t i o n s :
I f the words ' f o r the g e n e r a l purposes o f the a s s o c i -
a t i o n ' were h e l d t o import a t r u s t , the q u e s t i o n would
have t o be asked, what i s the t r u s t and who a r e the
beneficiaries? A g i f t can be made t o persons ... b u t
i t cannot be made t o a purpose o r t o an o b j e c t : so
a l s o , a t r u s t may be c r e a t e d f o r t h e b e n e f i t o f persons
as c e s t u i s que t r u s t b u t n o t f o r a purpose o r o b j e c t
u n l e s s the purpose o r o b j e c t be c h a r i t a b l e . For a
purpose o r o b j e c t cannot sue, b u t , i f i t be c h a r i t a b l e ,
the A t t o r n e y General can sue t o e n f o r c e i t .

T r u s t s f o r n o n - c h a r i t a b l e purposes must f a i l , i n c l u d i n g those f o r u n i n -

c o r p o r a t e d a s s o c i a t i o n s , because no d i r e c t c o n t r o l mechanism i s a v a i l a b l e .

Under the ' b e n e f i c i a r y p r i n c i p l e ' , they must be d e c l a r e d v o i d .

6. Conclusion

I t has been demonstrated t h a t the ' b e n e f i c i a r y p r i n c i p l e ' as a

p r i n c i p l e o f law o r i g i n a l l y r e s t e d on unsteady f o u n d a t i o n s . The d e v e l o p -

ments o f t h e l a s t t h i r t y y e a r s have n e v e r t h e l e s s rendered the p r i n c i p l e un-

shakeable. Widespread acceptance o f the 'beneficiary p r i n c i p l e ' i n the

area of donations t o u n i n c o r p o r a t e d a s s o c i a t i o n s has been the major culprit

i n c o n f u s i n g and c o m p l i c a t i n g t h e s u b j e c t . Faced with, the problem o f d e t e r -

mining the l e g a l e f f e c t o f an attempt t o make such, a d o n a t i o n , the j u d i c i a r y

now takes- t h e ' b e n e f i c i a r y p r i n c i p l e ' f o r g r a n t e d . The f o l l o w i n g example i s

taken from t h e most r e c e n t case o f the s u b j e c t , Conservative and Unionist

 - 131 -

Central Office v. Burrell (Inspector of Taxes) O J

:

[ l ] t i s s a i d , as there cannot be a trust for a non-

charitable purpose, e f f e c t can o n l y be g i v e n to the
donor's i n t e n t i o n i f i t i s p o s s i b l e t o c o n s t r u c t
out o f the m a t e r i a l b e f o r e the c o u r t some u n i n -
c o r p o r a t e d a s s o c i a t i o n which can be s a i d to be the
owner o f moneys g i v e n f o r the purposes o f the
Conservative Party. The purpose which the owner
wishes t o f u r t h e r i s then a c h i e v e d ... not by
the creation of a trust for the purpose (which
is a legal impossibility) but by i n f e r r i n g the
e x i s t e n c e o f an u n i n c o r p o r a t e d a s s o c i a t i o n , the
members o f which can be t r e a t e d as the owners o f
those moneys and the r u l e s o f which w i l l i n p r a c -
t i c e ensure t h a t the moneys w i l l be devoted to
the i n t e n d e d purpose 86.

The p o s s i b i l i t y of analysing the g i f t as a n o n - c h a r i t a b l e purpose t r u s t

i s automatically discounted. Because the 'beneficiary p r i n c i p l e ' pre-

v e n t s the s u c c e s s f u l use o f the t r u s t device i n such a s i t u a t i o n , o t h e r

87

devices are attempted , some o f which do, and some o f which do not,

succeed i n e f f e c t i n g the d o n a t i o n . In a d d i t i o n to the confusion that

t h i s s t a t e of a f f a i r s causes, the a l t e r n a t i v e methods i n v a r i a b l y f r u s -

t r a t e the donor's t r u e i n t e n t i o n : to f u r t h e r the a s s o c i a t i o n ' s purposes

by f i n a n c i a l b e n e f i t , c o u p l e d w i t h a guarantee that t h i s w i l l occur. A

t r u s t f o r the purposes o f the a s s o c i a t i o n would a c h i e v e p r e c i s e l y the

desired e f f e c t . But i t has no b e n e f i c i a r i e s and therefore falls foul

o f the 'beneficiary p r i n c i p l e ' .

In summary, i t cannot be doubted t h a t , however obscure i t s o r i g i n s

might have been, today the ' b e n e f i c i a r y p r i n c i p l e ' appears f i r m l y rooted

i n the c u r r e n t law, w i t h the u n f o r t u n a t e consequence f o r the law on dona-

t i o n s t o u n i n c o r p o r a t e d a s s o c i a t i o n s t h a t i t p r e v e n t s the operation of

the one mechanism which c o u l d a c h i e v e the d e c e p t i v e l y simple aim of en-

s u r i n g the enrichment o f u n i n c o r p o r a t e d associations.

 - 132 -

B. Gifts on T r u s t f o r Non-Abstract Purposes : The D e n l e y Analysis

1. Introduction

A makes a b e q u e s t in his will i n general terms t o t h e l o c a l volun-

tary youth a s s o c i a t i o n . A l t e r n a t i v e l y , he i s more s p e c i f i c a n d makes t h e

bequest i n the following terms : "I bequeath $x o n t r u s t f o r t h e Blanktown

Youth A s s i s t a n c e and R e c r e a t i o n Association to further i t s purposes f o r as

long as t h e law p e r m i t s " . The A s s o c i a t i o n i s a non-charitable club, of

which membership i s open t o a l l r e s i d e n t s of the l o c a l i t y between t h e ages

of nine and twenty-one. I t s objects, as s t a t e d i n i t s founding c o n s t i t u t i o n

and currently executed, include t h e p r o v i s i o n o f r e c r e a t i o n a l and social

facilities and t h e o r g a n i s a t i o n of sporting and l e i s u r e programmes f o r i t s

members. On A ' s d e a t h , the trustees of h i s w i l l apply to court for direc-

tions on t h e v a l i d i t y o f t h e bequest, on t h e assumption t h a t the club is a

non-charitable non-profit-making unincorporated association. L e t u s assume,

for t h e p u r p o s e s o f argument, that the court, on e x a m i n a t i o n o f t h e a s s o c i -

ation, i t s c o n s t i t u t i o n , t h e terms o f t h e bequest and o t h e r relevant cir-

cumstances, concludes as a matter o f c o n s t r u c t i o n that neither the Absolute

88

Gift Analysis nor the Contract Analysis i s applicable. Nor does i t

interpret the g i f t as intended to operate as i f i t read as a g i f t on trust

for t h e members of the association. Its possible reasons f o r so doing need

not c o n c e r n us h e r e . F o r whatever reason, the courts holds that the bequest

must o p e r a t e as a gift on t r u s t f o r the purposes o f t h e Blanktown Youth

Assistance and R e c r e a t i o n Association. In the opinion of our h y p o t h e t i c a l

court, t h e mechanism whereby t h e g i f t can take effect, i f at a l l , is via

a non-charitable purpose trust.

 - 133 -

As discussed i n the immediately preceding section of this chapter,

cases s u c h a s Re Astov 8 9
, Re Endaoott 9 0
and Leahy v. Attorney-Geneval for

91

New South Wales have e s t a b l i s h e d that a gift f o r the promotion of the

non-charitable purposes of an unincorporated association i s prima facie in-

valid because of the 'beneficiary p r i n c i p l e ' . In o t h e r words, a t r u s t must

fail i f i t has no human b e n e f i c i a r y . Therefore, the view which p r e v a i l s in

the current law i s that, i f the only permissible construction of a gift is

that i t creates a t r u s t f o r the purposes of the association, then the gift

must fail unless the association's purposes are charitable i n nature. Apply-

ing the ' b e n e f i c i a r y p r i n c i p l e ' t o A's bequest to the Blanktown Association,

the gift would fail and the funds would fall into residue on resulting

trust.

However, the above statement of the law concerning purpose trusts is

subject to one qualification, the s c o p e and s i g n i f i c a n c e of which are un-

certain but which nevertheless warrants some d i s c u s s i o n . In b r i e f , i t was

92

held i n Re Denley's Trust Deed that the 'beneficiary p r i n c i p l e ' i s con-

fined to those non-charitable p u r p o s e t r u s t s where t h e purposes are abstract

and impersonal i n nature. In o t h e r words, a t r u s t which, though expressed

in terms o f a purpose t r u s t , i s d i r e c t l y or indirectly f o r the benefit of

one or more i n d i v i d u a l s may nevertheless be valid.

It will be submitted that t h i s l i m i t a t i o n of the operation of the

' b e n e f i c i a r y p r i n c i p l e ' can be of limited assistance in facilitating

gifts to unincorporated associations. Therefore the source of the Re

Denley q u a l i f i c a t i o n and i t s implications will now be discussed.

 - 134 -

2. Re Denley's Trust Deed

(i) Facts

A company by the name o f H. H. Martyn & Co. owned a p l o t o f l a n d i n

Cheltenham. In 1936 i t conveyed the l a n d to t r u s t e e s by a complicated

inter vivos deed o f s e t t l e m e n t which s p e c i f i e d the t r u s t e e s ' powers and

otherwise r e g u l a t e d i n d e t a i l any f u t u r e d e a l i n g s with the p r o p e r t y . In

particular, the t r u s t e e s were i n s t r u c t e d to h o l d the l a n d f o r the duration

of a s p e c i f i e d p e r i o d on the f o l l o w i n g terms :

The s a i d l a n d s h a l l be maintained and used as and

f o r the purpose of a r e c r e a t i o n or s p o r t s ground
p r i m a r i l y f o r the b e n e f i t o f the employees of
the company.

When, i n 1966, the company proposed to s e l l a p o r t i o n o f the lands to

r a i s e proceeds f o r the r e n o v a t i o n of the remainder, i t had to challenge

the v a l i d i t y o f the above c l a u s e so t h a t the l a n d c o u l d r e v e r t to the

company, f r e e o f r e s t r i c t i o n , on r e s u l t i n g t r u s t . I t argued t h a t the

c l a u s e c r e a t e d a n o n - c h a r i t a b l e purpose t r u s t and was consequently void

f o r having v i o l a t e d the 'beneficiary principle'. I t was i n t h i s manner

t h a t the scope o f the ' b e n e f i c i a r y p r i n c i p l e ' came to be re-examined by

the Chancery D i v i s i o n o f the High Court o f England. .

( i i ) The Decision

G o f f , J . r e j e c t e d the argument o f the company and h e l d , inter alia,

t h a t the c l a u s e c r e a t e d a v a l i d t r u s t . Since the t r u s t was phrased ex-

p r e s s l y f o r a n o n - c h a r i t a b l e purpose, the p r i n c i p a l i s s u e of course was

the a p p l i c a t i o n t o the case a t bar o f the 'beneficiary p r i n c i p l e ' as

 - 135 -

formulated i n Re Astov's Settlement Tvusts . Whilst not q u e s t i o n i n g the

correctness of that d e c i s i o n , G o f f , J . nevertheless gave i t a narrow i n t e r -

94
p r e t a t i o n , as f o l l o w s :

[ T l h e r e may be a purpose o r o b j e c t t r u s t , the

c a r r y i n g out o f which would b e n e f i t an i n d i v i d u a l
o r i n d i v i d u a l s , where t h a t b e n e f i t i s so i n d i r e c t
o r i n t a n g i b l e or which i s o t h e r w i s e so framed
as not t o g i v e those persons any l o c u s s t a n d i
t o apply to the c o u r t to e n f o r c e the t r u s t , i n
which case the b e n e f i c i a r y p r i n c i p l e would, as
i t seems t o me, apply t o i n v a l i d a t e the t r u s t ,
q u i t e a p a r t from any q u e s t i o n o f u n c e r t a i n t y
or p e r p e t u i t y .

In o t h e r words, assuming t h a t the requirements of c e r t a i n t y and perpetuity

are s a t i s f i e d , the essence of the v a l i d i t y o f a t r u s t i s t h a t i t be sub-

j e c t t o the c o n t r o l o f the c o u r t . According t o G o f f , J . , i f the trust i s

s e t up f o r a t o t a l l y a b s t r a c t purpose or by i t s terms c o n f e r s no signifi-

cant b e n e f i t on anyone, then no-one has loous standi t o invoke the court's

jurisdiction. The t r u s t can not be c o n t r o l l e d and is invalid. As Goff,J.

explained, i t i s o n l y i n these c i r c u m s t a n c e s t h a t the 'beneficiary p r i n -

. , , 95
c i p l e ' operates :

[ l ] n my judgment the b e n e f i c i a r y p r i n c i p l e o f In
ve Astov 's Settlement Tvusts ... i s c o n f i n e d to
purpose o r o b j e c t t r u s t s which are a b s t r a c t or
impersonal. The o b j e c t i o n i s not t h a t the t r u s t
i s f o r a purpose or o b j e c t per se, but t h a t t h e r e
i s no b e n e f i c i a r y or c e s t u i que t r u s t .

G o f f , J . then went on to e l a b o r a t e on the sense i n which he was using the

96
phrase " b e n e f i c i a r y or c e s t u i que trust" :

Where, then, the t r u s t , though e x p r e s s e d as a

purpose, i s d i r e c t l y or i n d i r e c t l y f o r the b e n e f i t
of an i n d i v i d u a l or i n d i v i d u a l s , i t seems to me
t h a t i t i s i n g e n e r a l o u t s i d e the m i s c h i e f o f the
beneficiary principle.

By way o f paraphrase, t h e r e f o r e , i t appears t h a t a t r u s t which i s a non-

c h a r i t a b l e purpose t r u s t on i t s f a c e may be v a l i d i f i n d i v i d u a l s d e r i v e

some k i n d o f b e n e f i t from i t s o p e r a t i o n .
 - 136 -

On t h e f a c t s o f Re Denley itself, the t r u s t was designed t o b e n e f i t

the employees o f t h e company. They were e n t i t l e d t o use and enjoy the

land i n question as a s p o r t s ground. I n the o p i n i o n o f G o f f , J . , t h e t r u s t

was t h e r e f o r e " d i r e c t l y o r i n d i r e c t l y f o r the b e n e f i t o f " the employees

and was v a l i d . Locus standi t o invoke the c o u r t s ' j u r i s d i c t i o n t o c o n t r o l

the t r u s t i f n e c e s s a r y was v e s t e d i n the employees.

3. Q u e s t i o n s Unanswered

At f i r s t blush, one might conclude t h a t Re Denley has s o l v e d the

problem o f A's h y p o t h e t i c a l bequest t o t h e Blanktown Youth A s s i s t a n c e and

Recreation Association. A l t h o u g h the g i f t prima facie s e t s up a t r u s t f o r

non-charitable purposes, i t i s arguable t h a t t h e t r u s t i s n e i t h e r "abstract"

nor " i m p e r s o n a l " and t h a t i t t h e r e f o r e escapes the i n f l u e n c e o f the 'bene-

f i c i a r y p r i n c i p l e ' and i s v a l i d . The argument would p o i n t o u t t h e presence

of t h e members o f t h e A s s o c i a t i o n . They are i n d i v i d u a l s who b e n e f i t d i r e c t -

l y by t h e t r u s t and - the argument might c o n t i n u e - they t h e r e f o r e have

standing t o apply t o court to c o n t r o l the t r u s t . I f the v a l i d i t y o f t h i s

argument were accepted, the h y p o t h e t i c a l c o u r t would conclude t h a t t h e

bequest was v a l i d .

However, i t i s submitted t h a t Re Denley l e f t many q u e s t i o n s as y e t

unanswered which p r e c l u d e so s t r a i g h t f o r w a r d a c o n c l u s i o n and subsequent

97

cases have done l i t t l e t o d i s p e l the doubts. I t i s n o t proposed t o

attempt s o l u t i o n s o f t h e many problems r a i s e d by Re Denley i n this dis-

cussion. Instead, the p l a n i s merely t o pose some o f the q u e s t i o n s which

it r a i s e s , i n order t o i l l u s t r a t e the i s s u e s which remain o u t s t a n d i n g i n

the area o f d o n a t i o n s on t r u s t f o r t h e purposes o f u n i n c o r p o r a t e d associ-

ations .
 - 137 -

(i) A u t h o r i t a t i v e Weaknesses o f Re Deriley

The first question which Re Denley i n v i t e s i s : from what source

did G o f f , J . d e r i v e the p r i n c i p l e t h a t a purpose t r u s t which i s d i r e c t l y

or i n d i r e c t l y f o r the b e n e f i t o f i n d i v i d u a l s i s v a l i d , whereas an abstract

or impersonal purpose t r u s t i s i n v a l i d ? I t s h o u l d be apparent from the

d i s c u s s i o n o f Re Astov i n the p r e c e d i n g s e c t i o n t h a t Roxburgh,J., i n

formulating the 'beneficiary p r i n c i p l e ' i n general terms, denied the

existence of a dichotomy betweeen p e r s o n a l and impersonal such as that

asserted by G o f f , J . i n Re Denley. I t i s submitted t h a t the foundations

on which the new p r i n c i p l e was b u i l t were v e r y weak.

Three cases were put forward as a u t h o r i t i e s i n Re Denley each o f

98

which m e r i t s b r i e f d i s c u s s i o n . The f i r s t was In re Harpur's Will Trusts

which d e a l t with, a d i r e c t i o n t o t r u s t e e s t o pay and divide residue "between

such i n s t i t u t i o n s and a s s o c i a t i o n s having f o r t h e i r main o b j e c t the a s s i s -

tance and care of s o l d i e r s , s a i l o r s , airmen and o t h e r members o f H.M.Forces

who had been wounded o r i n c a p a c i t a t e d d u r i n g the r e c e n t w o r l d wars". It is

s u b m i t t e d t h a t the case i s no a u t h o r i t y for Goff,J.'s ratio decidendi in

Re Denley f o r the f o l l o w i n g reasons : the p r i n c i p a l i s s u e t u r n e d on a ques-

99

t i o n of statutory i n t e r p r e t a t i o n ; the ' b e n e f i c i a r y p r i n c i p l e ' of Re

Astor was not d i s c u s s e d ; c e r t a i n ambiguous comments made by L o r d Evershed

and Harman,J. In the case c o n c e r n i n g purpose t r u s t s were p l u c k e d by Goff,

J. t o t a l l y out o f c o n t e x t . In s h o r t , the case p r o v i d e s no support f o r the

p r o p o s i t i o n t h a t the ' b e n e f i c i a r y p r i n c i p l e ' o p e r a t e s t o s t r i k e down only

abstract, impersonal purpose t r u s t s .

The second case was In re Aberconway 's Settlement Trusts where

 - 138 -

the v a l i d i t y was i n q u e s t i o n o f a t r u s t o f t h e income o f s e t t l e d l a n d

e s t a b l i s h e d f o r t h e purpose o f " s e c u r i n g and a s s i s t i n g and d e v e l o p i n g t h e

use o f t h e gardens a t Bodnant f o r t h e c u l t i v a t i o n o f p l a n t s and f l o w e r s

o f home and f o r e i g n c o u n t r i e s o f b o t a n i c a l and h o r t i c u l t u r a l i n t e r e s t " .

A g a i n t h e case t u r n e d p r i n c i p a l l y on a q u e s t i o n of statutory interpreta-

102

tion . The v a l i d i t y o f n o n - c h a r i t a b l e purpose t r u s t s was a minor i s s u e

s i n c e i t was a p p a r e n t l y assumed by t h e c o u r t t h a t t h e t r u s t f o r t h e garden

had been v a l i d u n t i l t e r m i n a t e d by t h e o p e r a t i o n o f the settlement terms.

Thus t h e case may r e p r e s e n t an a s s e r t i o n o f t h e p o s s i b l e v a l i d i t y o f non-

c h a r i t a b l e purpose t r u s t s , though t h e p o i n t was n e i t h e r argued nor d i s -

cussed. However, even i f t h i s i s so, i t i s important t o observe t h a t no

d i s t i n c t i o n was drawn between a b s t r a c t purpose t r u s t s on t h e one hand, and

purpose t r u s t s f o r t h e b e n e f i t o f i n d i v i d u a l s on the o t h e r . The c o u r t

assumed t h a t all n o n - c h a r i t a b l e purpose t r u s t s were v a l i d . Therefore i t

i s submitted t h a t t h e case c o n t a i n s no support f o r t h e q u a l i f i c a t i o n o f

the o p e r a t i o n o f t h e ' b e n e f i c i a r y p r i n c i p l e ' p u t forward by G o f f , J . i n

Re Henley.

103

The t h i r d case, by c o n t r a s t , was Re Bowes . The d e c i s i o n con-

c e r n e d a t r u s t f o r p l a n t i n g t r e e s and indeed c o n t a i n s dicta t o the e f f e c t

t h a t the t r u s t was v a l i d because t h e purpose was o f i n d i r e c t b e n e f i t t o

those e n t i t l e d t o t h e l a n d on which t h e t r e e s were t o be p l a n t e d . The

dicta a r e ambiguous, however, and n e i t h e r a n a l y s i s n o r d i s c u s s i o n o f t h e

'beneficiary p r i n c i p l e ' i s present. Therefore, i n l i g h t o f the precedent-

based p r o c e s s o f development o f t h e common law, i t must be concluded that

Re Henley i s dubious. As y e t , however, i t has n o t been c h a l l e n g e d by

subsequent courts.
 - 139 -

(ii) Direct or Indirect Benefit

N e v e r t h e l e s s , assuming t h a t Re Denley was c o r r e c t l y d e c i d e d and

did l a y down a v a l i d l e g a l p r i n c i p l e , the next q u e s t i o n i s : e x a c t l y what

legal principle d i d i t create? The d e c i s i o n was summarised i n the f o l l o w -

i n g statement<-
1 0 4

Where ... the t r u s t , though expressed as a purpose,

i s d i r e c t l y o r i n d i r e c t l y f o r the b e n e f i t o f an
i n d i v i d u a l o r i n d i v i d u a l s , i t seems t o me t h a t i t
i s i n g e n e r a l o u t s i d e t h e m i s c h i e f o f the bene-
ficiary principle.

In o t h e r words, p r o v i d e d t h a t the f u l f i l m e n t o f a purpose somehow b e n e f i t s

an individual, a t r u s t f o r t h a t purpose i s v a l i d . The scope o f t h e

p r i n c i p l e must, however, be u n c e r t a i n u n l e s s the meaning o f " d i r e c t l y o r

indirectly f o r the b e n e f i t o f an i n d i v i d u a l " i s determined.

Re Denley i t s e l f i s of l i t t l e assistance i n c l a r i f y i n g Goff,J.'s

meaning. There t h e t r u s t presumably c o n f e r r e d on the employees a licence

of some k i n d t o use t h e p r o p e r t y as a s p o r t s ground. Such a l i c e n c e has

many elements,: i t c o n f e r s both f i n a n c i a l and f a c t u a l b e n e f i t and i s o f

immediate and t a n g i b l e advantage t o t h e employees. Would a merely de

facto advantage, such, as the p l e a s u r e o f b e i n g a b l e t o look a t a beautiful

work o f a r t , be s u f f i c i e n t t o b r i n g a purpose t r u s t w i t h i n the scope o f

Re Denley, o r would t h i s be t o o " i n t a n g i b l e " ? Would the b e n e f i t t o the

p o p u l a t i o n a t l a r g e o f a t r u s t f o r "the p r e s e r v a t i o n o f t h e independence

and i n t e g r i t y o f newspapers and the encouragement o f the a d o p t i o n and

maintenance by newspapers o f f e a r l e s s e d u c a t i o n a l and c o n s t r u c t i v e p o l i c i e s "

as attempted i n Re Astor be too i n d i r e c t t o be saved by the Denley Analysis?

Does the i n d i v i d u a l have t o have a l e g a l i n t e r e s t o f t h e type n e c e s s a r y

105
to a t t a i n s t a n d i n g i n o t h e r c i v i l actions ? Even on t h e f a c t s o f Re
 - 140 -

Denley itself, was the l i c e n c e i r r e v o c a b l e and c o n t r a c t u a l ? I f so, would

i t have been s u f f i c i e n t o t h e r w i s e ? These a r e b u t a few examples o f the

,106
q u e s t i o n s one might ask

The scope o f t h e p r i n c i p l e l a i d down i n Re Denley and the e x t e n t t o

which i t w i l l facilitate the v a l i d i t y o f n o n - c h a r i t a b l e purpose t r u s t s

can o n l y be determined by s u c c e s s i v e j u d i c i a l d e c i s i o n s on the s u b j e c t .

The development which w i l l t h e r e b y o c c u r w i l l no doubt be d i c t a t e d by

p o l i c y c o n s i d e r a t i o n s and j u d i c i a l v a l u e judgments on the s o c i a l utility

of t h e p a r t i c u l a r purpose t r u s t s i n q u e s t i o n . Over the course o f the

f o u r t e e n y e a r s s i n c e the Denley d e c i s i o n , no g u i d e l i n e s have been forth-

coming. The q u e s t i o n s t h e r e f o r e remain unanswered.

(iii) The Nature o f a V a l i d ' P e r s o n a l ' Purpose T r u s t

107

A c c o r d i n g t o the Denley A n a l y s i s , a purpose t r u s t i s v a l i d i f i t

is " d i r e c t l y o r i n d i r e c t l y f o r the b e n e f i t o f an i n d i v i d u a l o r i n d i v i d u a l s " .

Another q u e s t i o n which t h i s f o r m u l a t i o n l e f t unanswered was whether the

t r u s t thus v a l i d a t e d o p e r a t e d as a purpose t r u s t o r as a d i s c r e t i o n a r y
108

t r u s t f o r human aestuis que trust . In o t h e r words, a r e the i n d i v i d u a l s

whose a b i l i t y t o c o n t r o l the t r u s t r e n d e r s i t v a l i d merely ' f a c t u a l bene-

ficiaries' o f a purpose t r u s t , o r a r e they t r u e t r u s t b e n e f i c i a r i e s stvioto

sensu?

G o f f , J . l e f t both i n t e r p r e t a t i o n s open, y e t the consequences and

i m p l i c a t i o n s o f each d i f f e r enormously. These w i l l be d i s c u s s e d i n bare

o u t l i n e o n l y t o demonstrate the p o t e n t i a l problems.

 - 141 -

On t h e o n e h a n d , throughout h i s a n a l y s i s o f the 'beneficiary

principle' and h i s f o r m u l a t i o n o f t h e dichotomy between those purpose

trusts which violate i t and those which do n o t , G o f f , J . spoke i n terms

of "beneficiaries or cestuis que t r u s t " . The d i s t i n c t i o n he drew between

an invalid a b s t r a c t purpose trust and a v a l i d personal purpose trust

was t h a t t h e f o r m e r h a d no b e n e f i c i a r y o r cestui que trust while the l a t t e r

109

did . The i n f e r e n c e w h i c h may be drawn f r o m t h e u s e o f s u c h t e r m i n o l o g y

is that a purpose t r u s t may b e v a l i d i f i t can be p e r s o n a l i s e d and con-

verted into a discretionary trust w i t h human b e n e f i c i a r i e s i n the tradit-'

ional sense o f t h e word. In o t h e r words, the g i f t ' s o p e r a t i o n may b e p a r a -

phrased as follows : 'on t r u s t f o r X, Y, Z, t o b e u s e d f o r purpose W.

On t h e o t h e r h a n d , Goff,J. also spoke on o c c a s i o n i n terms of direct

110

or indirect benefit f o r o n e o r more i n d i v i d u a l s and a v o i d e d u s i n g t h e

words 'beneficiary o r cestui que trust .1

The i n f e r e n c e w h i c h may b e

drawn from the use o f such n o n - l e g a l terminology i s that a purpose trust

may o p e r a t e v a l i d l y i f i t has merely 'factual beneficiaries'. Meanwhile,

it retains i t s 'purpose trust' label and i t s immediate object i sthe

purpose, not the individuals. I n o t h e r words, the g i f t o p e r a t e s a s one

'on t r u s t f o rpurpose W, f b r the b e n e f i t o f X, Y, Z'.

If one f a v o u r s t h e f o r m e r interpretation, i t i s s u b m i t t e d t h a t one

is then committed to the following consequences o f one's analysis. In the

first place, the b e n e f i c i a r i e s have, a t the very least, a spes o f owner-

ship. I n o t h e r words, i f the personal purpose trust o p e r a t e d as a dis-

cretionary trust i n Re Denley, t h e employees must have h e l d equitable

interests o r some o t h e r f o r m o f ' o w n e r s h i p ' i n the land

 - 142 -

Secondly, i f the above c o n c l u s i o n i s correct, i t follows that the

t r u s t guarantee t h a t the purpose w i l l be c a r r i e d out is lost. The bene-

112

f i c i a r i e s may invoke the p r i n c i p l e o f Saunders V. Vautier and together

t e r m i n a t e the t r u s t by demanding the t r a n s f e r o f the t r u s t p r o p e r t y or

fund to them by the t r u s t e e s . Thus, on the h y p o t h e s i s t h a t a d i s c r e t i o n a r y

t r u s t f o r human b e n e f i c i a r i e s i s c r e a t e d by the Denley Analysis, those

b e n e f i c i a r i e s may p r o f i t a t the expense o f f u t u r e and continuing fulfil-

113
ment o f the e x p r e s s e d purpose

T h i r d l y , i n order f o r a d i s c r e t i o n a r y t r u s t to s a t i s f y the rule

a g a i n s t p e r p e t u i t i e s , the i n t e r e s t s o f the b e n e f i c i a r i e s must v e s t within

114
the a p p l i c a b l e p e r p e t u i t y period

Fourthly, i f the Denley Analysis converts a purpose t r u s t i n t o a

d i s c r e t i o n a r y t r u s t , i t s c o n s t i t u e n t words must s a t i s f y the c e r t a i n t y

requirements f o r such t r u s t s as formulated i n MoPhail V. Doulton .

The t e s t i s as f o l l o w s :

The t r u s t i s v a l i d i f i t can be s a i d w i t h
c e r t a i n t y t h a t any g i v e n i n d i v i d u a l i s or i s
not a member o f the c l a s s .

P r i o r to MoPhail V. Doulton, the s t a n d a r d demanded had been f a r more

rigorous. The House o f Lords i n t h a t case o v e r r u l e d Inland Revenue

117

Commissioners v. Broadway Cottages which had l a i d down the strict

r u l e t h a t a d i s c r e t i o n a r y t r u s t was too u n c e r t a i n u n l e s s a l l o f the elig-

i b l e b e n e f i c i a r i e s were a s c e r t a i n e d o r a s c e r t a i n a b l e . It i s interesting

t o note t h a t G o f f , J . , d e c i d i n g Re Denley before the MoPhail V. Doulton

d e c i s i o n , u t i l i s e d the now obsolete Broadway Cottages t e s t to evaluate

the t r u s t ' s v a l i d i t y on the c e r t a i n t y i s s u e . This indicates that Goff,J.

may have p e r c e i v e d the r e s u l t o f h i s a n a l y s i s t o be the c o n v e r s i o n of

 - 143 -

purpose t r u s t s i n t o d i s c r e t i o n a r y trusts.

By c o n t r a s t , i f one f a v o u r s t h e second i n t e r p r e t a t i o n o f t h e e f f e c t

118

of Re Deriley - t h a t t h e purpose t r u s t undergoes no t r a n s f o r m a t i o n b u t

o p e r a t e s as a t r u s t f o r a purpose p r o v i d e d i t has ' f a c t u a l b e n e f i c i a r i e s ' -

the f o l l o w i n g a r e t h e major consequences.

Firstly, the ' f a c t u a l b e n e f i c i a r i e s ' have no e q u i t a b l e i n t e r e s t i n

the t r u s t fund o r p r o p e r t y . They have no form o f ownership nor even spes

os ownership. Secondly, they can o n l y e n f o r c e the purpose t r u s t : they

can n o t p u t an end t o i t s o p e r a t i o n . Thirdly, the r u l e a g a i n s t perpetuities

does n o t as such demand o f a purpose t r u s t t h a t i n t e r e s t s v e s t a t any

p a r t i c u l a r time. I n s t e a d , t h e r u l e c o n t r o l s t h e duration o f the t r u s t .

F o u r t h l y , the t r u s t must s a t i s f y a c e r t a i n t y requirement, b u t i n a d i f f -

119
e r e n t f a s h i o n from d i s c r e t i o n a r y trusts

The common law. has n o t y e t produced an answer t o t h e q u e s t i o n : into

which o f t h e two c o n c e p t u a l frameworks d i s c u s s e d here does t h e Denley-type

trust f i t . S t r o n g arguments can be made f o r and a g a i n s t each p o s s i b i l i t y ,

y e t t h e answer i s o f more than merely academic i n t e r e s t because, as t h e

rough o u t l i n e above shows, t h e problem touches p r a c t i c a l as w e l l as con-

ceptual issues. Without an answer, t h e v a l u e o f Re Denley t o the d e v e l o p -

ment o f t r u s t s law i s l i m i t e d . As w i l l become apparent, the p r e s e n t

w r i t e r ' s p r e f e r e n c e i s f o r t h e view t h a t the purpose t r u s t which i s s a l -

vaged by t h e Denley q u a l i f i c a t i o n o f t h e scope o f t h e ' b e n e f i c i a r y

principle 1
retains t h e n a t u r e and c h a r a c t e r i s t i c s o f a purpose t r u s t ; and

t h a t t h e ' f a c t u a l b e n e f i c i a r i e s ' a r e merely t h e n e c e s s a r y i n s t r u m e n t s o f

enforcement; no d i s c r e t i o n a r y t r u s t i s created.
 - 144 -

4. Re Denley and G i f t s to U n i n c o r p o r a t e d Associations

A further question h i t h e r t o unanswered i n the course o f t h i s dis-

cussion i s whether or not A's h y p o t h e t i c a l bequest to the Blanktown Youth

Assistance and Recreation A s s o c i a t i o n can be f a c i l i t a t e d by u t i l i s i n g the

Denley A n a l y s i s o f purpose t r u s t s . I t w i l l be r e c a l l e d t h a t the bequest

prima facie fails. B e i n g a g i f t on t r u s t f o r the promotion o f the non-

c h a r i t a b l e purposes o f an u n i n c o r p o r a t e d a s s o c i a t i o n , i t appears t o fall

f o u l o f the 'beneficiary p r i n c i p l e ' .

No unincorporated a s s o c i a t i o n was i n v o l v e d i n Re Denley itself. The

employees o f H. H. Martyn & Co. merely c o n s t i t u t e d a c l a s s o f i n d i v i d u a l s

l i n k e d by the c o n t r a c t o f employment they each h e l d i n common w i t h the

company. They were not f o r m a l l y a s s o c i a t e d inter se by any contract of

membership. Therefore, the r e a s o n i n g i n Re Denley would have to be ex-

tended to a s s i s t A's h y p o t h e t i c a l donation to the Blanktown A s s o c i a t i o n .

Whether o r not Re Denley s 1

generous i n t e r p r e t a t i o n o f the scope o f the

'beneficiary p r i n c i p l e ' can be a p p l i e d i n the context of g i f t s to unin-

corporated a s s o c i a t i o n s i s an i s s u e which has apparently come b e f o r e the

courts, on o n l y two occasions. The uncertainty i s i n c r e a s e d by the fact

t h a t the answer g i v e n i n each o f those two i n s t a n c e s was different.

120

A negative answer was given i n Re Grant's Will Trusts . That

case d e a l t with, a bequest to a branch, o f the Labour P a r t y f o r the benefit

of a p a r t i c u l a r l o c a l party's headquarters. V i n e l o t t , J . discussed the

v a r i o u s mechanisms, ( a l r e a d y canvassed here), whereby g i f t s to unincorporated

a s s o c i a t i o n s c o u l d be v a l i d In p a r t i c u l a r c i r c u m s t a n c e s . On the subject

of non-charitable purpose trusts:, however, he asserted a strict application

 - 145 -

p f the 'beneficiary p r i n c i p l e ' and said :

[T]he t e s t a t o r may seek t o f u r t h e r the purpose ...

by p u r p o r t i n g t o impose a t r u s t [T]he g i f t
w i l l f a i l on the ground t h a t the c o u r t cannot
compel the use o f the p r o p e r t y i n f u r t h e r a n c e
o f a s t a t e d purpose u n l e s s , o f course, the purpose
is a charitable one.

The existence of i n d i v i d u a l s o r , more s p e c i f i c a l l y , o f members o f the

association who d e r i v e d a d i r e c t or i n d i r e c t b e n e f i t from the trust was

122
not considered of s i g n i f i c a n c e by V i n e l o t t , J . Of Re Denley, he said

That case on a p r o p e r a n a l y s i s , i n my judgment,

f a l l s a l t o g e t h e r o u t s i d e the c a t e g o r i e s o f g i f t s
t o u n i n c o r p o r a t e d a s s o c i a t i o n s and purpose t r u s t s .

Without the a s s i s t a n c e o f Re Denley, the bequest would v i o l a t e the 'bene-

ficiary p r i n c i p l e ' , i f c o n s t r u e d i n the c i r c u m s t a n c e s as imposing a p u r -

pose t r u s t . In the r e s u l t , the bequest a l s o f a i l e d t o s a t i s f y the pre-

requisites o f a l l the o t h e r mechanisms c u r r e n t l y available i n the law for

effecting a successful d o n a t i o n to an u n i n c o r p o r a t e d a s s o c i a t i o n . The

funds t h e r e f o r e devolved as on intestacy.

In Re Grant's Will Trusts, t h e r e f o r e , V i n e l o t t , J . denied that Re

Denley extended the r e q u i s i t e element o f c o n t r o l t o s a t i s f y the 'bene-

ficiary p r i n c i p l e ' from t r a d i t i o n a l oestuis que trust to 'factual-bene-

ficiaries', p a r t i c u l a r l y i n the area of g i f t s t o u n i n c o r p o r a t e d associ-

123
ations. His reasons f o r so d o i n g were as follows :

I can see no d i s t i n c t i o n i n p r i n c i p l e between

a t r u s t t o p e r m i t a c l a s s d e f i n e d by r e f e r e n c e
to employment t o use and enjoy l a n d i n a c c o r d -
ance w i t h r u l e s t o be made a t the d i s c r e t i o n o f
t r u s t e e s on the one hand, and, on the o t h e r hand,
a t r u s t t o d i s t r i b u t e income at the d i s c r e t i o n
o f t r u s t e e s amongst a c l a s s , d e f i n e d by r e f e r e n c e
t o , f o r example, r e l a t i o n s h i p t o the s e t t l o r .

In o t h e r words, V i n e l o t t , J . i n t e r p r e t e d Re Denley as treating the trust

124
i n that case as a d i s c r e t i o n a r y personal trust and not l a y i n g down
 - 146 -

any g e n e r a l p r i n c i p l e f o r v a l i d a t i n g purpose t r u s t s . On t h i s i n t e r -

pretation, the employees i n Re Denley a r e seen as .orthodox cestuis que

trust t o whom, a t the t r u s t e e s ' d i s c r e t i o n , the funds would ultimately

belong. In V i n e l o t t , J . ' s view, the t r u s t was not a purpose t r u s t a t a l l .

Each member o f t h e c l a s s o f employees t h e r e f o r e had a t l e a s t a spes o f

a c t u a l ownership i n the p r o p e r t y and c o u l d t e r m i n a t e the t r u s t i n c e r t a i n

c i r c u m s t a n c e s ; he was n o t merely the r e c i p i e n t o f a f a c t u a l b e n e f i t under

a purpose t r u s t .

Such a narrow i n t e r p r e t a t i o n o f Re Denley has been c r i t i c i s e d as

125

" u n f o r t u n a t e and r e t r o g r e s s i v e " . I t a l s o i g n o r e s the second case on

the current i s s u e - the e x t e n s i o n o f the Denley Analysis o f t h e 'bene-

f i c i a r y p r i n c i p l e ' t o g i f t s for unincorporated associations - which held

t h a t a t r u s t f o r the purposes o f an a s s o c i a t i o n can succeed because o f Re

Denley.

126

Re Lipinski's Will Trusts involved a bequest t o a youth a s s o c i -

a t i o n on t r u s t , w i t h the a d d i t i o n a l s t i p u l a t i o n t h a t the funds be used t o

construct new, o r improve the e x i s t i n g , premises o f the a s s o c i a t i o n . A l -

though t h e e x a c t b a s i s f o r O l i v e r , J . ' s d e c i s i o n t h a t the g i f t was v a l i d

127
i s unclear, he t r e a t e d Re Denley as " d i r e c t l y on p o i n t " and " [ i n ]
12 8

accord with authority and w i t h common sense" . A p p l y i n g Re Denley t o

the f a c t s o f Re Lipinski, the bequest was v a l i d as a purpose t r u s t which

was n e i t h e r a b s t r a c t nor impersonal, b u t was f o r the b e n e f i t o f a s c e r -

t a i n e d i n d i v i d u a l s , namely, the members o f the a s s o c i a t i o n . In o t h e r

* 129
words :
[T]he case appears t o me t o be one o f t h e spec-
i f i c a t i o n o f a p a r t i c u l a r purpose f o r the b e n e f i t
o f a s c e r t a i n e d b e n e f i c i a r i e s , the members o f t h e
a s s o c i a t i o n f o r the time b e i n g .
 - 147 -

The presence o f t h e members meant t h a t the t r u s t e e s c o u l d be con-

t r o l l e d and t h a t the purpose t r u s t was v a l i d .

I t i s i n t e r e s t i n g t o note t h a t the c o u r t was w i l l i n g t o i g n o r e

the express s t i p u l a t i o n o f t h e t e s t a t o r i n the Lipinski case t h a t the

funds be expended on the a s s o c i a t i o n ' s p r e m i s e s . Therefore i t i s p o s s i b l e

t o r e g a r d i t as a f u r t h e r r e l a x a t i o n o f t h e ' b e n e f i c i a r y p r i n c i p l e ' . To

expand. The f i r s t s t e p i n the p r o c e s s o f a l l e v i a t i n g the r i g i d i t y o f

the ' b e n e f i c i a r y p r i n c i p l e ' was t h a t taken i n Re Denley : the presence

o f i n d i v i d u a l s who b e n e f i t , d i r e c t l y o r i n d i r e c t l y from the performance

o f the purpose t r u s t was h e l d s u f f i c i e n t t o c o n s t i t u t e a valid trust. It

i s s u b m i t t e d t h a t a second s t e p was taken i n Re Lipinski i n t h a t the

i n d i v i d u a l s who b e n e f i t i n t h i s manner were h e l d e n t i t l e d t o o v e r r i d e

the e x p r e s s e d purpose. By v i r t u e o f t h i s second step, the c o u r t was p e r -

m i t t e d t o i g n o r e t h e t e s t a t o r ' s s t i p u l a t i o n and deny t h a t i t c o n s t i t u t e d

a f e t t e r on i t s u t i l i s a t i o n o f the Denley Analysis. O l i v e r , J . concluded

I do n o t t h i n k t h e f a c t t h a t the t e s t a t o r has
d i r e c t e d the a p p l i c a t i o n ' s o l e l y ' f o r the spec-
i f i e d purpose adds any l e g a l f o r c e t o the d i r e c t i o n .
The b e n e f i c i a r i e s , the members o f t h e a s s o c i a t i o n
f o r the time b e i n g , a r e t h e persons who c o u l d
e n f o r c e t h e purpose and they must, as i t seems
t o me, be e n t i t l e d n o t t o e n f o r c e i t o r , indeed,
to vary i t .

In sum, t h e bequest was v a l i d and a p p a r e n t l y took e f f e c t as a g i f t on

trust f o r the general purposes o f the a s s o c i a t i o n (not merely f o r the

s p e c i f i c purpose o f c o n s t r u c t i o n o r improvement o f i t s b u i l d i n g s ) . The

members o f t h e a s s o c i a t i o n f o r the time b e i n g would d e r i v e a benefit

from t h e t r u s t i n t h i s form so i t was " o u t s i d e the m i s c h i e f o f the

131

beneficiary principle" and c o u l d be c o n t r o l l e d . I t was therefore

valid.
 - 148 -

As a r e s u l t o f Re Lipinski, i t i s p o s s i b l e t o say t h a t the members

o f an u n i n c o r p o r a t e d a s s o c i a t i o n can s a t i s f y the t e s t f o r m u l a t e d by Re

Denley for a valid, c o n t r o l l a b l e purpose t r u s t . On one interpretation

o f the Denley Analysis, g i f t s on n o n - c h a r i t a b l e purpose t r u s t f o r u n i n -

corporated associations require the existence of 'factual beneficiaries'

who are i n t e r e s t e d i n the d i s p o s a l o f the donated funds because o f t h e i r

d i r e c t or i n d i r e c t b e n e f i t therefrom, even though they are not cestuis

que trust i n the t r a d i t i o n a l and strict sense o f the term. The associ-

a t i o n ' s members can f i t this description.

It i s submitted, however, t h a t t h i s w i l l not always be the case.

132
It i s worth r e p e a t i n g the words o f G o f f , J . i n Re Denley :

I t h i n k t h e r e may be a purpose or o b j e c t t r u s t ,
the c a r r y i n g out o f which would b e n e f i t an i n -
d i v i d u a l o r i n d i v i d u a l s , where t h a t b e n e f i t i s
so i n d i r e c t o r i n t a n g i b l e o r which i s o t h e r w i s e
so framed as not t o g i v e those persons any l o c u s
s t a n d i t o a p p l y t o the c o u r t t o e n f o r c e the t r u s t ,
i n which case the b e n e f i c i a r y p r i n c i p l e would,
as i t seems to me, a p p l y t o i n v a l i d a t e the t r u s t ,
q u i t e a p a r t from any q u e s t i o n o f u n c e r t a i n t y o r
perpetuity.

A p p l y i n g t h i s l i m i t a t i o n to the u n i n c o r p o r a t e d a s s o c i a t i o n context, the

trust w i l l fail i f the s p e c i f i e d purpose i s a b s t r a c t or impersonal and

no tangible nor s u f f i c i e n t l y d i r e c t b e n e f i t accrues t o i n d i v i d u a l s .

L i k e w i s e i f a g i f t i s g i v e n on t r u s t f o r the g e n e r a l purposes o f a society,

it will fail i f those purposes are a b s t r a c t and impersonal. To borrow

133

the t e r m i n o l o g y u t i l i s e d i n an A u s t r a l i a n case on the Contract Analysis

a gift to an 'inward l o o k i n g a s s o c i a t i o n ' w i l l be v a l i d because i t i s s e t

up t o p r o v i d e b e n e f i t to i t s own members. By contrast, a g i f t t o an 'out-

ward l o o k i n g a s s o c i a t i o n ' which pursues e x t e r n a l , a l t r u i s t i c goals of no

b e n e f i t to i t s members w i l l f a i l . The d i s t i n g u i s h i n g l i n e between the two

t y p e s of a s s o c i a t i o n , and c o n s e q u e n t l y between v a l i d and i n v a l i d g i f t s ,
 - 149 -

e v i d e n t l y depends on the scope o f ' b e n e f i t ' i n t h i s c o n t e x t , a problem

134

t o which no r e s o l u t i o n has y e t been found . F o r example, take the

f a c t u a l s i t u a t i o n o f Re Grant's Will Trusts. Assuming t h a t V i n e l o t t , J .

had acknowledged Re Denley's salvaging e f f e c t i n the c o n t e x t o f u n i n -

corporated a s s o c i a t i o n s , would the bequest f o r the purposes o f the Head-

quarters o f a l o c a l Labour P a r t y have n e v e r t h e l e s s failed? The answer

would depend on the c o u r t ' s i n t e r p r e t a t i o n o f ' b e n e f i t ' and ' f a c t u a l

135

beneficiary'. On the one hand, i t might have concluded that the

f a c t u a l b e n e f i t t o members o f the r e c e i p t o f funds t o a s s i s t the r u n n i n g

of t h e i r p o l i t i c a l party's administrative c e n t r e was t o o remote and i n -

t a n g i b l e ; the n a t u r e o f the b e n e f i t was f a r d i f f e r e n t from t h a t enjoyed

by t h e employees through t h e p r o v i s i o n o f r e c r e a t i o n a l f a c i l i t i e s i n

Re Denley. On the o t h e r hand, the purpose may not have been seen i n so
136

abstract a light . The members must d e r i v e some t a n g i b l e benefit

from the b o o s t i n g o f t h e i r a s s o c i a t i o n ' s c o f f e r s .

Even a g i f t on t r u s t to an 'outward l o o k i n g a s s o c i a t i o n ' may

succeed by v i r t u e o f the Denley Analysis. Although, t h e a s s o c i a t i o n ' s

members may not be f a c t u a l b e n e f i c i a r i e s who s u p p l y t h e r e q u i s i t e element

o f c o n t r o l , the a s s o c i a t i o n ' s purposes may w e l l be o f d i r e c t o r i n d i r e c t

benefit to ascertainable i n d i v i d u a l s who a r e not members o f the a s s o c i -

ation. Presumably the g i f t would be v a l i d i n such, a c a s e . F o r example,

take the case o f a g i f t on t r u s t f o r the purposes o f Blanktown Association

for the P r o v i s i o n o f R e c r e a t i o n a l Facilities t o Deprived C h i l d r e n . The

h y p o t h e t i c a l members a r e n o t themselves d e p r i v e d c h i l d r e n and t h e r e f o r e

d e r i v e no t a n g i b l e b e n e f i t from t h e f u r t h e r a n c e o f the a s s o c i a t i o n ' s pur-

poses. Y e t the t r u s t may succeed, because t h e d e p r i v e d c h i l d r e n o f Blank-

town do b e n e f i t , i n the same way as. the employees i n Re Denley itself.

 - 150 -

5. Conclusion

I f the Denley A n a l y s i s i s a c c e p t e d , A's bequest "on t r u s t f o r the

Blanktown Youth A s s i s t a n c e and R e c r e a t i o n A s s o c i a t i o n to f u r t h e r i t s pur-

poses f o r as long as the law p e r m i t s " w i l l be v a l i d . The A s s o c i a t i o n i s

an 'inward l o o k i n g a s s o c i a t i o n ' and i t s members a r e the d i r e c t r e c i p i e n t s

o f the t a n g i b l e b e n e f i t s produced by the A s s o c i a t i o n ' s operation. The

bequest i s s q u a r e l y w i t h i n the c o n f i n e s o f He Denley and thus escapes the

scope o f the ' b e n e f i c i a r y p r i n c i p l e ' .

However, the Denley A n a l y s i s i s n o t the p e r f e c t s o l u t i o n t o t h e p r o b -

lem o f g i f t s on t r u s t f o r n o n - c h a r i t a b l e unincorporated associations. Two

p o i n t s must be emphasised. In the f i r s t p l a c e , clarification o f the scope

and e f f e c t o f Re Denley i s necessary before i t can p l a y a u s e f u l and p r a c -

t i c a l role. Secondly, some major l i m i t a t i o n s on i t s a b i l i t y to f a c i l i t a t e

gifts are already clear. The most important o f these i s t h a t i t must be

p o s s i b l e t o construe t h e g i f t as b e i n g f o r a n o n - a b s t r a c t purpose before

the Denley A n a l y s i s w i l l be o f any a s s i s t a n c e i n e f f e c t i n g the donor's ' '.'.

wishes.

C. G i f t s on T r u s t f o r the P r e s e n t and F u t u r e Members o f an A s s o c i a t i o n

1. Introduction

In h i s d e s i r e n o t o n l y t o c o n f e r a c o n t i n u i n g p e c u n i a r y b e n e f i t upon

an u n i n c o r p o r a t e d a s s o c i a t i o n , b u t a l s o t o ensure t h a t h i s l a r g e s s e be

remembered f o r some c o n s i d e r a b l e p e r i o d i n the f u t u r e , a wealthy garden

 - 151 -

enthusiast, X, i n c l u d e s i n h i s w i l l a bequest o f h i s r e s i d u a r y estate i n

the f o l l o w i n g terms : "I bequeath my r e s i d u a r y estate, henceforth t o be

known as the X memorial fund, upon t r u s t f o r the p r e s e n t and f u t u r e members

o f t h e Greenthumb V i l l a g e Gardening S o c i e t y so t h a t they may c o n t i n u e t o

c a r r y o u t i t s aims and o b j e c t s f o r as l o n g as p o s s i b l e " . Alternatively,

X merely bequeaths h i s e s t a t e on t r u s t f o r the Gardening S o c i e t y simplic-

itev, which i n i t s e l f and i n the c u r r e n t s t a t e o f the law i s an impossible

t r u s t , b u t t h e c i r c u m s t a n c e s o f the bequest a r e such t h a t they r e b u t a l l

presumptions t h a t the g i f t can take e f f e c t i n any way o t h e r than on t r u s t

for present and f u t u r e members o f t h e S o c i e t y , i d e n t i f i e d by the r e f e r e n c e

137

to the S o c i e t y i t s e l f . In o t h e r words, as a matter o f i n t e r p r e t a t i o n ,

a c o u r t would conclude t h a t t h i s was the r e s u l t i n t e n d e d by X.

In each s i t u a t i o n , X has attempted t o c r e a t e a t r u s t f o r a c l a s s com-

p r i s i n g t h e e x i s t i n g and f u t u r e members o f an u n i n c o r p o r a t e d association i n

the hope t h a t they w i l l d i v e r t the funds t o the advantage o f t h e a s s o c i a t i o n .

If the t r u s t stands up, he has t h e guarantee t h a t they and no one e l s e will

b e n e f i t from the g i f t . He has no guarantee, however, t h a t they w i l l indeed

d i v e r t the funds as d i r e c t e d . Although t h e problem o f an unincorporated

a s s o c i a t i o n ' s l a c k o f l e g a l p e r s o n a l i t y i s s u c c e s s f u l l y a v o i d e d by c r e a t -

ing such a t r u s t , e q u a l l y troublesome problems a r e c r e a t e d i n i t s place.

In r e c e n t cases d e a l i n g with, t h e i s s u e o f d o n a t i o n s t o unincorporated

a s s o c i a t i o n s , i t i s a c c e p t e d w i t h o u t d i s c u s s i o n as t r i t e law t h a t a t r u s t
138

for present and f u t u r e members o f an a s s o c i a t i o n must f a i l . As a

mechanism f o r e f f e c t i n g a d o n a t i o n , such a t r u s t i s c o n s i d e r e d t o t a l l y un-

s u c c e s s f u l and a l t e r n a t i v e l e g a l a n a l y s e s o f t h e s i t u a t i o n have t o be

sought i n an attempt t o a c h i e v e a r e s u l t approximating t o the donor's wishes.

 - 152 -

The t h r e e major 'potential reasons f o r the f a i l u r e o f t r u s t s i n g e n e r a l w i l l

be reviewed i n t h i s s e c t i o n : the ' b e n e f i c i a r y p r i n c i p l e ' , u n c e r t a i n t y and

the r u l e a g a i n s t perpetuities. I t i s the l a t t e r which i s g e n e r a l l y

t r e a t e d as t h e c u l p r i t i n the case o f a g i f t on t r u s t f o r the p r e s e n t and

f u t u r e members o f an a s s o c i a t i o n . Some comments w i l l be o f f e r e d on t h i s

subject and i t w i l l be suggested t h a t the r e c e n t cases which a c c e p t w i t h -

out q u e s t i o n t h a t such a t r u s t must f a i l on t h i s ground a r e n o t n e c e s s a r -

ily correct. A t the o u t s e t , however, i n the i n t e r e s t s o f completeness,

the manner i n which the b e n e f i c i a r y and c e r t a i n t y requirements a r e satis-

fied w i l l be e x p l a i n e d i nbrief.

2. The ' B e n e f i c i a r y P r i n c i p l e '

The operation and scope o f the ' b e n e f i c i a r y p r i n c i p l e ' have already

139

been d i s c u s s e d a t length . A g i f t on t r u s t f o r the members, p r e s e n t

and future, o f an u n i n c o r p o r a t e d a s s o c i a t i o n e v i d e n t l y has human b e n e f i c i a r -

i e s who can e n f o r c e due e x e c u t i o n o f the terms o f t h e t r u s t should the

need a r i s e . T h e r e f o r e i t i s n o t , nor has i t ever been contended t o be, on

the b a s i s o f the ' b e n e f i c i a r y p r i n c i p l e ' t h a t g i f t s on t r u s t f o r p r e s e n t

and f u t u r e members have c o n s i s t e n t l y failed.

3. Certainty o f Objects

140

In the words o f Lord Upjohn i n Ee Gulberikian's Settlement Trusts ,

"the Court o f Chancery, which, a c t s i n d e f a u l t o f t r u s t e e s , must know w i t h

s u f f i c i e n t c e r t a i n t y the objects o f t h e b e n e f i c e n c e o f the donor so as t o

141

execute the t r u s t " . I t i s a requirement o f the law o f t r u s t s t h a t t h e

donor express h i s i n t e n t i o n s w i t h s u f f i c i e n t p r e c i s i o n and c l a r i t y f o r

 - 153 -

t r u s t e e s , b e n e f i c i a r i e s and the c o u r t t o be a b l e t o know, and t o do or

142
cause t o be done what the donor i n t e n d e d when he f o r m u l a t e d h i s g i f t
143
The requirement has been the s u b j e c t o f a g r e a t d e a l o f r e f i n e m e n t and

144

academic comment i n r e c e n t y e a r s and o f i t s e l f c o u l d be the s u b j e c t

of volumes o f a n a l y s i s and conjecture. Here the aim i s f a r more modest.

It i s proposed merely t o summarise the manner i n which the g i f t i n question

on t r u s t f o r the members from time t o time o f a p a r t i c u l a r unincorporated

a s s o c i a t i o n s a t i s f i e s the requirement of c e r t a i n t y of o b j e c t s .

The d i s c u s s i o n w i l l p r o c e e d on the h y p o t h e s i s t h a t the n o t i o n o f

145

c e r t a i n t y can be s u b j e c t e d t o a f o u r - f o l d c l a s s i f i c a t i o n . The fivst

type o f c e r t a i n t y i s the most important : t r u s t o b j e c t s must be d e s c r i b e d

with 'conceptual c e r t a i n t y ' . In o t h e r words, the t e r m i n o l o g y used t o des-

c r i b e the t r u s t b e n e f i c i a r i e s must have p r e c i s e boundaries o f meaning, and

i t must be p o s s i b l e t o s t a t e c l e a r l y what are the c r i t e r i a which any con-

c e i v a b l e c l a i m a n t must f u l f i l i n o r d e r t o f i t the d e s c r i p t i o n . Classic

examples o f c o n c e p t u a l l y u n c e r t a i n t e r m i n o l o g y are phrases such as " o l d

f r i e n d s " and "good c i t i z e n s " . By c o n t r a s t , i n the p r e s e n t case o f a t r u s t

for the e x i s t i n g and f u t u r e members o f an u n i n c o r p o r a t e d a s s o c i a t i o n , the

words admit l i t t l e doubt as t o t h e i r meaning. In o r d e r t o be w i t h i n t h i s

c l a s s and thus e s t a b l i s h e n t i t l e m e n t as a b e n e f i c i a r y , the n e c e s s a r y and

sufficient c r i t e r i a which an i n d i v i d u a l must f u l f i l are c e r t a i n : he must,

w i t h i n the r e l e v a n t time p e r i o d , have e n t e r e d i n t o a c o n t r a c t o f member-

s h i p w i t h the a s s o c i a t i o n i n accordance with, the r u l e s o f i t s c o n s t i t u t i o n

(if any), c o n c e r n i n g admission. The g i f t t h e r e f o r e s a t i s f i e s the r e q u i r e -

ment o f c o n c e p t u a l certainty.

The second type o f c e r t a i n t y r e q u i r e d o f a n o n - c h a r i t a b l e t r u s t i s

 - 154 -

'evidential certainty'. Assuming t h a t c o n c e p t u a l c e r t a i n t y i s present,

i t may n e v e r t h e l e s s be i m p o s s i b l e as a matter o f f a c t u a l e v i d e n c e to

i d e n t i f y s p e c i f i c p e o p l e as h a v i n g s a t i s f i e d the criteria involved in the

d e f i n i t i o n of the class.

I t i s here t h a t the d i s t i n c t i o n between f i x e d t r u s t s and discretion-

ary t r u s t s becomes s i g n i f i c a n t . On the one hand, the donor may have made i t

c l e a r by the wording o f h i s g i f t t h a t every member o f the defined class of

beneficiaries i s t o have a s p e c i f i c share i n the donated funds. The trust

is t h e n ' f i x e d ' , as compared, on the o t h e r hand, w i t h a 'discretionary

t r u s t ' , where t r u s t e e s , though o b l i g e d to d i s t r i b u t e , have an element o f

c h o i c e i n the matter o f who w i l l benefit and t o what e x t e n t . Although the

same degree o f c o n c e p t u a l c e r t a i n t y i s required f o r b o t h f i x e d and dis-

cretionary t r u s t s , the requirement o f e v i d e n t i a l c e r t a i n t y is totally diff-

erent. I f , as a matter o f i n t e r p r e t a t i o n , a f i x e d t r u s t has been c r e a t e d ,

it i s n e c e s s a r y f o r the trustees t o be a b l e t o draw up a complete l i s t of

names o f everyone i n the c l a s s of b e n e f i c i a r i e s since the t r u s t can not be

d u l y executed u n l e s s every s i n g l e p e r s o n b e n e f i t s . T h i s l i s t must be com-

p i l e d within the p e r p e t u i t y period i n o r d e r to s a t i s f y the requirement

of e v i d e n t i a l c e r t a i n t y . In the case o f the g i f t by X to the p r e s e n t and

f u t u r e members o f the Gardening S o c i e t y , a complete l i s t can be drawn up by

consulting the membership r e c o r d s o f the association from the date the

146
t r u s t becomes e f f e c t i v e , f o r the d u r a t i o n o f the p e r p e t u i t y period

More o f t e n , however, i t i s submitted t h a t a g i f t on trust for the

members o f an association w i l l be d i s c r e t i o n a r y i n nature. The donor's

true intention i s normally to b e n e f i t the association i t s e l f and the trust

for i t s members i s merely a d e v i c e to approximate t o the desired result.

 - 155 -

In such a case, "equal d i v i s i o n i s s u r e l y the l a s t t h i n g the s e t t l o r ever

intended; e q u a l d i v i s i o n among a l l [members o f the a s s o c i a t i o n ] may,

147

p r o b a b l y would, produce a r e s u l t b e n e f i c i a l t o none" . Nor a r e a l l p o t -

e n t i a l b e n e f i c i a r i e s e n t i t l e d t o be c o n s i d e r e d . There i s t h e r e f o r e no need

for a complete l i s t o f e l i g i b l e r e c i p i e n t s b e f o r e the t r u s t e e s and the

c o u r t can execute the terms o f the t r u s t and e v i d e n t i a l u n c e r t a i n t y i n draw-

148
ing i t up i s n o t important . The t r u s t can be v a l i d even i n the absence
149
of evidential certainty :
The c o u r t i s never d e f e a t e d by e v i d e n t i a l c e r t a i n t y
Once t h e c l a s s o f persons t o be b e n e f i t e d i s
c o n c e p t u a l l y c e r t a i n i t then becomes a q u e s t i o n o f
f a c t t o be determined on evidence whether any
p o s t u l a n t has on e n q u i r y been proved t o be w i t h i n
i t ; i f he i s not so proved then he i s not i n i t .

In o t h e r words, i f a person c l a i m i n g t o be w i t h i n the c o n c e p t u a l l y c e r t a i n

d e f i n i t i o n can e s t a b l i s h h i s c l a i m , he i s e n t i t l e d t o t h e r i g h t s o f a bene-

ficiary; i f he can not, then he i s n o t so e n t i t l e d . N e v e r t h e l e s s , even i n

the l a t t e r case, i f the t r u s t s a t i s f i e s the requirement of conceptual cer-

tainty, i t i s v a l i d and no f u r t h e r requirement need be met ^ ® . In the

case o f a member from time t o time o f an a s s o c i a t i o n , p r o v i d e d he can e s -

t a b l i s h by documentary o r o t h e r evidence t h a t he d i d indeed e n t e r i n t o a

c o n t r a c t o f membership, he i s a b e n e f i c i a r y . In t h e case, however, o f

someone a t t e m p t i n g t o e s t a b l i s h t h a t he i s the r e l a t i v e o f X, f o r example,

when a l l r e l e v a n t b i r t h and marriage r e c o r d s have been d e s t r o y e d , X's

p a r t i c u l a r c l a i m may f a i l because t h e e v i d e n t i a l d i f f i c u l t i e s may prove i n -

surmountable. Despite t h i s , the t r u s t i t s e l f " f o r t h e r e l a t i v e s o f X"

would be v a l i d , s i n c e a d i s c r e t i o n a r y t r u s t i s not d e f e a t e d by e v i d e n t i a l

uncertainty.

The third type o f u n c e r t a i n t y a r i s e s i f t h e r e i s doubt c o n c e r n i n g

 - 156 -

151
"the whereabouts o r c o n t i n u e d e x i s t e n c e o f some members [of t h e c l a s s ] "

who a r e n e v e r t h e l e s s c l e a r l y w i t h i n the d e f i n i t i o n o f t h e c l a s s o f o b j e c t s

as a matter o f c o n c e p t u a l certainty. Such u n c e r t a i n t y i s n o t important and

b o t h f i x e d and d i s c r e t i o n a r y t r u s t s a r e v a l i d n o t w i t h s t a n d i n g the l a c k o f

1
ascertainability . 1

The fouvth type o f u n c e r t a i n t y causes a problem "where the meaning

o f t h e words used i s c l e a r b u t the d e f i n i t i o n o f b e n e f i c i a r i e s i s so hope-

l e s s l y wide as n o t t o form 'anything l i k e a c l a s s ' , so t h a t the t r u s t i s

152
a d m i n i s t r a t i v e l y unworkable" . In such a case, the t r u s t w i l l fail.

The e x a c t scope o f t h i s category i s unclear. To borrow the words o f P r o f -

153

e s s o r Emery , i t appears t h a t a t r u s t w i l l be h e l d t o be a d m i n i s t r a t i v e l y

unworkable "where the s e t t l o r has i n e f f e c t s e t h i s t r u s t e e s an i m p o s s i b l e

task" with the r e s u l t t h a t "the e x t e n t and nature o f t h e duty i s ... so

nebulous as t o make i t u n e n f o r c e a b l e " . F o r example, a d i s c r e t i o n a r y t r u s t

154

for " a l l the r e s i d e n t s o f G r e a t e r London" would f a i l on the ground o f

administrative unworkability : t h e s i z e and g e n e r a l i t y o f t h e d e f i n i t i o n

renders the t r u s t u n c o n t r o l l a b l e ; t h e r e a r e no metes nor bounds s e t t o t h e

155

e x e r c i s e by t h e t r u s t e e s o f t h e i r d i s c r e t i o n ; no c o u r t would be able t o

judge whether o r n o t t r u s t e e s were p e r f o r m i n g their obligations properly i n

d i s t r i b u t i n g funds. A g i f t on t r u s t f o r the members o f an unincorporated

a s s o c i a t i o n , on the o t h e r hand, g i v e s t r u s t e e s an easy t a s k .

In c o n c l u s i o n , t h e r e f o r e , i t i s apparent t h a t t h e reason f o r the con-

s i s t e n t f a i l u r e o f g i f t s on t r u s t f o r the p r e s e n t and f u t u r e members o f an

unincorporated a s s o c i a t i o n has n o t been t h e c e r t a i n t y requirements o f a

valid trust. The major h u r d l e under the head o f c e r t a i n t y i s the need f o r

conceptual c e r t a i n t y , and t h e n o t i o n o f membership o f an a s s o c i a t i o n

 - 157 -

embodies a concept which admits o f no doubt.

4. The Rule a g a i n s t Perpetuities

The main problem w i t h a g i f t on t r u s t f o r p r e s e n t and f u t u r e mem-

b e r s o f an a s s o c i a t i o n i s the r u l e against perpetuities. F o r example, an

old I r i s h instance of a g i f t t o the members o f a s o c i e t y which f a i l e d be-

cause i t was h e l d t o contemplate f u t u r e as w e l l as p r e s e n t members as bene-

156
ficiaries, was the case o f Morrow V. M ConviVle 1
where a g i f t o f p r o p e r t y

for t h e use and b e n e f i t o f a Roman C a t h o l i c convent was h e l d t o be non-

157
c h a r i t a b l e and v o i d . C h a t t e r t o n , V . - C . gave t h e reason as f o l l o w s :

[ A ] g i f t , n o t c h a r i t a b l e , t o a r e l i g i o u s community,
i n c l u d i n g n o t o n l y t h e e x i s t i n g members, b u t a l s o
a l l persons who s h o u l d be, o r become t h e r e a f t e r ,
members o f i t , d u r i n g a p e r i o d c a p a b l e o f e x t e n d i n g
beyond the l e g a l l i m i t s p r e s c r i b e d by t h e r u l e
against p e r p e t u i t i e s , i s void.

F u t u r e members may j o i n the s o c i e t y and become a s c e r t a i n e d and t h e i r

i n t e r e s t s i n the g i f t may v e s t a t a time t o o remote from the date that

the gift takes e f f e c t . The g i f t therefore f a i l s ab -initio.

Although i t i s f e l t that a d e t a i l e d d i s c u s s i o n o f the o p e r a t i o n o f

the rule against perpetuities i s beyond the scope and s i z e o f t h i s t h e s i s ,

some comments a r e a p p r o p r i a t e .

(i) The Rule a t Common Law

The common law r u l e a g a i n s t remoteness o f v e s t i n g (otherwise known

as t h e r u l e i n The Duke of Norfolk's Case 1 5 8

) runs as f o l l o w s 1 5 9
:

No i n t e r e s t i s good u n l e s s i t must v e s t , i f a t a l l ,
not l a t e r than twenty-one years a f t e r some l i f e
i n b e i n g a t the c r e a t i o n o f the i n t e r e s t .
 - 158 -

It i s apparent w i t h a g i f t t o f u t u r e members o f an a s s o c i a t i o n t h a t

interests will p r o b a b l y v e s t more than twenty-one y e a r s a f t e r the death

of a l l relevant l i v e s i n being. In t h i s case, i t r e q u i r e s none o f the

e x p l o r a t i o n o f improbable h y p o t h e t i c a l s i t u a t i o n s , t o which the c o u r t s a r e

accustomed when d e a l i n g w i t h the r u l e a g a i n s t p e r p e t u i t i e s , t o r e a l i s e that

c e r t a i n t y o f v e s t i n g within the permitted period i s lacking. Furthermore,

even i f the i n t e r e s t s o f e x i s t i n g members w i l l v e s t i n time, a c l a s s gift

can n o t be p a r t l y good and p a r t l y bad. I f , a t the time the i n s t r u m e n t comes

into operation, some members o f t h e c l a s s , such as f u t u r e members, a r e

not c e r t a i n t o be a s c e r t a i n e d w i t h i n the p e r p e t u i t y p e r i o d , then the whole

gift i s t o o remote ^ ® m I n sum, a g i f t on t r u s t f o r p r e s e n t and f u t u r e

members o f an u n i n c o r p o r a t e d a s s o c i a t i o n v i o l a t e s t h e common law r u l e

against p e r p e t u i t i e s .

( i i ) The Rule under Statute

Over the l a s t twenty y e a r s , most common law j u r i s d i c t i o n s have

p a s s e d l e g i s l a t i o n which s u b s t a n t i a l l y m o d i f i e s the common law p e r p e t u i t i e s

rule and i t i s t e n t a t i v e l y suggested t h a t t h e l e g a l e f f e c t o f a g i f t

on t r u s t f o r the p r e s e n t and f u t u r e members o f an u n i n c o r p o r a t e d associ-

a t i o n may have changed a c c o r d i n g l y . Two p r o v i s i o n s i n p a r t i c u l a r o f t h e

United Kingdom l e g i s l a t i o n may be r e l e v a n t . I t was mentioned above t h a t ,

at common law, an i n t e r e s t must, as o f the date t h e g i f t takes e f f e c t , be

a b s o l u t e l y c e r t a i n t o v e s t w i t h i n the p e r p e t u i t y p e r i o d . Under the l e g i s -

l a t i o n , however, i f t h i s common law r u l e would render a g i f t v o i d , i t i s

nevertheless t r e a t e d as v a l i d u n t i l events prove t h a t the i n t e r e s t w i l l ,

162

indeed, v e s t ( i f a t a l l ) a f t e r the end o f t h e p e r p e t u i t y p e r i o d . In

the meantime, one w a i t s t o see what developments t h e passage o f time

 - 159 -

might b r i n g . To use the example o f a g i f t on t r u s t f o r the e x i s t i n g and

f u t u r e members o f an u n i n c o r p o r a t e d a s s o c i a t i o n , such a g i f t would, i n the

absence o f l e g i s l a t i v e reform, be s t r u c k down by the common law r u l e . This

e v e n t u a l i t y t r i g g e r s the o p e r a t i o n o f the l e g i s l a t i v e 'wait and see' pro-

v i s i o n s which operate t o s a l v a g e the g i f t f o r the time b e i n g by p r e t e n d i n g

t h a t the d i s p o s i t i o n i s n o t s u b j e c t t o the r u l e a g a i n s t p e r p e t u i t i e s a t a l l .

Prima facie and f o r a t l e a s t the d u r a t i o n of the perpetuity p e r i o d , the

gift t o the a s s o c i a t i o n ' s members i s v a l i d .

The p e r i o d o f 'waiting and s e e i n g ' i s c a l c u l a t e d by r e f e r e n c e t o

statutory l i v e s i n being. In the above s i t u a t i o n , the donor and a l l those

who were c u r r e n t members i n good s t a n d i n g o f the u n i n c o r p o r a t e d a s s o c i a t i o n

a t t h e date o f t h e g i f t i n the case o f an inter vivos donation, o r a l l c u r r -

ent members i n good s t a n d i n g o f the a s s o c i a t i o n a t the date o f t h e donor's

death i n the case o f a testamentary d o n a t i o n a r e r e l e v a n t lives i n

163

being . However, t h i s a s s e r t i o n must be r e a d s u b j e c t t o the p r o v i s i o n

t h a t "the l i v e s o f any d e s c r i p t i o n o f persons f a l l i n g w i t h i n paragraph (b)

... o f [ s u b s e c t i o n 5] s h a l l be d i s r e g a r d e d i f the number o f persons o f t h a t

d e s c r i p t i o n i s such as t o render i t i m p r a c t i c a b l e t o a s c e r t a i n the date o f

164
death o f the s u r v i v o r " . I f t h i s p r o v i s i o n o p e r a t e s t o render e x i s t i n g
members u n a v a i l a b l e as r e l e v a n t measuring l i v e s , and the d o n a t i o n i s t e s t a -
165

mentary, "the p e r i o d s h a l l be twenty-one y e a r s " . I t seems t h a t future

members o f the a s s o c i a t i o n , though " p o t e n t i a l members o f t h e c l a s s " defined

by t h e donor , do n o t q u a l i f y as s t a t u t o r y l i v e s i n being since they

would n o t be " i n d i v i d u a l s i n b e i n g and ascertainable a t the commencement o f

• ... 167
the p e r p e t u i t y p e r i o d

The second p r o v i s i o n o f the U n i t e d Kingdom l e g i s l a t i o n which may

 - 160 -

be r e l e v a n t i n f a c i l i t a t i n g t h e i n i t i a l v a l i d i t y o f a g i f t t o the p r e s e n t

and f u t u r e members o f an u n i n c o r p o r a t e d a s s o c i a t i o n r e v e r s e s the common law

168
rule t h a t t h e share o f every member o f t h e donor's c l a s s of intended

r e c i p i e n t s must be a s c e r t a i n a b l e w i t h i n the p e r p e t u i t y p e r i o d . The p r o -

169
v i s i o n runs e s s e n t i a l l y as f o l l o w s :

Where i t i s apparent a t the time the d i s -

p o s i t i o n i s made o r becomes apparent a t a sub-
sequent time t h a t , a p a r t from t h i s s u b s e c t i o n ,
the i n c l u s i o n o f any p e r s o n s , b e i n g p o t e n t i a l
members o f a c l a s s ... would cause the d i s p o s i t i o n
to be t r e a t e d as v o i d f o r remoteness, those persons
s h a l l , u n l e s s t h e i r e x c l u s i o n would exhaust the
c l a s s , t h e n c e f o r t h be deemed f o r a l l t h e purposes
of t h e d i s p o s i t i o n t o be excluded from the c l a s s .

In o t h e r words, t h e l e g i s l a t i o n p e r m i t s s e p a r a t i o n o f t h e good from the

bad and p r o b a b l y reforms the g i f t t o comply more c l o s e l y than was p o s s i b l e

under t h e common law r u l e w i t h t h e donor's i n t e n t i o n s , who undoubtedly

would have p r e f e r r e d p a r t o f the c l a s s t o take i n t h e event t h a t i t was

impossible to give f u l l e f f e c t t o h i s complete i n t e n t i o n with respect t o

the c l a s s as a whole. In the case o f a g i f t t o the p r e s e n t and f u t u r e

members o f an u n i n c o r p o r a t e d a s s o c i a t i o n , s i n c e t h e r e i s no time restraint

p l a c e d upon t h e date o f membership o f f u t u r e members, t h e i r i n c l u s i o n i n

the c l a s s o f r e c i p i e n t s w i l l e v i d e n t l y cause problems r e s u l t i n g i n t h e

g i f t ' s b e i n g s t r u c k down f o r remoteness even a t t h e end o f t h e 'wait and

see' p e r i o d . In t h i s event, they s h o u l d be e x c l u d e d a t t h a t time from

the c l a s s so t h a t t h e g i f t can o p e r a t e v a l i d l y i n f a v o u r o n l y o f a l l those

who might be members o f t h e a s s o c i a t i o n a t t h a t time.

In o r d e r t o summarise t h e p e r c e i v e d (though as y e t untested) com-

b i n e d e f f e c t o f t h e s t a t u t o r y r e f o r m on g i f t s on t r u s t f o r p r e s e n t and

f u t u r e members o f u n i n c o r p o r a t e d a s s o c i a t i o n s , i t i s h e l p f u l t o r e f e r

back t o t h e example posed a t t h e b e g i n n i n g o f t h i s s e c t i o n o f X's bequest

 - 161 -

t o A and B f o r the p r e s e n t and f u t u r e members o f t h e Greenthumb V i l l a g e

170

Gardening S o c i e t y . Assuming t h a t X d i e d a f t e r J u l y 15, 1964 , i t is

submitted t h a t t h e c o r r e c t approach i s , firstly, t o apply t h e common law

r u l e a g a i n s t p e r p e t u i t i e s t o see whether the d i s p o s i t i o n i n f r i n g e s i t .

The unavoidable conclusion i s t h a t an i n f r i n g e m e n t has indeed taken p l a c e .

Since t h i s i s so, the second step i s t o apply the s t a t u t o r y 'wait and

see' p r o v i s i o n s , w i t h the r e s u l t t h a t the g i f t i s given initial validity.

A v a l i d t r u s t has been c r e a t e d , a t l e a s t f o r the time b e i n g , and A and B,

the t r u s t e e s , can p r o c e e d t o d i s t r i b u t e income, f o r example, disregarding

the p o s s i b i l i t y o f f u t u r e i n v a l i d i t y and w i t h o u t f e a r o f such a c t s being

171

subsequently i n v a l i d a t e d . A t the end o f t h e 'wait and see' period

(twenty-one y e a r s a f t e r the death o f t h e l a s t s u r v i v i n g p e r s o n who was a

member o f t h e Gardening S o c i e t y on X's death), one can a s c e r t a i n whether

o r not, i n the events which have a c t u a l l y t r a n s p i r e d , i n t e r e s t s under t h e

g i f t have i n f a c t v e s t e d . I t i s p o s s i b l e , f o r example, t h a t the Greenthumb

V i l l a g e Gardening S o c i e t y has been d i s s o l v e d by t h i s time and i t s funds

d i s t r i b u t e d amongst the members. X's g i f t on t r u s t c o u l d n o t p r e v e n t such

a contingency. In such a t u r n o f events, i n t e r e s t s i n t h e g i f t w i l l have

vested i n time and the 'waiting and s e e i n g ' w i l l n o t have been i n v a i n ,

s i n c e X's wishes w i l l have been complied w i t h f o r a p o t e n t i a l l y c o n s i d e r a b l e

p e r i o d o f time. A t common law, they would have been f r u s t r a t e d ab initio.

Assuming, however, t h a t the Gardening S o c i e t y i s s t i l l f l o u r i s h i n g

i h Greenthumb a t the end o f the 'wait and see' p e r i o d , i t i s then apparent

t h a t the third s t e p must be taken. The i n t e r e s t s o f f u t u r e members e v i d -

e n t l y w i l l n o t v e s t i n time so they must be e x c l u d e d from the c l a s s . The

prospective shares o f those members then accrue f o r the b e n e f i t o f t h e

e x i s t i n g members i n whom, as a c l a s s , the t o t a l i n t e r e s t i n X's d o n a t i o n

 - 162 -

then v e s t s . These members may then choose t o t e r m i n a t e the t r u s t and

d i v e r t the funds f o r t h e i r own p e r s o n a l use so, u l t i m a t e l y , X's wish t o

b e n e f i t t h e Gardening S o c i e t y v i a i t s members w i l l be d e f e a t e d . In t h e

meantime, however, the s t a t u t e has p e r m i t t e d the achievement o f h i s aims.

This conclusion i s s u b j e c t , o f course, t o one q u a l i f i c a t i o n . In view o f

the wording o f the g i f t as one t o the members themselves, whether o r n o t

the members i n f a c t channel the income they r e c e i v e under the t r u s t t o the

good o f t h e S o c i e t y w i l l depend on t h e i r own i n c l i n a t i o n s . They might feel

morally bound t o do so but, i n the absence o f o b l i g a t i o n s imposed upon them

independently o f the g i f t ( f o r example, i n t h e i r c o n t r a c t o f membership),

they a r e under no legal obligation.

(iii) Conclusion

Recent cases have c o n t i n u e d t o t r e a t g i f t s on t r u s t f o r the p r e s e n t

and f u t u r e members o f u n i n c o r p o r a t e d a s s o c i a t i o n s as a u t o m a t i c a l l y invalid

even when they take e f f e c t a f t e r 1964, d i s r e g a r d i n g the p o t e n t i a l l y s a l -

vaging impact o f t h e l e g i s l a t i v e reform d i s c u s s e d above. I t i s submitted

t h a t the c o u r t s i n so d o i n g a r e i n e r r o r . By way o f c o n c l u s i o n , i t i s

submitted t h a t i f , i n a l l the c i r c u m s t a n c e s and on a f a i r c o n s t r u c t i o n o f

the donation, the t r u e i n t e r p r e t a t i o n o f i t s i n t e n t i s t h a t a t r u s t f o r

present and f u t u r e members has been c r e a t e d , the above a n a l y s i s o f the

e f f e c t o f the l e g i s l a t i o n should be u t i l i s e d t o p e r m i t the g i f t initial

v a l i d i t y even i f i t i s l a t e r c u r t a i l e d i n i t s d u r a t i o n .

The major disadvantage o f a r g u i n g t h a t a g i f t t o an a s s o c i a t i o n

s h o u l d be i n t e r p r e t e d as t a k i n g e f f e c t as one on t r u s t f o r i t s p r e s e n t

and f u t u r e members i s , o f course, t h a t the e f f e c t i v e n e s s and accuracy o f

 - 163 -

the above a n a l y s i s a r e u n t e s t e d . Apparently the a p p l i c a b i l i t y o f the

s t a t u t o r y reform o f the r u l e a g a i n s t p e r p e t u i t i e s has not been thoroughly

172

a n a l y s e d by t h e c o u r t s , . N e v e r t h e l e s s , i t i s submitted that at l e a s t

two c o n s i d e r a t i o n s argue i n f a v o u r o f i t s acceptance. In the f i r s t p l a c e ,

t h e r e i s n o t h i n g i n the l i t e r a l wording o f t h e s t a t u t e t o p r e v e n t i t s

a p p l i c a t i o n t o g i f t s on t r u s t f o r t h e p r e s e n t and f u t u r e members o f u n i n -

corporated a s s o c i a t i o n s . Secondly, p o l i c y arguments i n i t s favour a r e

strong. The aim o f t h e s t a t u t o r y p r o v i s i o n s r e f o r m i n g t h e r u l e a g a i n s t

173
p e r p e t u i t i e s i n g e n e r a l has been summarised as f o l l o w s :
No l o n g e r w i l l f a m i l y d i s p o s i t i o n s c o n t a i n i n g
no t h r e a t t o t h e p u b l i c i n t e r e s t , and r e a s o n -
a b l e b a r g a i n s between b u s i n e s s men, c o n t i n u e
to be s t r u c k down i n t h e name o f p u b l i c p o l i c y .

S u r e l y t h i s argument a p p l i e s e q u a l l y t o g i f t s by well-meaning donors t o

the members o f u n i n c o r p o r a t e d a s s o c i a t i o n s ?

W h i l s t a r g u i n g the d e s i r a b i l i t y o f t h e above a n a l y s i s , i t i s a t the

same time acknowledged t h a t i t by no means s o l v e s a l l the problems o f

e f f e c t i n g donations to unincorporated a s s o c i a t i o n s . As mentioned above,

although i t p e r m i t s a c o n t i n u i n g b e n e f i t t o be c o n f e r r e d by way o f t r u s t ,

the b e n e f i t goes t o the members, and w i l l accrue t o the a s s o c i a t i o n i t -

s e l f o n l y i f the members, p r e s e n t and f u t u r e , f e e l m o r a l l y compelled t o

174

d i v e r t t h e funds i n t h i s manner . As a matter o f t r u s t s law, the

b e n e f i c i a r i e s a r e the members as i n d i v i d u a l s , n o t t h e a s s o c i a t i o n .
 - 164 -

FOOTNOTES : CHAPTER IV

1. I f a g i f t i n these terms succeeds, prima faoie the p r e s e n t members

of the a s s o c i a t i o n a c q u i r e e q u i t a b l e i n t e r e s t s i n the fund. Once
the t r u s t e e s d i s t r i b u t e the t r u s t fund, they are functus officio and
the t r u s t mechanism can be t e r m i n a t e d by the a c t i o n o f the bene-
f i c i a r i e s (the members o f the a s s o c i a t i o n ) who can then, as a matter
of t r u s t s law, d i v e r t the funds t o t h e i r own use away from the
association. I t i s p o s s i b l e , however, t h a t the C o n t r a c t A n a l y s i s
may I n t e r v e n e a t t h i s stage : supra, pp 51-78. In o t h e r words, i t
may be apparent as a matter o f i n t e r p r e t a t i o n from the c i r c u m s t a n c e s
of the d o n a t i o n t h a t the donor i n t e n d e d the a s s o c i a t i o n and not
i t s p r e s e n t members t o d e r i v e a c o n t i n u i n g b e n e f i t and t h a t the
nomination o f the p r e s e n t members as b e n e f i c i a r i e s was merely a
c o n v e n i e n t d e v i c e t o i d e n t i f y the a s s o c i a t i o n as the r e c i p i e n t
a c t u a l l y i n t e n d e d . In such a case, the nature o f the a s s o c i a t i o n
as a c o n t r a c t u a l arrangement between the members w i l l p r e v a i l and
the members' e q u i t a b l e i n t e r e s t s w i l l be s u b j e c t e d t o c o n t r a c t u a l
terms r e s t r a i n i n g the members from t r e a t i n g the funds as t h e i r own.
In o t h e r words, the C o n t r a c t A n a l y s i s is- e q u a l l y a p p l i c a b l e whether
the i n i t i a l method o f d o n a t i o n t o the members i s d i r e c t , g i v i n g
them l e g a l t i t l e , o r whether the i n i t i a l mechanism i s v i a a t r u s t ,
g i v i n g members e q u i t a b l e i n t e r e s t s . S i n c e the o p e r a t i o n o f the
C o n t r a c t A n a l y s i s i s p u r e l y a matter o f c o n t r a c t law, the p r o p e r t y
i s s u e o f l e g a l t i t l e versus e q u i t a b l e i n t e r e s t i s i r r e l e v a n t .

2. Supra, pp 33-50.

3. Supra, pp 51-78.

4. D i s c u s s e d supra, pp 51-78.

5. S u b j e c t t o what w i l l be s a i d i n the next s e c t i o n , infra, pp 132-150.

6. Re Denley's Trust Deed [1969] 1 Ch. 373; [1968] 3 W.L.R.457; [1968]

3 A l l E.R.65. Per G o f f , J . [1969]1 Ch.373 a t 382.

7. McGovern v. Attorney General [1982] 2 W.L.R.222; [1981] 3 A l l E.R.493.

8. (1805), 10 Ves.Jr.522; 32 E.R.947, a f f i r m i n g (1804), 9 Ves.Jr.399;

32 E.R.656.

10. • For example, the C h a r i t y Commissioners, the A t t o r n e y G e n e r a l .

11. See g e n e r a l l y , Hanbury & Maudsley, Modern E q u i t y , l l t h . e d . , eds.

R. H. Maudsley & J . E. M a r t i n (London: Stevens, 1981), pp 210-216 ;
Emery, "The Most Hallowed P r i n c i p l e - C e r t a i n t y o f B e n e f i c i a r i e s o f
T r u s t s and Powers o f Appointment", (1982) 98 L.O.R.551.

12. (1805), 10 Ves.Jr.522 a t 539-540.

13. See a l s o , L e i g h , " T r u s t s o f Imperfect O b l i g a t i o n " , (1955) 18 Mod'.L.R.

120.
 - 165 -

14. [1917] A.C.406; 86 L.J.Ch.568.

15. F o r example, In re Diplock [ 1 9 4 1 ] C h . 2 5 3 ; [ 1 9 4 1 ] 1 A l l E.R.193, [1941]

C h . 2 5 3 a t 2 5 9 ; Re Astor's Settlement Trusts [1952] Ch.534; [1952]
1 A l l E.R.1067 at 1 0 7 0 .

16. Lords Dunedin, P a r k e r o f Waddington, Sumner and Buckmaster.

L o r d F i n l a y , L.C. d i s s e n t e d .

17. [1917] A.C.406 at 4 7 8 .

18. Ibid at 4 4 1 . I t a l i c s added.

19. [ 1 9 7 9 ] 1 Q . B . 1 0 ; [ 1 9 7 8 ] 3 A l l E . R . 1 7 5 , a f f i r m e d , sub nom. Whitehouse

V. Lemon [ 1 9 7 9 ] A . C . 6 1 7 ; [ 1 9 7 9 ] 1 A l l E . R . 8 9 8 .

20. [1917] A.C.406 at 4 6 4 - 4 6 7 , per L o r d Sumner.

21. Ibid a t 4 6 8 per L o r d Buckmaster.

22. Tennant Plays v. I.R.C. [ 1 9 4 8 ] 1 A l l E.R.506.

23. [1917] A.C.406 at 4 2 0 - 4 2 1 , per Lord F i n l a y , L.C.

24. Bouzaid v. Horowhenua Indoor Bowls Centre Inc. [1964] N.z.L.R.187.

25. (1958), 1 2 D.L.R.(2d) 23 at 3 0 .

26. S i m i l a r l y , Re Inman [ 1 9 6 5 ] V.R.238.

27. [1917] A.C.406 at 4 6 4 - 4 6 7 , per L o r d Sumner.

28. Re Boardwalk Merchandise Mart Ltd. and the Queen ( 1 9 7 3 ) , 31 D.L.R.

(3d). 1 6 2 a t 1 8 0 .

29. [1917] A.C.406 a t 4 4 2 , per Lord Parker.

30. F o r example, Re Shaw [ 1 9 5 7 ] 1 W.L.R.729; [1957] 1 A l l E.R.745 ; Re

Cooperative College of Canada and Saskatchewan Human Rights Commission
( 1 9 7 5 ) , 6 4 D.L.R.(3d) 5 3 1 ; Re Knight [ 1 9 3 7 ] O.R.462 ; Perpetual
Trustees Estate and Agency Company of New Zealand v. League of Nations
Union of New Zealand [ 1 9 4 1 ] N . z . L . R . 1 0 6 5 ; Knowles v. Commissioner
of Stamp Duties- [ 1 9 4 5 ] N . z . L . R . 5 2 2 ; McGovern v. Attorney General
supra, f o o t n o t e 7 .
31. Another example i s The Public Trustee v. Nolan ( . 1 9 4 3 ) , 4 3 S t a t e
Reports (N.S.W.) 1 6 9 . There, income was d i r e c t e d to be h e l d on
t r u s t " t o e r e c t a c a r i l l o n on s i m i l a r l i n e s t o the one a t A v a l o n
. :.: C a t a l i n a I s l a n d , C a l i f o r n i a , a t such, p l a c e on Sydney Harbour, o r
on the f o r e s h o r e s t h e r e o f , o r a t Park H i l l , North. Head, as my: t r u s t e e s
may deem e x p e d i e n t , o r t o j o i n w i t h any o t h e r p e r s o n o r persons- or
p u b l i c body i n e r e c t i n g such c a r i l l o n , and i t is- my d e s i r e t h a t such,
c a r i l l o n s h o u l d be p l a y e d i f p o s s i b l e on the a r r i v a l o f and t o
welcome o v e r s e a l i n e r s coming i n t o Sydney Harbour". The Supreme
C o u r t o f New South Wales h e l d t h a t the t r u s t was v o i d because i t
 - 166 -

i n f r i n g e d the ' b e n e f i c i a r y p r i n c i p l e ' . A u t h o r i t i e s c i t e d were

Morice v. The Bishop of Durham, supra, f o o t n o t e 8 a n d Bowman v.
The Secular Society, supra, f o o t n o t e 14. Per R o p e r , J . : " T h a t
p u r p o r t e d t r u s t , b e i n g n o n - c h a r i t a b l e and n o t f o r t h e b e n e f i t o f
any a s c e r t a i n a b l e cestui que trust f a i l s a n d i s v o i d " ( A t 172).

32. Supra, f o o t n o t e 15. A f f i r m e d , sub nam. Chichester Diocesan Bund

and Board of Finance v. Simpson [1944] A.C.341; [1944] 2 A l l E.R.60.

33. Supra, p p 107-114.

34. [1941] Ch.253 a t 259, per S i r W i l f r i d G r e e n e , M.R.

35. Ibid.

36. Chichester Diocesan Fund and Board of Finance v. Simpson, supra,

f o o t n o t e 32.

37. Ibid, a t 349, per L o r d Macmillan.

38. Ibid, a t 371, per L o r d Simonds.

39. [1949] Ch.498; [1949] 1 A l l E.R.1100.

40. [1949] Ch.498 a t 501.

41. Supra, p p 114-116.

42. [1949] Ch.498 a t 502. Italics added.

43. The a u t h o r s o f Hanbury & M a u d s l e y , op.cit.supra, footnote 11, a g r e e ,

p 429. See a l s o . P o t t e r , "Trusts f o r Non-Charitable Purposes", (1949)
13.Conv.(N.S.)418.

44. F o r e x a m p l e , Carne V. Long (1860), 2 De G.F.S'J.75; 29 L.J.Ch.503; 8

W.R.570; 45 E.R.550 ; Thomson v. Shakespear (1860), 1 De G.F.& J.399;
29 L.J.Ch..276; 8 W.R.265; 45 E.R.413 ; Re Dutton (1878), 4 Ex.D.54;
Be Amos [1891]3 Ch.159 ; Be Nottage [1895] 2 Ch.649; 64 L.J.Ch.695 ;
Re Swain (.1908) , 99 L.T.R.604 ; Re Clifford [1912] 1 Ch.28; 81 L . J . C h .
220; (.1912), 106 L.T.R.14 ; Macaulay v. 0'Donnell [1943] Ch.435n ;
Re Wightwick's Will Trusts [1950] ch.260; [1950] 1 A l l E.R.689 ;
Leahy v. Attorney-General for New South Wales [1959] A.c.457; [1959]
2 W.L.R.722; [1959] 2 A l l E.R.300.

45. F o r e x a m p l e , M o r r i s & L e a c h , The R u l e A g a i n s t Perpetuities,'2nd.ed.

( L o n d o n : S t e v e n s , 1962), p p 316-317 , - Widdows, " T r u s t s i n F a v o u r
o f A s s o c i a t i o n s a n d S o c i e t i e s : Re L i p i n s k i ' s W i l l " , (1977), 41
C o n v . ( N . S .) 1 7 9 ; H a r t , "Some R e f l e c t i o n s o n t h e C a s e o f Re C h a r d o n " ,
(.1937) 53 L.Q.R.24, p p 35-52 ; per C r o s s , J . i n Neville Estates V.
Madden [1962] Ch.832; [1961] 3 W.L.R.999; [1961] 3 A l l E.R.769 a t
779 ; F o r d , U n i n c o r p o r a t e d Non-Profit Associations (Oxford : Clarendon,
1959), p p 27-28.

46. Per S i r M o n t a g u e E . S m i t h i n leap Cheah Neo v. Ong Cheng Neo (1875)

L.R.6 P.C.381 a t 394.
 - 167 -

47. F o r example, i n Carne V. Long, supra, f o o t n o t e 4 4 , the L o r d Chan-

c e l l o r ' s concern was not merely t h a t the fund was r e n d e r e d i n a l i e n -
a b l e (which a l o n e was s u f f i c i e n t ground f o r s t r i k i n g down the g i f t )
but t h a t i t would be i n a l i e n a b l e f o r l o n g e r than the p e r i o d o f a
l i f e i n b e i n g , p l u s twenty-one y e a r s - the p e r p e t u i t y p e r i o d r e l e -
vant t o , and borrowed from, remoteness o f v e s t i n g r u l e s .

48. Supra, footnote 44.

49. [1936] Ch.52'0; 105 L.J.Ch.257; [1936] 2 A l l E.R.93.

50. [1936] 2 A l l E.R.93 a t 9 9 .

51. F o r example, Re Button, supra, footnote 44 ; Re Clarke [1901] 2

C h . 1 1 0 ; 70 L . J . C h . 6 3 1 .

52. Re Button, ibid.

53. F o r example, Carne V. Long, supra, footnote 4 4 .

54. As i n , f o r example, Re Drummond [ 1 9 1 4 ] 2 C h . 9 0 ; 8 3 L . J . C h . 8 1 7 : a

g i f t t o t r u s t e e s t o h o l d on t r u s t f o r an o l d boys' c l u b , t o be u t i l i -
sed as the c l u b ' s committee s h o u l d t h i n k b e s t f o r the s c h o o l and the
c l u b ; Re Prevost [ 1 9 3 0 ] 2 C h . 3 8 3 ; 9 9 L . J . C h . 4 2 5 : a bequest t o the
t r u s t e e s o f the London L i b r a r y on t r u s t f o r the g e n e r a l purposes o f
the l i b r a r y , i n c l u d i n g the b e n e f i t o f the s t a f f .

55. Supra, f o o t n o t e 1 5 . See g e n e r a l l y , M a r s h a l l , "The F a i l u r e o f the

Astor Trust", (1953) 6 C.L.P . 1 5 1 ,- L e i g h , op. ait. supra, f o o t n o t e 1 3 .

56. [1952] 1 A l l E.R.1067 at 1074-1075.

57. Supra, pp 107-109.

58. T h i s i s an a d a p t a t i o n t o purpose t r u s t s o f the t e s t o f c e r t a i n t y i n

d i s c r e t i o n a r y t r u s t s l a i d down i n MaPhail V. Doulton [1971] A.C.424;
[ 1 9 7 0 ] 2 W.L.R.1110; [ 1 9 7 0 ] 2 A l l E . R . 2 2 8 . See f u r t h e r , infra, pp
152-157.

59. Supra, footnote 9 .

60. Per Roxburgh,J. [1952] 1 A l l E.R.1067 at 1 0 7 5 .

61. W. N. H o h f e l d , "Some Fundamental L e g a l Conceptions as A p p l i e d i n

J u d i c i a l Reasoning", ( 1 9 1 3 ) 2 3 Y a l e L . J . 1 6 ; ( 1 9 1 7 ) 2 6 Y a l e L . J . 7 1 0 .

62. [1952] 1 A l l E.R.1067 at 1 0 7 1 . Italics added.

63. Supra, footnote 8 .

64. Pettingall v. Pettingall ( 1 8 4 2 ) , 1 1 L . J . C h . 1 7 6 ; Mitford v. Reynolds

( 1 8 4 8 ) , 1 6 S i m . 1 0 5 ; 1 7 L . J . C h . 2 3 8 ; 6 0 E.R.812 ; Re Dean ( 1 8 8 9 ) , 4 1
Ch..D.552 5 8 L . J . C h . 6 9 3 ; Pirbright
; v. Salwey [ 1 8 9 6 ] W.N.86 ; Re
Hooper [ 1 9 3 2 ] 1 C h . 3 8 ; 1 0 1 L.J.Ch.61 ; Re Thompson [ 1 9 3 4 ] C h . 3 4 2 ;
103 L.J.Ch.162. D i s c u s s e d , infra, pp 2 2 0 - 2 2 6 .
 - 168 -

65. [1952] 1 A l l E.R.1067 at 1071.

66. Ibid a t 1 0 7 4 . See, E v a n s , " P u r p o s e T r u s t s - F u r t h e r Refinements",

( 1 9 6 9 ) 32 M o d . L . R . 9 6 . Note t h a t Messrs. M o r r i s & Leach i n c l u d e
(admittedly with reservations) i n t h e i r s u b - c l a s s i f i c a t i o n of these
s o - c a l l e d "anomalous" e x c e p t i o n s the case o f v a l i d t r u s t s f o r the
p u r p o s e s o f u n i n c o r p o r a t e d a s s o c i a t i o n s ( d i s c u s s e d supra,. p p 1 1 7 - 1 2 1 )
M o r r i s & Leach,op.cit.supra, f o o t n o t e 4 5 , p 3 1 0 . The l e a r n e d
gentlemen l i s t the f o l l o w i n g exceptions to the ' b e n e f i c i a r y p r i n -
ciple' : "(1) t r u s t s f o r t h e e r e c t i o n o r m a i n t e n a n c e o f monuments
o r g r a v e s ; (2) t r u s t s f o r t h e s a y i n g o f masses, i n j u r i s d i c t i o n s
where s u c h t r u s t s a r e n o t r e g a r d e d as c h a r i t a b l e ; (3) t r u s t s f o r t h e
m a i n t e n a n c e o f p a r t i c u l a r a n i m a l s ; (4) t r u s t s f o r t h e b e n e f i t o f
u n i n c o r p o r a t e d a s s o c i a t i o n s ( t h o u g h t h i s g r o u p i s more d o u b t f u l ) ;
(.5) m i s c e l l a n e o u s c a s e s " .

67. Supra, footnote 8.

68. Supra, footnote 14.

69. Supra, footnote 39.

70. I t i s a l w a y s p o s s i b l e t h a t b e n e f i c i a r i e s may c h o o s e not to initiate

proceedings.

71. N o t e , h o w e v e r , t h a t Re Astor h a s a l s o b e e n d i s t i n g u i s h e d on t h e
' b e n e f i c i a r y p r i n c i p l e ' p o i n t : Re Denley's Trust Deed, supra, f o o t n o t e
6;;Re Lipinski's Will Trusts [ 1 9 7 6 ] C h . 2 3 5 ; [ 1 9 7 6 ] 3 W.L.R.522; [ 1 9 7 7 ]
1 A l l E . R . 3 3 . Per O l i v e r , J . [ 1 9 7 7 ] 1 A l l E . R . 3 3 a t 4 3 - 4 4 . Discussed
infra pp 1 3 2 - 1 5 0 .

72. [1960] Ch.232; [1959] 3 W.L.R.799; [1959] 3 A l l E.R.562.

73. [1952] 1 A l l E.R.1067 a t 1 0 7 1 - 1 0 7 4 . Supra, pp 125-126.

74. [1959] 3 A l l E.R.562 a t 568.

75. Ibid, at 570-571.

76. Note, however, t h a t L o r d Evershed,M.R. u s e d r a t h e r an i n t e r e s t i n g

case i n the course o f h i s judgment. The n a t u r e o f t h e t e s t a m e n t a r y
g i f t i n Re Catherall ( u n r e p o r t e d ) was v e r y s i m i l a r t o t h a t i n
Endacott, y e t t h e t r u s t was u p h e l d . I t s r e l i g i o u s overtones might
have a t t r a c t e d a c h a r i t a b l e l a b e l . However, R o x b u r g h , J . ( o f Re
Astor fame) seemed p r e p a r e d t o u p h o l d i t e v e n a s a n o n - c h a r i t a b l e
p u r p o s e t r u s t , d e s p i t e t h e a b s e n c e o f human b e n e f i c i a r i e s : " I t was
argued whether t h i s i s a c h a r i t a b l e d i s p o s i t i o n . I h a v e r e a c h e d no
c o n c l u d e d o p i n i o n on t h a t . D i s t i n c t i o n s are very f i n e . I could
c o n s t r u e t h e words as m e a n i n g such p u r p o s e s (of a r e l i g i o u s c h a r a c -
t e r ) a s t h e y may t h i n k f i t , b e i n g s u i t a b l e a s a m e m o r i a l ; t h a t i s
c h a r i t a b l e ; o r I c o u l d c o n s t r u e t h e words as m e a n i n g any p u r p o s e
s u i t a b l e as a memorial; t h a t i s n o n - c h a r i t a b l e . But t h e r e i s a n o t h e r
g r o u n d on w h i c h t h i s t r u s t c a n be u p h e l d . I t i s not p e r p e t u i t o u s .
I w e n t i n t o t h e s e c a s e s i n Re Astor's Settlement Trusts. Such a
t r u s t as t h i s i s v a l i d whether c h a r i t a b l e o r n o t . P u r p o s e must
embody a d e f i n i t e c o n c e p t " . ( Q u o t e d b y L o r d E v e r s h e d i n Re Endacott
 - 169 -

[1959] 3 A l l E.R.562 a t 569.

77. Supra, footnote 30.

78. Ibid, at 753-757.

79. Bowman v. The Secular Society, supra, f o o t n o t e 14, and pp 109-114.

80. [1957] 1 A l l E.R.745 a t 758.

81. C o n s t r a i n e d by Re Astor from u p h o l d i n g the bequest as a t r u s t ,

Harman,J. had wanted t o h o l d i t v a l i d as a power ( a t 759).
Though t h e r e c o u l d be no guarantee o f performance, a t l e a s t
t h i s would more c l o s e l y approximate t o the t e s t a t o r ' s i n t e n t i o n s
than t o t a l f a i l u r e . There was s t r o n g a u t h o r i t y a g a i n s t t h i s
course o f a c t i o n , however, so the bequest f a i l e d . Nevertheless,
t h i s Was what happened i h the end, backed up by an u n d e r t a k i n g
from t h e t r u s t e e s t h a t trey would c a r r y out the p u r p o s e s . T h i s
was a c h i e v e d by a compromise, the v a l i d i t y o f which was a f f i r m e d
by the C o u r t o f Appeal : Re Shaw [1958] 1 A l l E.R.245.

82. Supra, f o o t n o t e 44. Discussed fully, supra, pp 33-50.

83. New South. Wales Conveyancing A c t 1919-1954, S.37D.

84. [1959] A.C.457 a t 478-479.

85. [1980] 3 A l l E.R.42; [1980] T.R.143. Affirmed [1982] 1 W.L.R.522;:

[1982] 2 A l l E.R.I

86. [1980] 3 A l l E.R.42. Per V i n e l o t t , J . a t 60. Italics added.

87. D i s c u s s e d i n the p r e c e d i n g c h a p t e r s , pp 33-78.

88. D i s c u s s e d supra, pp 33-50 & pp 51-78.

89. Supra, f o o t n o t e 15.

90. Supra, footnote 73.

91. Supra, footnote 44.

92. Supra, f o o t n o t e 6. See g e n e r a l l y , Evans, op.cit.supra, footnote

66 ; McKay, " T r u s t s f o r Purposes - Another View", (1973) 37 Conv.(N.S.)
420.

93. Supra, pp 121-12 7.

94. [1969] 1 Ch.373 a t 382-383.

95. Ibid a t 383.

96. Ibid a t 383-384.

97. S p e c i f i c a l l y , Re Lipinski's Will Trusts, supra, f o o t n o t e 71 ,- Re

 - 170 -

Grant's Will Trusts [1980] 1 w.L.R.360; [1979] 3 A l l E.R.359.

98. [1962] Ch.78; [1961] 3 W.L.R.924; [1961] 3 A l l E.R.588.

99. U n i t e d Kingdom C h a r i t a b l e T r u s t s ( V a l i d a t i o n ) A c t 1954, 2 & 3 E l i z . I I ,

c.58, s . l ( l ) .

100. [1962] Ch.78 a t 91 and 96, r e s p e c t i v e l y .

101. [1953] Ch.647; [1953] 3 W.L.R.183; [1953] 2 A l l E.R.350.

102. U n i t e d Kingdom S e t t l e d Land A c t 1925, 15 & 16 Geo.V, c.18, s.106.

103. [1896] 1 Ch.507; 65 J.L.Ch.298; 44 W.R.441.

104. [1969] 1 Ch.373 a t 383-384.

105. See, McKay, op.ait.supra, footnote 92.

106. F o r an attempt a t answering them, see, McKay, op.cit. supra, foot-

note 92.

107. [1969] 1 Ch.373 a t 383.

108. Another a l t e r n a t i v e i s t h a t i t c r e a t e s a f i d u c i a r y power - not a

trust at a l l . Another s u g g e s t i o n i s t h a t the Denley-type trust
r e p r e s e n t s a convergence o f p r i v a t e and purpose t r u s t s : L o v e l l ,
"Non-Charitable Purpose T r u s t s - F u r t h e r R e l e c t i o n s " , (1970) 34
Conv.(N.S.)77, pp 78-80.

109. [1969] 1 Ch.373 at'383 C.

110. Ibid a t 383 G.

111. T h i s i s e v i d e n t l y the view o f McKay,"Re L i p i n s k i and G i f t s t o

U n i n c o r p o r a t e d A s s o c i a t i o n s " , (1977) 9 V.U.W.L.R.I, pp 8-12.

112. [1841] C r . s Ph.240; 10 L.J.Ch.354. See a l s o , Re Chardon [1929] Ch.

464; 97 L.J.Ch.289 ; Re Smith [1928] Ch.915; 97 L.J.Ch..441 ; Re
Nelson [1928] Ch.920n; 97 L.J.Ch..443n ; Re Beckett's Settlement
[1940] Ch.279; 109 L.J.Ch.81 ; Re A.E.G. Unit Trust (Managers) Deed
[1957] Ch.415; [1957] 3 W.L.R.95; [1957] 2 A l l E.R.506. F o r a
review o f the r u l e ' s a p p l i c a t i o n i n Canada, see, Waters, Law o f
T r u s t s i n Canada (Toronto: C a r s w e l l , 1974), pp 811-829.

113. O l i v e r , J . demonstrates t h i s r e s u l t i n Re Lipinski's Will Trusts,

supra, f o o t n o t e 71 [1977] 1 A l l E.R.33 a t 42-46.

114. F o r a b r i e f d i s c u s s i o n o f t h i s t o p i c , see infra, pp 157-162.

115. Supra, footnote 58.

116. Per L o r d W i l b e r f o r c e [1970] 2 A l l E.R.228 a t 246. F o r a r e c e n t and

thorough a n a l y s i s o f the c e r t a i n t y requirement, see, Emery, op.cit.
supra, f o o t n o t e 11. See a l s o , infra, pp 152-157.
 - 171 -

117. [1955] Ch.20; [1954] 3 W.L.R.438; [1954] 3 A l l E.R.120.

118. As does Rickett, "Unincorporated Associations and t h e i r Dissolution",

(1980) 39 C.L.J.88, pp 104-106.

119. Discussed supra,pp 123-124.

120. Supra, footnote 97. Discussed supra, pp 64-66. C r i t i c i s e d on t h i s

issue i n , Green, "'Love's Labours Lost': A Note on Re Grant's W i l l
Trusts", (1980), 43 Mod.L.R.459, p 461.

121. [1979]3 A l l E.R.359 at 366-367.

122. Ibid at 368.

123. Ibid.

124. The f i r s t interpretation discussed above, pp 140-143. See also,

McKay, op.cit.supra, 'footnote 111.

125. Rickett, op. cit.supra, footnote 118-

126. Supra, footnote 71. See also, supra, pp 58-59.

127. [1977] 1 A l l E.R.33 at 43.

128. Ibid at 44.

129. Ibid, per O l i v e r , J . at 45.

130. Ibid at 45-46.

131. Re Denley, supra, footnote 6. Per Goff,J. [1969] 1 Ch.373 at 384.

132. Ibid at 382-383.

133. The d i s t i n c t i o n was rejected i n that context i n Re Recher's Will

Trusts [1972] Ch.526; [1971] 3 W.L.R.321; [1971] 3 A l l E.R.401.
See [1972] Ch.526 at 542; and Re Grant 's Will Trusts,.supra, footnote
97 [1979] 3 A l l E.R.359 at 365. See infra, pp 236-243.

134. As discussed supra, pp 139-140.

135. As d i d Rickett, "Mr. Justice V i n e l o t t on Unincorporated Associations

and G i f t s for Non-Charitable Purposes", (1982) 12 V.U.W.L.R.l, p 10.

136. See, Green, op.cit.supra, footnote 120.

137. See Bacon V. Pianta (1966), 114 C.L.R.634. For c r i t i c i s m of the

decision, see, Hogg, "Testamentary Dispositions to Unincorporated
Associations", (1971-1972) 8 Mel.U.L.Rev.l.

138. For example, Neville Estates v. Madden, supra, footnote 45, [1961]
3 A l l E.R.769 at 779 ; Leahy v. Attorney-General for New South
 - 172 -

Wales , supra, f o o t n o t e 44 [1959] 2 A l l E.R.300 a t 306 ,- Re

Recher's Will Trusts, supra, footnote 133 [1971] 3 A l l E.R.401 a t 404.

139. Supra, pp 125-131.

140. [1970] A.C.508; [1968] 3 W.L.R.1127; [1968] 3 A l l E.R.785.

141. [1970] A.C.508 a t 524.

142. See a l s o the d i s c u s s i o n , supra, pp 123-124.

143. F o r example, McPhail v. Doulton, supra, f o o t n o t e 58 ; Re Baden's
Deed Trusts (No.2) [1973] Ch.9; [1972] 3 W.L.R.250; [1972] 2 A l l E.R.
1304 ; Re Manisty's Settlement Trusts [1974] ch.17; [1973] 3 w.L.R.
341; [1973] 2 A l l E.R.1203 ; Re Looker's Settlement Trusts [1977]
1 W.L.R.1323; [1978] 1 A l l E.R.216 ; Re Barlow's Will Trusts [1979]
1 w.L.R.278; [1979] 1 A l l E.R.296 ; Re Bay's Settlement Trusts [1982]
1 W.L.R.202 ; [1981] 3 A l l E.R.786.

144. F o r example, Hopkins, " C e r t a i n U n c e r t a i n t i e s o f T r u s t s and Powers",

(1971) 29 C.L.J.68 ; H a r r i s , " T r u s t , Power and Duty", (1971) 87
L.Q.R.31 ; McKay, "Re Baden and the T h i r d C l a s s o f C e r t a i n t y " , (1974)
38 Conv.(N.S.)269 ; Emery, op.cit.supra, f o o t n o t e 11.

145. A classification used by Emery, op.cit.supra, f o o t n o t e 11.

146. D i s c u s s e d p r e s e n t l y , infra,pp 157-163.

147. Per L o r d W i l b e r f o r c e , McPhail V. Doulton, supra, f o o t n o t e 58 [1971]

A.C.424 a t 451.

148. McPhail v. Doulton, ibid, o v e r r u l i n g Inland Revenue Commissioners

v. Broadway Cottages Trust, supra, f o o t n o t e 117, which, had h e l d
t h a t a complete l i s t o f b e n e f i c i a r i e s was n e c e s s a r y i n both, c a s e s .
A l s o d i s c u s s e d , supra, pp 142-143.

149. Per Sachs, L . J . i n Re Baden's Deed Trusts (No.2), supra, footnote 143
[1973] Ch.9 a t 20.

150. Cf. Megaw,L.J., ibid a t 24 and Stamp,L.J., ibid a t 27-28.

151. Per L o r d Upjohn i n Re Gulbenkian's Settlement Trusts, supra, footnote

140 [1970] A.C.508 a t 524.

152. Per L o r d W i l b e r f o r c e i n McPhail V. Doulton, supra, f o o t n o t e 58 [1971]

A.C.424 a t 457.

153. Op.cit.supra, f o o t n o t e 11, p 558.

154. Per L o r d W i l b e r f o r c e i n McPhail V. Doulton, supra, footnote 152.

155. see Blausten v. Inland Revenue Commissioners [1972] Ch.256 d i s c u s s e d

i n Re Ray's Settlement Trusts, supra, f o o t n o t e 143.

156. (.1883), 11 L.R.Ir.Eq.236.

 - 173 -

157. Ibid at 246.

158. (1683), 2 Swan.454; 3 Ch.Cas.l; 22 E.R.931.

159. G r a y , The R u l e A g a i n s t P e r p e t u i t i e s , 4th.ed., ed. R. Gray (Boston:

L i t t l e , Brown & Co., 1 9 4 2 ) , i 201.

160. Leake V. Robinson ( 1 8 1 7 ) , 2 M e r . 3 6 3 ; 35 E . R . 9 7 9 . See, M o r r i s &

L e a c h , op.ait.supra, f o o t n o t e 45, pp 101 f f ; L e a c h , "The Rule
A g a i n s t P e r p e t u i t i e s a n d G i f t s t o C l a s s e s " , (1938) 51 H a r v . L . R . 1 3 2 9 .

161. F o r example, U n i t e d Kingdom P e r p e t u i t i e s and A c c u m u l a t i o n s A c t 1964,

c . 5 5 ; i n C a n a d a , f o r e x a m p l e , B r i t i s h C o l u m b i a P e r p e t u i t y A c t , R.S.B.C.
1979, c . 3 2 1 ; i n A u s t r a l i a , f o r e x a m p l e , W e s t e r n A u s t r a l i a Law R e f o r m
( P r o p e r t y , P e r p e t u i t i e s a n d S u c c e s s i o n ) A c t 1962, No.83 - now
P r o p e r t y Law A c t 1969, No.32, P t . x i ; New Z e a l a n d P e r p e t u i t i e s A c t
1964, No.47. For d e t a i l s of reform enacted i n other j u r i s d i c t i o n s see,
M a u d s l e y , The M o d e r n Law o f P e r p e t u i t i e s ( L o n d o n : B u t t e r w o r t h s ,
1 9 7 9 ) , pp 247-256.

162. U n i t e d Kingdom A c t , s . 3 ( l ) . Parallel provisions : British Columbia

A c t , s s . 4 , 5; New Z e a l a n d A c t , s.8; W e s t e r n A u s t r a l i a A c t , s.7.

163. U n i t e d Kingdom A c t , s . 3 ( 5 ) ( a ) & ( b ) ( i ) . Parallel provisions :

B r i t i s h C o l u m b i a A c t , s.6; New Z e a l a n d A c t , s . 8 ( 4 ) & ( 5 ) ; cf.
Western A u s t r a l i a Act, s.7(3).

164. U n i t e d Kingdom A c t , s.3(4) ( a ) .

165. Ibid, s . 3 ( 4 ) (b) .

166. Ibid, s.3(5)(b)(i).

167. Ibid, s.3(4)(a). Italics added.

168. Supra, pp 157-158.

169. U n i t e d Kingdom A c t , s . 4 ( 4 ) . Parallel p r o v i s i o n s : B r i t i s h Columbia

A c t , s . 8 ( 2 ) ; New Z e a l a n d A c t , s . 9 ( 4 ) ; Western A u s t r a l i a Act,s.10.

170. U n i t e d Kingdom A c t , s . l 5 ( 5 ) . P a r a l l e l p r o v i s i o n s : B r i t i s h Columbia

A c t , s.25, B . C . R e g s . 4 6 4 / 7 8 , J a n u a r y 1,. 1 9 7 9 W e s t e r n . A u s t r a l i a A c t ,
s . 3 ( l ) , December 6, 1962; New Z e a l a n d A c t , s . 4 ( l ) , November 11, 1964.

171. U n i t e d Kingdom A c t , s . 3 ( l ) . Parallel provisions : British Columbia

A c t , s.13; New Z e a l a n d A c t , s.8(l).

172. I t a p p e a r s t h a t the U n i t e d Kingdom l e g i s l a t i o n has been a n a l y s e d

by t h e s u p e r i o r c o u r t s o n l y i n t h e f o l l o w i n g c a s e s : Re Holt's
Settlement [1969] 1 Ch.100; [1968] 2 W.L.R.653; [1968] 1 A l l E.R.
470 ; Re Thomas Meadows & Co.Ltd. and Subsidiary Companies (i960)
Staff Pension Scheme Rules [1970] 3 W.L.R.524; [1971] 1 A l l E.R.239.

173. M o r r i s & Wade, " P e r p e t u i t i e s R e f o r m - a t L a s t " , (1964) 80 L.Q.R.486,

p 5 34.
 - 174 -

174. T h i s p r o b l e m may be s o l v e d i n p a r t by the members' c o n t r a c t o f

a s s o c i a t i o n which may compel members t o u t i l i s e funds g i v e n
d i r e c t l y o r on t r u s t i n a s p e c i f i e d manner o r be sued f o r b r e a c h
o f c o n t r a c t i n d e f a u l t . F o r the o p e r a t i o n , advantages and d i s -
advantages o f t h i s mechanism, see supra, pp 51-78. I t i s em-
p h a s i s e d , however, t h a t any guarantee secured t o the donor by
t h i s method sounds p u r e l y i n c o n t r a c t ; i t has n o t h i n g t o do
w i t h the i n i t i a l mechanism o f d o n a t i o n by way of t r u s t ; i t i s
superimposed s u b s e q u e n t l y by v i r t u e o f the a s s o c i a t i o n ' s con-
s t i t u t i o n and by the n a t u r e o f the a s s o c i a t i o n i t s e l f .
 - 175 -

PART THREE

THE CONTROL ANALYSIS

 - 176 -

P a r t One explained the n a t u r e of the problem posed by the fact that

an u n i n c o r p o r a t e d a s s o c i a t i o n does not have the legal capacity i t s e l f to be

the r e c i p i e n t o f a d o n a t i o n . V a r i o u s a n a l y s e s are n e v e r t h e l e s s available

i n the current law o f the mechanism whereby d o n a t i o n s can be made to an

unincorporated association. The purpose o f P a r t Two was to outline nine

such a n a l y s e s . The aim of P a r t Three i s t o expound an a l t e r n a t i v e , and

more s a t i s f a c t o r y , s o l u t i o n t o the problem.

As was explained i n P a r t Two, none of the n i n e a n a l y s e s of g i f t s to

unincorporated associations which have been f o r m u l a t e d from time to time i s

satisfactory. A t p r e s e n t , the common law has no a n a l y s i s which p r o v i d e s a

donor w i t h both of the two r e s u l t s f o r which he aspires : t h a t i s , both the

v a l i d i t y o f his: g i f t t o the u n i n c o r p o r a t e d a s s o c i a t i o n , and a guarantee

that his g i f t w i l l e f f e c t i v e l y b e n e f i t the a s s o c i a t i o n , and no one else.

The Absolute G i f t Analysis e n t a i l s t h a t the g i f t take e f f e c t as one

to the current members of the a s s o c i a t i o n who are then under no more than

a moral o b l i g a t i o n t o u t i l i s e the funds f o r the purposes of the association.

The same i s t r u e o f a g i f t on t r u s t f o r the c u r r e n t members of the associ-

ation. A g i f t on t r u s t f o r p r e s e n t and f u t u r e members o f the association

is likely to f a i l i n the current s t a t e of the law. Even i f t h i s were not

the case, such an a n a l y s i s of a g i f t t o the a s s o c i a t i o n would be unsatis-

factory i n that, although i t introduces an element of c o n t i n u i t y t o the

"benefit derived from the g i f t which i s l a c k i n g i n the A b s o l u t e G i f t Analysis

and the a n a l y s i s of the g i f t as one on t r u s t f o r o n l y the p r e s e n t members

of the a s s o c i a t i o n , a g a i n the r e c i p i e n t s of the g i f t are merely under moral

o b l i g a t i o n s : t o use the fund to the advantage of the a s s o c i a t i o n o f which

they are members. There i s no l e g a l guarantee of b e n e f i t t o the association

 - 177 -

itself. I f the C o n t r a c t A n a l y s i s i s used, a g a i n the a c t u a l r e c i p i e n t s o f

the g i f t are the p r e s e n t members o f the a s s o c i a t i o n and i t i s only by

v i r t u e of p e r s o n a l c o n t r a c t u a l o b l i g a t i o n s t h a t they a r e r e s t r a i n e d from

u s i n g t h e donated funds f o r t h e i r own gain. T h i s r e s u l t s i n b o t h concep-

t u a l and p r a c t i c a l weaknesses, and by no means guarantees t h a t the intended

r e c i p i e n t - the a s s o c i a t i o n i t s e l f - w i l l b e n e f i t from the donation.

G e n e r a l l y speaking, the Mandate Theory s u f f e r s from the same d e f e c t and

p r o v i d e s o n l y the l i m i t e d guarantee of due performance f u r n i s h e d by a

c o n t r a c t u a l bond. Furthermore, each, of the f o u r B u r r e l l T h e o r i e s of Dona-

t i o n i s a v a i l a b l e o n l y i n the case of inter vivos g i f t s and p r o v i d e s no

g e n e r a l s o l u t i o n t o the problem o f g i f t s t o u n i n c o r p o r a t e d associations.

It i s t o the law o f t r u s t s t h a t one must t u r n t o f i n d an arrangement

which guarantees performance of the s p e c i f i c terms of a g i f t . However, as

was explained i n P a r t Two, a t r u s t f o r the n o n - c h a r i t a b l e purposes of an

unincorporated a s s o c i a t i o n shares the f a t e of a l l n o n - c h a r i t a b l e purpose

t r u s t s i n the c u r r e n t s t a t e of the law. Such t r u s t s are v a l i d o n l y i n

narrowly d e f i n e d , e x c e p t i o n a l cases which, are inadequate f o r g e n e r a l use.

In a l l o t h e r c a s e s , a n o n - c h a r i t a b l e purpose t r u s t f a i l s because i t has no

human b e n e f i c i a r i e s .

P a r t Three t h e r e f o r e o f f e r s an a n a l y s i s which would permit a gift on

t r u s t f o r the n o n - c h a r i t a b l e purposes o f an u n i n c o r p o r a t e d a s s o c i a t i o n to

be v a l i d , thus f u r n i s h i n g the guarantee of performance i n f a v o u r of the

a s s o c i a t i o n I t s e l f which a l l c u r r e n t a n a l y s e s lack. I t i s an uncontested

and b a s i c p r i n c i p l e t h a t a t r u s t must be e n f o r c e a b l e t o be v a l i d . Having

s a t i s f i e d the requirements of c e r t a i n t y and compliance w i t h the r u l e

against p e r p e t u i t i e s , a non-charitable t r u s t must a l s o c o n t a i n some mech-

 - 178 -

anism whereby the duties of i t s trustees can be enforced. This thesis in

no way questions the validity of the sentiment that " i t i s not possible to

contemplate with equanimity the c r e a t i o n of large funds devoted t o non-

charitable purposes which no court and no department of State can control,

or, i n the case of m a l a d m i n i s t r a t i o n , reform" However, t h e 'beneficiary

principle', which has prevailed i n the common law for over t h i r t y years,

stands f o r the proposition that this requirement of e n f o r c e a b i l i t y can be

satisfied only- by- t h e presence of d i r e c t b e n e f i c i a r i e s of the trust. It

will be. a r g u e d that this takes too restricted a view of the need for control

over trustees, and that the 'beneficiary principle' should be supplanted

by the so-called 'control principle'.

In b r i e f , the 'control principle', like the 'beneficiary principle',

acknowledges t h a t a t r u s t m u s t be enforceable. As compared w i t h the 'bene-

ficiary principle', however, i t argues t h a t the r e q u i s i t e element of con-

trol can be supplied by any one of numerous c l a s s e s of persons other than

direct b e n e f i c i a r i e s , provided that t h e y p o t e n t i a l l y have a claim over, or

interest i n , the subject-matter of the trust. It will be contended that

such, p e r s o n s include the following categories, each of which w i l l be dis-

cussed i n the pages which follow :-

i. Direct b e n e f i c i a r i e s of the trust: that i s ,

traditional cestuis que trust 2

;

ii. Factual b e n e f i c i a r i e s of the trust: that i s ,

individuals who, though not direct beneficiaries,

nevertheless enjoy a de facto advantage from

the existence and due administration of the trust ;

i i i . The settlor who creates an inter vivos trust

and who, being identifiable, stands to regain

 - 179 -

the funds by way o f r e v e r t e r on resulting

4

trust ;

iv. The r e p r e s e n t a t i v e s o f the e s t a t e o f a t e s -

t a t o r who c r e a t e s a testamentary t r u s t who

l i k e w i s e stand to r e c e i v e the funds under the

5

resulting trust doctrine :

v. A t e s t a t o r ' s l e g a t e e s who may b e n e f i t by way of

resulting trust ^;

vi. Those e n t i t l e d on the i n t e s t a c y o f a deceased

donor who c r e a t e s the t r u s t i n q u e s t i o n over

h i s r e s i d u a r y e s t a t e w i t h no f u r t h e r p r o v i s i o n
7

f o r undisposed-of funds ;

vii. The Crown, i n the case o f t r u s t s c r e a t e d by anon-

ymous o r u n i d e n t i f i a b l e p e r s o n s , and so on,

8
because of the n o t i o n of bona vacantia ;
viii. The r e s i d u a r y l e g a t e e s or remaindermen ( i f any)
9

named i n the t r u s t deed

I t w i l l be argued t h a t each o f the above c l a s s e s o f persons has standing to

go t o c o u r t and c o n t r o l the t r u s t e e i n h i s d e a l i n g s w i t h the funds e n t r u s t e d

to him. The e x i s t e n c e of any one i n d i v i d u a l w i t h i n any of the above c l a s s e s

s u f f i c e s t o render the t r u s t c o n t r o l l a b l e . A g i f t on t r u s t can therefore

be v a l i d even i f the t r u s t i s a n o n - c h a r i t a b l e purpose t r u s t which l a c k s

human b e n e f i c i a r i e s . T h i s use o f the 'control p r i n c i p l e 1

to analyse gifts

which v a l i d l y take e f f e c t by way o f n o n - c h a r i t a b l e purpose t r u s t w i l l be

c a l l e d the C o n t r o l A n a l y s i s .

The C o n t r o l A n a l y s i s as thus f o r m u l a t e d i s consistent with the

b a s i c p r i n c i p l e t h a t a t r u s t must be e n f o r c e a b l e . I t i s also desirable

 - 180 -

as a matter o f p u b l i c p o l i c y i n t h a t , g e n e r a l l y speaking, non-charitable

purpose t r u s t s a r e c r e a t e d t o f u r t h e r causes which are a t worst u n o b j e c t -

ionable, and a t b e s t b e n e f i c i a l t o s o c i e t y as a whole. I t i s submitted

t h a t t h e p r e s e n t a t t i t u d e towards n o n - c h a r i t a b l e purpose t r u s t s stifles

harmless d i s p l a y s o f g e n e r o s i t y without good reason.

Consistent as i t may be w i t h b a s i c l e g a l p r i n c i p l e and p o l i c y , how-

ever, i t w i l l be acknowledged t h a t t h e C o n t r o l A n a l y s i s may r u n i n t o p r a c -

t i c a l problems. The o b j e c t i o n can be v a l i d l y made t h a t , as a matter o f

p r a c t i c e and f a c t , c e r t a i n o f t h e above c l a s s e s o f persons i n p a r t i c u l a r

could n o t be r e l i e d upon t o e x e r t e f f e c t i v e c o n t r o l over t r u s t e e s . This

may be so f o r e i t h e r o f two reasons: the expense o f l i t i g a t i o n may o u t -

weigh, t h e p o t e n t i a l f i n a n c i a l advantage ( i f any), t o t h e i n d i v i d u a l o f due

administration o f the t r u s t (classes i i i , i v , v i i ) ; or the i n d i v i d u a l

may enjoy a d i s t i n c t f i n a n c i a l b e n e f i t from m a l a d m i n i s t r a t i o n of the t r u s t

( c l a s s e s v, v i and v i i i , i n c e r t a i n circumstances).. I t w i l l be admitted

t h a t such c o n s i d e r a t i o n s - a r e s t r o n g arguments a g a i n s t the v a l i d i t y o f the

' c o n t r o l p r i n c i p l e ' as a g e n e r a l p r i n c i p l e o f t h e law o f t r u s t s and the

f e a s i b i l i t y of the Control Analysis as a s a t i s f a c t o r y a n a l y s i s o f a l l

g i f t s on n o n - c h a r i t a b l e purpose t r u s t .

In t h e s p e c i f i c area o f d o n a t i o n s t o u n i n c o r p o r a t e d associations,

however, the o b j e c t i o n l o s e s i t s f o r c e e n t i r e l y . T h i s i s because, t o t h e

c l a s s e s i i through v i i i o f p o t e n t i a l c o n t r o l l e r s l i s t e d above, one can

add the f o l l o w i n g i n the case o f a g i f t t o an u n i n c o r p o r a t e d association:-

ix. The members o f t h e u n i n c o r p o r a t e d association

It w i l l be demonstrated t h a t t h e members o f an u n i n c o r p o r a t e d association

are i n p r a c t i c e e f f e c t i v e c o n t r o l l e r s o f t h e t r u s t e e s who h o l d funds on

 - 181 -

trust f o r that association. S i n c e t h i s i s so, the t r u s t i s e n f o r c e a b l e .

As a matter o f l e g a l p r i n c i p l e , p o l i c y and p r a c t i c e , t h e r e f o r e , a g i f t on

t r u s t f o r the n o n - c h a r i t a b l e purposes o f an u n i n c o r p o r a t e d association

ought t o be v a l i d .

Above a l l , i f a g i f t t o an u n i n c o r p o r a t e d a s s o c i a t i o n were i n t e r -

p r e t e d i n accordance w i t h t h e C o n t r o l A n a l y s i s , the a n a l y s i s would s u f f e r

from none o f t h e d e f i c i e n c i e s observed i n P a r t Two as i n h e r e n t i n a l l

nine a n a l y s e s discussed there. I n the f i r s t p l a c e , as compared w i t h t h e

current analyses o f g i f t s on n o n - c h a r i t a b l e purpose t r u s t , which i s based

on t h e ' b e n e f i c i a r y p r i n c i p l e ' , under t h e C o n t r o l A n a l y s i s t h e g i f t would

be v a l i d . Secondly, as- compared w i t h t h e A b s o l u t e G i f t A n a l y s i s , the

C o n t r a c t A n a l y s i s and the a n a l y s e s whereby the g i f t t a k e s e f f e c t on t r u s t

f o r members, under the C o n t r o l A n a l y s i s no l e g a l r i g h t s over t h e donated

funds would accrue t o t h e a s s o c i a t i o n ' s members. A l t h o u g h the members

might i n d i r e c t l y enjoy t h e advantage o f membership o f an e n r i c h e d a s s o c i -

ation, the b e n e f i t accrues t o the a s s o c i a t i o n i t s e l f . T h i r d l y , as com-

p a r e d with, the B u r r e l l T h e o r i e s o f Donation, and (again) the C o n t r a c t

A n a l y s i s , under t h e C o n t r o l A n a l y s i s enjoyment by t h e a s s o c i a t i o n o f t h a t

b e n e f i t i s guaranteed by the machinery and remedies o f t r u s t s law.

The d i s c u s s i o n w i l l proceed i n three chapters. The f i r s t chapter will

e x p l a i n the nature and s i g n i f i c a n c e o f t h e ' c o n t r o l p r i n c i p l e ' and i t s r o l e

w i t h i n the C o n t r o l A n a l y s i s . The second w i l l demonstrate the o p e r a t i o n o f

the C o n t r o l A n a l y s i s as an a n a l y s i s o f at~l n o n - c h a r i t a b l e purpose t r u s t s .

The t h i r d w i l l d e a l s p e c i f i c a l l y with, the C o n t r o l A n a l y s i s o f g i f t s on

t r u s t f o r the n o n - c h a r i t a b l e purposes o f an u n i n c o r p o r a t e d association.

* * * * * * * * * *
 - 182 -

FOOTNOTES : PART THREE, INTRODUCTORY COMMENTS

1.
[1952] 1 T.L. R . 1 0 0

2. Infra, p p 1 8 7 - • 1 8 9 .

3. Infra, p p 1 9 8 - • 2 0 3 .

4. Infra,pp 203-•208.

5. Infra,pp 208-•209.

6. Infra, p p 2 0 8 - • 2 1 3 .

7.

8. Infra,pp 213-•217.

9. Infra, p p 2 1 7 - • 2 2 7 .

10. Infra,pp 233-•253.

 - 183 -

I. THE CONTROL PRINCIPLE

1. Introduction

In o r d e r to be v a l i d , a t r u s t must s a t i s f y a t l e a s t t h r e e major

requirements. I t s o b j e c t s must be described with s u f f i c i e n t c e r t a i n t y 1

;

i t must comply w i t h the rule against perpetuities ; and i t must be en-

forceable. Throughout t h i s c h a p t e r , i t i s assumed t h a t the first two

requirements have been met i n any particular i n s t a n c e , and the emphasis

f a l l s t o t a l l y on the requirement of enforceability.

The f a c t t h a t the obligations o f a t r u s t e e must be subject to

enforcement by the c o u r t s of e q u i t y i s a b a s i c and fundamental p r i n c i p l e

3
of the law of t r u s t s . The r e a s o n i s simple :

There can be no t r u s t , over the e x e r c i s e o f which t h i s

C o u r t w i l l not assume a c o n t r o l ; f o r an u n c o n t r o l l a b l e
power o f d i s p o s i t i o n would be ownership, and hot t r u s t .

I t i s because the c r u c i a l word i s " c o n t r o l " t h a t the p r i n c i p l e which demands

a t r u s t to be controllable i s referred to here as the 'control principle'.

T h i s c h a p t e r w i l l examine the meaning and nature o f 'control' i n t h i s con-

text .

I t may be recalled t h a t the 'beneficiary principle' demands t h a t a

t r u s t be s u b j e c t to the control of d i r e c t human b e n e f i c i a r i e s before i t

s a t i s f i e s the requirement of enforceability. I t w i l l be argued t h a t t h i s i s

an overly-restrictive interpretation of the need f o r c o n t r o l and that the

'beneficiary principle' i s , i n f a c t , merely one i l l u s t r a t i o n o f the broader

and more f l e x i b l e 'control principle'. The 'control principle' will be

f o r m u l a t e d as f o l l o w s : a t r u s t which i s o t h e r w i s e v a l i d w i l l s a t i s f y the
 - 184 -

need f o r e n f o r c e a b i l i t y , even i f i t has no direct beneficiaries, provided

that t h e r e i s a t l e a s t one i d e n t i f i a b l e p e r s o n i n e x i s t e n c e who has suff-

i c i e n t i n t e r e s t i n the o p e r a t i o n of the t r u s t that he may draw a c o u r t ' s

attention t o the trustees' conduct i n r e l a t i o n t h e r e t o i f the need arises.

By re-examining the manner i n which d i r e c t b e n e f i c i a r i e s p e r f o r m the nec-

essary function o f c o n t r o l l i n g the e x e c u t i o n of a t r u s t i n t h e i r f a v o u r , i t

w i l l be seen t h a t exactly the same f u n c t i o n can be performed by other

individuals whose i n t e r e s t i n the.trust c o n f e r s upon them the standing to

5
exert control .

2. The Need f o r Control

In the eyes o f the law, when a t r u s t e e i s a p p o i n t e d by a t r u s t deed,

w i l l or d e c l a r a t i o n o f t r u s t and the p r o p e r t y which i s the subject-matter of

the trust i s transferred t o him, the trustee becomes the l e g a l owner o f that

property. The l e g a l e s t a t e i s v e s t e d i n h i s name and he holds l e g a l title.

Yet, i f the t r u s t i s v a l i d , the law o f t r u s t s w i l l guarantee the achieve-

ment of the stated aims of the s e t t l o r or t e s t a t o r i n creating the trust.

No c o n t r a c t need e x i s t between the trustee and the s e t t l o r i n the case of

an intev vivos t r u s t , nor between the trustee and the testator's personal

r e p r e s e n t a t i v e s i n the case of a testamentary t r u s t . Furthermore, i f the

t r u s t has direct beneficiaries, no agency r e l a t i o n s h i p e x i s t s between them

as p r i n c i p a l s and the trustee as agent. At no time i s a t r u s t e e necessarily

bound by contractual duties- o f t h i s n a t u r e . How then, can: the t r u s t .arrange-

ment f u n c t i o n t o a c h i e v e the expressed purposes o f the trust? How can there

be any guarantee t h a t the trustee will not e x e r c i s e the legal rights and

p r i v i l e g e s which, he enjoys as- owner and d i v e r t the p r o p e r t y t o h i s own use?

 - 185 -

6
The key l i e s i n the n o t i o n o f f i d u c i a r y o b l i g a t i o n :

E q u i t y has i n t e r v e n e d and not simply t o p r e v e n t

self-interested action. I t has imposed a g e n e r a l
o b l i g a t i o n on the f i d u c i a r y oontroZ'l'ing the
manner i n which he d e a l s w i t h and e x e r c i s e s h i s
discretions.

The key word i s " c o n t r o l " . By c o n f e r r i n g on a t r u s t e e the s p e c i a l s t a t u s

o f f i d u c i a r y , e q u i t y has recognised the need f o r c o n t r o l over h i s owner-

ship. " C o n t r o l " i s used above and throughout t h i s d i s c u s s i o n i n i t s e v e r y -

day, non-legal sense t o denote a simple concept. In the words of the Short-

er O x f o r d E n g l i s h D i c t i o n a r y , t o " c o n t r o l " someone means "to e x e r c i s e re-

s t r a i n t or d i r e c t i o n upon the f r e e a c t i o n o f " t h a t p e r s o n .

Therefore, c o n t r o l by the c o u r t s o f e q u i t y over the t r u s t e e as legal

owner, w i t h o u t which a t r u s t would not v a l i d l y e x i s t , i s a c h i e v e d by the

i m p o s i t i o n o f a f i d u c i a r y o b l i g a t i o n upon the t r u s t e e by those c o u r t s . The

statement t h a t the t r u s t e e owns the t r u s t p r o p e r t y i s o n l y t r u e t o the ex-

t e n t t h a t he i s a f i d u c i a r y , since equity controls or r e s t r a i n s h i s free

a c t i o n i n r e l a t i o n t o the p r o p e r t y . Without t h i s c o n t r o l , the trustee's

ownership would be a b s o l u t e and he c o u l d d i v e r t t r u s t funds t o h i s own use.

As a f i d u c i a r y , on the o t h e r hand, the t r u s t e e i s r e s t r a i n e d from d e a l i n g

w i t h the t r u s t p r o p e r t y as h i s own o r o t h e r w i s e i n b r e a c h o f the terms of

the t r u s t , both by c o n t r o l s i m p l i e d by e q u i t y once the t r u s t comes i n t o

being and by the s p e c i f i c and express l i m i t s s e t out i n the t r u s t deed or

s t a t e d i n the d e c l a r a t i o n o f t r u s t . The parameters o f the t r u s t e e ' s own-

e r s h i p of t r u s t p r o p e r t y are thus determined by the e x t e n t and scope of

equity's control. In sum, therefore, the ' c o n t r o l p r i n c i p l e ' stands f o r

the p r o p o s i t i o n t h a t , i f an arrangement c o n f e r s l e g a l ownership on a p e r s o n

but l a c k s a mechanism o f c o n t r o l l i n g t h a t ownership, i t i s not a v a l i d t r u s t .

 - 186 -

The p r i n c i p l e i s u n i v e r s a l and h o l d s t r u e f o r both non-charitable

and charitable trusts. I n s o f a r as c h a r i t a b l e t r u s t s a r e concerned, i t was

7

p o i n t e d out a t t h e v e r y b e g i n n i n g of this thesis t h a t any d e t a i l e d d i s -

c u s s i o n o f t h e law r e l a t i n g t o c h a r i t a b l e t r u s t s would be o m i t t e d . T h i s was

because, i n g e n e r a l , they stand q u i t e a p a r t , i n a category o f t h e i r own, and

are g i v e n q u i t e d i f f e r e n t treatment from t r u s t s f o r purposes and p e o p l e o f

g

a n o n - c h a r i t a b l e nature . Nevertheless, t h e presence o f c o n t r o l over the

a c t i o n s o f t h e t r u s t e e s i s as important t o the v a l i d i t y of a c h a r i t a b l e

t r u s t as i t i s t o the v a l i d i t y o f a n o n - c h a r i t a b l e t r u s t and a c h a r i t a b l e

t r u s t can o n l y be v a l i d i f i t i s subject t o the c o n t r o l o f the courts o f

equity. However, c o n s i s t e n t l y w i t h t h e p r e f e r e n t i a l treatment accorded

c h a r i t a b l e t r u s t s i n r e c o g n i t i o n o f t h e i r v a l u e t o s o c i e t y and the S t a t e ,

a mechanism o f c o n t r o l i s a u t o m a t i c a l l y a v a i l a b l e v i a the Crown. The

Master o f t h e R o l l s , S i r W i l f r i d Greene, e x p l a i n e d t h e p o s i t i o n w i t h clarity
9
i n Re Diplook -.
[T]he Crown, as parens p a t r i a e t a k i n g a l l c h a r i t i e s
under i t s p r o t e c t i o n , i s i n a p o s i t i o n t o e n f o r c e
the t r u s t ; and t h e r e f o r e , although t h e r e may be no
s p e c i f i e d c h a r i t a b l e b e n e f i c i a r y who can come t o
the Court and i n s i s t on having t h e t r u s t performed,
n e v e r t h e l e s s t h e A t t o r n e y - G e n e r a l can appear and
i s e n t i t l e d t o i n s i s t on the t r u s t b e i n g c a r r i e d
out, i f necessary, by a scheme cy p r e s .
E q u i t y ' s concern t h a t the t r u s t be under c o n t r o l i s s a t i s f i e d by the

p r e s e n c e o f someone who has r i g h t s o f c o n t r o l over the arrangement.

In the case o f n o n - c h a r i t a b l e t r u s t s , however, t h e i d e n t i f i c a t i o n o f

a method o f c o n t r o l t o s a t i s f y the ' c o n t r o l p r i n c i p l e ' can be more problem-

atic . The f a c t t h a t the c u r r e n t law acknowledges t h a t the e x i s t e n c e o f

human b e n e f i c i a r i e s p r o v i d e s adequate c o n t r o l i s o f l i t t l e assistance unless

the b a s i s o f t h e i r a b i l i t y t o c o n t r o l i s understood. Again, i t i s submitted

 - 187 -

t h a t t h e key l i e s i n the n o t i o n o f f i d u c i a r y o b l i g a t i o n . Of i t s e l f , t h e

e x i s t e n c e o f an o b l i g a t i o n i s meaningless u n l e s s i t i s p e r f e c t e d by t h e e x i s -

tence o f a c o r r e s p o n d i n g r i g h t . In o r d e r t o a s c e r t a i n whether such a r i g h t

e x i s t s i n any p a r t i c u l a r case, the nature o f t h e t r u s t e e ' s o b l i g a t i o n must

be examined more c l o s e l y . I t has been seen t h a t t h e o v e r r i d i n g obligation

of a t r u s t e e as a f i d u c i a r y i s t o d e a l w i t h the p r o p e r t y t o which he h o l d s

title i n accordance w i t h t h e terms o f t h e t r u s t , which a l l o c a t e t o numer-

ous parties t h e i r respective i n t e r e s t s i n the t r u s t p r o p e r t y . I f he broke

h i s o b l i g a t i o n and used t h e funds f o r h i s own b e n e f i t , that a l l o c a t i o n

would be u p s e t . T h e r e f o r e , i t i s submitted t h a t each o f those p a r t i e s t o

whom i n t e r e s t s have been a l l o c a t e d should have t h e r i g h t t o p r e v e n t such an

eventuality. They s h o u l d be e n t i t l e d n o t t o have those i n t e r e s t s impaired

or i n t e r f e r e d w i t h by t h e t r u s t e e . Only i f t h e e x i s t e n c e o f t h e s e r i g h t s

can be found does t h e f i d u c i a r y o b l i g a t i o n become e n f o r c e a b l e and c o n t r o l

over t h e t r u s t become e f f e c t i v e . Therefore i t i s only i f persons holding

such, r i g h t s can be found t h a t t h e ' c o n t r o l p r i n c i p l e ' i s s a t i s f i e d and t h e

t r u s t is- v a l i d .

That t h i s i s t h e t r u e b a s i s of the a b i l i t y of direct beneficiaries

t o s a t i s f y t h e ' c o n t r o l p r i n c i p l e ' w i l l now be demonstrated.

3. Control by D i r e c t Beneficiaries

S conveys l a n d t o X and Y on t r u s t f o r h i s c h i l d r e n , A,B and C t o s e t

up i n b u s i n e s s when they r e a c h twenty-one. A,B and C a r e d i r e c t bene-

ficiaries o f t h e t r u s t t o whom p o t e n t i a l i n t e r e s t s i n t h e t r u s t p r o p e r t y

have been a l l o c a t e d . I t i s e v i d e n t t h a t , whatever e l s e they may have ^ ,

they have a p e c u n i a r y i n t e r e s t i n the t r u s t p r o p e r t y . I f X.,and Y broke

 - 188 -

their fiduciary obligations and sold the l a n d t o P, a bona fide pur-

chaser o f the l e g a l estate f o r value without notice, A, B and C would suffer

a pecuniary l o s s . They t h e r e f o r e have a r i g h t to r e s t r a i n the trustees

from d e a l i n g w i t h the p r o p e r t y o t h e r w i s e than i n accordance w i t h the terms

o f the trust. T h i s r i g h t g i v e s them s t a n d i n g t o go t o c o u r t and e x e r t con-

t r o l over them. Inter alia, they may ask f o r an injunction or, if the

b r e a c h has a l r e a d y o c c u r r e d , an account. The t r u s t therefore contains a

control mechanism and i n t h i s manner s a t i s f i e s the 'control principle'.

The t r u s t i s e n f o r c e a b l e and valid.

I t i s u n f o r t u n a t e t h a t the law o f income tax - the "cuckoo i n e q u i t y ' s

nest" ^ - has caused some c o n f u s i o n i n t h i s a r e a by redefining the position

of the direct beneficiary w i t h i n the t r u s t arrangement. In Bahev V. Avoher-

12

Shee , f o r example, t r u s t e e s were t r e a t e d , not as l e g a l owners of the

securities t h a t comprised the t r u s t fund, but as a mere c o n d u i t f o r the

passage o f funds t o the trust's beneficiary. As a result, the l a t t e r became

t a x a b l e on the income r e c e i v e d from the trust. T h i s was equivalent to saying

t h a t the t r u s t e e was: an agent o f the benficiary. T h i s s t r i k e s a t the very

essence of t r u s t e e s h i p s i n c e i t p l a c e s the beneficiary, not the trustee, at

the h e a r t o f the relationship. I t makes the beneficiary the owner of the

13
t r u s t p r o p e r t y , which d e s t r o y s the whole concept o f a trust

As V i s c o u n t Sumner s t a t e d i n h i s d i s s e n t i n g judgment i n Baker V.

Aroher-Shee 1 4
:

Lady Archer-Shee [the b e n e f i c i a r y ] . . . does not, f o r

income t a x purposes, i n my view own and i s not en-
t i t l e d to any o f the s t o c k s , shares, s e c u r i t i e s or
r e a l p r o p e r t y t h a t form p a r t o f the V.. t r u s t
estate. These belong to the t r u s t e e company
A l l t h a t she has i s a r i g h t , i n the forum o f the
t r u s t e e and o f the t r u s t fund, to have the t r u s t
 - 189 -

executed i n her favour under an o r d e r to be made

f o r her b e n e f i t by the a p p r o p r i a t e C o u r t o f e q u i t y .

As the 'control p r i n c i p l e 1
a s s e r t s , the t r u e p o s i t i o n o f the d i r e c t bene-

f i c i a r y o f a t r u s t i s as a r i g h t - h o l d e r , capable o f c o n t r o l l i n g the trustee

i n case o f m i s a p p l i c a t i o n of funds, but o t h e r w i s e merely the p a s s i v e re-

c i p i e n t of any b e n e f i t s t o which he is entitled. He can not i n s t r u c t the

t r u s t e e s on m a t t e r s i n v o l v i n g the t r u s t , nor can he become p e r s o n a l l y liable

to t h i r d p a r t i e s f o r the a c t i o n s o f the t r u s t e e s . Any resemblances between

the a g e n t / p r i n c i p a l r e l a t i o n s h i p and the t r u s t e e / b e n e f i c i a r y r e l a t i o n s h i p

are amply outweighed by fundamental d i f f e r e n c e s ^.

It i s therefore t o be hoped t h a t the view t h a t a b e n e f i c i a r y h o l d s

a p r o p r i e t a r y i n t e r e s t i n the t r u s t p r o p e r t y i t s e l f which i s administered

f o r him by a t r u s t e e as a mere agent w i l l be r e s t r i c t e d to t a x a t i o n cases,

or even to the f a c t s i t u a t i o n i n Baker v. Avehev-Shee, where the taxpaying

b e n e f i c i a r y was s o l e l y e n t i t l e d t o the income which was the subject-matter

16

o f the t r u s t . Whenever the i s s u e i n v o l v e s the working and supervision

o f the t r u s t machinery, the d i r e c t b e n e f i c i a r y has merely a spes o f ulti-

mate ownership i n the p r o p e r t y derived from the a l l o c a t i o n o f i n t e r e s t s

e x p r e s s e d i n the terms of the t r u s t . Meanwhile he e v i d e n t l y has a pecuni-

ary i n t e r e s t i n the due a d m i n i s t r a t i o n o f the t r u s t and i s thereby entitled

to go t o c o u r t and a s s e r t c o n t r o l over the t r u s t e e to ensure t h a t he exer-

c i s e s f a i t h f u l l y and without-negligence.the administrative r o l e h e l d by him

as a f i d u c i a r y . The d i r e c t b e n e f i c i a r y can t h e r e b y e x e r c i s e the control

r i g h t s t h a t are e s s e n t i a l t o the t r u s t arrangement. It i s for this reason

t h a t a t r u s t which has direct beneficiaries is valid.

4. C o n t r o l by Persons Other Than D i r e c t B e n e f i c i a r i e s

 - 190 -

When one examines the manner i n which d i r e c t b e n e f i c i a r i e s satisfy

the 'control principle', i t becomes apparent t h a t t h i s i s not exclusive to

direct beneficiaries alone. T h e i r r i g h t to e x e r c i s e c o n t r o l i s d e r i v e d from

t h e i r p e c u n i a r y i n t e r e s t i n the o p e r a t i o n of the trust. The allocation of

t r u s t funds i n the terms o f the t r u s t gave them an i n t e r e s t i n ensuring

that the t r u s t e e s performed t h e i r f i d u c i a r y o b l i g a t i o n not to i n t e r f e r e with

that allocation. Such an i n t e r e s t s u f f i c e s t o g i v e them s t a n d i n g t o invoke

the j u r i s d i c t i o n o f a c o u r t of e q u i t y and thus c o n t r o l the trustee.

However, s t a n d i n g t o a p p e a l t o the equitable j u r i s d i c t i o n of a court

i s not o n l y accorded to those who, like direct beneficiaries, have a spes

o f ownership i n the trust property. E q u i t a b l e p r i n c i p l e s are flexible and

expansive, and "any attempt t o found the j u r i s d i c t i o n to g r a n t injunctions

[ f o r example] e x c l u s i v e l y upon the e x i s t e n c e o f p r o p e r t y or proprietary

17

r i g h t s cannot be justified" . Thus i t i s t h a t Spry, speaking o f injunc-

t i o n s but u s i n g words e q u a l l y a p p l i c a b l e t o e q u i t a b l e remedies i n g e n e r a l ,

18
says :
[A] somewhat d i f f e r e n t b a s i s f o r the g r a n t o f i n -
j u n c t i o n s i s found where what i s i n q u e s t i o n i s ,
not the p r e v e n t i o n o f a breach o f the l e g a l r i g h t s
o f the p l a i n t i f f , but r a t h e r a need to p r e v e n t the
defendant from a c t i n g i n a manner which i s not i n
b r e a c h o f h i s l e g a l o b l i g a t i o n s but which i s nonethe-
l e s s unconscionable,• as b e i n g c o n t r a r y t o e s t a b l i s h e d
equitable p r i n c i p l e s or doctrines. Doctrines of t h i s
nature are seen i n a p p l i c a t i o n i n the r u l e s r e l a t i n g
to the a d m i n i s t r a t i o n o f t r u s t s , i n the r u l e s r e -
l a t i n g to f i d u c i a r y r e l a t i o n s h i p s

Since a t r u s t e e i s under a f i d u c i a r y o b l i g a t i o n not to i n t e r f e r e with the

a l l o c a t i o n of i n t e r e s t s s p e c i f i e d i n the terms o f the t r u s t , any such i n t e r -

ference i n breach of that obligation must s u r e l y be considered "unconscion-

able". A c o u r t of e q u i t y would t h e r e f o r e g r a n t a remedy t o any person

affected by such u n c o n s c i o n a b l e b e h a v i o u r . T h i s i n c l u d e s all those whose

 - 191 -

pecuniary i n t e r e s t s are affected by the e x i s t e n c e o f the t r u s t and n o t

merely those who a r e d i r e c t b e n e f i c i a r i e s o f the t r u s t .

I t w i l l be demonstrated i n the next chapter i n the c o n t e x t o f a g i f t

on t r u s t f o r a n o n - c h a r i t a b l e purpose, t h a t the a c t i o n s o f t h e t r u s t e e

a f f e c t the p o t e n t i a l pecuniary i n t e r e s t s o f many i n d i v i d u a l s , i n c l u d i n g the

donor and the v a r i o u s persons who stand t o b e n e f i t , e i t h e r a f t e r the t r u s t

has d u l y r u n i t s course o r i f i t f a i l s f o r some r e a s o n . As such, they a r e as

e n t i t l e d t o be g r a n t e d s t a n d i n g t o c o n t r o l the t r u s t e e s as a r e t h e d i r e c t
19

beneficiaries o f a t r u s t , and, as Lawson says " u b i remedium l b i ]us :

where t h e r e ' s a remedy t h e r e ' s a r i g h t " . . In o t h e r words, i t i s submitted

t h a t the f a c t t h a t these i n d i v i d u a l s a r e e n t i t l e d t o invoke the c o u r t s '

r e m e d i a l e q u i t a b l e j u r i s d i c t i o n t o remedy an u n c o n s c i o n a b l e situation re-

v e a l s t h a t they possess rights of control. Their pecuniary i n t e r e s t s i n the

e x e c u t i o n o f t h e t r u s t g i v e them a r i g h t t o e n f o r c e the t r u s t e e ' s f i d u c i -

ary obligation t o d e a l w i t h the trust p r o p e r t y l e g a l l y and i n accordance with

the terms o f t h e t r u s t . His obligation i s thus rendered meaningful and he

i s e f f e c t i v e l y subject to control. In t h i s manner, t h e ' c o n t r o l principle'

i s s a t i s f i e d , and the t r u s t should be c o n s i d e r e d e n f o r c e a b l e and t h e r e f o r e

valid.

In sum, i t i s submitted t h a t the b a s i c p r i n c i p l e t h a t a t r u s t must

be e n f o r c e a b l e t o be v a l i d can be complied w i t h i n e x a c t l y the same manner

by persons o t h e r than d i r e c t b e n e f i c i a r i e s as i t i s when d i r e c t beneficiaries

are present. A t r u s t which i s otherwise v a l i d w i l l s a t i s f y t h e need f o r en-

forceability, even i f i t has no d i r e c t b e n e f i c i a r i e s , provided that there i s

a t l e a s t one i d e n t i f i a b l e p e r s o n i n e x i s t e n c e who has s u f f i c i e n t p e c u n i a r y

i n t e r e s t i n the o p e r a t i o n o f t h e t r u s t t h a t he can be s a i d t o h o l d a r i g h t
 - 192 -

of control over the t r u s t e e . Furthermore, i t i s argued t h a t he has a s u f f -

i c i e n t p e c u n i a r y i n t e r e s t i f he i s p r e s e n t l y o r p o t e n t i a l l y a f f e c t e d by the

a l l o c a t i o n o f funds, s t i p u l a t e d by the terms o f the t r u s t . I t i s the terms

o f the t r u s t t h a t d e f i n e the t r u s t e e ' s f i d u c i a r y o b l i g a t i o n o f which control

is essential.

The next c h a p t e r w i l l t e s t t h i s a n a l y s i s i n the c o n t e x t o f n o n - c h a r i -

t a b l e purpose t r u s t s by examining the p o s i t i o n o f s e v e r a l categories of

p e r s o n who have i n t e r e s t s i n such t r u s t s .

5. The Nature o f the C o n t r o l E x e r c i s e d

The r e - e x a m i n a t i o n o f the r o l e o f the d i r e c t b e n e f i c i a r i e s o f a

t r u s t i n the c o n t e x t o f the ' c o n t r o l p r i n c i p l e ' r a i s e s a few p o i n t s about

the nature o f the c o n t r o l which they e x e r c i s e which s h o u l d be clarified.

Firstly, i t has been s a i d t h a t , whenever a t r u s t e e acts, or f a i l s to act,

i n such a way t h a t he breaks, a term o f the f i d u c i a r y o b l i g a t i o n , the persons

whose p e c u n i a r y i n t e r e s t s are t h e r e b y a f f e c t e d have s t a n d i n g t o ask that

the t r u s t e e be c o n t r o l l e d or r e s t r a i n e d . However, i t s h o u l d be emphasised

that t h i s need not a c t u a l l y happen b e f o r e the t r u s t can be d e c l a r e d v a l i d .

The p o t e n t i a l for control, should such an e v e n t u a l i t y a t some time o c c u r ,

is- s u f f i c i e n t t o enable a v a l i d t r u s t to e x i s t , assuming t h a t a l l o t h e r

requirements f o r a v a l i d t r u s t have been complied w i t h . Likewise, i f a

person whose p e c u n i a r y i n t e r e s t has been damaged by the t r u s t e e ' s actions

chooses not t o go t o c o u r t i n v i n d i c a t i o n of t h i s r i g h t of control, such i n -

action does, not i n v a l i d a t e the t r u s t . The p o s s i b i l i t y t h a t the d i r e c t

b e n e f i c i a r i e s o f a t r u s t might not, i n case o f b r e a c h , e n f o r c e t h e i r rights

a g a i n s t the t r u s t e e has always existed, y e t has never l e d t o the s u g g e s t i o n

 - 193 -

t h a t the t r u s t i s i n v a l i d . Take the example, used by M a i t l a n d , of a t r u s t

which he s e t s up by p a y i n g over t o t r u s t e e s a sum of money upon t r u s t f o r

, . 20 . ,
h i s son . As M a i t l a n d says :

[M]y son i s the cestui que trust, and t h i s t r u s t

may be p e r f e c t l y c o n s t i t u t e d a l t h o u g h he knows
n o t h i n g about i t . He perhaps i s a baby i n arms,
o r perhaps he i s i n A u s t r a l i a , o r even perhaps he
i s unborn, f o r you may have a t r u s t f o r an unborn
p e r s o n or an u n a s c e r t a i n e d p e r s o n . Here i t can
not be s a i d t h a t cestui que trust p l a c e s any t r u s t
o r r e l i a n c e i n the t r u s t e e .

The p o s s i b i l i t y o f c o n t r o l by i d e n t i f i a b l e i n d i v i d u a l s i s enough f o r v a l i d -

i t y ab initio.

Secondly, the f a c t t h a t c o n t r o l by a p e c u n i a r y i n t e r e s t - h o l d e r may

21

not o c c u r does not t u r n the t r u s t i n t o a mere power . The essential diff-

erence between the two phenomena i s t h a t a t r u s t i s i m p e r a t i v e w h i l s t a

power i s p e r m i s s i v e . A t r u s t r e t a i n s i t s i m p e r a t i v e nature even i f no

one takes the s t e p s n e c e s s a r y t o compel performance by the t r u s t e e . The

nature of the arrangement can not depend on the chance t h a t someone may or

may not commence l i t i g a t i o n . The important f a c t i s t h a t , should the oper-

a t i o n o f the t r u s t be brought t o the a t t e n t i o n o f the c o u r t , the t r u s t e e , i f

found to be out o f l i n e , w i l l be commanded to perform h i s f i d u c i a r y obliga-

tions.

Thirdly, the c o u r t s h o u l d be w i l l i n g to e x e r c i s e g e n e r a l c o n t r o l o f
22

both a p o s i t i v e and a n e g a t i v e nature over the t r u s t e e . In o t h e r words,

once i t s a t t e n t i o n has been drawn to some problem i n r e l a t i o n to the admini-

s t r a t i o n o f the t r u s t , i t s h o u l d not f e e l r e s t r i c t e d to g i v i n g o n l y the

remedy r e q u e s t e d by the i n d i v i d u a l who happens t o come t o c o u r t (assuming

he has established his entitlement). I t s h o u l d oversee the t r u s t i n gener-

a l and make whatever o r d e r s i t c o n s i d e r s a p p r o p r i a t e . For example, take

 - 194 -

the case o f a fund t r a n s f e r r e d to t r u s t e e s S and T t o . I n v e s t and pay the

income thereon to A, B and C u n t i l they marry, w i t h d i s t r i b u t i o n of the

capital thereafter amongst X, Y and Z. I f X goes t o c o u r t and complains

t h a t the t r u s t e e s ' mode o f investment i s e r o d i n g the c a p i t a l t o which he

may one day become e n t i t l e d , he may qualify f o r and get an injunction.

However, i f a t the same time, on examining the o p e r a t i o n o f the trust,

the c o u r t n o t i c e s t h a t the t r u s t e e s are d e p r i v i n g A, B and C of t h e i r full

e n t i t l e m e n t by u n a u t h o r i s e d payments t o T, i t should a l s o o r d e r T t o account

t o A, B and C. The mere f a c t t h a t the direct beneficiaries, A, B and C,

are s i t t i n g on their rights and are not b e f o r e the c o u r t as plaintiffs

s h o u l d not p r e v e n t the c o u r t from e x e r c i s i n g general equitable control

23

over i t s f i d u c i a r y relationship w i t h S and T

6. Conclusion

I t has been argued t h a t the 'control p r i n c i p l e ' merely r e s t a t e s the

b a s i c p r i n c i p l e of t r u s t s law t h a t a t r u s t must be enforceable. Under the

'control principle', the fiduciary obligation imposed by e q u i t y on a

t r u s t e e must be c o n v e r t e d i n t o an effective control mechanism by the exis-

tence o f p e r s o n s who are e n t i t l e d to e n f o r c e i t . An otherwise v a l i d trust

i s e n f o r c e a b l e i f t h e r e i s a t l e a s t one p e r s o n who has the standing to

exercise this control over the trustee. Direct beneficiaries o f the trust

are merely one example o f the many c l a s s e s o f persons who f i t t h i s des-

c r i p t i o n and render a t r u s t c o n t r o l l a b l e and therefore v a l i d . The 'control

principle', thus formulated, i s the b a s i s o f the Control A n a l y s i s of gifts

on n o n - c h a r i t a b l e purpose t r u s t which f o l l o w s .

* * * * * * * * * *
 - 195 -

FOOTNOTES : CHAPTER I

1. D i s c u s s e d supra, pp 107-108, pp 123-124.

2. D i s c u s s e d supra, pp 117-121.

3. Moriae V. The Bishop of Durham (1804), 9 Ves.Jr.399; 32 E.R.656.

A f f i r m e d (1805), 10 Ves.Jr.522; 32 E.R.947. D i s c u s s e d supra,ppl07-l
Per S i r W. Grant, (1804),9 Ves.Jr.399 a t 404-405.

4. See supra, pp 125-126.

5. See a l s o , H a r r i s , " T r u s t , Power and Duty", (1971) 87 L.Q.R.31,

pp 36-39, pp 53-57.

6. Finn, F i d u c i a r y O l i g a t i o n s (Sydney: The Law Book Company L i m i t e d , 19

p 8. I t a l i c s added.

7. Supra, p 7.

8. See g e n e r a l l y , Hanbury & Maudsley, Modern E q u i t y , 11th.ed., eds.

R. H. Maudsley & J . E. M a r t i n (London: Stevens, 1981), pp 447-452.

9. [1941] 1 Ch.253 a t 259.

10. F o r a d e t a i l e d d i s c u s s i o n o f t h e p o s i t i o n o f b e n e f i c i a r i e s , see,
Waters, "The Nature o f the T r u s t B e n e f i c i a r y ' s I n t e r e s t " , (.1967).
45 Can.Bar Rev.219.

11. Waters, "The Law o f T r u s t s i n the 80s", (.1980-1981) 7 E.T.R.27,

p 32.

12. [1927] A.C.844; 96 L.J.K.B.803.

13. Cf. supra, pp 184-185.

14. [1927] A.C.844 a t 856.

15. See, Fridman, The Law o f Agency, 4th..ed. (London: B u t t e r w o r t h s ,

1976).., pp 15-18; Waters, op. cit. supra, f o o t n o t e 11, pp 38-50.

16. As. i n Reid's Trustees v. Commissioners- of Inland Revenue [1929]

S.C.439; .14 T.C.512, per L o r d Sands, (1929), 14 T.C.512 a t 528- .
529 Re Young [1942] V.L.R.4 ; Stannus v. Commissioner of Stamp
Duties [1947] N.Z.L.R.I, per C a l l a n , J . a t 24. But cf. M.N.R. v.
Trans-Canada Investment Corp. Ltd. [1955] 5 D.L.R.576; [1956]
S.C.R.49, where i t s scope was i n f a c t extended.

17. Spry, E q u i t a b l e Remedies, 2d.ed. (London: Sweet & Maxwell, 1980),

p 316.

18. Ibid, p 317. Italics added. See a l s o , K e r r , I n j u n c t i o n s , 6th.ed.,

 - 196 -

ed. J . M. P a t e r s o n ( F l o r i d a : Gaunt, 1981), pp 506-512.

19. Lawson, Remedies o f E n g l i s h Law, 2d.ed. (London: B u t t e r w o r t h s ,

1980), pp 1-2.

20. Maitland, Equity, 2d.ed.reprint (London: Cambridge U n i v e r s i t y

P r e s s , 1969), p 44.

21. Cf. The s o l u t i o n t o the problem o f f e r e d by, Ames, "The F a i l u r e o f

the ' T i l d e n T r u s t ' " , (1891-1892) 5 Harv.L.Rev.389 ; S c o t t , " T r u s t s
f o r C h a r i t a b l e and Benevolent Purposes" (1944-1945) 58 Harv.L.Rev.
548 ; and r e j e c t e d by Gray, " G i f t s f o r a N o n - C h a r i t a b l e Purpose"
(1901-1902) 15 Harv.L.Rev.509 ; Harman,L.J. i n Re Shaw [1957] 1
W.L.R.729; [1957] 1 A l l E.R.745 ; Evershed, M.R. i n Re Endacott
[1960] Ch.232 a t 246; [1959] 3 W.L.R.799;"[1959] 3 A l l E.R.562.
See supra, p 129, f o o t n o t e 81.

22. Cf. McKay, " T r u s t s f o r Purposes - Another View", (1973) 34 Conv.

(N.S.)420.

23. In a n t i c i p a t i o n o f an o b j e c t i o n t h a t might be made t o t h i s s u g g e s t i o n ,

i t i s p o i n t e d out t h a t t h i s g e n e r a l c o n t r o l i s not e q u i v a l e n t t o
the day-to-day s u p e r v i s i o n o f t r u s t s o f which the c o u r t s are so
wary.
 - 197 -

II. THE CONTROL ANALYSIS AND NON-CHARITABLE PURPOSE TRUSTS

1. Introduction

X settles f u n d s on A and B on trust t o pay the income t h e r e f r o m for

the purpose of beautifying the parking l o t s of Concrete C i t y for as long as

the law permits, and to resettle the c a p i t a l at the end of that period on

trust for his friends, Y and Z (who are parking l o t attendants). Assuming

for the sake o f argument t h a t the beautification of parking lots is a

non-charitable purpose, in the current state of the law the trust would

fail and the interests of Y and Z w o u l d be accelerated. However unobjection-

able i n terms of public policy the express intentions of X m i g h t be, they

w o u l d be defeated. This i s b e c a u s e Re Astor's Settlement Trusts 1

and the

line of c a s e s which, f o l l o w e d i t have e s t a b l i s h e d the principle that trusts

for n o n - c h a r i t a b l e p u r p o s e s must f a i l because t h e y have no human beneficiar-

ies. This so-called 'beneficiary principle' insists not merely that a

3

trust be enforceable (a p r o p o s i t i o n with which there can be no dispute )

but that the element of enforceability can only be p r o v i d e d by the presence

of d i r e c t human b e n e f i c i a r i e s . In the above example, the 'beneficiary prin-

ciple' is violated because there are no human b e n e f i c i a r i e s of the trust,

so the trust fails db initio.

The 'control p r i n c i p l e ' , on the other hand , stands for the pro-

position that a trust, which satisfies the requirements of certainty and

compliance with the rule against perpetuities, i s v a l i d provided that some-

one exists who has a pecuniary interest i n the execution of the trust and

who can therefore exercise control over the trustees. If this principle

is used to analyse the validity of a non-charitable purpose trust (the

 - 198 -

Control Analysis), the t r u s t w i l l not fail. As a matter o f p r i n c i p l e , i t

would be e n f o r c e a b l e under the Control Analysis. T h i s i s because numerous

5 .
classes o f persons e l i g i b l e t o e x e r c i s e c o n t r o l exist i n the law of trusts
6

g e n e r a l l y and o n l y one class - direct beneficiaries - i s lacking in the

s p e c i f i c case o f n o n - c h a r i t a b l e purpose t r u s t s . T h e r e f o r e , i n any particular

i n s t a n c e o f a n o n - c h a r i t a b l e purpose t r u s t , at!: l e a s t one c l a s s w i l l be avail-

a b l e t o s u p p l y the necessary c o n t r o l . Take the above example o f X's settle-

ment i n f a v o u r of the beautification of parking l o t s . As w i l l be demons-

trated i n t h i s c h a p t e r , X, Y and Z and the c i t i z e n s o f Concrete C i t y are

a l l affected by the a l l o c a t i o n o f funds attempted by the t r u s t and there-

f o r e have a p e c u n i a r y i n t e r e s t i n c o n t r o l l i n g the a c t i v i t i e s o f A and B, the

trustees. Under the Control Analysis, the t r u s t would, i n p r i n c i p l e , be

valid.

Four c l a s s e s o f persons whose e x i s t e n c e i n p r i n c i p l e can validate a

7 8
n o n - c h a r i t a b l e purpose t r u s t w i l l be discussed: 'factual beneficiaries' ;

the donor (or h i s e s t a t e ) ^; the Crown ; and residuary beneficiaries

However, the discussion w i l l reveal not o n l y the o p e r a t i o n o f the Control

A n a l y s i s i n p r i n c i p l e and i t s authoritative support, but a l s o the practi-

c a l problems t o which i t g i v e s r i s e i n many i n s t a n c e s .

2. 'Factual Beneficiaries'

S donates funds to X and Y on t r u s t t o b u i l d and m a i n t a i n a squash

c o u r t f o r the use o f law s t u d e n t s a t a named s c h o o l f o r a s p e c i f i e d p e r i o d

o f time. S i n c e i t i s assumed t h a t t h i s would not be considered a chari-

12

table trust and s i n c e t h e r e are no d i r e c t human b e n e f i c i a r i e s , S has

c r e a t e d a n o n - c h a r i t a b l e purpose t r u s t .
 - 199 -

13
Re Denley ' s Trust Deed nevertheless held that such a t r u s t would

be v a l i d , because i t confers a factual benefit on i n d i v i d u a l s : hence t h e

term 'factual beneficiaries'. I n t h e above example, the f a c t u a l bene-

ficiaries a r e t h e law s t u d e n t s . Although they h a v e no spes o f ownership

14

in the trust fund (as compared w i t h direct beneficiaries ) , on t h e a u t h -

ority o f Re Denley, the t r u s t i s enforceable b y them a n d t h e r e f o r e valid.

Although s u c h was n o t t h e e x p r e s s b a s i s of the decision i n Re

Denley, t h e above c o n c l u s i o n c a n be r e a d i l y explained i n terms o f t h e

'control principle'. Factual beneficiaries enjoy a de facto advantage

from t h e t r u s t ' s execution, and the pecuniary benefit of not having to

pay f o r the p r i v i l e g e s and r i g h t s which i t confers. They a r e t h e r e f o r e

affected by t h e a l l o c a t i o n o f f u n d s effected by t h e t r u s t and have ' i n t -

erests i n t h e due a n d p r o p e r , continued performance o f t h e i r obligations

by the trustees. I n t h e above example, i f X and Y c l o s e d down t h e s q u a s h

court and s o l d the property i n i t t o commercial concerns, i n breach o f

their fiduciary obligations, the f a c t u a l beneficiaries of the trust would

suffer some d e p r i v a t i o n . Any such m i s a p p l i c a t i o n o f funds o r o t h e r breach

15

of t r u s t w o u l d be " u n c o n s c i o n a b l e " . This suffices to give the f a c t u a l

beneficiaries standing f o r the duration of the trust t o go t o c o u r t and

assert their rights of control t o secure proper performance o f the trustees'

obligations should they feel so i n c l i n e d . As a m a t t e r o f p r i n c i p l e ,

equity i s satisfied that the p o s s i b i l i t y of control i n t h i s manner exists

ab •initio and that the trust i s under s u r v e i l l a n c e . From t h e p r a c t i c a l

point o f view, i t i s more l i k e l y than not that factual beneficiaries would

indeed exercise their rights of control i n such a s i t u a t i o n . The continu-

ation o f t h e a d v a n t a g e s which, t h e y a r e e n t i t l e d t o e n j o y u n d e r t h e t r u s t

can only be a s s u r e d b y due a d m i n i s t r a t i o n of the trust, which they a r e

 - 200 -

e n t i t l e d to compel. The ' c o n t r o l p r i n c i p l e ' i s t h e r e f o r e complied with

and the t r u s t i s v a l i d .

I t i s submitted that t h i s Control A n a l y s i s of a non-charitable pur-

17

pose t r u s t can be seen i n o p e r a t i o n i n Re Trusts of the Abbott Fund

In t h a t case, a sum o f money was c o l l e c t e d and h e l d on t r u s t f o r the main-

tenance o f two deaf and dumb l a d i e s who subsequently d i e d . I t was held

t h a t they had had no p r o p r i e t a r y i n t e r e s t s i n the t r u s t fund, so they were

not d i r e c t b e n e f i c i a r i e s . The t r u s t was therefore a non-charitable purpose

t r u s t but was nevertheless valid. The l a d i e s had been f a c t u a l b e n e f i c i a r i e s

of the t r u s t d u r i n g t h e i r l i f e t i m e s . They had d e r i v e d the b e n e f i t o f fin-

a n c i a l a s s i s t a n c e and m e d i c a l care under the t r u s t and were t h e r e f o r e entit-

18
l e d to e x e r c i s e r i g h t s o f c o n t r o l over the t r u s t e e s . As S t i r l i n g , J . s a i d :
[ l ] f the t r u s t e e s had not done t h e i r duty - i f they
e i t h e r f a i l e d t o e x e r c i s e t h e i r d i s c r e t i o n or e x e r -
c i s e d i t i m p r o p e r l y - the l a d i e s might s u c c e s s f u l l y
have a p p l i e d t o the C o u r t t o have the fund adminis-
t e r e d a c c o r d i n g t o the terms o f the c i r c u l a r .

The t r u s t had t h e r e f o r e been e n f o r c e a b l e and v a l i d , and o n l y f a i l e d when

the l a d i e s d i e d , l e a v i n g s u r p l u s funds a v a i l a b l e .

Other cases which i l l u s t r a t e the C o n t r o l A n a l y s i s i n o p e r a t i o n are

19 . 20
those which were c i t e d i n Re Henley Re Harpur's Will Trusts , Re
21
Aberconway's Settlement Trusts and Re Bowes.

In Re Harpur's Will Trusts, the E n g l i s h . Court o f Appeal had to deal

with the t e s t a t r i x ' s d i r e c t i o n to t r u s t e e s t o pay and d i v i d e her residu-

a r y e s t a t e "between such i n s t i t u t i o n s and a s s o c i a t i o n s having for their

main o b j e c t the a s s i s t a n c e and care o f s o l d i e r s , s a i l o r s , airmen, and other

members o f His: M a j e s t y ' s F o r c e s who have been wounded o r i n c a p a c i t a t e d

 - 201 -

23
d u r i n g the r e c e n t w o r l d wars". L o r d Evershed said that t h i s non-

c h a r i t a b l e t r u s t f o r the f a c t u a l b e n e f i t o f the war v e t e r a n s would have

been v a l i d i f expressed with s u f f i c i e n t c e r t a i n t y . I t would not have

failed f o r lack of c o n t r o l l a b i l i t y . The b e n e f i t c o n f e r r e d upon the v e t e r -

ans by the due a d m i n i s t r a t i o n o f the t r u s t would have g i v e n them s t a n d i n g

to secure c o n t i n u e d and p r o p e r performance by the t r u s t e e s o f t h e i r oblig-

ations. Had the need a r i s e n , they c o u l d have c o n t r o l l e d the t r u s t ' s exe-

cution. The b e n e f i t c o n f e r r e d was presumably by way of medical, rehabili-

t a t i v e and financial aid. The r e c i p i e n t s would not thereby a c q u i r e any

i n t e r e s t i n the t r u s t p r o p e r t y i t s e l f . T h e i r b e n e f i t was of a purely

pecuniary nature.

24

In Re Aberconway's Settlement Trusts , the t r u s t c r e a t e d by Lady

Aberconway was on terms t o a p p l y the income o f s e t t l e d l a n d , o f which her

son was tenant f o r l i f e , inter alia " i n o r towards s e c u r i n g and assisting

and d e v e l o p i n g the use o f the ... gardens a t Bodnant f o r the cultivation

of p l a n t s and f l o w e r s o f home and f o r e i g n c o u n t r i e s o f b o t a n i c a l and hor-

t i c u l t u r a l i n t e r e s t and f o r experiments i n the p r o d u c t i o n and hybridization

of f o r e i g n and domestic f l o w e r s and p l a n t s o f a l l k i n d s " . I t was assumed

t h a t t h i s n o n - c h a r i t a b l e t r u s t was v a l i d d e s p i t e the absence o f direct

human b e n e f i c i a r i e s , because t h e r e was a f a c t u a l b e n e f i c i a r y who was seen

as a p o t e n t i a l c o n t r o l l e r o f the t r u s t e e s . Lord Evershed,M.R. e x p l a i n e d

25
the nature of the b e n e f i t i n q u e s t i o n :
In t h i s case, the p r o v i s i o n s o f the Garden s e t t l e -
ment may, no doubt, be regarded as i n d i r e c t l y
f o r the b e n e f i t o f the tenant f o r l i f e , a t any
r a t e so l o n g as the t e n a n t f o r l i f e happens t o
enjoy the a m e n i t i e s o f a good garden o r happens
to be an amateur o f h o r t i c u l t u r e .

26
The son was "not e n t i t l e d to touch a penny o f the income" . Neverthe-
 - 202 -

l e s s , the terms o f t h e t r u s t c o n f e r r e d upon him t h e f a c t u a l and p e c u n i -

ary b e n e f i t of enjoying a garden m a i n t a i n e d a t t h e expense o f the t r u s t .

T h i s e n t i t l e d him t o e x e r c i s e r i g h t s o f c o n t r o l over t h e t r u s t e e s and was

the b a s i s o f t h e t r u s t ' s v a l i d i t y .

21

In Re Bowes , a trust "to expend-^ 5,000 i n p l a n t i n g t r e e s f o r

s h e l t e r " on s e t t l e d l a n d o f which the t e s t a t o r was tenant f o r l i f e was

h e l d t o be a v a l i d t r u s t . I t i s submitted t h a t t h i s was because the

C o n t r o l A n a l y s i s was used. The c o u r t concluded t h a t the t r u s t was "a

v a l i d t r u s t t o l a y o u t money f o r the b e n e f i t o f t h e persons e n t i t l e d t o

28

the e s t a t e " . The b e n e f i t t h e r e was t h a t o f an improvement t o t h e v a l u e

o f t h e e s t a t e which the f a c t u a l b e n e f i c i a r i e s , as tenant f o r l i f e and t e n -

ant i n t a i l , owned. They t h e r e f o r e had a p e c u n i a r y i n t e r e s t i n due p e r -

formance o f t h e t r u s t and ho doubt would have taken t h e n e c e s s a r y steps

t o ensure t h a t the t r u s t e e s a c t e d a c c o r d i n g l y , had the need a r i s e n . The

t r u s t was t h e r e f o r e under c o n t r o l and the ' c o n t r o l p r i n c i p l e ' satisfied.

To summarise t h i s s e c t i o n , i t i s concluded t h a t a g i f t on non-

c h a r i t a b l e purpose t r u s t i s v a l i d ( p r o v i d e d the c e r t a i n t y and p e r p e t u i t y

requirements f o r v a l i d i t y a r e s a t i s f i e d ) , i f t h e r e a r e i n d i v i d u a l s who

derive a f a c t u a l , pecuniary b e n e f i t from t h e g i f t . In t h e c u r r e n t s t a t e

of t h e law, t h i s i s e x p l a i n e d i n terms o f the ' b e n e f i c i a r y p r i n c i p l e ' .

I t i s submitted, however, t h a t i t i s r a t h e r an i l l u s t r a t i o n o f the v a l i d i t y

of t h e C o n t r o l A n a l y s i s . The r e c e i p t o f t h e b e n e f i t g i v e s t h e f a c t u a l

b e n e f i c i a r i e s an i n t e r e s t i n t h e due performance o f t h e t r u s t . On a p p l i -

cation to a court of equity, they would be accorded s t a n d i n g t o ask f o r

preventive o r r e s t i t u t i v e remedies a g a i n s t t r u s t e e s who t h r e a t e n e d o r com-

m i t t e d any breach, o f . t r u s t . Meanwhile, throughout t h e e x i s t e n c e o f t h e

 - 203 -

trust, these p o t e n t i a l l i t i g a n t s hover i n s u r v e i l l a n c e over the t r u s t e e s .

The l e g a l ownership o f the t r u s t e e s can be r e s t r a i n e d thereby i n the

manner demanded by e q u i t y o f those i n the p o s i t i o n o f f i d u c i a r i e s . Thus

c o n t r o l l e d , the t r u s t i s v a l i d .

Under the C o n t r o l A n a l y s i s , t h e r e f o r e , S's g i f t t o X and Y t o

b u i l d a squash c o u r t f o r use by law s t u d e n t s would be e n f o r c e a b l e and valid.

Similarly, i f one r e f e r s back t o the h y p o t h e s i s used i n the i n t r o d u c t i o n t o

29 .
t h i s chapter , i t i s p o s s i b l e t o argue t h a t the g i f t t o A and B on trust

to b e a u t i f y p a r k i n g l o t s a l s o has f a c t u a l b e n e f i c i a r i e s : the c i t i z e n s o f
30

Concrete C i t y

3. The Donor

S makes an irvbev vivos s e t t l e m e n t o f funds on A and B on t r u s t t o

a c h i e v e purpose X. I f purpose X i s d u l y a c h i e v e d w i t h o u t e x h a u s t i n g the
funds d e s i g n a t e d t h e r e f o r , the s u r p l u s funds are h e l d on t r u s t f o r , and
31

r e s u l t to, S . T h e r e f o r e , q u i t e a p a r t from the n a t u r a l , emotional i n -

t e r e s t a donor has i n the d e s t i n a t i o n o f funds which he donates, S has a

p o t e n t i a l pecuniary i n t e r e s t i n the t r u s t he has s e t up.

The case i s s i m i l a r i f T makes a bequest o f funds t o C and D on trust

to be a p p l i e d f o r purposes Y and Z. For the sake o f d i s c u s s i o n , assume t h a t

purpose Y i s d e s c r i b e d w i t h i n s u f f i c i e n t c e r t a i n t y and t h a t purpose Z has

become i m p o s s i b l e by the date o f T's death. The t r u s t f o r those purposes

fails. C and D must then h o l d the funds on r e s u l t i n g t r u s t f o r T's execu-

t o r s t o be d i s t r i b u t e d by them e i t h e r as r e s i d u e i f T's w i l l so p r o v i d e s ,

or as undiposed-of funds i f not, o r i f the bequest i t s e l f was of r e s i d u e .

 - 204 -

T's r e s i d u a r y l e g a t e e s and i n t e s t a t e s u c c e s s o r s r e s p e c t i v e l y t h e r e f o r e have

32
p o t e n t i a l pecuniary i n t e r e s t s i n the g i f t . In a d d i t i o n , T's executors
33

are p o t e n t i a l l y i n t e r e s t e d i n the bequest because they a r e i n i t i a l l y

under a f i d u c i a r y duty t o ensure due a d m i n i s t r a t i o n o f T's e s t a t e . Obvious-

l y t h e i r i n t e r e s t w i l l cease when the e s t a t e has been a d m i n i s t e r e d and they

have d i s c h a r g e d their duty.

Both examples i l l u s t r a t e the d o c t r i n e o f r e s u l t i n g t r u s t : whenever

someone i n t e n d s t o c r e a t e a t r u s t but, as i t t u r n s o u t , t h e t r u s t i s i n e f f -

e c t u a l l y c r e a t e d , n o t expressed at a l l , or f a i l s , a resulting trust arises

i n favour of the c r e a t o r . The o p e r a t i o n o f t h e d o c t r i n e i s demonstrated

34

by t h e V a n d e r v e l l l i t i g a t i o n , where the s e t t l o r was h e l d l i a b l e t o income

tax because, having overlooked the p o s s i b i l i t y o f r e v e r t e r on r e s u l t i n g

t r u s t when he g r a n t e d an o p t i o n on t r u s t without naming b e n e f i c i a r i e s , he

had failed
t o d i v e s t h i m s e l f a b s o l u t e l y o f h i s i n t e r e s t i n the shares
35
which were t h e s u b j e c t o f t h a t o p t i o n . As Lord W i l b e r f o r c e s a i d :
The c o n c l u s i o n , on the f a c t s found, i s simply t h a t
the o p t i o n was v e s t e d i n the t r u s t e e company as
a t r u s t e e on t r u s t s , n o t d e f i n e d a t t h e time,
p o s s i b l y t o be d e f i n e d l a t e r . The equitable,
• or beneficial interest, however, cannot remain
in the air-, the consequence i n law must be t h a t
i t remains i n the s e t t l o r .

I t i s unnecessary f o r p r e s e n t purposes t o d i s c u s s t h e V a n d e r v e l l litigation

in detail. The l o n g and s h o r t o f i t was t h a t the s e t t l o r was demonstrated

to have r e t a i n e d a p e c u n i a r y i n t e r e s t i n t h e t r u s t which he had s e t up.

I t i s submitted t h a t the r e s u l t i n g t r u s t d o c t r i n e , l i k e the 'bene-

ficiary principle', i s merely an i l l u s t r a t i o n o f t h e fundamental p r i n c i p l e

upon which t h e ' c o n t r o l p r i n c i p l e ' i s based, t h a t a t r u s t must be e n f o r c e -

able. The r a t i o n a l e b e h i n d the d o c t r i n e o f r e s u l t i n g t r u s t s i s t h a t

 - 205 -

"equity abhors a beneficial vacuum" ^. In o t h e r words ^:

A resulting trust comes i n t o existence

w h e r e v e r t h e r e i s a gap i n t h e b e n e f i c i a l o w n e r -
ship. I t c e a s e s t o e x i s t w h e n e v e r t h a t gap is
f i l l e d by someone b e c o m i n g b e n e f i c i a l l y e n t i t l e d .
As s o o n a s t h e gap i s f i l l e d by t h e c r e a t i o n or
declaration of a v a l i d t r u s t , the r e s u l t i n g trust
comes t o an end.

Although the law does not always succeed in explaining the location of the

38

legal fee simple , i t insists upon b e i n g able to locate 'equitable owner-

ship' when l e g a l title and 'equitable ownership' are divided, as in the

39

case of a trust. This i s because, as already discussed , when a trust is

created the trustee i s the legal owner. The role of equity in developing

the notion of the trust was to recognise that the legal ownership of the

trustee as fiduciary had to be subject to restraints. Otherwise, the trust-

ee w o u l d be free to deal with the trust property as i f i t were h i s own, con-

trary to his undertaking as trustee and contrary to the intentions of the

settlor or testator. Therefore equity demands t h a t the trustee's owner-

ship be circumscribed by restraints or rights of control, loosely termed

'equitable ownership'. A gap in this latter i s not permitted.

The whole d o c t r i n e of resulting trusts i s s i m i l a r l y b a s e d on equity's

demand f o r control over the trustees as legal owners. As has been ex-

plained, when a valid trust is set up, the trustee owns t h e trust property

at law, but he is constantly subject to restraint by- p e r s o n s who hold rights

of control. This element of potential controllability is crucial to the

successful operation of the trust. However, e v e n when t h e trust comes to

an end because i t s objects have been a c h i e v e d , or fails, and there are sur-

plus trust funds, the trustee can not be permitted to exercise his full

rights over the f u n d s as legal owner o f them: he is still i n the position

of a fiduciary and can not become a b s o l u t e l y entitled at any time.

 - 206 -

Therefore equity imposes a n o t h e r trust u p o n him: a resulting trust. The

trustee has to hold the f u n d s on bare trust for the s e t t l o r or testator's

40
estate, whose s i t u a t i o n i s then analogous to that of a direct beneficiary

The s e t t l o r or testator has a direct pecuniary interest i n the resulting

trust and i s thus entitled to exercise rights of control over the trustee.

In t h i s manner, the gap in control is filled.

With the possible exception of the situation which w i l l be discussed

41

in due course , a resulting trust might a r i s e at any time d u r i n g the

intended existence of the original trust. Even i f the trust initially takes

effect, there i s always the p o s s i b i l i t y of a resulting trust. Those who

w o u l d become e n t i t l e d to the surplus funds as beneficiaries of the result-

ing trust on s u c h an occurrence stand to benefit at any time. They there-

fore have p o t e n t i a l pecuniary interests i n the original trust from its

inception.

(i) Inter' Vivos Gift .

To illustrate this firstly in the context of an inter vivos trust,

42

take the hypothesis posed above of a gift by S to A and B on trust to

achieve purpose X which does not exhaust the funds. If A and B perform

their duties under the trust properly and i n accordance with the standards

imposed upon them as f i d u c i a r i e s , when a resulting trust arises after

a c h i e v i n g p u r p o s e X, and S receives the surplus funds, he can have no

ground to challenge the quantum o f his pecuniary benefit. However, i f

the t r u s t e e s were p e r m i t t e d to squander the fund in applying i t for pur-

p o s e X, thus d e p l e t i n g the surplus available thereafter, S would suffer

a pecuniary loss. This eventuality i l l u s t r a t e s that S has an interest

 - 207 -

i n the due administration o f the t r u s t . In the event o f an a c t u a l or

threatened b r e a c h o f duty by the t r u s t e e s , i t i s submitted t h a t t h i s i n -

t e r e s t s u f f i c e s to give S standing t o appear b e f o r e a court of equity and

invoke r i g h t s o f c o n t r o l over the t r u s t e e s . The t r u s t therefore satisfies

the ' c o n t r o l p r i n c i p l e ' and is valid. I t i s submitted t h a t Roxburgh,J.

43
was m i s t a k e n i n Re Astor's Settlement Trusts when he said:

I f the purposes are v a l i d t r u s t s , the s e t t l o r s

have r e t a i n e d no b e n e f i c i a l i n t e r e s t and c o u l d
not i n i t i a t e [proceedings].

As a matter o f p r i n c i p l e , i t i s submitted t h a t the s e t t l o r does r e t a i n a

p o t e n t i a l p e c u n i a r y i n t e r e s t i n the t r u s t which he has s e t up, which s u f f r . 1

i c e s t o render the t r u s t c o n t r o l l a b l e . Furthermore, as a matter o f fact,

a s e t t l o r can be expected i n p r a c t i c e to e x e r c i s e h i s r i g h t s of c o n t r o l

to ensure t h a t the funds which he has donated reach t h e i r i n t e n d e d des-

t i n a t i o n , and not the p o c k e t s o f the t r u s t e e s . Under the C o n t r o l Analysis,

therefore, the t r u s t i s v a l i d .

The Control A n a l y s i s of a non-charitable purpose t r u s t can be illus-

t r a t e d by the case o f In re Hobourn Aero Components Limited's Air Raid

44

Distress Fund , where the t r u s t e e s were s u b j e c t e d to c o n t r o l v i a the

resulting trust doctrine. In t h a t case, a war emergency fund was estab-

l i s h e d through v o l u n t a r y c o n t r i b u t i o n s and d e d u c t i o n s from the wages o f

a company's employees. T h i s was h e l d by t r u s t e e s on t r u s t "to h e l p any

employee who i s i n d i r e d i s t r e s s as the r e s u l t o f enemy a c t i o n " . As the

end o f the war drew c l o s e r and the purposes o f the fund became redundant,

the fund was l i q u i d a t e d and representatives o f the donors a p p l i e d to

court f o r i t s d e c i s i o n on what s h o u l d be done w i t h the surplus. It was

h e l d t h a t the c o n t r i b u t o r s were e n t i t l e d on r e s u l t i n g t r u s t to have pro-

45
portionate shares o f the fund r e t u r n e d t o them. At f i r s t instance ,
 - 208 -

46
Cohen,J. e x p l a i n e d the b a s i s o f t h i s d e c i s i o n :

[T]he b a s i s on which the c o n t r i b u t i o n s are r e -

t u r n e d i s t h a t each donor r e t a i n e d an i n t e r e s t
i n the amount o f h i s c o n t r i b u t i o n s e x c e p t so f a r
as they a r e a p p l i e d f o r the purposes f o r which
they were s u b s c r i b e d .

The s e t t l o r s r e t a i n e d a p o t e n t i a l p e c u n i a r y i n t e r e s t i n the t r u s t which

f u r n i s h e d them w i t h c o n t r o l r i g h t s over t h e t r u s t e e s . The t r u s t was t h e r e -

f o r e c o n t r o l l a b l e and v a l i d ab initio s i n c e the ' c o n t r o l p r i n c i p l e ' had

been s a t i s f i e d . The case a l s o demonstrates how s e t t l o r s do i n p r a c t i c e

e x e r c i s e t h e i r c o n t r o l r i g h t s when the need a r i s e s . The C o n t r o l Analysis

o f g i f t s on n o n - c h a r i t a b l e purpose t r u s t i s t h e r e f o r e s a t i s f a c t o r y both

as a matter o f p r i n c i p l e and i n p r a c t i c e when the g i f t t a k e s e f f e c t intev

vivos.

( i i ) Testamentary Gift

The o p e r a t i o n o f t h e C o n t r o l A n a l y s i s i n the c o n t e x t o f a testamentary

47

gift can be i l l u s t r a t e d by t h e h y p o t h e s i s posed above o f a bequest by T

to C and D on t r u s t f o r purpose Y which f a i l s t o s a t i s f y certainty require-

ments, and purpose Z which i s i m p o s s i b l e . On f a i l u r e o f t h e bequest, t h e

funds r e v e r t by way o f r e s u l t i n g t r u s t t o T's e s t a t e . Initially, therefore,

it i s T's e x e c u t o r s who have an i n t e r e s t i n the a d m i n i s t r a t i o n o f t h e t r u s t .

They r e t a i n a p o t e n t i a l p e c u n i a r y i n t e r e s t i n the t r u s t funds because o f

48

the p o s s i b i l i t y o f a r e s u l t i n g t r u s t . Under the ' c o n t r o l p r i n c i p l e ' ,

t h i s means t h a t they a r e e n t i t l e d t o e x e r c i s e r i g h t s o f c o n t r o l over the

t r u s t e e s , t o r e s t r a i n them from v i o l a t i n g t h e terms o f the bequest. As

a matter o f p r i n c i p l e , t h e r e f o r e , t h e C o n t r o l A n a l y s i s o f t h e bequest

leads, t o t h e r e s u l t t h a t the t r u s t i s c o n t r o l l a b l e and t h e r e f o r e valid.

As, a m a t t e r o f p r a c t i c e , the duty o f an e x e c u t o r as f i d u c i a r y i s t o t h e

 - 209 -

49
e s t a t e as a whole , so one might expect executors t o keep a watchful
50

eye on t r u s t e e s who h o l d funds o f the e s t a t e and t o ensure t h a t the

terms o f the bequest are d u l y adhered t o . Since executors do not gener-

ally stand to b e n e f i t p e r s o n a l l y from the f a i l u r e of the bequest which

t r i g g e r s the r e s u l t i n g t r u s t d o c t r i n e , they are l i k e l y t o be as i n t e r e s t e d

i n due a d m i n i s t r a t i o n o f the t r u s t as i n i t s f a i l u r e .

However, the executors are not the o n l y persons w i t h p o t e n t i a l

interests i n a non-charitable purpose t r u s t c r e a t e d by a w i l l , and their

i n t e r e s t s cease on c o m p l e t i o n o f the a d m i n i s t r a t i o n o f the e s t a t e anyway.

I f , on t o t a l f a i l u r e o f the t r u s t or i n the event o f s u r p l u s funds remain-

i n g , funds r e v e r t t o the e s t a t e by way o f r e s u l t i n g t r u s t , they w i l l be

d i s t r i b u t e d e i t h e r t o r e s i d u a r y l e g a t e e s or to the t e s t a t o r ' s i n t e s t a t e

successors. In t h i s manner, the a l l o c a t i o n o f t r u s t funds by the terms o f

the bequest a f f e c t s r e s i d u a r y l e g a t e e s and i n t e s t a t e successors, and con-

f e r s on them p o t e n t i a l p e c u n i a r y i n t e r e s t s i n the t r u s t funds. Under the

'control p r i n c i p l e ' , t h e r e f o r e , they can be regarded as p o t e n t i a l c o n t r o l l -

e r s o f the t r u s t e e s . T h e i r p r e s e n c e s u f f i c e s to render the t r u s t v a l i d db

initio.

However, the C o n t r o l A n a l y s i s can not be assessed o n l y a t the theor-

etical level. I t must not o n l y comply w i t h b a s i c l e g a l p r i n c i p l e but must

also provide a p r a c t i c a b l e s o l u t i o n t o the problem o f the enforcement o f

non-charitable purpose t r u s t s . Direct beneficiaries, factual beneficiaries

and s e t t l o r s are a l l l i k e l y to e x e r c i s e t h e i r r i g h t s o f c o n t r o l i n p r a c t i c e

because they are a l l p e r s o n a l l y i n t e r e s t e d i n the due administration of

the t r u s t funds. R e a l i s t i c a l l y , however, the o b j e c t i o n can be v a l i d l y made

t h a t r e s i d u a r y l e g a t e e s and i n t e s t a t e successors are u n s u i t a b l e and unreli-

 - 210 -

a b l e c o n t r o l l e r s t o the e x t e n t that t h e i r r i g h t s o f c o n t r o l are depen-

dent on the r e s u l t i n g t r u s t d o c t r i n e . Since such an o b j e c t i o n has impor-

t a n t consequences f o r the f e a s i b i l i t y o f the C o n t r o l A n a l y s i s o f gifts

by way of non-charitable purpose t r u s t , i t warrants some d i s c u s s i o n .

An opponent o f the C o n t r o l A n a l y s i s can f o r c e f u l l y argue t h a t there

i s o n l y one s i t u a t i o n i n which r e s i d u a r y l e g a t e e s and intestate successors

are l i k e l y t o a c t to ensure compliance w i t h the terms o f the t r u s t . This i s

the s i t u a t i o n i n which the t r u s t e e ' s a c t i o n s are e x h a u s t i n g the t r u s t funds,

w h i l s t due a d m i n i s t r a t i o n would n o t . In such a case, the r e s i d u a r y lega-

t e e s and i n t e s t a t e successors would have s u f f i c i e n t p e c u n i a r y interest in

c o n t r o l l i n g the t r u s t e e t o e x e r c i s e t h e i r r i g h t s so t o do. U n l e s s checked,

the t r u s t e e ' s a c t i o n s would d i m i n i s h the s u r p l u s funds over which a r e s u l t i n g

t r u s t might a r i s e i n f a v o u r o f the t e s t a t o r ' s e s t a t e .

Otherwise, however.(the opponent's argument might c o n t i n u e ) , due

execution of the terms o f a bequest i s s u r e l y the last thing residuary

l e g a t e e s and i n t e s t a t e successors want. T h e i r i n t e r e s t i n the fund i s ,

more o f t e n than not, contingent on the failure o f the t r u s t . Therefore

they are l i k e l y t o e x e r c i s e the r i g h t s o f c o n t r o l which, i n p r i n c i p l e ,

they h o l d , o n l y when the v a l i d i t y o f the t r u s t i n q u e s t i o n i s subject to

doubt. They can d e r i v e no p e r s o n a l f i n a n c i a l b e n e f i t from s i t u a t i o n s where

the t r u s t e e i s m i s a p p l y i n g the funds o f a . v a l i d t r u s t . They t h e r e f o r e have

no i n c e n t i v e to a c t i n the v e r y s i t u a t i o n when a c t i o n i s e s s e n t i a l : when

there is- no ground f o r c h a l l e n g i n g the v a l i d i t y o f the t r u s t , but the trus-.

tee i s : a b u s i n g his; p o s i t i o n . In p r a c t i c e , i n the absence o f o t h e r con-

t r o l l e r s : , the t r u s t i s then u n c o n t r o l l a b l e .
 - 211 -

The p o i n t can be i l l u s t r a t e d by the case of Movice V. The Bishop

of DiLvham where the n e x t - o f - k i n o f the t e s t a t r i x a p p l i e d to c o u r t to

assert their entitlement under a r e s u l t i n g t r u s t . They claimed that a

bequest on t r u s t f o r "such o b j e c t s o f benevolence and l i b e r a l i t y as the

Bishop o f Durham [the t r u s t e e ] i n h i s d i s c r e t i o n s h a l l most approve o f "

failed for uncertainty. They succeeded, and the funds r e v e r t e d t o them

on r e s u l t i n g t r u s t . In p r i n c i p l e , t h e r e f o r e , they e s t a b l i s h e d t h e i r pec-

uniary i n t e r e s t i n the purpose t r u s t but, i n p r a c t i c e , the c o n t r o l they

e x e r c i s e d was o f the most n e g a t i v e type.

52

Similarly, i n Re Diptodk , the n e x t - o f - k i n o f the t e s t a t o r , v i a

h i s executors, challenged the a c t i o n s of the t r u s t e e s i n d i s t r i b u t i n g over

a quarter o f a m i l l i o n pounds s t e r l i n g which belonged to a t r u s t fund amongst

numerous c h a r i t a b l e and b e n e v o l e n t o b j e c t s and institutions. The testator

had given the r e s i d u e of h i s e s t a t e to h i s e x e c u t o r s on t r u s t "to apply

the r e s i d u e f o r such c h a r i t a b l e i n s t i t u t i o n o r i n s t i t u t i o n s o r o t h e r chari-

t a b l e or b e n e v o l e n t o b j e c t or o b j e c t s i n England as my a c t i n g executors or

e x e c u t o r may i n t h e i r or h i s a b s o l u t e d i s c r e t i o n s e l e c t , and to be p a i d to

o r f o r such i n s t i t u t i o n s and objects i f more than one i n such proportions

as my executors o r e x e c u t o r may think proper". The House o f Lords h e l d

t h a t the t r u s t was v o i d f o r u n c e r t a i n t y and a r e s u l t i n g t r u s t arose i n

f a v o u r o f the n e x t - o f - k i n . Again, t h e r e f o r e , i t can be seen t h a t the next-

o f - k i n undoubtedly h e l d p o t e n t i a l p e c u n i a r y i n t e r e s t s i n the testamentary

t r u s t , but t h a t i n p r a c t i c e the c o n t r o l which they were thereby entitled

t o e x e r c i s e was of a l i m i t e d nature.

I f one s u p p o r t s the C o n t r o l A n a l y s i s , however, two arguments are

a v a i l a b l e t o m i t i g a t e the p r a c t i c a l d e f e c t o f the C o n t r o l A n a l y s i s pointed

 - 212 -

out by our h y p o t h e t i c a l opponent and which the above cases illustrate.

In the f i r s t place, i t i s a r g u a b l e t h a t the c o u r t i n each case might have

disagreed w i t h the a s s e r t i o n s o f the n e x t - o f - k i n and found t h a t the pur-

pose t r u s t was expressed w i t h s u f f i c i e n t c e r t a i n t y . I t might then have

d i r e c t e d the t r u s t e e t o p e r f o r m h i s f i d u c i a r y o b l i g a t i o n s and apply the

53

funds t o the s t a t e d purposes . In t h i s s i t u a t i o n , the C o n t r o l Analysis

operates s a t i s f a c t o r i l y . The ' c o n t r o l p r i n c i p l e ' i s s a t i s f i e d because the

next-of-kin's p o t e n t i a l p e c u n i a r y i n t e r e s t ( d e r i v e d under the r e s u l t i n g

t r u s t doctrine) gave them s t a n d i n g to a s s e r t t h e i r r i g h t s of c o n t r o l . Fur-

thermore, as a matter o f p r a c t i c e , the f a c t t h a t they launched the suit

demonstrated t h a t the t r u s t was p o t e n t i a l l y under c o n t r o l .

The second argument runs as f o l l o w s : a p o t e n t i a l c o n t r o l l e r can s i t on

h i s r i g h t s and y e t not d e s t r o y the c o n c e p t u a l b a s i s o f the C o n t r o l Analysis.

After a l l , the p o s s i b i l i t y t h a t a d i r e c t b e n e f i c i a r y might choose not to

e x e r c i s e h i s c o n t r o l r i g h t s i n any p a r t i c u l a r i n s t a n c e does not i n v a l i d a t e

54

the t r u s t . I t i s a r g u a b l e t h a t the fact that residuary legatees or i n -

testate successors may s i m i l a r l y choose as a p r a c t i c a l matter not to

a c t i n the event o f an a c t u a l o r t h r e a t e n e d b r e a c h o f t r u s t should likewise

not m a t t e r : t h e i r mere e x i s t e n c e s a t i s f i e s the 'control p r i n c i p l e ' .

In o r d e r to reach a conclusion i n t h i s s e c t i o n , one has t o weigh the

r e l a t i v e strengths o f the arguments o u t l i n e d above o f the h y p o t h e t i c a l op-

ponent and the h y p o t h e t i c a l s u p p o r t e r o f the C o n t r o l A n a l y s i s r e s p e c t i v e l y .

I t i s submitted t h a t , a l t h o u g h the r e s u l t i n g t r u s t d o c t r i n e can solve the

problem o f the e n f o r c e a b i l i t y o f n o n - c h a r i t a b l e purpose t r u s t s i n c e r t a i n

c i r c u m s t a n c e s , i t i s not a g e n e r a l solution. As a matter o f p r i n c i p l e , aVl

g i f t s by way of non-charitable purpose t r u s t can be rendered e n f o r c e a b l e by

 - 213 -

the e x i s t e n c e o f i n d i v i d u a l s who have p o t e n t i a l i n t e r e s t s i n the trust

funds because o f the p o s s i b i l i t y o f r e v e r t e r on r e s u l t i n g t r u s t . In fact,

however, the C o n t r o l A n a l y s i s can o n l y o p e r a t e s u c c e s s f u l l y i n l i m i t e d

fact situations. For example, the h y p o t h e t i c a l g i f t described i n the intro-

d u c t i o n to t h i s c h a p t e r would be v a l i d under the C o n t r o l A n a l y s i s , even

though i t i s a n o n - c h a r i t a b l e purpose t r u s t w i t h o u t d i r e c t b e n e f i c i a r i e s .

When X s e t t l e d funds on A and B on t r u s t f o r the purpose of b e a u t i f y i n g

parking l o t s , h i s p o t e n t i a l pecuniary i n t e r e s t i n the fund, coupled with

his concern t h a t h i s wishes be c a r r i e d out, would supply the c o n t r o l n e c e s s -

a r y f o r v a l i d i t y under the C o n t r o l A n a l y s i s . In o t h e r s i t u a t i o n s , however

- as when r e s i d u a r y l e g a t e e s and i n t e s t a t e successors are the o n l y p o t e n t i a l

c o n t r o l l e r s a v a i l a b l e - to the e x t e n t t h a t i t has t o r e l y on the r e s u l t i n g

t r u s t d o c t r i n e f o r i t s e f f e c t i v e n e s s , the C o n t r o l A n a l y s i s s u f f e r s from

major p r a c t i c a l defects.

4. The Crown

By way of c o n t r a s t w i t h the above s e c t i o n , some cases have a l t o g e t h e r

r e j e c t e d the a p p l i c a t i o n o f the r e s u l t i n g t r u s t d o c t r i n e t o p a r t i c u l a r types

56

of d o n a t i o n for non-charitable purposes . In c e r t a i n c i r c u m s t a n c e s , the

donation i s seen as an out-and-out t r a n s f e r , so t h a t when the purpose i s

achieved without exhausting the funds or when the purpose becomes impossible

o f achievement, the donor i s c o n s i d e r e d t o have g i v e n up all interest in

the funds. The s u r p l u s funds are deemed to be ownerless. I t i s submitted

t h a t the p o s s i b i l i t y o f such an o c c u r r e n c e g i v e s the Crown a p o t e n t i a l pec-

uniary i n t e r e s t i n the d o n a t i o n which c o n f e r s upon i t s t a n d i n g to b r i n g liti-

gation concerning the a d m i n i s t r a t i o n of the donated funds. In c e r t a i n c i r -

cumstances, t h e r e f o r e , the n e c e s s a r y element o f c o n t r o l over a d o n a t i o n can

 - 214 -

57
be p r o v i d e d by the Crown

The p o i n t can be i l l u s t r a t e d by In ve West Sussex Contabulavy 's

58

Widows, Childven and Benevolent (1930) Fund Tvusts . i n t h a t case, a

fund was accumulated f o r the purpose o f g r a n t i n g allowances t o the widows

and c h i l d r e n o f deceased members o f the West Sussex c o n s t a b u l a r y . Funds

were g i v e n , intev alia, v i a entertainment, raffles, sweepstakes and collec-

ting-boxes. When doubt arose as t o the f a t e o f the fund on the amalgamation

o f the West Sussex C o n s t a b u l a r y w i t h another p o l i c e f o r c e , the t r u s t e e s

proposed t o use a p o r t i o n of i t i n o r d e r t o purchase annuities for certain

widows and c h i l d r e n and t o d i s t r i b u t e the remainder t o members o f the o l d

West Sussex C o n s t a b u l a r y . They a p p l i e d t o c o u r t f o r j u d i c i a l a p p r o v a l o f

t h e i r scheme. The T r e a s u r y S o l i c i t o r appeared as one o f many defendants,

on b e h a l f o f the Crown,,and c h a l l e n g e d the proposed scheme, a r g u i n g i n s t e a d

t h a t the fund was bona vacantia. The p o t e n t i a l p e c u n i a r y i n t e r e s t o f the

Crown i n the fund gave i t s t a n d i n g t o c o n t r o l the a c t i o n s o f the t r u s t e e s

i n t h i s manner.

In the event, the Crown succeeded i n i t s c l a i m over so much o f the

fund as had been s u b s c r i b e d v i a such events as r a f f l e s , and c o l l e c t i n g - b o x e s .

59
In r e a c h i n g t h i s c o n c l u s i o n , the c o u r t adopted the f o l l o w i n g dictum :

So f a r as regards the c o n t r i b u t o r s t o e n t e r t a i n -
ments, s t r e e t c o l l e c t i o n s , e t c . , I have no h e s i t a t i o n
i n h o l d i n g t h a t they must be taken t o have p a r t e d
w i t h t h e i r money out-and-out. I t i s inconceivable
t h a t any person p a y i n g f o r a c o n c e r t t i c k e t o r p l a c i n g
a c o i n i n a c o l l e c t i n g - b o x p r e s e n t e d t o him i n the
s t r e e t s h o u l d have i n t e n d e d t h a t any p a r t o f the
money so c o n t r i b u t e d should be r e t u r n e d t o him when
the immediate o b j e c t f o r which the c o n c e r t was g i v e n
o r the c o l l e c t i o n made had come t o an end. To
draw such an i n f e r e n c e would be absurd on the f a c e
of i t .

The presumption o f r e s u l t i n g t r u s t t o the donors was rebutted.

 - 215 -

T h e r e f o r e , i n those c i r c u m s t a n c e s where the p o s s i b i l i t y e x i s t s that

the funds w i l l become bona vacantia when the purpose i s a c h i e v e d , o r aban-

doned, o r rendered i m p o s s i b l e , the 'control p r i n c i p l e ' can be satisfied

by the Crown. I t has an i n t e r e s t i n p r e v e n t i n g m i s a p p l i c a t i o n o f funds.

However, i t i s submitted t h a t the c i r c u m s t a n c e s i n which the bona

Vacantia argument i s a p p r o p r i a t e are l i m i t e d and e x c e p t i o n a l . O n a o f '.

three f a c t o r s , i n p a r t i c u l a r , must be p r e s e n t . In the f i r s t p l a c e , funds

g e n e r a l l y devolve as bona vacantia o n l y when they were not as such donated

at a l l . I f funds a r e . g i v e n i n r e t u r n f o r a c o n c e r t , o r r a f f l e t i c k e t , and

so on, a c o n t r a c t u a l r e l a t i o n s h i p o f s o r t s comes i n t o e x i s t e n c e , and the

c o n t r i b u t o r r e t a i n s no f u r t h e r i n t e r e s t i n the funds because he r e c e i v e s

i n r e t u r n a l l t h a t f o r which he c o n t r a c t e d . T h i s i s as compared w i t h a

t r u e d o n a t i o n s p e c i f i c a l l y f o r a p a r t i c u l a r purpose, on f a i l u r e o f which the

funds r e t u r n t o the donor by way of r e s u l t i n g t r u s t . The d i s t i n c t i o n was

i t e r a t e d c l e a r l y i n the West Sussex Constabulary case 6 0

where the p o r t i o n

o f the fund which had been r a i s e d by the s a l e o f t i c k e t s , entertainment,

and so on, d e v o l v e d as bona vacantia w h i l s t .the p o r t i o n o f the fund which

had been r a i s e d by d o n a t i o n r e v e r t e d on r e s u l t i n g t r u s t to the contributors.

A second f a c t o r which argues i n favour o f d e s i g n a t i n g s u r p l u s funds

as bona vacantia i s a s t i p u l a t i o n i n the i n s t r u m e n t which i n v i t e d the con-

t r i b u t i o n s t o the e f f e c t t h a t the s u r p l u s w i l l not be r e t u r n e d to the

61
contributor

A t h i r d f a c t o r which appears t o be i n f l u e n t i a l i s the inconvenience

which would be caused i f the donated funds were h e l d t o be s u b j e c t t o the

62
resulting trust doctrine . T h i s can be seen p a r t i c u l a r l y when t h e r e a r e
 - 216 -

a l a r g e number o f c o n t r i b u t o r s t o a common fund, many o f whom a r e u n i d e n t i -

f i a b l e o r anonymous, as when funds are accumulated u s i n g c o l l e c t i n g boxes,

o r when the r e s u l t i n g t r u s t would n o t a r i s e u n t i l some c o n s i d e r a b l e period

o f time had e l a p s e d s i n c e the c o n s t i t u t i o n o f t h e o r i g i n a l t r u s t . In such

s i t u a t i o n s , the p r a c t i c a l s o l u t i o n which has been reached i n some cases i s

t h a t the s u r p l u s funds devolve on the Crown as bona vacantia.

In Re GiUingJiam Bus Disaster Fund , however, the c o u r t was not

p r e p a r e d t o h o l d t h a t the Crown's e n t i t l e m e n t to surplus funds c o u l d be

based merely on convenience and p r a c t i c a l i t y . In t h a t case, a fund was

s e t up t o d e f r a y t h e f u n e r a l expenses o f Royal Marine c a d e t s who were

killed, and pay f o r the care o f o t h e r s who were d i s a b l e d , i n a road a c c i -

dent. The p u b l i c c o n t r i b u t e d t o t h e fund b o t h by s i g n i f i c a n t donations

and by anonymous, s m a l l e r contributions, when s u r p l u s funds were found

remaining, the Crown argued t h a t the t r u s t e e s should pay them over as bona

Vacantia. The c o u r t d i s a g r e e d and h e l d t h a t the s u r p l u s should be h e l d

64
on r e s u l t i n g t r u s t f o r t h e donors :

In my judgment the Crown has f a i l e d t o show t h a t

t h i s case should not f o l l o w t h e o r d i n a r y r u l e
merely because t h e r e was a number o f donors who ...
are u n a s c e r t a i n a b l e . I see no r e a s o n m y s e l f t o
suppose t h a t the s m a l l g i v e r who i s anonymous
has any wider i n t e n t i o n than t h e l a r g e g i v e r who
can be named. They a l l g i v e f o r the one o b j e c t .
I f they can be found by i n q u i r y the r e s u l t i n g
t r u s t can be executed i n t h e i r f a v o u r . I f they
cannot I do not see how the money c o u l d then ...
change i t s d e s t i n a t i o n and become bona v a c a n t i a .
I t w i l l be merely money h e l d upon a t r u s t f o r which
no b e n e f i c i a r y can be found. Such cases a r e
common and where i t i s known t h a t t h e r e a r e bene-
f i c i a r i e s the f a c t t h a t they cannot be a s c e r -
t a i n e d does not e n t i t l e t h e Crown t o come i n
and c l a i m .

An i n q u i r y was o r d e r e d t o a s c e r t a i n , i f p o s s i b l e , t h e i d e n t i t y o f the

donors.
 - 217 -

In sum, even i f one agrees w i t h the a d m i t t e d l y more p r a c t i c a b l e

s o l u t i o n o f d e c l a r i n g s u r p l u s funds bona vacantia i n such circumstances,

i t can be seen t h a t the types o f cases i n which the Crown w i l l be a b l e to

e s t a b l i s h i t s r i g h t to c o n t r o l the t r u s t e e s o f donated funds are limited.

Only i f one or more o f the above f a c t o r s i s p r e s e n t i n any p a r t i c u l a r case

will the C o n t r o l A n a l y s i s be a p p l i c a b l e to the g i f t v i a the bona vacantia

doctrine. Therefore the c o n c l u s i o n must be reached t h a t the p o s s i b i l i t y of

c o n t r o l by the Crown does not p r o v i d e a g e n e r a l s o l u t i o n to the need f o r

e n f o r c e a b i l i t y i n a n o n - c h a r i t a b l e purpose trust.

5. Residuary B e n e f i c i a r i e s

There are a t l e a s t f o u r s i t u a t i o n s i n which an i n d i v i d u a l may become

e n t i t l e d t o t r u s t funds as the r e s i d u a r y b e n e f i c i a r y o f a g i f t which p u r -

p o r t s t o take e f f e c t as a n o n - c h a r i t a b l e purpose t r u s t .

(i) E n t i t l e m e n t t o Residue Dependent on Success o f Gift

S t r a n s f e r s funds t o A and B to use the income f o r the maintenance

o f h i s p r i v a t e park f o r as l o n g as the law p e r m i t s , and to pay over the

c a p i t a l t o W when t h i s d i r e c t i o n has been complied with. Although the

donor has c r e a t e d a n o n - c h a r i t a b l e purpose t r u s t , i t i s submitted that,

if i n t e r p r e t e d i n accordance w i t h the C o n t r o l A n a l y s i s , i t would be valid.

In cases such as t h i s the e n t i t l e m e n t o f W, the r e s i d u a r y b e n e f i c i a r y , i s

dependent upon due a d m i n i s t r a t i o n o f the t r u s t fund by the t r u s t e e s , and

he t h e r e f o r e has a p o t e n t i a l p e c u n i a r y i n t e r e s t i n t h e . t r u s t funds. Since

he i s d i r e c t l y a f f e c t e d by the a l l o c a t i o n o f funds s t i p u l a t e d i n the terms

o f t h e t r u s t , he has the r i g h t to c o n t r o l the t r u s t e e s i n t h e i r execution

 - 218 -

of them. In t h i s manner, the 'control p r i n c i p l e ' is satisfied. Further-

more, W has every i n c e n t i v e a c t u a l l y t o ensure t h a t the t r u s t e e s do i n

f a c t perform t h e i r o b l i g a t i o n s to m a i n t a i n the p r i v a t e p a r k . Therefore,

as a matter o f both p r i n c i p l e and f a c t , the t r u s t i s c o n t r o l l a b l e .

( i i ) Quantum o f Residue Dependent on Success o f Gift

T bequeaths funds t o C and D to apply the income t h e r e o f f o r the

maintenance o f h i s p r i v a t e park f o r twenty-one y e a r s , and to pay the capital

and any accumulated income t o X t h e r e a f t e r . Again, the wording o f the

g i f t has created a non-charitable purpose t r u s t . A g a i n , however, i t i s

s u b m i t t e d t h a t the C o n t r o l A n a l y s i s may assist.

I t i s e v i d e n t t h a t X, as r e s i d u a r y l e g a t e e , has a pecuniary interest

i n the a d m i n i s t r a t i o n o f the t r u s t . The a c t i o n s o f the t r u s t e e w i l l direct-

l y a f f e c t h i s own f i n a n c i a l expectations. Under the 'control p r i n c i p l e ' X

has standing t o e x e r c i s e r i g h t s o f c o n t r o l over the performance by C and D

o f t h e i r f i d u c i a r y o b l i g a t i o n s i n r e l a t i o n t o the t r u s t fund. X has good

reason t o check on any d e a l i n g s C and D may have w i t h the t r u s t property

throughout the d u r a t i o n o f the t r u s t . Therefore the r e q u i s i t e element o f

65
c o n t r o l i s present, e q u i t y i s s a t i s f i e d and the t r u s t i s v a l i d

In p r a c t i c e , however, the s i t u a t i o n may not be q u i t e as simple.

T h i s may be demonstrated by p o s i n g two h y p o t h e t i c a l sequences o f events,

one o f which i l l u s t r a t e s the C o n t r o l A n a l y s i s o p e r a t i n g effectively, and

the o t h e r o f which i l l u s t r a t e s the p o t e n t i a l problems i n p r a c t i c e . Firstly,

C and D may i n v e s t the t r u s t fund so f o o l i s h l y t h a t t h e r e w i l l be insuff-

i c i e n t income t o m a i n t a i n the park a d e q u a t e l y , l e a v e alone to accumulate

 - 219 -

for X. Although X will receive t h e c a p i t a l w h a t e v e r h a p p e n s , he evidently

has an i n t e r e s t i n p r e v e n t i n g the trustees' misapplication o f income i n

t h i s manner. I n such a case, therefore, X would have a p o s i t i v e i n c e n t i v e

to exercise his right t o p r e v e n t m i s a p p l i c a t i o n o f income. Although X's

application to court w o u l d be p h r a s e d i n terms o f m i s a p p l i c a t i o n of trust

funds, the court w o u l d p r e s u m a b l y be f r e e t o a s s e r t affirmative control

over the trustees as w e l l , i f necessary ^ . In t h i s manner, due perform-

ance could be compelled.

The second sequence o f events c h a n g e s t h e n a t u r e o f X's i n t e r e s t i n

one fundamental respect. Assume that C and D s i m p l y invest the t r u s t fund

and e i t h e r ignore the d i r e c t i o n to u t i l i s e t h e income f o r t h e m a i n t e n a n c e

of T's p a r k t o t a l l y , or merely apply minimal amounts t o t h a t p u r p o s e . Such

a breach, o f t r u s t i s manifestly in, rather than contrary t o the financial

interests o f X, since the value of h i s residue i s enhanced thereby. A l -

though i n principle X has s t a n d i n g to exercise c o n t r o l over C a n d D, i n

fact i t would be f u t i l e to expect any e f f e c t i v e c o n t r o l by him. He h a s

no f i n a n c i a l i n c e n t i v e e i t h e r t o compel performance o r p r e v e n t misapplic-

67

ation o f funds . Indeed, h e i s more likely t o attempt t o have the t r u s t

declared totally invalid. Thus, a s w i t h the case o f residuary legatees or

intestate successors whose p o t e n t i a l i n t e r e s t s d e p e n d n o t o n t h e t e r m s o f

68

the gift, but on the d o c t r i n e of resulting trusts , the Control Analysis

runs into practical problems. In c e r t a i n circumstances, the conceptual

validity o f t h e a n a l y s i s i s r o b b e d by c o n s i d e r a t i o n s of a realistic and

practical nature.

The operation i n principle of the Control Analysis i n this context

can be i l l u s t r a t e d by a case, w h i c h a l s o d e m o n s t r a t e s how the p r a c t i c a l

 - 220 -

69
problems can be o v e r l o o k e d i n s p e c i a l circumstances. In Re Thompson ,

the t e s t a t o r bequeathed a sum o f money t o a t r u s t e e t o be a p p l i e d as t h e

t r u s t e e thought f i t towards the promotion and f u r t h e r a n c e o f f o x - h u n t i n g .

H i s r e s i d u a r y e s t a t e was t o go t o t h e Master and F e l l o w s of T r i n i t y Hall,

Cambridge f o r the b e n e f i t o f the c o l l e g e . I t i s e v i d e n t t h a t t h e r e a r e no

human b e n e f i c i a r i e s , whether d i r e c t o r f a c t u a l . The t r u s t was nevertheless

70
valid, s i n c e i t was c o n t r o l l a b l e v i a the r e s i d u a r y l e g a t e e s . As Clauson,

71
J . p o i n t e d out :
[ l ] n case the l e g a c y s h o u l d by a p p l i e d by [the
t r u s t e e ] otherwise than towards the promotion
and f u r t h e r a n c e o f f o x - h u n t i n g , the r e s i d u a r y
l e g a t e e s a r e t o be a t l i b e r t y t o a p p l y .

Although i t i s obvious t h a t the r e s i d u a r y l e g a t e e s might f e e l i t t o t h e i r

advantage not t o draw e q u i t y ' s a t t e n t i o n t o such a breach of trust i n that

the c o l l e g e c o u l d thereby p r o f i t , t h i s p o s s i b i l i t y was r e c o g n i s e d t o be

conceptually irrelevant. The p r a c t i c a l consequences c o u l d be i g n o r e d i n

t h i s p a r t i c u l a r case because the c o l l e g e was "anxious t h a t t h e wishes o f

the t e s t a t o r i n . r e s p e c t t o the l e g a c y t o h i s f r i e n d [the t r u s t e e ] s h o u l d

72

be c a r r i e d o u t " . In these circumstances, the r e s i d u a r y l e g a t e e would

have s u f f i c i e n t , a l b e i t n o n - f i n a n c i a l , i n c e n t i v e t o e x e r c i s e i t s c o n t r o l

r i g h t s over the t r u s t e e , s h o u l d the need a r i s e .

(iii) Quantum o f Residue Independent o f G i f t

V bequeaths a fund t o E and F, and s t i p u l a t e s t h a t a l l the income has

t o be used t o m a i n t a i n h i s p r i v a t e park f o r twenty-one years and t h a t t h e

c a p i t a l i s t o go t o Y t h e r e a f t e r . Y w i l l r e c e i v e t h e c a p i t a l whether o r not

E and F p e r f o r m t h e i r o b l i g a t i o n s w i t h r e g a r d t o the income. His i n t e r e s t

i n the c a p i t a l s u f f i c e s t o g i v e him s t a n d i n g t o c h a l l e n g e any u n a u t h o r i s e d

 - 221 -

d e a l i n g s by the t r u s t e e s w i t h i t d u r i n g the twenty-one y e a r p e r i o d . Strict-

l y speaking, t h i s s a t i s f i e s the 'control p r i n c i p l e ' . I t p e r m i t s him t o

draw a c o u r t ' s a t t e n t i o n to the t r u s t e e s and the c o u r t may then take

a f f i r m a t i v e a c t i o n v i s - a - v i s the income.

However, Y's t o t a l l a c k o f i n t e r e s t i n the income and the t r u s t e e s '

d e a l i n g s w i t h i t poses an insurmountable p r a c t i c a l problem. I f E and F chose

t o do n o t h i n g w i t h the income,, f o r twenty-one y e a r s , Y c o u l d not be relied

73

upon t o t a k e any a c t i o n whatsoever. Except i n cases, l i k e Re Thompson ,

where a r e s i d u a r y b e n e f i c i a r y i n a p o s i t i o n s i m i l a r t o Y's was w i l l i n g t o

s u p e r v i s e the a d m i n i s t r a t i o n o f the t r u s t , through a sense o f moral duty,

f o r example, the t r u s t would be e f f e c t i v e l y u n c o n t r o l l a b l e . Indeed, such

would be the case i n the h y p o t h e t i c a l posed i n the i n t r o d u c t i o n t o t h i s

74

chapter , where the r e s i d u a r y b e n e f i c a i r i e s are i n t e r e s t e d o n l y i n the

c a p i t a l o f the t r u s t fund. A l t h o u g h as a matter o f p r i n c i p l e they satisfy

the requirement f o r c o n t r o l over t r u s t e e s , i n p r a c t i c e e f f e c t i v e control

would depend on merely moral obligation.

(iv) Residue Charged w i t h Payment o f G i f t

R t r a n s f e r s funds t o G and H and d i r e c t s t h a t a c e r t a i n sum be p a i d

a n n u a l l y t h e r e f r o m f o r the maintenance o f h i s p r i v a t e park f o r as l o n g as

the law p e r m i t s , w i t h the remainder t o go to Z. Such an a l l o c a t i o n o f

funds a f f e c t s Z d i r e c t l y and he has a d i s t i n c t p e c u n i a r y i n t e r e s t i n en-

s u r i n g t h a t G and H do not abscond with, the funds. S i n c e t h i s i s so, i t

is submitted t h a t Z has s t a n d i n g t o e x e r c i s e r i g h t s o f c o n t r o l over G and H

arid t h a t the ' c o n t r o l p r i n c i p l e ' has been s a t i s f i e d . In p r i n c i p l e , the

g i f t takes e f f e c t under a v a l i d n o n - c h a r i t a b l e purpose trust.

 - 222 -

Two examples o f v a l i d t r u s t s c o n t r o l l e d i n t h i s way by residuary

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legatees are found i n the case o f Mitford V. Reynolds . There, the

t e s t a t o r d i r e c t e d that a h i l l o c k , belonging t o a c e r t a i n Mr. Evans, be

bought f o r the d e p o s i t o f the t e s t a t o r ' s body and those o f h i s p a r e n t s and

sister. He gave h i s t r u s t e e s d e t a i l e d i n s t r u c t i o n s v i s - a - v i s the mound :

On the summit o f which they w i l l be p l e a s e d t o cause
the e r e c t i o n ( c o n s t r u c t i o n ) o f a s u i t a b l e and hand-
some, as w e l l as d u r a b l e monument, p l a n t i n g the
summit and s i d e s o f the mount w i t h cedar and cypress
t r e e s , i n a manner t h a t may render i t ornamental t o
the town I d i r e c t and e x p r e s s l y w i l l and
command t h a t t h i s i n j u n c t i o n f o r the p l a c e o f f i n a l
interment, be a b s o l u t e l y a t t e n d e d to and c a r r i e d
i n t o i n s t a n t e f f e c t and c o m p l e t i o n .

The residuary e s t a t e was bequeathed t o the Government o f Bengal f o r c h a r i t -

a b l e purposes. As t h i n g s turned out, Mr. Evans r e f u s e d to s e l l the l a n d , so

the t r u s t f a i l e d . However, as Shadwell, V.-C. pointed out, t h i s was "not

on a c c o u n t o f any matter o f law, but on account o f a matter o f fact"

I t i s submitted t h a t , had the s a l e o f the l a n d gone through, the t r u s t f o r

the e r e c t i o n o f the monument would have been v a l i d , even though i t was

an a b s t r a c t purpose t r u s t and had no d i r e c t nor f a c t u a l human b e n e f i c i a r i e s .

T h i s i s because the g i f t over bequeathed .not o n l y the r e s i d u a r y estate,

but a l s o r i g h t s - of c o n t r o l t o the Government o f Bengal, which satisfied

the 'control p r i n c i p l e ' .

The second example i s found i n the p r o v i s i o n o f the w i l l r e l a t i n g to

the r e s i d u a r y bequest, which ran as follows:

I w i l l , d e v i s e , g i v e and bequeath the remainder

o f my p r o p e r t y , of whatsoever k i n d and d e s c r i p t i o n
and t h a t may a r i s e from the s a l e o f my e f f e c t s ,
a f t e r d e d u c t i n g the annual amount t h a t w i l l be
r e q u i s i t e t o d e f r a y the keep o f my h o r s e s (which. I
w i l l and d i r e c t be p r e s e r v e d as p e n s i o n e r s , and are
never, under any p l e a or p r e t e n c e , t o be used, rode
o r d r i v e n , or a p p l i e d t o l a b o u r ) t o the Government
o f Bengal, f o r the express purpose o f t h a t Government
 - 223 -

a p p l y i n g t h e amount t o c h a r i t a b l e , b e n e f i c i a l
and p u b l i c works a t and i n the c i t y o f Dacca i n
Bengal.

The c o u r t d e c l a r e d t h a t the t r u s t f o r t h e maintenance o f t h e h o r s e s was

77

v a l i d and o r d e r e d t h a t i t be c a r r i e d o u t . A g a i n t h e r e were no human

b e n e f i c i a r i e s , b u t t h e E a r l o f Auckland, r e p r e s e n t i n g t h e r e s i d u a r y legatee,

the Government o f Bengal, was a p a r t y t o the a c t i o n . I t i s evident that,

had t h e r e been any query as t o t h e v a l i d i t y o f t h e t r u s t f o r t h e h o r s e s o r

i t s due a d m i n i s t r a t i o n , t h e matter c o u l d have been r a i s e d on b e h a l f o f

the r e s i d u a r y l e g a t e e and i t s r i g h t o f c o n t r o l e x e r t e d . The t r u s t was t h e r e -

f o r e c o n t r o l l a b l e i n p r i n c i p l e and c o u l d be p e r m i t t e d t o operate.

However, how l i k e l y i s i t t h a t the Government o f Bengal would have

complained i f t h e t r u s t e e s had i g n o r e d t h e horses a l t o g e t h e r and thereby

i n c r e a s e d the r e s i d u e a v a i l a b l e f o r c h a r i t a b l e purposes? Returning t o

the case o f R's g i f t o f r e s i d u e t o Z, Z i n f a c t has no p r a c t i c a l i n t e r e s t

whatever i n c o m p e l l i n g performance o f t h e t r u s t f o r t h e maintenance o f the

78

park. Indeed, h i s i n t e r e s t i s o n l y i n i t s f a i l u r e . Yet again the

C o n t r o l A n a l y s i s runs i n t o the problem t h a t many o f t h e p o t e n t i a l c o n t r o l l -

e r s have no i n c e n t i v e t o e x e r c i s e t h e i r r i g h t s - a g a i n s t d e l i n q u e n t trustees.

79

I t may be r e c a l l e d t h a t an attempt was made above t o minimise t h e

p r a c t i c a l s i g n i f i c a n c e of the lack o f coincidence between a p o t e n t i a l con-

troller's i n t e r e s t and due performance o f t h e t r u s t . I t was argued t h a t the

f a c t t h a t a c o n t r o l l e r goes t o c o u r t , even i f he does so t o c o n t e s t t h e v e r y

v a l i d i t y o f a t r u s t , demonstrates t h a t i t i s , i n f a c t , under c o n t r o l . Once

i t s a t t e n t i o n has been drawn t o t h e e x i s t e n c e o f a t r u s t e e ' s f i d u c i a r y obli-

g a t i o n s b i n d i n g h i s l e g a l ownership o f t r u s t funds, a c o u r t can pursue e i t h e r

o f two a l t e r n a t i v e c o u r s e s o f a c t i o n : i f i t c o n c l u d e s t h a t t h e t r u s t i s
 - 224 -

valid, i t can a s s e r t a f f i r m a t i v e c o n t r o l over t h e t r u s t e e , i f necessary;

but i f t h e r e s i d u a r y b e n e f i c i a r y proves h i s c l a i m t h a t t h e t r u s t i s not

valid, i t can s t r i k e i t down. T h i s was demonstrated i n Re Dean ,

where t h e t e s t a t o r t r a n s f e r r e d h i s l a n d f o r l i f e t o t h e p l a i n t i f f i n the

case, w i t h remainder t o the p l a i n t i f f ' s sons, and charged i t w i t h an a n n u i t y

in favour o f h i s t r u s t e e s f o r f i f t y years. The w i l l went on t o provide':'

I d e c l a r e t h a t my t r u s t e e s s h a l l apply t h e s a i d
annual sum payable t o them under t h i s c l a u s e i n
the maintenance o f t h e ...horses and hounds f o r
the time b e i n g l i v i n g [which had been g i v e n t o the
t r u s t e e s ] , and i n m a i n t a i n i n g t h e s t a b l e s , kennels
and b u i l d i n g s now i n h a b i t e d by t h e s a i d animals
i n such c o n d i t i o n o f r e p a i r as my t r u s t e e s may deem f i t .

All r e s i d u a r y p e r s o n a l e s t a t e was g i v e n t o t h e p l a i n t i f f and h i s h e i r s .

The p l a i n t i f f , as r e s i d u a r y l e g a t e e , c l a i m e d t h a t t h e t r u s t i n f a v o u r o f the

horses and hounds was i n v a l i d ( i n which case h i s l i f e e s t a t e would be f r e e

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of t h e charge) and asked f o r a declaration to that e f f e c t . The -court

h e l d t h a t t h e t r u s t f o r t h e h o r s e s and hounds was v a l i d , even though t h e r e

were no b e n e f i c i a r i e s who c o u l d e n f o r c e i t s terms d i r e c t l y . North,J. r e c -

ognised the c o n t r o l r i g h t s o f i n d i v i d u a l s who h e l d p e c u n i a r y i n t e r e s t s i n

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the t r u s t p r o p e r t y , i n c l u d i n g t h e r e s i d u a r y l e g a t e e i n t h i s p a r t i c u l a r case :
[A] t r u s t t o l a y o u t a c e r t a i n sum i n b u i l d i n g a
monument, and t h e g i f t o f another sum i n t r u s t t o
a p p l y t h e same t o keeping t h a t monument i n r e p a i r ,
say, f o r t e n y e a r s , i s , i n my o p i n i o n , a p e r f e c t l y
good t r u s t , a l t h o u g h I do n o t see who c o u l d ask the
Court t o e n f o r c e i t . I f persons b e n e f i c i a l l y i n t e r -
e s t e d i n t h e e s t a t e c o u l d do so, then the p r e s e n t
P l a i n t i f f can do so; b u t , i f such persons c o u l d
not e n f o r c e the t r u s t , s t i l l i t cannot be s a i d
t h a t t h e t r u s t must f a i l because t h e r e i s no one
who can a c t i v e l y e n f o r c e i t .

-In o t h e r words, even though t h e r e were no d i r e c t b e n e f i c i a r i e s o f the

trust "who can a c t i v e l y e n f o r c e i t " by c o m p e l l i n g performance o f t h e

trustee's obligations, the t r u s t was v a l i d . The C o u r t was w i l l i n g t o

a f f i r m t h e t r u s t ' s v a l i d i t y and order, p o s i t i v e performance o f i t s o b l i g -

 - 225 -

a t i o n s even though the remedy requested by the r e s i d u a r y l e g a t e e had been

a declaration of invalidity. The f a c t t h a t the r e s i d u a r y l e g a t e e had

commenced the p r o c e e d i n g s by v i r t u e o f a p e c u n i a r y i n t e r e s t which conflic-

t e d w i t h due a d m i n i s t r a t i o n o f t h e t r u s t had n e v e r t h e l e s s demonstrated t h a t

the t r u s t was under c o n t r o l . Once i t s a t t e n t i o n was drawn t o the t r u s t i n

t h i s manner, the c o u r t e x e r c i s e d i t s g e n e r a l power o f c o n t r o l over i t s

83
operation

However, even when t h i s i s so, the p r a c t i c a l problem o f the r e s i d u a r y

l e g a t e e whose p e r s o n a l i n t e r e s t s c o n f l i c t with the due performance o f the

trust i s s t i l l only p a r t i a l l y solved. If he i n f a c t c h a l l e n g e s the v a l i d i t y

o f the t r u s t , on the a u t h o r i t y o f Re Dean, he has demonstrated t h a t the

t r u s t i s under c o n t r o l . However, i f no p o s s i b l e grounds f o r c h a l l e n g i n g

i t s v a l i d i t y e x i s t and the t r u s t e e s a r e enhancing h i s f i n a n c i a l advantage

by m a l a d m i n i s t e r i n g the t r u s t , the r e s i d u a r y l e g a t e e has no reason t o a s s e r t

h i s standing t o c o n t r o l them.

In sum, the p r a c t i c a l problem o f e n s u r i n g e f f e c t i v e c o n t r o l remains

and can o n l y be a l l e v i a t e d by a s i t u a t i o n such as t h a t which e x i s t e d i n

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Pettingatl V. Pettingall . In t h a t case, a t e s t a t o r made a bequest t o

h i s e x e c u t o r f o r h i s " f a v o u r i t e b l a c k mare" i n the f o l l o w i n g terms:

I hereby bequeath, t h a t a t my d e a t h , £ 5 0 p e r annum

be p a i d f o r her keep i n some park i n England o r
Wales; h e r shoes t o be taken o f f , and she never
t o be r i d d e n o r p u t i n h a r n e s s ; and t h a t my exec-
u t o r c o n s i d e r h i m s e l f i n honour bound t o f u l f i l
my wish, and see t h a t she be w e l l p r o v i d e d f o r , and
removeable a t h i s w i l l .

T h i s was h e l d t o be a v a l i d t r u s t f o r a n o n - c h a r i t a b l e purpose even though

i t had no d i r e c t b e n e f i c i a r i e s . Since t h e r e were r e s i d u a r y l e g a t e e s with

a pecuniary i n t e r e s t i n the due a d m i n i s t r a t i o n o f the t r u s t fund, the

85
t r u s t was p o t e n t i a l l y under c o n t r o l and Knight Bruce,V.-C. h e l d i t v a l i d :
 - 226 -

[ l ] f the mare were n o t p r o p e r l y attended t o ,

any o f the p a r t i e s i n t e r e s t e d i n t h e r e s i d u e
might apply t o the C o u r t .

As a matter o f p r i n c i p l e , the r e s i d u a r y l e g a t e e s h e l d the a l l - i m p o r t a n t

86

rights of control , and, even though i n p r a c t i c e they o n l y stood t o

lose from c o n t i n u e d payments f o r the b e n e f i t o f the mare, t h i s was over-

looked i n t h e circumstances because the r e s i d u a r y l e g a t e e s themselves

had admitted t h a t t h e t r u s t was c o n t r o l l a b l e .

Such a s o l u t i o n t o the p r a c t i c a l problem can o n l y be a v a i l a b l e i n

e x c e p t i o n a l cases. I n a l l o t h e r cases, i t has t o be admitted t h a t the

problem o f r e n d e r i n g e f f e c t i v e the C o n t r o l A n a l y s i s o f g i f t s on n o n - c h a r i -

t a b l e purpose t r u s t where the only potential controller i s a residuary

b e n e f i c i a r y o f type (iv) i s insurmountable.

6. Conclusion

I t has been demonstrated t h a t a n o n - c h a r i t a b l e purpose t r u s t need

not n e c e s s a r i l y f a i l merely because i t l a c k s d i r e c t human b e n e f i c i a r i e s .

The b a s i c requirement t h a t a t r u s t , t o be v a l i d , must be e n f o r c e a b l e can

be f u l f i l l e d by t h e e x i s t e n c e o f i n d i v i d u a l s o t h e r than d i r e c t bene-

ficiaries. A t l e a s t one o r o t h e r o f t h e c a t e g o r i e s o f p o t e n t i a l con-

87

t r o l l e r s d i s c u s s e d i n t h i s chapter will e x i s t i n every case o f a g i f t

which p u r p o r t s t o take e f f e c t as a n o n - c h a r i t a b l e purpose t r u s t . I f the

gift i s made f o r n o n - a b s t r a c t purposes, i t s f a c t u a l b e n e f i c i a r i e s can

enforce i t s terms (class i i ) . But even i f t h e g i f t has a b s t r a c t purposes,

i f t h e donor i s i d e n t i f i a b l e , the r e s u l t i n g t r u s t d o c t r i n e a c t i v a t e s t h e

c o n t r o l r i g h t s o f e i t h e r the s e t t l o r , i n t h e case o f an inter vivos gift

(.class i i i ) . , o r the t e s t a t o r ' s executors (class iv) , residuary legatees

 - 227 -

( c l a s s v) o r i n t e s t a t e successors ( c l a s s v i ) , i n the case o f a bequest.

But even i f t h e g i f t has a b s t r a c t purposes and the donor i s not i d e n t i -

fiable, the n o t i o n o f bona vacantia b r i n g s t h e Crown (class v i i ) into the

picture as a p o t e n t i a l controller. Moreover, i n every s i t u a t i o n , i f the

gift expressly i d e n t i f i e s residuary b e n e f i c i a r i e s (class v i i i ) , they also-

serve t o s a t i s f y t h e ' c o n t r o l p r i n c i p l e ' and render t h e t r u s t v a l i d .

However, the aim o f t h e d i s c u s s i o n i n t h i s chapter has not o n l y

been t o demonstrate the soundness o f t h e C o n t r o l A n a l y s i s i n p r i n c i p l e .

Throughout, o b j e c t i o n s o f a p r a c t i c a l nature have been a n t i c i p a t e d and

voiced. I n many I n s t a n c e s they were r e c o g n i s e d as v a l i d . By way o f

summary, i t must be s a i d t h a t , i f a n o n - c h a r i t a b l e purpose t r u s t lacks

factual beneficiaries and i s testamentary, and t h e r e f o r e has t o depend

upon r e s i d u a r y l e g a t e e s (either class v or class v i i i ) or intestate

successors ( c l a s s vi). f o r i t s c o n t r o l , i t i s e f f e c t i v e l y unenforceable.

D e s p i t e the t h e o r e t i c a l advantages o f t h e C o n t r o l A n a l y s i s , this should

not be p e r m i t t e d t o obscure p r a c t i c a l r e a l i t y and v a l i d a t e such a t r u s t .

When a s s e s s e d i n these terms, i t has t o be c o n c l u d e d t h a t the C o n t r o l

A n a l y s i s i s f a r from b e i n g t h e p e r f e c t solution f o r all g i f t s i n g e n e r a l

which a r e i n t e r p r e t e d as t a k i n g e f f e c t by way o f n o n - c h a r i t a b l e purpose

trust. As a g e n e r a l s o l u t i o n , i t i s unsatisfactory.

* * * * * * * * * *
 - 228 -

FOOTNOTES : CHAPTER I I

1. [1952] Ch.534; [1952] 1 A l l E.R.1067. D i s c u s s e d supra, pp 121-127.

2. D i s c u s s e d supra, pp 127-130.

3. See supra, pp 183-187.

4. Supra, pp 183-196.

5. L i s t e d supra, pp 178-180.

6. Class i .

7. A c o n s o l i d a t i o n o f c l a s s e s i i through v i i i , supra, pp 178-179.

8. Class i i , ibid.

9. C l a s s e s i i i , i v , v^ - v i , ibid.

10. Class v i i , ibid.

11. C l a s s v i i i , ibid. See Re Shaw [1957] 1 W.L.R.729; [1957] 1 A l l E.R.

745, per Harman,J. [1957] 1 A l l E.R.745 a t 758.

12. Under the r e a s o n i n g o f London Hospital Medical College V. I.R.C.

(1976), 120 S.J.250.

13. [1969] 1 Ch.373;'"[1968] 3 W.L.R.457; [1968] 3 A l l E.R.65. Discussed

supra, pp 132-150.

•14. See supra, pp 187-189.

15. Per Spry, op.cit.supra, p 190.

16. Cf. McKay, " T r u s t s f o r Purposes - Another View", (1973) 34 Conv.

(N.S.)420, pp 428-429: the employees who were the f a c t u a l bene-
f i c i a r i e s i n Re Denley o n l y had s t a n d i n g because they were con-
t r a c t u a l l i c e n s e e s , and no l e s s e r i n t e r e s t would s u f f i c e f o r en-
forceability. See a l s o , R i c k e t t , " U n i n c o r p o r a t e d A s s o c i a t i o n s and
t h e i r D i s s o l u t i o n " , (1980) 39 Camb.L.J.88, pp 104-108.

17. [1900] 2 Ch.326; 69 L.J.Ch.539; 48 W.R.541.

18. [1900] 2 Ch.326 a t 331.

19. I t was demonstrated supra, pp 137-138, t h a t these cases were i n

f a c t no a u t h o r i t y f o r the ratio i n Re Denley which merely d i s -
t i n g u i s h e d the ' b e n e f i c i a r y p r i n c i p l e .
1
They do n e v e r t h e l e s s
support the ' c o n t r o l p r i n c i p l e ' and the a n a l y s i s o f f e r e d here
of t h e r o l e p l a y e d by f a c t u a l b e n e f i c i a r i e s .

20. [1962J Ch.78; [1961] 3 W.L.R.924; [1961] 3 A l l E.R.588.

 - 229 -

21. '[f953] Ch.647; [1953] 3 W.L.R.183; [1953] 2 A l l E.R.350.

22. [1896] 1 Ch.507; 65 L.J.Ch.298; 44 W.R.441.

23. [1962] Ch.78 a t 92.

24. Supra, f o o t n o t e 21.

25. [1953] 2 A l l E.R.350 a t 359.

26. Ibid.

27. Supra, f o o t n o t e 22.

28. [1896] 1 Ch.507 a t 511.

29. Supra, p 197.

30. A p o s s i b l e o b j e c t i o n would by non-compliance w i t h the f o u r t h

of c e r t a i n t y requirement. See supra, p 156.

31. F o r example, Re Cochrane [1955] Ch.309; [1955] 2 W.L.R.267; [1955]

1 A l l E.R.222; Re Flower's Settlement Trusts [1957] 1 w.L.R.401;
[1957] 1 A l l E.R.462; In re Trusts of the Abbott Fund, supra, f o o t -
note 17 ; In re Gillingham Bus Disaster Fund [1959] Ch.62; [1958]
3 W.L.R.325; [1958] 2 A l l E.R.749 ; In re West [1900] 1 Ch.84;
69 L.J.Ch.71 ,• Re British Red Cross Balkan Fund [1914] 2 ch.419;
84 L.J.Ch.. 79 ; Re Hobourn Aero Components Air Raid Distress Fund
[1946] Ch.194; 115 L.J.Ch.158; [1946] 1 A l l E.R.501 ; In re
Hillier's Trusts [1954] 1 w.L.R.700.

32. See a l s o supra,pp 217-226.

33. F o r example, see Morice V. The Bishop of Durham (1804), 9 V e s . J r .

399; (1805), 10 Ves.Jr.522 ; In re Diplock, sub nom. Ministry of
Health V. Simpson [1951] A.C.251; [1950] 2 A l l E.R.1137 ; Essery
v. Cowlard (1884), 26 Ch.D.191; 53 L.J.Ch.661 ,- In re Ames'
Settlement [1946] Ch.217; 115 L.J.Ch.344; [1946] 1 A l l E.R.694.

34. Vandervell v. I.R.C. [1967] 2 A.C.291; [1967] 2 w.L.R.87; [1967]

1 A l l E.R.I ; White v'. Vandervell Trustees [1971] A.C.912; [1970]
3 W.L.R.452; [1970] 3 A l l E.R.16 ; Re Vandervell's Trusts (No.2)
[1974J Ch.269; [1974] 3 W.L.R.256; [1974] 3 A l l E.R.205. F o r
c r i t i c i s m , see H a r r i s , "The Case o f the S l i p p e r y E q u i t y " , (1975)
. 38 Mod.L.R.557.

35. Vandervell v. I.R.C, supra, f o o t n o t e 34, [1967] 1 A l l E.R.I a t

18. I t a l i c s added.

36. Per D i p l o c k , L . J . i n Vandervell V. I.R.C, supra, f o o t n o t e 34,

[1965] 2 A l l E.R.37 a t 46.

37. Per Lord Denning,M.R. i n Re Vandervell's Trusts (No.2), supra,

f o o t n o t e 34, [1974] 3 A l l E.R.205 a t 211.
 - 230 -

38. F o r example, i n the a r e a o f c o n t i n g e n t r e m a i n d e r s , the l o c a t i o n and

ownership o f the f e e s i m p l e remains a mystery t o t h i s day. Megarry
& Wade summarise the v a r i o u s t h e o r i e s t h a t have, from t i m e t o t i m e ,
been o f f e r e d t o p r o v i d e a s o l u t i o n (Megarry & Wade, The Law o f
R e a l P r o p e r t y , 4 t h . e d . (London: S t e v e n s , 1978), pp 182-183) -
"Some s a i d t h a t the f e e s i m p l e was i n abeyance, o r in nubibus
( i n the c l o u d s ) o r in gremio legis ( i n the bosom o f t h e l a w ) ;
o t h e r s argued on the p r i n c i p l e t h a t what the g r a n t o r had n o t con-
veyed away he s t i l l had i n him, and so s a i d t h a t t h e f e e s i m p l e
remained v e s t e d i n the g r a n t o r , o r , i f he was dead, h i s d e v i s e e
or h e i r . The q u e s t i o n was never f i n a l l y s e t t l e d , b u t the l a t t e r
view more n e a r l y c o r r e s p o n d s w i t h modern i d e a s " . Another s u g g e s t i o n
was t h a t t h e i n t e r e s t was " p r e s e r v e d i n the bowels o f t h e l a n d "
(Chudleigh's Case (1595), 1 Co.Rep.113b a t 137b; 76 E.R.261 a t 319).

39. Supra, pp 184-187.

40. Supra, pp 187-189.

41. Infra, pp 213-217.

42. Supra, p 203.

43. Supra, f o o t n o t e 1, [1952] 1 A l l E.R.1067 a t 1071.

44. Supra, f o o t n o t e 31.

45. [1946] Ch.86; [1945] 2 A l l E.R.711.

46. [1946] Ch.86 a t 97.

47. Supra, pp 203-204.

48. See Re Ames, supra, footnote 33.

49. Re Charteris [1.917] 2 Ch.379; 86 L.J.Ch.658.

50. Assuming t h a t t h e y a r e n o t one and the same p e r s o n .

51. (1805), 10 V e s . J r . 5 2 2 . D i s c u s s e d supra, pp 107-109.

52. Sub nom. Chichester Diocesan Fund & Board of Finance v. Simpson
[1944] A.C.341; 113 L.J.Ch.225; [1944] 2 A l l E.R.60.

53. See a l s o supra, pp 193-194 and infra, pp 223-225.

54. D i s c u s s e d supra, pp 192-193.

55. Supra, p 197.

56. F o r example, Cunnack V. Edwards [ 1 8 9 6 ] 2 C h . 6 7 9 ; 6 5 L . J . C h . 8 0 1 ;

Braithwaite v. Attorney General [ 1 9 0 9 ] 1 C h . 5 1 0 ; 7 8 L . J . C h . 3 1 4 ;
In re Welsh Hospital CNetley) Fund [ 1 9 2 1 ] 1 C h . 6 5 5 ; 9 0 L . J . C h . 2 7 6 ;
In re Hillier's Trusts, supra, f o o t n o t e 31 ; In re Ulverston &
District New Hospital Building Trusts [1956] C h . 6 2 2 ; [1956]
3 w . L . R . 5 5 9 ; [ 1 9 5 6 ] 3 A l l E . R . 1 6 4 ; In re West Sussex Constabulary's
 - 231 -

Widows Children & Benevolent (1930) Fund Trusts [1971] c h . l ;

[ 1 9 7 0 ] 2 W.L.R.848. For comments and c r i t i c i s m see H i c k l i n g , "The
D e s t i n a t i o n o f the Funds o f Defunct V o l u n t a r y A s s o c i a t i o n s " , ( 1 9 6 6 )
3 0 C o n v . ( N . S . ) 1 1 7 , p 1 1 8 , pp 1 2 1 - 1 2 2 ; Green, "The D i s s o l u t i o n o f
U n i n c o r p o r a t e d N o n - P r o f i t A s s o c i a t i o n s " , ( 1 9 8 0 ) 4 3 Mod.L.R.626,
pp 6 4 3 - 6 4 8 ; R i c k e t t , op.cit.supra, f o o t n o t e 1 6 , pp 1 1 2 - 1 2 2 .

57. Cf. C o n t r o l by the Crown o f c h a r i t a b l e d o n a t i o n s , discussed supra,

p 186.

58. Supra, footnote 56.

59. [ 1 9 7 1 ] C h . l a t 1 2 , q u o t i n g P. O. Lawrence,J. i n Re Welsh Hospital

(Netley) Fund, supra, f o o t n o t e 5 6 , [ 1 9 2 1 ] 1 C h . 6 5 5 a t 6 6 0 .

60. Supra, footnote 56.

61. See Re West Sussex Contabular (etc.), supra, f o o t n o t e 5 6 , [1971]

C h . l a t 9 ; Cunnack v. Edwards, supra, f o o t n o t e 5 6 , [ 1 8 9 6 ] 2 c h .
679 at 6 8 3 . A l t e r n a t i v e l y the fund may be r e g u l a t e d by s t a t u t e
and a p r o v i s i o n t h e r e i n may e x p r e s s l y make such a s t i p u l a t i o n .
F o r example, F r i e n d l y S o c i e t i e s A c t 1 8 2 9 , 1 0 G e o . i v , c . 5 6 s . 2 6 :
see Cunnack v. Edwards, supra a t 6 8 8 .

62. See Cunnack V. Edwards, supra, f o o t n o t e 5 6 , [ 1 8 9 6 ] 2 Ch.679 at 6 8 8 ;

Re West Sussux Contabulary (etc.), supra, f o o t n o t e 56, [1971]

Ch.l at 1 2 - 1 3 .

63. Supra, footnote 31.

64. Per Harman,J. a t f i r s t instance [1958] 1 Ch.300 at 314.

65. Cf. McKay, op.cit.supra, f o o t n o t e 1 6 , pp 430-432.

66. See infra, pp 223-225.

67. See a l s o d i s c u s s i o n supra, pp 209-213.

68. Ibid.

69. [1934] Ch.342; 103 L.J.Ch.162.

70. Note t h a t Roxburgh,J. a g r e e d w i t h t h i s a n a l y s i s i n Re Astor's
Settlement Trusts, supra, f o o t n o t e 1 , d i s c u s s e d supra, pp 1 2 1 - 1 2 7 .
[ 1 9 5 2 ] C h . 5 3 4 a t 5 4 6 , but then went on t o say t h a t c o n t r o l v i a
r e s i d u a r y l e g a t e e s was "anomalous".

71. [1934] Ch.342 at 3 4 4 .

72. Per c o u n s e l , ibid at 3 4 3 .

73. Supra, p 220.

74. Supra, p 197.

 - 232 -

75. (1848), 16 Sim.105. Another o f Roxburgh,J.'s "anomalous" c a s e s :

supra, f o o t n o t e 70.

76. (1848), 16 Sim.105 a t 120. See a l s o , Trimmer v. Danby (1856),

25 L.J.Ch.424, per K i n d e r s l e y , V . - C . a t 427.

77. See the d i s c u s s i o n o f t h i s case i n Re Dean (1889), 41 Ch.D.552;

58 L.J.Ch.693, per North,J.,41 Ch.D.552 a t 557-560 f o r the d e t a i l s
of the c o u r t o r d e r .

78. See a l s o , d i s c u s s i o n supra, pp 210-211.

79. Supra, pp 193-194, pp 211-213.

80. Supra, f o o t n o t e 77: another "anomalous" case, supra, f o o t n o t e 70.

See a l s o , Trimmer v. Danby, supra, f o o t n o t e 76 ; Pirbright v.
Salwey [1896] w.N.86 Note 4 ; Re Hooper [1932] 1 ch.38; 101 L.J.Ch.
61. Pirbright V. Salwey and Re Hooper have been f o l l o w e d , r e l a t i v e l y
r e c e n t l y , i n Canada: Crocker v. Senior (1972), 2 N.& P.E.I.R.179.

81. I n the a l t e r n a t i v e , he c l a i m e d t h a t he was e n t i t l e d to the money

l e f t over a n n u a l l y when the t r u s t had been performed. The c o u r t
d i d not d e a l w i t h t h i s a l t e r n a t i v e c l a i m .

82. (1889), 41 Ch.D.552 a t 557.

83. Note a weakness i n the d e c i s i o n o f N o r t h , J . i n Re Dean: t h a t the

t r u s t was h e l d v a l i d f o r a p r o j e c t e d d u r a t i o n o f f i f t y y e a r s .
The p e r p e t u i t y p e r i o d a p p l i c a b l e t o the d u r a t i o n o f a n o n - c h a r i t a b l e
purpose t r u s t i s a l i f e i n b e i n g p l u s twenty-one y e a r s . An animal's
l i f e can not be counted as a l i f e i n b e i n g : Re Kelly [1932] i r . R .
255. When t h e r e i s no l i f e i n b e i n g , a t r u s t can o n l y v a l i d l y l a s t
twenty-one y e a r s .

84. (1842), 11 L.J.Ch.176.

85. Ibid a t 177.

86. Note t h a t Roxburgh,J. agreed w i t h t h i s a n a l y s i s i n Re Astor,
supra, f o o t n o t e 70 [1952]Ch.534 a t 543.
87. L i s t e d supra,pp 178-180. The enumeration o f c l a s s e s i n t h i s para-
graph, a l s o r e f e r s back t o the same l i s t .
 - 233 -

III. THE CONTROL ANALYSIS AND G I F T S TO UNINCORPORATED ASSOCIATIONS

1. Introduction

If X makes a d o n a t i o n f o r the non-charitable purposes o f a particular

unincorporated a s s o c i a t i o n , one o f n i n e possible interpretations will be

put on t h e l e g a l effect o f w h a t he h a s a c h i e v e d \ A court's choice amongst

the nine will be d i c t a t e d b o t h by o b j e c t i v e f a c t o r s , s u c h a s c i r c u m s t a n t i a l

information concerning X, the g i f t and t h e a s s o c i a t i o n , and s u b j e c t i v e fac-

tors, such as the c o u r t ' s assessment o f the s o c i a l value of the a s s o c i a t i o n

and t h e p u r p o s e s w h i c h X's g i f t purports to further. As t h e law stands at

present, a n d a s was demonstrated i n Part Two, none o f t h e n i n e i n t e r p r e t -

ations leads to a totally satisfactory result. In p a r t i c u l a r , i f the court

concludes, or, indeed, i f X expressly or unequivocally stipulates, that

the gift must take effect as a t r u s t f o r the non-charitable purposes of the

association, i twill fail . This i s because i t h a s no human b e n e f i c i a r i e s

and therefore v i o l a t e s the s o - c a l l e d 'beneficiary p r i n c i p l e ' .

However, the C o n t r o l A n a l y s i s , as e x p l a i n e d and d e v e l o p e d i n the pre-

ceding chapter, i s as a p p l i c a b l e t o g i f t s on t r u s t f o r the non-charitable

purposes o f an u n i n c o r p o r a t e d a s s o c i a t i o n as i t i s t o a l l n o n - c h a r i t a b l e

purpose trusts i n general. Therefore a l l t h e comments and considerations

of the l a s t thirty-five pages are d i r e c t l y r e l e v a n t t o the case o f the gift

to an u n i n c o r p o r a t e d association. Above a l l , i t c a n be s a i d that a gift

on trust f o r an a s s o c i a t i o n , i f t e s t e d a c c o r d i n g to the Control Analysis,

will not f a i l f o r lack of enforceability. At least one i n d i v i d u a l from

one o r more of the various classes of controllers will exist who can

exercise c o n t r o l over t h e t r u s t e e s and thus v a l i d a t e t h e gift.

 - 234 -

I t may be r e c a l l e d t h a t t h e c l a s s e s of available c o n t r o l l e r s who

have been d i s c u s s e d h i t h e r t o include:-

i. Direct beneficiaries;

ii. Factual beneficiaries;

iii. The s e t t l o r o f an intev vivos trust;

iv. The r e p r e s e n t a t i v e s o f t h e e s t a t e o f a donor

by way o f testamentary t r u s t ;

v. The l e g a t e e s o f such a donor;

vi. Those e n t i t l e d on t h e i n t e s t a c y o f such a

donor;

vii. The Crown;

viii. The r e s i d u a r y b e n e f i c i a r i e s o f t h e t r u s t .

Evidently, a g i f t on t r u s t f o r an u n i n c o r p o r a t e d a s s o c i a t i o n has no d i r e c t

beneficiaries ( c l a s s i). because t h e a s s o c i a t i o n itself lacks l e g a l person-

a l i t y and i s t h e r e f o r e i n c a p a b l e o f b e i n g t h e b e n e f i c i a r y of a trust. How-

ever, i f t h e purposes o f t h e u n i n c o r p o r a t e d a s s o c i a t i o n a r e such t h a t they

i n f a c t confer benefit oh i d e n t i f i a b l e persons, these f a c t u a l beneficiaries

4

can s u p p l y t h e n e c e s s a r y element o f c o n t r o l (class i i ) . As f o r the donor

h i m s e l f , the r e s u l t i n g t r u s t d o c t r i n e can operate i n e x a c t l y t h e same f a s h -

i o n as i t does with, n o n - c h a r i t a b l e purpose t r u s t s i n g e n e r a l , and c o n f e r

potential control r i g h t s on the s e t t l o r i f t h e d o n a t i o n t o t h e u n i n c o r p o r a t e d

5
association i s made irvtev vivos ( c l a s s i i i ) , o r on h i s representatives,
6

legatees- and h e i r s (classes i v , v and v i ) i f t h e d o n a t i o n i s testamentary

i n nature. S i m i l a r l y , the bona Vacantia n o t i o n and p o s s i b l e entitlement of

the Crown a r e as- much an e x c e p t i o n t o t h e above o p e r a t i o n o f t h e r e s u l t i n g

trust doctrine when the d o n a t i o n i s made on t r u s t f o r the purposes o f an

unincorporated association as- i t i s when the g i f t i s f o r any o t h e r non-

7
charitable purpose ( c l a s s v i i ) . . In a d d i t i o n , i f t h e donor s p e c i f i e d
 - 235 -

residuary beneficiaries of h i s g i f t , they t o o can s a t i s f y t h e ' c o n t r o l

g

principle' i n the c o n t e x t o f u n i n c o r p o r a t e d a s s o c i a t i o n s (class v i i i )

I n sum, i f X's g i f t on t r u s t f o r t h e n o n - c h a r i t a b l e purposes o f t h e s p e c i -

f i e d u n i n c o r p o r a t e d a s s o c i a t i o n were i n t e r p r e t e d i n accordance w i t h t h e

C o n t r o l A n a l y s i s , and i t s a t i s f i e d the requirements o f c e r t a i n t y and com-

9

p l i a n c e with the r u l e against p e r p e t u i t i e s , i n p r i n c i p l e i t would be

valid.

T h e r e f o r e a c o u r t has a t o t a l o f t e n p o s s i b l e a n a l y s e s from which t o

choose i n i n t e r p r e t i n g a g i f t t o an u n i n c o r p o r a t e d a s s o c i a t i o n . However,

one o f t h e many f a c t o r s which should i n f l u e n c e the choice of a n a l y s i s i s the

p r a c t i c a l f e a s i b i l i t y o f t h e s e l e c t e d i n t e r p r e t a t i o n , s i n c e an a n a l y s i s

which- merely s u p e r f i c i a l l y complies w i t h l e g a l p r i n c i p l e b u t which in fact

i s incapable o f implementing the p r i n c i p l e ' s o b j e c t i v e s s h o u l d n o t be adopt-

ed. In t h i s regard, i t has been demonstrated t h a t not every c l a s s o f p o t e n -

tial c o n t r o l l e r s discussed h i t h e r t o who s a t i s f y t h e ' c o n t r o l p r i n c i p l e ' i n

f a c t ensures t h a t t r u s t e e s are a c t u a l l y c o n t r o l l e d i n t h e i r ownership o f

t r u s t funds. I n the cases o f h e i r s and r e s i d u a r y beneficiaries (classes

v, v i . and v i i i ) . , i n p a r t i c u l a r , i t was observed t h a t compliance w i t h p r i n -

c i p l e and e f f e c t i v e enforcement i n f a c t were m u t u a l l y i n c o n s i s t e n t .

Therefore, i f the Control Analysis c o u l d be developed no f u r t h e r than i t

has been i n the c o n t e x t o f n o n - c h a r i t a b l e purpose t r u s t s i n g e n e r a l , i t

would have t o be concluded t h a t i t d i d n o t supply a s a t i s f a c t o r y s o l u t i o n

to t h e problem o f g i f t s t o u n i n c o r p o r a t e d associations.

However, i t w i l l be demonstrated i n t h i s c h a p t e r t h a t t h e o b j e c t i o n

which weakens t h e p l a u s i b i l i t y o f t h e C o n t r o l A n a l y s i s i n r e l a t i o n t o non-

c h a r i t a b l e purpose t r u s t s i n g e n e r a l l o s e s i t s f o r c e t o t a l l y when the

 - 236 -

a n a l y s i s i s a p p l i e d s p e c i f i c a l l y t o g i f t s on t r u s t f o r t h e non-charitable

purposes o f an u n i n c o r p o r a t e d a s s o c i a t i o n . T h i s i s because an u n i n -

corporated a s s o c i a t i o n , by i t s v e r y n a t u r e , has t o have members. The

r o l e t h a t can be p l a y e d by those members as c o n t r o l l e r s o f t h e t r u s t , both

i n p r i n c i p l e and i n f a c t , w i l l be e x p l a i n e d . I t w i l l be seen t h a t , what-

e v e r t h e purposes o f t h e u n i n c o r p o r a t e d a s s o c i a t i o n , the a v a i l a b i l i t y o f

i t s members t o e x e r c i s e c o n t r o l r e n d e r s t h e C o n t r o l A n a l y s i s f a r superior

to any o f t h e a n a l y s e s which t h e law p r e s e n t l y has t o o f f e r .

2. C o n t r o l by t h e Members o f an U n i n c o r p o r a t e d Association

For t h e purposes o f t h i s d i s c u s s i o n , ' i t i s proposed t o u t i l i s e the

d i s t i n c t i o n which has been drawn between 'inward l o o k i n g ' associations,

and 'outward l o o k i n g ' associations An 'inward l o o k i n g ' association

i s one t h a t promotes the i n t e r e s t s o f i t s members and i s i l l u s t r a t e d by

the example o f a s o c i a l c l u b . An 'outward l o o k i n g ' a s s o c i a t i o n , on the

o t h e r hand, promotes o u t s i d e purposes, such as a n t i - v i v i s e c t i o n , o r a p o l -

itical i d e a l , and i t s members a r e t h e i n s t r u m e n t s r a t h e r than the r e c i p i -

ents o f the b e n e f i t s thereby conferred.

( i ) G i f t t o an Inward Looking A s s o c i a t i o n

I f a g i f t i s made on t r u s t f o r the purposes o f an inward looking

u n i n c o r p o r a t e d a s s o c i a t i o n , t h e members d e r i v e a f a c t u a l b e n e f i t from t h e

trust. F o r example, take t h e case o f a chess c l u b , whose c o n s t i t u t i o n

s t i p u l a t e s as t h e purpose o f i t s e x i s t e n c e the p r o v i s i o n of f a c i l i t i e s f o r

i t s members, t o p l a y chess i n a p p r o p r i a t e surroundings. The members enjoy

the b e n e f i t o f having t h e premises, equipment and a m e n i t i e s t o pursue t h e i r

 - 237 -

pastime. They a r e t h e r e f o r e f a c t u a l b e n e f i c i a r i e s o f t h e g i f t on t r u s t

which e n r i c h e s t h e a s s o c i a t i o n , and stand i n e x a c t l y the same p o s i t i o n as

12
the f a c t u a l b e n e f i c i a r i e s o f a l l o t h e r n o n - c h a r i t a b l e purpose trusts

The additional f e a t u r e t h a t t h e p o t e n t i a l c o n t r o l l e r s are not o n l y

f a c t u a l b e n e f i c i a r i e s b u t a l s o members o f the a s s o c i a t i o n f o r whose purposes

the g i f t was made does not add a n y t h i n g t o t h e C o n t r o l A n a l y s i s as a l r e a d y

discussed. The members enjoy a f a c t u a l and p e c u n i a r y b e n e f i t from t h e g i f t

and would be a f f e c t e d by any breach o f t r u s t by the t r u s t e e s i n t h e i r admin-

i s t r a t i o n o f t h e t r u s t funds. They t h e r e f o r e have s t a n d i n g under the 'con-

t r o l p r i n c i p l e ' to assert rights of control t o secure due performance o f the

trustees' obligations. The t r u s t i s thus rendered c o n t r o l l a b l e , w i t h t h e

r e s u l t that the g i f t f o r t h e purposes o f t h e a s s o c i a t i o n would be v a l i d i n

principle. Furthermore, t h e t r u s t i s without doubt a c t u a l l y under control,

as a matter o f f a c t . I f the trustees absconded w i t h t h e d o n a t i o n , o r used

it f o r purposes o t h e r than the purchase o f chess boards o r s i m i l a r associ-

a t i o n purposes, the members would undoubtedly e x e r c i s e their rights of

control i n order to restore t o themselves the f a c t u a l b e n e f i t which i s

13
r i g h t f u l l y t h e i r s , v i a t h e i r membership o f the a s s o c i a t i o n

( i i ) G i f t t o an Outward Looking Association

By contrast, i fa gift i s made on t r u s t f o r the purposes o f an out-

ward l o o k i n g unincorporated association, the members p e r s o n a l l y d e r i v e no

immediate f a c t u a l b e n e f i t from the donated funds. F o r example, take the

case o f a p o l i t i c a l p a r t y which e x i s t s f o r t h e purpose o f p r o m u l g a t i n g and

furthering the p o l i t i c a l i d e a l s o f i t s members. Although the e x i s t e n c e o f

such an a s s o c i a t i o n may w e l l be b e n e f i c i a l i n g e n e r a l terms t o a democratic

 - 238 -

s o c i e t y , no i d e n t i f i a b l e p e r s o n b e n e f i t s from t h e f u r t h e r a n c e o f such abs-

t r a c t and i n t a n g i b l e p u r p o s e s . In p a r t i c u l a r , i t i s not p o s s i b l e t o des-

c r i b e t h e members as b e i n g t h e f a c t u a l b e n e f i c i a r i e s o f any g i f t on t r u s t

14
for those purposes

However, i t i s submitted t h a t t h e members can, n e v e r t h e l e s s , satisfy

the demands o f t h e ' c o n t r o l p r i n c i p l e ' and extend the scope o f t h e C o n t r o l

A n a l y s i s beyond t h a t h i t h e r t o d i s c u s s e d . T h i s submission i s based on t h e

o v e r a l l nature and c o m p o s i t i o n o f an u n i n c o r p o r a t e d a s s o c i a t i o n ^ . 5
To

summarise, i t i s a c o n s e n s u a l arrangement whereby a l l c u r r e n t members i n

good s t a n d i n g have agreed t o a s s o c i a t e w i t h one another f o r the f u r t h e r a n c e

o f c e r t a i n purposes. They n o r m a l l y pay some s o r t o f s u b s c r i p t i o n on ad-

mission, and r e c e i v e v a r i o u s b e n e f i t s from membership i n r e t u r n . More o f t e n

than not, p a r t i c u l a r l y i n l a r g e r a s s o c i a t i o n s , the members a p p o i n t commit-

tees as t h e r e p r e s e n t a t i v e s o f the a s s o c i a t i o n i n i t s d e a l i n g s w i t h the o u t -

side world.

When a d o n a t i o n i s made i n g e n e r a l terms f o r the s p e c i f i e d purposes

of t h e a s s o c i a t i o n , whether from a member o r from an o u t s i d e r , i ti s re-

c e i v e d on the a s s o c i a t i o n ' s b e h a l f by d e s i g n a t e d committee members who hold

it as t r u s t e e s on t r u s t f o r the a s s o c i a t i o n . These committee members

are c o n t r a c t u a l l y bound t o the members o f t h e a s s o c i a t i o n t o d e a l w i t h such

property i n accordance w i t h t h e terms o f t h e a s s o c i a t i o n c o n t r a c t , o r con-

s t i t u t i o n , which s p e c i f i e s t h e purposes and o b j e c t s o f the a s s o c i a t i o n ' s

existence. S i n c e i t i s merely a c o n t r a c t , the c o n s t i t u t i o n can be v a r i e d

a t any time by t h e agreement o f t h e members. Therefore, depending on the

wording o f t h e t r u s t , the committee members c o u l d i n f a c t u t i l i s e the

donated .funds f o r purposes o t h e r than those contemplated by the donor a t

 - 239 -

the time o f t h e g i f t and y e t not v i o l a t e the terms o f t h e t r u s t . In

o t h e r words, i f the donor merely s t i p u l a t e s t h a t h i s g i f t i s f o r the p u r -

poses o f t h e a s s o c i a t i o n , t h i s might w e l l be i n t e r p r e t e d t o mean"'the

purposes from time t o time o f t h e a s s o c i a t i o n ' . I f so, the members might

have c o n t r a c t u a l l y v a r i e d those purposes by t h e time t h e g i f t takes e f f e c t .

If, on the o t h e r hand, the donor e x p r e s s l y enumerates t h e purposes f o r

which t h e funds a r e t o be used (which c o i n c i d e w i t h t h e purposes o f the

a s s o c i a t i o n ) , or i f the g i f t i s i n t e r p r e t e d as meaning 'the purposes o f t h e

a s s o c i a t i o n as they s t a n d a t time o f d o n a t i o n ' , the g i f t w i l l be immune

from v a r i a t i o n s t o the c o n s t i t u t i o n . b y the membership. In the l a t t e r case,

the committee members w i l l by i m p l i c a t i o n n e v e r t h e l e s s s t i l l be contractu-"

ally bound t o comply w i t h the terms o f t h e c o n s t i t u t i o n as i t s t o o d a t t h e

relevant time.

In l i g h t o f t h e s e f a c t s , i t i s e v i d e n t t h a t every member o f an u n i n -

corporated association i s a f f e c t e d by t h e d o n a t i o n o f funds t o i t and has

a p e c u n i a r y i n t e r e s t i n t h e due u t i l i s a t i o n o f t h o s e funds f o r t h e purposes

of the a s s o c i a t i o n . In t h e f i r s t p l a c e , even i f t h e a s s o c i a t i o n i s out-

ward l o o k i n g so t h a t members d e r i v e no immediate factual benefit from a

gift f o r i t s purposes, they a r e n e v e r t h e l e s s e n t i t l e d t o the enjoyment o f

c e r t a i n advantages from t h e i r membership. Indeed, the payments made by a

new member on a d m i s s i o n t o the a s s o c i a t i o n , and u s u a l l y demanded p e r i o d i c -

ally t o ensure c o n t i n u e d membership, a r e made i n c o n s i d e r a t i o n f o r the

r e c e i p t o f such advantages. These advantages include t h e r i g h t t o enjoy

the a s s o c i a t i o n ' s premises and f a c i l i t i e s . I f the a s s o c i a t i o n p r o s p e r s ,

members w i l l receive a good r e t u r n on t h e i r s u b s c r i p t i o n s v i a the f r i n g e

b e n e f i t s a v a i l a b l e through, membership. I f the a s s o c i a t i o n i s d e p r i v e d o f

i t s f u n d i n g , on t h e o t h e r hand, o r embezzled o f d o n a t i o n s , members w i l l

 - 240 -

s u f f e r a corresponding diminution i n t h e r e t u r n on t h e i r s u b s c r i p t i o n s .

Members t h e r e f o r e have t h e r i g h t n o t t o be w r o n g f u l l y deprived of their

enjoyment o f membership and t h i s r i g h t does n o t depend on a t r u e p r o -

16
prietary interest i n association property

Secondly, every member o f an u n i n c o r p o r a t e d a s s o c i a t i o n i s p a r t o f

the group e n t e r p r i s e i t represents. On admission, he a c q u i r e s a say i n

the a c t i v i t i e s and d i r e c t i o n o f t h a t e n t e r p r i s e , including i t s property.

Even though no member has a t r u e p r o p r i e t a r y i n t e r e s t i n funds g i v e n on

t r u s t f o r the a s s o c i a t i o n (unless he i s a t r u s t e e ) , e v e r y member n e v e r t h e -

l e s s enjoys a p e c u n i a r y i n t e r e s t i n them. T h i s i s because he has a con-

t r a c t u a l r i g h t t o ensure t h a t a s s o c i a t i o n p r o p e r t y i s devoted i n a c c o r d -

ance w i t h t h e a s s o c i a t i o n c o n t r a c t , t o which he i s a p a r t y . When funds a r e

donated t o t h e a s s o c i a t i o n , thus i n c r e a s i n g i t s p r o p e r t y value, the value

o f each member's c o n t r a c t u a l r i g h t i s likewise increased. Furthermore,

each member has t h e power t o c a s t h i s v o t e i n f a v o u r o f a change i n t h e

association's c o n s t i t u t i o n , thus amending t h e mode o f f u r t h e r i n g i t s p u r -

poses, and having a d i r e c t i n f l u e n c e on t h e d i s p o s i t i o n o f t h e donated funds.

In sum, t h e s t a t u s o f each member w i t h i n an a s s o c i a t i o n as one o f

the aggregate o f i n d i v i d u a l s o f which i t i s composed, c o n f e r s on him an

i n t e r e s t i n a l l d o n a t i o n s which a r e made t o t h e a s s o c i a t i o n . Even i f he

personally derives no f a c t u a l b e n e f i t from a p a r t i c u l a r d o n a t i o n because

the a s s o c i a t i o n i s outward l o o k i n g , he i s i n t e r e s t e d i n a l l d e a l i n g s which

a f f e c t the association's f i n a n c i a l status, i n c l u d i n g d o n a t i o n s t h e r e t o on

trust.

Therefore, from t h e p o i n t o f view o f p r i n c i p l e , every member o f an

 - 241 -

unincorporated association has s u f f i c i e n t interest i n the operation of a

trust f o r the purposes o f the a s s o c i a t i o n to s a t i s f y the 'control p r i n c i p l e ' .

If the trustee broke h i s f i d u c i a r y o b l i g a t i o n i n r e l a t i o n to the t r u s t

property and used i t f o rpurposes other than those o f the a s s o c i a t i o n ,

e v e r y member would be a f f e c t e d . E a c h member therefore has a r i g h t o f con-

trol over the trustee i n the performance o f h i s f i d u c i a r y d u t i e s . In t h i s

17
manner, the t r u s t i s rendered enforceable and v a l i d

Above a l l , i t i s submitted that control v i a members i s an e f f e c t i v e

method o f g u a r a n t e e i n g that donated funds a r e actually used f o r association

purposes. There i s no i n c o n s i s t e n c y between the pecuniary i n t e r e s t of the

members a n d t h e d u e a d m i n i s t r a t i o n o f t h e terms o f t h e t r u s t . Members

could derive no p e r s o n a l financial benefit from t h e f a i l u r e of the trust

because, on f a i l u r e , the donated funds, o r whatever surplus remained a t

that time, would e i t h e r return b y way o f r e s u l t i n g t r u s t t o t h e d o n o r o r

his estate, o r go t o t h e C r o w n a s bona vacantia. With t h e members, there-

fore, there i s no d a n g e r that the only o c c a s i o n on which they would exer-

cise their rights of control w o u l d b e when t h e v a l i d i t y o f t h e t r u s t was

in doubt. Likewise, members h a v e no i n t e r e s t i n p e r m i t t i n g trustees t o do

nothing to further the purposes o f the a s s o c i a t i o n f o r the duration of the

trust i n order to increase the residue available f o r residuary beneficiaries

of the g i f t . Instead, t h e i n t e r e s t s o f t h e members c o i n c i d e exactly with

the interests of the association, since t h e y ave t h e a s s o c i a t i o n . From t h e

point o f v i e w o f t h e members, t o f u r t h e r the purposes o f the a s s o c i a t i o n

is to further the i d e a l s which, as t h e i r membership evidences, they share.

Furthermore, there c a n be l i t t l e fear of apathetic passivity. Mem-

b e r s o f an u n i n c o r p o r a t e d association a r e u n l i k e l y t o s i t on t h e i r rights
 - 242 -

o f c o n t r o l and p e r m i t breaches o f t r u s t t o o c c u r . F o r example, i n the

18

case o f a donation f o r t h e purposes o f t h e Labour P a r t y , i t i s hard t o

b e l i e v e t h a t n o t one member t h e r e o f would e x e r c i s e h i s r i g h t t o e n f o r c e

due performance o f t h e t r u s t i f the t r u s t e e s used the funds t o p u b l i s h

pamphlets on b e h a l f o f t h e C o n s e r v a t i v e P a r t y , o r t o buy h i m s e l f a house

i n t h e South o f F r a n c e . T h i s a l s o i l l u s t r a t e s how, q u i t e a p a r t from t h e

e x i s t e n c e o f community o f i n t e r e s t between an u n i n c o r p o r a t e d association

and i t s membership, t h e p r a c t i c a l f e a s i b i l i t y o f t h e C o n t r o l A n a l y s i s i s

f u r t h e r enhanced by t h e numbers i n v o l v e d . There i s n o r m a l l y o n l y one

donor, f o r example, who one hopes w i l l e n f o r c e h i s g i f t ; an unincorporated

a s s o c i a t i o n , by c o n t r a s t , must have a t l e a s t s e v e r a l members i n o r d e r t o be

an u n i n c o r p o r a t e d a s s o c i a t i o n i n t h e f i r s t p l a c e , and many a s s o c i a t i o n s

have thousands, each one o f whom has t h e r i g h t t o e n f o r c e due performance

of t h e terms o f the t r u s t . The odds a r e t h e r e f o r e v e r y much i n f a v o u r o f

effective control. From t h e p o i n t o f view o f t h e expense o f l i t i g a t i o n ,

a l s o , t h e r e i s t h e p o s s i b i l i t y o f s h a r i n g t h e burden when l a r g e numbers

o f persons a r e i n v o l v e d .

In sum, i t i s submitted t h a t the C o n t r o l A n a l y s i s p r o v i d e s a satis-

f a c t o r y s o l u t i o n t o t h e problem o f g i f t s t o a s s o c i a t i o n s . C o n t r o l v i a mem-

bers n o t o n l y s a t i s f i e s t h e b a s i c p r i n c i p l e o f t r u s t s law t h a t a t r u s t must

be e n f o r c e a b l e ; i t a l s o guarantees c o n t r o l as a matter o f f a c t .

Before concluding t h i s s e c t i o n , i t should be p o i n t e d o u t t h a t the

c r i t i c i s m l e v e l l e d a t the 'inward looking'/'outward l o o k i n g ' terminology

19
by Brightman,J. i n Re Recher's Will Trusts which l e d him t o r e j e c t i t s

relevance, can i n f a c t be t u r n e d i n t o a f u r t h e r advantage o f t h e C o n t r o l

20
Analysis. Brightman,J. s a i d :
 - 243 -

The e x p r e s s i o n s "inward l o o k i n g " and "outward

l o o k i n g " a r e i m p r e c i s e and i t i s u n d e s i r a b l e
and indeed i m p r a c t i c a b l e that'.the law s h o u l d
depend upon an i l l - d e f i n e d d i s t i n c t i o n o f t h i s
s o r t ; some a s s o c i a t i o n s , no doubt, l o o k b o t h
ways; what then?

In t h e c o n t e x t o f t h e C o n t r o l A n a l y s i s , i t i s n o t n e c e s s a r y t h a t i t be

possible to categorise every s i n g l e u n i n c o r p o r a t e d a s s o c i a t i o n as e i t h e r

inward l o o k i n g o r outward l o o k i n g . In e i t h e r case, a g i f t on t r u s t f o r i t s

purposes can be c o n t r o l l e d by i t s members. The d i f f e r e n c e between the two

.types o f a s s o c i a t i o n merely d i c t a t e s t h e p a r t i c u l a r b a s i s f o r t h e members'

21

right of control. Furthermore, i f an a s s o c i a t i o n i s a " h y b r i d " , the

r e s u l t i s merely t h a t t h e e n t i t l e m e n t o f t h e members t o e x e r c i s e r i g h t s o f

control i s reinforced. Members w i l l n o t o n l y d e r i v e a f a c t u a l b e n e f i t from

the due performance o f t h e t r u s t , they w i l l a l s o enjoy t h e advantage o f see-

i n g t h e a s s o c i a t i o n ' s a b s t r a c t purposes and i d e a l s f u r t h e r e d , and i t s f i n a n -

c i a l p o s i t i o n i n general strengthened. In c o n c l u s i o n , whatever the nature

o f an u n i n c o r p o r a t e d a s s o c i a t i o n ' s objects, a g i f t on t r u s t t o f u r t h e r them

w i l l be v a l i d i f i n t e r p r e t e d i n accordance w i t h t h e C o n t r o l Analysis.

3. Assessment o f C o n t r o l A n a l y s i s of G i f t s to Unincorporated Associations

In o r d e r t o a s s e s s t h e t r u e v a l u e o f the C o n t r o l A n a l y s i s o f g i f t s

to unincorporated associations, i t i s n e c e s s a r y t o r e c a p i t u l a t e the advan-

tages and d i s a d v a n t a g e s o f t h e n i n e a n a l y s e s which a r e c u r r e n t l y a v a i l a b l e

i n the common law, and conduct a comparison. I t may be r e c a l l e d t h a t t h e

nine analyses already discussed a r e as f o l l o w s :-

i. The A b s o l u t e G i f t A n a l y s i s : a b s o l u t e gift to

the members o f t h e u n i n c o r p o r a t e d a s s o c i a t i o n ;

ii. The C o n t r a c t A n a l y s i s : t h e g i f t t o the members

 - 244 -

o f the a s s o c i a t i o n takes e f f e c t s u b j e c t to a

contractual o b l i g a t i o n t o use and r e t a i n t h e

funds f o r the purposes o f t h e a s s o c i a t i o n ;

iii. The Mandate Theory: the g i f t t o the members

o f the a s s o c i a t i o n takes e f f e c t s u b j e c t t o the

terms o f e i t h e r a r e v o c a b l e o r an i r r e v o c a b l e

mandate arrangement between the donor and those

members;

iv. The C o n t r a c t u a l Undertaking Theory: the g i f t t o

the members o f t h e a s s o c i a t i o n takes e f f e c t i n

accordance w i t h t h e terms o f an i m p l i e d contract

between the donor and the members;

v. The Suspended B e n e f i c i a l • Ownership Theory: the

gift t o the members o f t h e a s s o c i a t i o n takes

e f f e c t subject to a general equitable obligation

owed by them t o t h e donor;

vi. G i f t , on t r u s t f o r the p r e s e n t members o f the

association;

vii. G i f t on t r u s t f o r the p r e s e n t and f u t u r e mem-

bers o f the a s s o c i a t i o n ;

viii. The Denley A n a l y s i s : the g i f t on t r u s t f o r t h e

a s s o c i a t i o n i s v a l i d a t e d through t h e e x i s t e n c e o f

'factual beneficiaries';

ix. G i f t on t r u s t f o r the purposes o f t h e u n i n -

corporated association, governed by t h e 'bene-

ficiary principle'.
22

Under the A b s o l u t e G i f t A n a l y s i s , the donated funds are t r a n s f e r r e d d i r -

e x t l y and a b s o l u t e l y i n t o the hands o f t h e c u r r e n t members o f t h e a s s o c i a t i o n

 - 245 -

i n question a t t h e time the g i f t takes e f f e c t . There can be no l e g a l re-:

d r e s s i£ the a s s o c i a t i o n r e c e i v e s n o t one penny o f the g i f t because the mem-

b e r s take as co-owners and a r e under o n l y moral o b l i g a t i o n s t o d i v e r t the

funds t o the b e n e f i t o f the a s s o c i a t i o n . I f they l e a v e the a s s o c i a t i o n ,

they can take t h e i r share o f t h e funds w i t h them w i t h impunity. Under t h e

Control Analysis, t h e members o f t h e a s s o c i a t i o n a c q u i r e no p r o p r i e t a r y

i n t e r e s t i n donated funds a t a l l .

23

Under the C o n t r a c t Analysis , a g a i n t h e members take the donated

funds as co-owners t h e r e o f . A l t h o u g h they a r e c o n t r a c t u a l l y bound t o use

the funds f o r t h e purposes o f t h e a s s o c i a t i o n and t o t r a n s f e r t h e i r i n t e r e s t

i n them t o o t h e r members when they cease t o be members themselves, t h e r e i s

no guarantee t h a t t h e a s s o c i a t i o n w i l l b e n e f i t i n f u l l o r a t a l l from the

donation. T h i s i s because t h e r e s t r a i n t s on t h e members' ownership o f funds

are merely c o n t r a c t u a l and the remedies a v a i l a b l e a g a i n s t a d e f a u l t i n g mem-

ber therefore sound s o l e l y i n c o n t r a c t . However, under t h e C o n t r o l Analysis,

t r u s t e e s a r e r e s t r a i n e d i n t h e i r ownership o f t h e donated funds by the f i d -

u c i a r y duty t o which they a r e bound and t h i s i s r e i n f o r c e d by the guarantee

of c o n t r o l which t h e law o f t r u s t s e n s u r e s . The a n a l y s i s depends o n l y to a

minimal e x t e n t on the c o n t r a c t u a l nature o f membership o f an a s s o c i a t i o n .

Under t h e C o n t r o l A n a l y s i s , t h e c o n t r a c t u a l r i g h t s o f a member a r e merely

one o f the sources o f h i s entitlement t o e x e r c i s e c o n t r o l over the t r u s t e e s ,

which t r i g g e r s t h e whole panoply o f remedies o f t r u s t s law. This i s com-

pared with the Contract A n a l y s i s , where t h e whole s u c c e s s o f the g i f t

stands o r f a l l s on t h e weak support o f a c o n t r a c t u a l bond.

T u r n i n g next t o the v a r i o u s t h e o r i e s o f the Buvrel~l litigation, i f

24
the Mandate Theory i s adopted and i n t e r p r e t e d as r e q u i r i n g t h e g i f t t o
 - 246 -

take e f f e c t i n favour o f t h e members o f t h e u n i n c o r p o r a t e d a s s o c i a t i o n , b u t

subject t o some s o r t o f mandate, i t s u f f e r s from s e r i o u s weaknesses. Wheth-

er t h e mandate i s r e v o c a b l e o r i r r e v o c a b l e , the o n l y remedies f o r breach o f

mandate a r e c o n t r a c t u a l i n nature. Moreover, t h e mandate s u b s i s t s n o t

merely between the members o f t h e a s s o c i a t i o n inter se, b u t between the mem-

bers and the donor. T h i s l i m i t s the a v a i l a b i l i t y o f t h e t h e o r y t o inter

vivos d o n a t i o n s . By way o f c o n t r a s t , the C o n t r o l A n a l y s i s does n o t depend

on p e r s o n a l contractual remedies, and i t i s a p p l i c a b l e w i t h equal v a l i d i t y

t o both testamentary and inter vivos donations.

The f o u r t h a n a l y s i s i s t h a t the g i f t takes e f f e c t i n f a v o u r o f t h e

members o f t h e a s s o c i a t i o n a b s o l u t e l y (as a matter o f p r o p e r t y law), who

are r e s t r a i n e d by t h e terms o f an i m p l i e d C o n t r a c t u a l Undertaking t o the

25

donor t o u t i l i s e the funds f o r t h e purposes o f t h e a s s o c i a t i o n . This

i s u n s a t i s f a c t o r y as a g e n e r a l s o l u t i o n t o t h e problem o f d o n a t i o n s f o r the

purposes o f u n i n c o r p o r a t e d a s s o c i a t i o n s because i t can o n l y explain those

g i f t s which, take e f f e c t inter vivos. In a d d i t i o n , i t s u f f e r s a l l the draw-

backs o f b e i n g dependent upon t h e i m p l i c a t i o n and e f f e c t i v e n e s s o f a contT

r a c t t o c o n t r o l the ownership by members o f t h e donated funds. Therefore,

when compared w i t h t h e C o n t r o l A n a l y s i s , which has t h e advantages o f b e i n g

of general a p p l i c a t i o n , denying ownership t o members and b e i n g supported by

the enforcement p r o c e d u r e s o f t r u s t s law, the C o n t r a c t u a l Undertaking

Theory i s m a n i f e s t l y inadequate.

The Suspended B e n e f i c i a l Ownership Theory must l i k e w i s e be r e j e c t e d .

Insofar as i t r e l i e s upon the n o t i o n s o f suspended b e n e f i c i a l ownership and

general equitable o b l i g a t i o n , i t i s l e g a l l y unsound and o f l i t t l e practical

26
value . In comparing t h i s assessment w i t h t h e C o n t r o l A n a l y s i s , i t should
 - 247 -

be r e c a l l e d t h a t t h e C o n t r o l Analysis i s b u i l t on and around b a s i c legal

principle. Moreover, t h e o b j e c t i o n t h a t i t would f a i l i n p r a c t i c e has been

squarely met i n the c o n t e x t o f g i f t s f o r u n i n c o r p o r a t e d associations.

The r e m a i n i n g a l t e r n a t i v e i n t e r p r e t a t i o n s which can be p u t on a g i f t

t o an u n i n c o r p o r a t e d a s s o c i a t i o n move away from c o n s t r u i n g the g i f t as an

a b s o l u t e t r a n s f e r t o members ( a l b e i t coupled w i t h r e s t r a i n t s o f v a r i o u s

kinds) to u t i l i s e t h e mechanism o f a t r u s t . Two p o s s i b l e analyses are that

the g i f t takes e f f e c t e i t h e r on t r u s t f o r the p r e s e n t members o f t h e a s s o c i -

27

a t i o n , o r f o r b o t h p r e s e n t and f u t u r e members . However, i n e i t h e r case,

the a n a l y s i s f a i l s t o guarantee t h a t any b e n e f i t w i l l accrue t o t h e a s s o c i -

ation i t s e l f . Even assuming t h a t t h e g i f t complies w i t h the c e r t a i n t y r e -

quirements and t h e r u l e a g a i n s t p e r p e t u i t i e s , and i s d e c l a r e d v a l i d , as w i t h

the A b s o l u t e G i f t A n a l y s i s t h e b e n e f i t o f t h e g i f t goes n o t t o t h e a s s o c i -

a t i o n b u t t o t h e members themselves as b e n e f i c i a r i e s o f the t r u s t , and the

association w i l l share t h a t b e n e f i t o n l y i f t h e members f e e l compelled, as

a matter o f moral o b l i g a t i o n , t o d i v e r t t h e funds i n t h a t manner. Under t h e

Control Analysis, the r o l e s are reversed. The a s s o c i a t i o n i t s e l f i s t h e

' b e n e f i c i a r y ' o f the t r u s t , and the e x t e n t t o which t h e members w i l l bene-

fit from t h e d o n a t i o n w i l l depend upon t h e n a t u r e o f t h e a s s o c i a t i o n .

28

Under t h e Denley Analysis , t h e donated funds can be h e l d on t r u s t

for the u n i n c o r p o r a t e d a s s o c i a t i o n , and i t s b e n e f i c i a l enjoyment o f the

funds can be guaranteed by t h e p r e s e n c e o f persons ( i f any) who-derive

a f a c t u a l b e n e f i t from t h e g i f t . However, t h i s r e s u l t can o n l y be a c h i e v e d

i f t h e purposes o f the a s s o c i a t i o n a r e n o n - a b s t r a c t i n n a t u r e ; they must

confer a s u f f i c i e n t l y d i r e c t and t a n g i b l e b e n e f i t on i d e n t i f i a b l e bene-

ficiaries. The C o n t r o l A n a l y s i s , by comparison, can a c h i e v e the same r e s u l t

 - 248 -

in the case o f both, a b s t r a c t and non-abstract purposes. Furthermore, the

Henley A n a l y s i s per se i s u n s a t i s f a c t o r y as a matter o f law because i t i s

extremely u n c e r t a i n i n scope and e f f e c t , and has no a u t h o r i t a t i v e support.

It has been s u b m i t t e d t h a t these d e f e c t s would be e l i m i n a t e d i f the analysis

were i n s t e a d r e c o g n i s e d as a v a r i a t i o n o f the C o n t r o l A n a l y s i s .

Finally, i f a gift i s i n t e r p r e t e d as a n o n - c h a r i t a b l e purpose trust,

even i f i t i s d e s c r i b e d w i t h s u f f i c i e n t c e r t a i n t y and p r o p e r l y limited

29

in d u r a t i o n to the a p p l i c a b l e p e r p e t u i t y p e r i o d , i t w i l l fail ab -initio

T h i s i s because the c u r r e n t law espouses the so-called 'beneficiary prin-

ciple , 1
f o r which the ' c o n t r o l p r i n c i p l e ' has been suggested as a r e p l a c e -

ment i n t h i s t h e s i s . Under the ' b e n e f i c i a r y p r i n c i p l e ' , a l l g i f t s on trust

for the n o n - c h a r i t a b l e purposes o f an u n i n c o r p o r a t e d association f a i l , and

the i n t e n t i o n s ( u s u a l l y generous and benevolent) of donors are f r u s t r a t e d .

Under the C o n t r o l A n a l y s i s , however, the g i f t s are v a l i d , o n l y the a s s o c i -

a t i o n can b e n e f i t and the f u l f i l m e n t o f the i n t e n t i o n s o f the donor i s

guaranteed.

4. Conclusion

Under the C o n t r o l A n a l y s i s , an o t h e r w i s e v a l i d g i f t f o r an unincor-

porated association w i l l take e f f e c t w i t h i n the framework o f a non-charit-

a b l e purpose t r u s t f o r the d u r a t i o n o f the a p p l i c a b l e p e r p e t u i t y p e r i o d ^.

It i s s u b m i t t e d t h a t t h i s i s a d e s i r a b l e r e s u l t - as a matter of p r i n c i p l e ,

in f a c t , and from the p o i n t o f view o f p u b l i c p o l i c y .

In the f i r s t p l a c e , the C o n t r o l A n a l y s i s i s c o n s i s t e n t w i t h the funda-

mental p r i n c i p l e of t r u s t s law t h a t a t r u s t must be e n f o r c e a b l e to be valid.

 - 249 -

Secondly, t h e C o n t r o l A n a l y s i s o f a g i f t t o an u n i n c o r p o r a t e d association

ensures t h a t t h e o b j e c t i v e s o f t h a t p r i n c i p l e a r e a c h i e v e d i n f a c t , as w e l l

as i n theory. T h i r d l y , i f one surveys t h e case law on t h e s u b j e c t , i t is

apparent t h a t the v a s t m a j o r i t y o f g i f t s f o r a s s o c i a t i o n s which have failed

through l a c k o f an a n a l y s i s such as t h a t propounded i n t h i s t h e s i s have been

a t worst n e u t r a l and a t b e s t b e n e f i c i a l from t h e p o i n t o f view o f p u b l i c

policy. The i n a b i l i t y o f t h e law t o p r o v i d e a guarantee t h a t g i f t s t o a s s o -

c i a t i o n s such as Amnesty I n t e r n a t i o n a l , comtemplative o r d e r s o f nuns, t h e

Conservative P a r t y and youth c l u b s has been a sad anomaly. In sum, one must

conclude t h a t t h e a d o p t i o n o f t h e C o n t r o l A n a l y s i s o f g i f t s t o unincorporated

a s s o c i a t i o n s would be a v a l u a b l e reform o f the c u r r e n t law.

Given t h a t t h i s i s so, one f u r t h e r i s s u e which remains t o be d i s -

cussed i s whether and how such a reform might be p o s s i b l e . E v i d e n t l y , the

most e f f i c i e n t method o f e f f e c t i n g a reform o f t h i s n a t u r e would be through

the passage o f a p p r o p r i a t e legislation. S t a t u t o r y measures t o t h e e f f e c t

that g i f t s f o r unincorporated a s s o c i a t i o n s should be v a l i d and take e f f e c t

through, the v e s t i n g o f funds i n t r u s t e e s would s u f f i c e , c o u p l e d w i t h a spec-

i f i c p r o v i s i o n c o n f e r r i n g standing on members t o e n f o r c e the g i f t i n court.

In t h e i n t e r e s t s o f c e r t a i n t y and p u b l i c p o l i c y , a d d i t i o n a l p r o v i s i o n s might

s t i p u l a t e a maximum d u r a t i o n f o r such t r u s t s and deny v a l i d i t y t o g i f t s f o r

s p e c i f i e d types o f a s s o c i a t i o n , such as s u b v e r s i v e political parties.

However, two o b j e c t i o n s can be l e v e l l e d a t t h e s u g g e s t i o n t h a t reform

can be a c h i e v e d via legislation. Firstly, the problem o f the v a l i d i t y o f

g i f t s t o unincorporated a s s o c i a t i o n s has e x i s t e d f o r a c o n s i d e r a b l e period

o f time and, d e s p i t e frequent c a l l s by commentators f o r l e g i s l a t i v e reform,

none o f a g e n e r a l n a t u r e has been f o r t h c o m i n g . L e g i s l a t o r s e v i d e n t l y con-

 - 250 -

s i d e r e x i s t i n g i n c o r p o r a t i o n and r e g i s t r a t i o n p r o c e d u r e s adequate, and a r e

u n w i l l i n g t o encourage t h e p r o l i f e r a t i o n o f u n i n c o r p o r a t e d associations.

Secondly, i t c o u l d be argued t h a t l e g i s l a t i o n i s not n e c e s s a r y . The same

r e s u l t c o u l d be a c h i e v e d , based on e x i s t i n g common law p r i n c i p l e , i t only

the s i t u a t i o n were r e - a n a l y s e d and a s s e s s e d by t h e c o u r t s i n t h e manner

suggested here.

In t h e U n i t e d Kingdom, however, t h e door t o such reform i s apparently

c l o s e d by t h e s t r o n g body o f law which f o l l o w e d Re Astov and a l l b u t e n t r e n -

31

ched t h e ' b e n e f i c i a r y p r i n c i p l e ' as a r u l e o f law . N e v e r t h e l e s s , the

matter has never been d e c i d e d o r r u l e d upon by t h e House o f Lords, which

would have t h e power t o o v e r r u l e t h e ' b e n e f i c i a r y p r i n c i p l e 1

i n the context

of g i f t s t o unincorporated associations. T h i s c o u l d be a c h i e v e d i n one o f

two ways. On t h e one hand, t h e House c o u l d simply announce t h a t i t was

changing t h e law because i t no l o n g e r made sense. A l t e r n a t i v e l y , i t could

32 33
adopt t h e method i t used i n t h e Baden l i t i g a t i o n . I n t h a t case , the

House o f Lords was d e a l i n g w i t h t h e requirement o f c e r t a i n t y i n d i s c r e t i o n -

ary t r u s t s . L o r d W i l b e r f o r c e had p o i n t e d o u t t h a t t h e b a s i s o f t h e need f o r

c e r t a i n t y was t h e p r i n c i p l e t h a t "a t r u s t cannot be v a l i d u n l e s s , i f need be,

34

it can be executed by the c o u r t " . Having conducted a h i s t o r i c a l review

o f the cases, he d i s c o v e r e d t h a t , w h i l s t t h e e a r l i e r cases had executed dis-

c r e t i o n a r y t r u s t s a c c o r d i n g t o the p e r c e i v e d i n t e n t i o n o f t h e s e t t l o r , later
35

on, "the C o u r t o f Chancery adopted a l e s s f l e x i b l e a t t i t u d e " . The new

r u l e which then developed was t h a t equal d i v i s i o n between a l l b e n e f i c i a r i e s

had t o be p o s s i b l e and t h e e a r l i e r cases were d i s m i s s e d as "anomalous".

Lord Wilberforce commented on the i n t e r a c t i o n o f p r a c t i c e and p r i n c i p l e i n

36
the f o l l o w i n g terms :
I do n o t t h i n k t h a t t h i s change o f a t t i t u d e , o r
p r a c t i c e , a f f e c t s the p r i n c i p l e that a d i s c r e t i o n a r y
 - 251 -

t r u s t can, i n a s u i t a b l e case, be executed a c c o r d i n g

to i t s m e r i t s and o t h e r w i s e than by e q u a l d i v i s i o n .
I p r e f e r n o t t o suppose t h a t t h e g r e a t masters, o f
e q u i t y , i f f a c e d w i t h t h e modern t r u s t f o r employees,
would have f a i l e d t o adapt t h e i r c r e a t i o n t o i t s
p r a c t i c a l and commercial c h a r a c t e r .

In o t h e r words, L o r d W i l b e r f o r c e s i d e - s t e p p e d a body o f case law w i t h which

he d i d n o t agree by denying t h a t i t had e s t a b l i s h e d a new p r i n c i p l e . I t had

merely adopted a praotioe i n r e l a t i o n t o the underlying p r i n c i p l e - a

p r a c t i c e t h a t c o u l d be r e a d i l y changed t o s u i t contemporary conditions.

I t i s s u b m i t t e d t h a t such a l i n e o f argument i s e q u a l l y a p p l i c a b l e t o

the law o f n o n - c h a r i t a b l e purpose t r u s t s . A g a i n t h e fundamental p r i n c i p l e

i s t h a t a t r u s t must be e n f o r c e a b l e and i t has been seen t h a t both t h e 'bene-

f i c i a r y p r i n c i p l e ' and the ' c o n t r o l p r i n c i p l e ' a r e based on i t . On the a u t h -

o r i t y o f t h e above case, i t c o u l d be argued t h a t Re Astor and i t s 'bene-

ficiary principle 1
merely r e p r e s e n t e d a l e s s f l e x i b l e a t t i t u d e toward t h e

i n t e r p r e t a t i o n o f the p r i n c i p l e . The p r i n c i p l e i t s e l f has remained intact

and a d i f f e r e n t p r a c t i c e c o u l d v a l i d l y be adopted t o d e a l s p e c i f i c a l l y w i t h

the problem o f g i f t s t o u n i n c o r p o r a t e d a s s o c i a t i o n s . Perhaps a modern-day

c o u r t i n England c o u l d be persuaded t o adopt such an a t t i t u d e and adapt t h e

fundamental p r i n c i p l e i n the manner suggested here t o a r r i v e a t t h e C o n t r o l

Analysis o f g i f t s to unincorporated associations.

In Canada, however, the problems o f i n c o r p o r a t i n g t h e C o n t r o l A n a l -

y s i s i n t o t h e common law a r e l e s s a c u t e because t h e a r e a o f g i f t s t o u n i n -

37

c o r p o r a t e d a s s o c i a t i o n s i s r e l a t i v e l y untrodden ground . When t h e t o p i c

comes up next, t h e r e f o r e , i t i s t o be hoped t h a t t h e C o n t r o l A n a l y s i s , as

and f o r t h e r e a s o n s f o r m u l a t e d i n t h i s t h e s i s , w i l l prevail.

* * * * * * * * * *
 - 252 -

FOOTNOTES : CHAPTER I I I

1. See supra, pp 27-28.

2. Supra, pp 105-131.

3. Supra, pp 178-180.

4. D i s c u s s e d supra, pp 198-203.

5. D i s c u s s e d supra, pp 203-208.

6. D i s c u s s e d supra, pp 208-213.

7. D i s c u s s e d supra, pp 213-217.

8. D i s c u s s e d supra, pp 217-226.

9. I t s d u r a t i o n would have t o be r e s t r i c t e d t o the p e r p e t u i t y p e r i o d .

D i s c u s s e d supra, pp 117-121.

10. D i s c u s s e d supra, pp 209-213, pp 219-226.

11. i n Re Reaher's Will Trusts [1972] ch.526; [1971] 3 w.L.R.321; [1971]

3 A l l E.R.401, such was the submission b f Mr. Lyndon-Stanford, c o u n s e l
f o r one o f the o r g a n i s a t i o n s which b e n e f i t e d from the f a i l u r e o f
the t r u s t : [1972] Ch.526 a t 531-533. See a l s o supra, pp 148-149.

12. D i s c u s s e d supra, pp 198-203.

13. See a l s o . s u p r a , pp 144-149.

14. Of course, the purposes o f an outward l o o k i n g a s s o c i a t i o n can con-

f e r f a c t u a l b e n e f i t s on persons o t h e r than i t s members. See the
example, supra, pp 149-150. In such, a case, the o u t s i d e r s can con-
t r o l the t r u s t and render i t v a l i d as f a c t u a l b e n e f i c i a r i e s . The
p r e s e n t d i s c u s s i o n , however, deals- o n l y w i t h the r o l e o f members
o f the a s s o c i a t i o n as a c l a s s o f c o n t r o l l e r s additional t o those
a l r e a d y d i s c u s s e d . I f the purposes are t o t a l l y a b s t r a c t , as i n
the example used i n the t e x t , another source o f c o n t r o l must be found,

15. See a l s o supra, pp 12-16.

16. See a l s o , Cohen v. National Union of'. Tailors and Garment Makers (.1962)..
Times, 13 January ; Abbott V. Sullivan [1952] 1 K.B.189,- [1952]
1 A l l E.R.226 ; Lee v. Showman's Guild of Great Britain [1952]
2 Q.B.329; [1952] 1 A l l E.R.1175, per L o r d Denning.

17. See a l s o , I n s a l l , " G i f t s t o U n i n c o r p o r a t e d A s s o c i a t i o n s " , (1977)

N.Z.L.J.489, pp 492-493 ; Ford, U n i n c o r p o r a t e d N o n - P r o f i t A s s o c i -
a t i o n s (Oxford : Clarendon, 1959), p 31 ; Green, "The D i s s o l u t i o n
o f U n i n c o r p o r a t e d N o n - P f o f i t . . A s s o c i a t i o n s " , (1980) 43 Mod.L.R.626,
pp 642-643.
 - 253 -

18. Re Grant's Will Trusts [1980] 1 W.L.R.360;

As i n , f o r example,
[1979] 3 A l l E.R.359. Discussed supra, pp 64-66.

19. Supra, f o o t n o t e 11.

20,." Supra, 1 Ch.526 a t 542

21. Per Brightman,J.j ibid,

22. Supra, PP 33-50.

23. Supra, PP 51-78.

24. Supra, PP 82-88.

25. Supra, PP 88-91.

26. Supra, PP 91-95.

27. Supra, PP 150-163.

28. Supra, PP 132-150.

29. Supra, PP 105-131.

30. Supra, PP 236-243.

31. Similarly in Australia

General for New South Wales [1959] A.C.457; [1959] 2 w.L.R.722;
[1959] 2 A l l E.R.300 ; Re Wilson's Grant [1960] V.R.514 ; Re
Inman [1965] V.R.238; A.L.R.796.

32. MoPhail V. Doulton [1971] A.C.424; [1970] 2 W.L.R.1110; [1970]

2 A l l E.R.228 ; Re Baden's Deed Trusts (.No.2) [1973] Ch.9;
[1972] 3 W.L.R.250; [1972] 2 A l l E.R.1304.

33. MoPhail V. Doulton, supra, f o o t n o t e 32.

34. [1970] 2 A l l E.R.228 a t 241.

35. Ibid, a t 242.

36. Ibid.

37. There i s no s t r o n g a u t h o r i t y e i t h e r f o r or a g a i n s t the ' b e n e f i c i a r y

principle'. There a r e s t a t u t e s e x p r e s s l y v a l i d a t i n g n o n - c h a r i t a b l e
purpose t r u s t s f o r the p e r p e t u a l c a r e o f g r a v e s : f o r example, O n t a r i o
Cemeteries A c t , R.S.O.1970, c.57, s.23; Nova S c o t i a T r u s t e e A c t , R.S.
N.S.1967, c.317, s.64; and c o n v e r t i n g n o n - c h a r i t a b l e purpose t r u s t s
i n t o powers: O n t a r i o P e r p e t u i t i e s A c t , R.S.O.1970, c.343, s.16;
A l b e r t a P e r p e t u i t i e s A c t , R.S.A.1980, c.P-4, s.20. However, "beyond
t h i s p o i n t i t i s a matter f o r c o n j e c t u r e as t o what the p o s i t i o n
i s i n Canada because the amount o f r e p o r t e d l i t i g a t i o n on the s u b j e c t
is- so s m a l l " : Waters, Law o f T r u s t s i n Canada (Toronto: C a r s w e l l ,
1974);, p 429.
 - 254 -

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Hanbury, H a r o l d G. and Maudsley, Ronald H. Modern E q u i t y . 11th.ed.

E d i t e d by Ronald H. Maudsley and J i l l E. M a r t i n . London: Stevens,
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H o r s l e y , Mervyn, G. The Law and A d m i n i s t r a t i o n o f A s s o c i a t i o n s i n

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L l o y d , Dennis. The Law of Unincorporated Associations. London: Sweet &

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Maudsley, Ronald, H. The Modern Law of Perpetuities. London: Butterworths,

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M o r r i s , J . H. C. and Leach, W. Barton. The Rule.Against Perpetuities.

2d.ed. London: Stevens, 1962.

S t o l j a r , S.-J. Groups and E n t i t i e s . Canberra: Australian National

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V a i n e s , James C r o s s l e y . P e r s o n a l P r o p e r t y . 5th.ed. E d i t e d by E. L. G.
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Waters, Donovan, W. M. Law o f T r u s t s i n Canada. Toronto: Carswell,

1974.

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