non-charitable purpose trust

NON CHARITABLE PURPOSE TRUST

04/11/23 Equity & Trust II (Dr. Zuraidah Hj Ali)

Introduction

• Private Trust : trust in favour of ascertainable individuals

• Charitable trust : A trust for purposes which are treated in law as charitable.

• Non charitable purpose trust : where no individual directly benefits.

• Usually is struck down and it is not enforceable by anyone.


• Question : Is it possible to establish a trust for non charitable purposes

• There is no question whether this type of trust can be exempted from income tax

• The question is whether this type of trust can be considered as valid.


Objections to Non-Charitable Purpose Trust

• A) Enforceability• B) Uncertainty• C) Excessive Delegation of Testamentary

Power• D) Perpetuity


A) Enforceability

• A trust is an obligation• The object is that there cannot be an obligation upon

the trustee unless there is a correlative right in someone else to enforce it.

• Charitable trust : AG is in charged with the duty of enforcement

• Private trust will be void if there is no beneficiary• Due to this principle NCPT is rendered totally void.


MORICE V BISHOP OF DURHAM (1804) VES Jr 399

• Sir William Grant : Every trust must have a definite object. There must be somebody in whose favour the court can decree performance . . . The trust is void unless there human beneficiaries capable of enforcing the trust.


B) Uncertainty

• NCPT will be invalid if purposes are very wide.• Morice v Bishop of Durham : Benovelence

and liberality are wider concepts than ‘charity’ Purposes were uncertain and hence the trust was void.


RE ASTOR’S SETTLEMENT TRUSTS (1952) Ch 534

• An intervivos settlement was made in 1945 : all shares in the Observers Ltd were held for various non charitable purposes :

• 1) good maintenance of good understanding sympathy and coorperation between nation

• 2) The preservation of the independence and integrity of newspaper


• 3)The control publication financing or management of any newspaper periodicals books pamphlets

• The protection of newspaper from being absorbed by or being tied by finance or otherwise to special views inconsistent with the highest integrity and independence

• Held : Invalid : Uncertainty


C) Excessive Delegation of Testamentary Power

• In order to effect a NCPT powers might be given to willing trustee to perform.

• Judicial statements in some cases had led the effect that purpose trust created by will are void because trustees are left to determine the application of the property in a will.

• Reason :there is nobody to enforce the trust..


D) Perpetuity

• Charitable trust may last forever.• NCPT is void if it is to continue beyond the

perpetuity period.


Exceptional Cases Upholding a Valid Non Charitable Purpose Trust

• For a non Charitable purpose trust to be valid, it need to cover a narrow field.

• The purposes will need to be kept strictly within narrow confines of limited and exceptional cases.

• Gift must be limited to particular purposes.


a) Specific Animal(s)

• Gifts for the care for specific animals, though not charitable have been upheld as a valid trust.

• Petingall v Petingall (1842) 11 L.J Ch 176• An annuity of £50 to be applied in maintaining

the testator’s favourite blackmare.• Valid NCPT


• Re Dean (1889) 41 Ch. D 552• A testator charged his freehold estates with

the payment of £750 per annum to his trustee for the period of 50 years if any of his horses and hounds should so long live and declared that the trustees should apply the money in the maintenance of his houses and hound.

• A Valid non charitable trust although there was no one who could enforce it.


b) Tombs and Monuments

• A trust for building and the maintaining a particular grave or monument has been held as valid non charitable purpose trust,


Cases

• Re Hooper (1932) 1 Ch 38• A testator gave a sum of money for the case

and upkeep of certain family graves and a table and window a church for ‘ so long as the trustees legally can do.’

• Held : The trust not being charitable was valid for 21 years


• Mussett v Bingle (1959) AC 457• A gift for the erection for the erection of a

monument to the testator’s widow’s first husband.

• Held : A valid non charitable purpose trust.


• Re Hooper [1932] 1 Ch 38• A gift to trustees for the upkeep of graves and

monument for the period of 21 years.• Valid


• Trimmer v Danby (1856)• The testator gave £1000 to his executors “

and I do direct them to lay out and expand the same to erect a monument to my memory in St Paul’s Cathedral.

• Held : The bequest was upheld.


c) Masses for private individuals.

• A trust for masses in England and Wales is valid but not in Malaysia.

• Bourne v Keane (1919) AC 815• Trust created for the salvation of the

Christian.• Held : Valid


Position in Malaysia.

• 1) Cheo Choon No v Spottiswoods 1 KYSHE 216

• A trust for a ceremony called Siew Chiew.• Held : Void.• 2) Re Khoo Cheng Too (1932) 2 MLJ 119• A devise of property maintaining Siew Chiew

ceremony was held as void


• 3) Re Yap Kwan Seng (1924) 4 FMSLR 313• The testator gave land and house to b held in

trust forever for a family house for ancestral worship and family burial ground

• Held : Void.


d) Fox Hunting

• Re Thompson (1934) Ch 342• The testator gave a legacy of £1000 to a friend

to b applied by him towards the promotion and furthering of fox hunting

• Held : Valid


e) Unincorporated Association.

• An unincorporated association exists where two or more persons are bound together for one or more common purposes by mutual undertaking, each having mutual duties and obligations.

• An unincorporated associations is not a legal person and it cannot be an owner of property or subject to legal right and duties.


• Question: What is the effect of gifts to such associations.

• A) If it is for charitable then assets will be held by officers or a group of trustee.

• B) Non Charitable Purposes : Gifts need to be made in favour of the members


Cases

• 1) Leahy v A.G. For New South Wales (1959) AC 457.

• The testator provided that Elmslea, a sheep station of some 730 acres to be held upon trust for nuns of Catholic Church or the Christian Brothers as my executors and trustee shall select

• Held : Not Valid as neither a Charitable trust or Private Trust. NCPT.


• Re Lipinski’s Trust (1976) Ch 235.• The testator in 1967 bequeathed his residuary

estate to trustee on trust as one half to the Hull Judeans Association “ In memory of my late wife to be used solely in the work constructing the new building for the association.

• Held : Valid . A trust for the members of the Association.


non-charitable purpose trust

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