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Gifts to unincorporated associations 1983

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GIFTS TO UNINCORPORATED ASSOCIATIONS By SALLY DENNIS B.A., Lady Margaret H a l l , Oxford, 1980 LL.B., University of 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 i n THE FACULTY OF GRADUATE STUDIES (Department of Law) We accept t h i s t h e s i s as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA October 1983 © S a l l y Dennis, 1983 i 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 of the requirements f o r an advanced degree at the U n i v e r s i t y of B r i t i s h Columbia, I agree that the 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 reference and study. I f u r t h e r agree, t h a t permission f o r extensive copying of 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 granted by the head of my department or by h i s or her r e p r e s e n t a t i v e s . I t i s understood th a t 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 gain s h a l l not be allowed without my w r i t t e n permission. Department of L A W The U n i v e r s i t y of B r i t i s h Columbia 1956 Main Mall Vancouver, Canada V6T 1Y3 Date OCTOBER 1983 DE-6 (3/81) i i ABSTRACT An unincorporated association i s a strange phenomenon. As a matter of f a c t , i t undoubtedly e x i s t s and engages i n as wide a range of transactions as any l e g a l person. As a matter of law, however, i t has no existence separate and apart from that of i t s constituent mem- bers. I t i s consequently incapable of ei t h e r bearing l i a b i l i t i e s or enjoying r i g h t s . In p a r t i c u l a r , i t cannot be a donee or legatee i n i t s own r i g h t , nor can i t be a be 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 of i n t e r vivos d i s p o s i t i o n and legacy, and both, d i r e c t l y and on t r u s t , are con t i n u a l l y made i n favour of unincorporated a s s o c i - ations. I f the purposes pursued by an unincorporated association are charitable a g i f t made to i t w i l l be v a l i d . I f i t s purposes are not charitable, however, the fate of the g i f t is- uncertain. This thesis examines the current law on non-charitable g i f t s made to an unincorporated association, concludes that i t i s i n an unsatisfactory state and suggests a l e g a l analysis by reference to which such, g i f t s can be held to be v a l i d . The courts of the common law j u r i s d i c t i o n s of the United Kingdom, Canada, A u s t r a l i a and New Zealand have developed no less- than nine d i f f e r e n t possible ways of analysing a g i f t f o r the purposes of 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 to 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 , there i s no assurance, that the purposes of the association w i l l i n f a c t be c a r r i e d out. A g i f t f o r the purposes of an unincorporated as 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 that the donated property i s used for i i i those purposes and not f o r the personal purposes of the members of the a s s o c i a t i o n . Prima f a c i e a t r u s t on those terms would achieve t h i s r e s u l t . However, t h i s i s not the case because of a major deficiency i n the law of t r u s t s . The current law espouses the s o - c a l l e d '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 r e s u l t i s that i t i s impossible to make a g i f t to an unincorporated ass 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 of the 'beneficiary p r i n c i p l e ' , the conclusion i s reached that 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 that a t r u s t must be subject to enforcement, i t represents an extremely r e s t r i c t i v e view of 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 s a t i s f i e d . I t i s argued that a broader viewpoint i s both possible and acceptable. The 'bene-'. f i c i a r y p r i n c i p l e ' should be replaced by the 'control p r i n c i p l e ' . The 'control p r i n c i p l e ' stands for the proposition that 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 broad range of i n d i v i d u a l s , 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 p r i n c i p l e as i t s s t a r t i n g point, t h i s thesis propounds the Control Analysis of g i f t s to unincorporated associations whereby g i f t s on t r u s t for the purposes of the association are recognised as enforceable by i t s members and are therefore v a l i d . i v i TABLE OF CONTENTS Abstract i i PART ONE - INTRODUCTION TO UNINCORPORATED ASSOCIATIONS 1 Chapter I. The Scope of the Thesis 4 I I . The Legal Dilemma - Unincorporated Associations 12 PART TWO - GIFTS TO UNINCORPORATED ASSOCIATIONS ,' 26 Chapter I. Absolute G i f t Analysis 33 I I . Contract Analysis 51 I I I . The B u r r e l l Theories of Donation 79 IV. G i f t s to Unincorporated Associations on Trust 102 PART THREE - THE CONTROL ANALYSIS 175 Chapter I. The Control P r i n c i p l e 183 I I . The Control Analysis and Non-Charitable Purpose Trusts .. 197 I I I . The Control Analysis and G i f t s to Unincorporated Associations 233 Selected Bibliography 254 - 1 - PART ONE INTRODUCTION TO UNINCORPORATED ASSOCIATIONS - 2 In the common law j u r i s d i c t i o n s of 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 not possible to make a d i r e c t donation of funds to an unincorporated association. Yet, although no r e g i s t e r or s i m i l a r record i s kept to record the number of unincorporated associations i n existence at 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 that every adult person r e s i d i n g within those j u r i s d i c t i o n s belongs to at least one unincorporated association, whose purposes are furthered i n the main by voluntary donation. The f a i l u r e of the law to deal adequately with the common phenomenon of donation to such associations i s therefore rendered a l l the more unfortunate by the s i z e of the problem. This i s not to say that e f f o r t s have not been made from time to time to u t i l i s e p r i n c i p l e s of tr u s t s law, property law and the law of contracts to provide solutions to the d i f f i c u l t y . Many analyses have been attempted of the legal, framework within which g i f t s to unincorporated associations take e f f e c t , and i t i s with these attempts that Part Two of t h i s thesis deals. However, i t w i l l be demonstrated that none of these provides a t o t a l l y s a t i s f a c t o r y solution which ensures that the donated funds a c t u a l l y enure to the benefit of the intended unincorporated association. The law requires r e - a n a l y s i s . Therefore Part Three presents a proposal for reform of the law of g i f t s to unincorporated associations which endeavours to r i d the law of a longstanding anomaly. I t does so by reappraising the p r i n c i p l e of t r u s t s law known as the 'beneficiary p r i n c i p l e ' and suggesting a fe a s i b l e a l t e r n a t i v e . The topics, dealt with i n Part One are preliminary, in. nature. The purpose of Chapter I i s to c l a r i f y the scope of the t h e s i s . This objective i s achieved i n a negative manner by emphasising those matters which, though - 3 - of a r e l a t e d nature, are not c e n t r a l to the thesis and which w i l l not therefore be discussed further. Chapter II w i l l consider the nature of an unincorporated association and w i l l i l l u s t r a t e the problems which are caused by i t s p e c u l i a r status, both generally and i n respect to g i f t s i n p a r t i c u l a r . The discussion w i l l be neither d e t a i l e d nor lengthy because the purpose of i t s i n c l u s i o n here i s merely to provide a background to the main body of the thesis . * * * * * * * * * * - 4 I. THE SCOPE OF THE THESIS 1. Introduction This thesis deals only with the s p e c i f i c topic of the donation of funds, by e i t h e r a member or an outsider, to a non-profit-making, non- charitable, unregistered, unincorporated association. A number of topics are excluded from i t s scope. In p a r t i c u l a r , i t does not deal with the question of the d i s p o s i t i o n of donated funds i n the event of d i s s o l u t i o n of the association. Nor does i t deal with the issues that a r i s e when a donor an t i c i p a t e s the problems consequent upon donation and attempts to evade them by d r a f t i n g techniques. I t w i l l therefore be useful to be s p e c i f i c at the outset about the issues that are excluded from discussion. This chapter has a two-fold aim : f i r s t l y , to prepare the ground for the substantive analysis of the t o p i c of g i f t s to unincorporated a s s o c i - ations; and, secondly, to demonstrate how the l e g a l problems caused by g i f t s which f a l l within the d e f i n i t i o n can be avoided by keeping outside i t s scope. 2. Incorporated Bodies This thesis i s not concerned with e i t h e r the general issue of the l e g a l status of, nor the p a r t i c u l a r issue of g i f t s made to, incorporated bodies. 5 (i) Corporate Status If an association wishes to have i t s own l e g a l p e r s o n a l i t y separate from that of i t s constituent members, i t can do so by incorporating. On 2 compliance with the requirements of the applicable l e g i s l a t i o n , a company can be formed whose memorandum of association s t i p u l a t e s the purposes of the 3 a s s o c i a t i o n . Alternate methods are by p r i v a t e Act of Parliament or Royal 4 Charter . The most sui t a b l e type of company for a non-profit-making association i s the company l i m i t e d by guarantee i n which members are not shareholders as such but are guarantors of funds i n the event of the company being wound up with 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 . A l t e r - n a t i v e l y , the association 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 Society Act ~*. The advantages of incorporation are many. The association and the persons with which i t deals enjoy the b e n e f i t of i t s having f u l l l e g a l p e r s o n a l i t y . I t can therefore sue and be sued, acquire and deal with property 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 present purposes, i t can also be the r e c i p i e n t of donations i n i t s own r i g h t . 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 of incorporation are also numerous. Although some statutes make concessions for c e r t a i n types of non-profit- 6 making companies , an incorporated association has to comply with a multitude of f o r m a l i t i e s and i s c l o s e l y 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 therein must be approved, the f a c t of i t s incorporation must be c e r t i f i e d , i t s accounts must be published, i t must have reg i s t e r e d o f f i c e s , i t must hold annual - 6 - general meetings, auditors must be appointed, r e g i s t e r s of i t s members, dir e c t o r s and o f f i c e r s must be kept p u b l i c , and so on. A l l t h i s involves the expenditure of funds and time, and often the h i r i n g of lawyers and accountants. Although i t would neatly solve the prob- 7 lem of making donations to the association , incorporation xs therefore not the i d e a l s o l u t i o n f o r the majority of associations, the s i z e and aims of which do not j u s t i f y the unavoidable expense and 'red tape'. Numerous unincorporated associations e x i s t to which funds are r e g u l a r l y donated, and i t i s with them that t h i s thesis deals. ( i i ) Quasi-Corporate Status If c e r t a i n types of association comply with s p e c i f i c statutory requirements, though not incorporated, they are deemed to possess t h e i r own l e g a l i d e n t i t y for c e r t a i n purposes. The a s s o c i a t i o n acquires statutory recognition and various p r i v i l e g e s . The phenomenon which emerges can be termed a 'quasi-corporation' i n that i t has many of the usual a t t r i b u t e s of corporations, l i k e the possession of a name i n which i t may sue or be sued, and the power (independently of i t s members) to hold property for the purposes defined by i t s objects and c o n s t i t u t i o n . I l l u s — 8 t r a t i o n s xn England, for example, are r e g i s t e r e d Frxendly Societies , 9 10 b u i l d i n g societxes and trade unxons However, again r e g i s t r a t i o n i s not the i d e a l s o l u t i o n for a l l a s s o c i - ations. In the f i r s t place, only c e r t a i n categories of society 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 - t r a t i o n involves numerous f o r m a l i t i e s and extensive regulation of the 7. - society's c o n s t i t u t i o n , i n t e r n a l a f f a i r s and finances. This thesis there- fore deals only with unregistered, unincorporated associations. If a donation weve made to a duly incorporated or registered a s s o c i - ation, none of the problems which are encountered i n the common law and which this thesis discusses and attempts to solve would a r i s e . The matter would be governed t o t a l l y by statute. 3. Non-Charitable I f a donor s p e c i f i e s purposes for h i s g i f t which are ex c l u s i v e l y charitable i n nature, or i f the g i f t i s made to a charitable i n s t i t u t i o n to further i t s purposes, the l e g a l problems and issues are t o t a l l y d i f f e r e n t from those which a r i s e i n the context of non-charitable g i f t s . The law of c h a r i t i e s , both case law and statute 1 1 , i s a d i s t i n c t area of l e g a l learning and p r a c t i c e . Since charitable purposes are considered of p a r t i c - u l a r value to society, g i f t s f o r purposes which s a t i s f y the l e g a l d e f i n i t i o n of charitable are accorded a number of concessions which f a c i l i t a t e t h e i r v a l i d i t y and short-cut the l e g a l problems encountered with non-charitable g i f t s . Charitable donations are also encouraged by numerous f i s c a l advan- tages not enjoyed by donations pf a non-charitable nature, and are imple- mented and administered by state-funded bodies. Throughout t h i s t h e s i s , only g i f t s of a non-charitable nature w i l l be discussed - 8 - 4. Donation, not D i s s o l u t i o n The aim of t h i s thesis i s to analyse the l e g a l framework within which the donation of funds to an unincorporated as s o c i a t i o n can take e f f e c t . The discussion therefore deals p r i n c i p a l l y with the i n i t i a l 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 into a discussion of the method of property-holding within the association a f t e r the g i f t takes e f f e c t . However, there i s a further step i n the h i s t o r y of donated funds : t h e i r a l l o c a t i o n when the association i s dissolved and there are surplus funds remaining. 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 destination of funds on d i s s o l u t i o n of an a s s o c i a t i o n i s dictated i n the main by t h e i r o r i g i n a l source and method of donation. I f the law concerning donations were c l a r i f i e d (as this:.thesis proposes to do), the law concerning d i s s o l u t i o n would likewise 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 only because the mechanism of o r i g i n a l donation was not analysed at the time of donation. I t i s submitted that the s t a r t i n g place for resolving the problems should there- fore be the law of donation and i t i s to that topic that t h i s thesis i s 13 r e s t r i c t e d 5. Straightforward Donation I t w i l l be assumed throughout t h i s thesis that the donor, ignorant of the problems which he i s thereby causing, simply makes a straightforward donation to a s p e c i f i e d unincorporated as s o c i a t i o n for i t s purposes. I t w i l l be assumed that he makes no attempt, v i a conveyancing or other devices, to a n t i c i p a t e and f o r e s t a l l the d i f f i c u l t i e s which a straightforward g i f t w i l l meet i n the current state of the law. - 9 - On the other hand, a donor who i s well-acquainted with the current law on g i f t s to unincorporated associations 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 with the p i t f a l l s i n mind. For example, he might expressly give the funds to the current members of the unincorporated a s s o c i a t i o n on the con- d i t i o n that they use them for the purposes of the unincorporated association with a div e s t i n g clause i n the deed i n the event that the funds are not so used, the funds then reverting to a named person or body. In other words, 14 the members merely have a determinable i n t e r e s t i n the funds . A l t e r - n a t i v e l y , the g i f t might be made i n favour of a charity, but conditional upon the performance of a request that a proportion of the funds be used 15 for the purposes of an unincorporated association . In t h i s manner, the unincorporated association benefits from the donation as much as i f i t had had the l e g a l capacity i t s e l f to be the donee. For the purposes of t h i s t h e s i s , however, i t i s assumed that the donor merely s p e c i f i e s that the g i f t i s to go to a named unincorporated association In any p a r t i c u l a r instance, he may well confer i n t e r e s t s on other bodies and persons, but i t w i l l be assumed that they i n no way influence the operation of what he intends to be a straightforward g i f t to the association. 6. Conclusion To repeat, therefore, the aim of t h i s thesis i s to analyse the current and proposed common law on g i f t s to the residuary class of non-profit-making, unincorporated, unregistered, non-charitable associations. Discussion and analyses of other topics w i l l have to be sought elsewhere. * * * * * * * * * * - 10 - FOOTNOTES : CHAPTER I 1. A s i g n i f i c a n t amount of academic comment has already accumulated on the t o p i c . See generally, Ford, Unincorporated Non-Profit Associations (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 National University Press, 1973) ; Lloyd, The Law of Unincorporated Associations (London : Sweet & Maxwell, 1938). 2. United Kingdom Companies Act 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 Associations Incorporation Act 1895-1969 and Companies Act 1961, No.82 ; i n Canada, for example, B r i t i s h Columbia Society Act, R.S.B.C. 1979, c.390 ; New Zealand Incorporated So c i e t i e s Act 1908-1976. See generally, Horsley, Law and Administ- r a t i o n of Associations i n A u s t r a l i a (Sydney : Butterworths, 1976), pp 1-55 ; G a l l i n s , Guide to the Incorporation and Operation of a Society i n B r i t i s h Columbia (Vancouver : Community Legal Assistance Society, 1975) ; Sievers, "The Dissolution of Non-Profit Associations", (1981) 7 Mon.L.R.141, pp 159-164. 3. The oldest Australian corporate association, the Royal Benevolent Society of New South Wales, was created i n t h i s fashion i n 1813. 4. For example, the Royal H o r t i c u l t u r a l Society i n the United Kingdom. 5. Supra.; footnote 2. 6. For example, Queensland Religious Educational and Charitable I n s t i t u t i o n s Act 1861, No.19. 7. Incorporation was the suggestion of the Goodman Committee on Charity Law and Voluntary Organisations, 19 76, para.24. 8. United Kingdom F r i e n d l y Societies Act 1974, c.46. See, F u l l e r , The Law of F r i e n d l y S o c i e t i e s , 4th.ed. (London : Stevens, 1926) for background l e g i s l a t i o n and p r i n c i p l e s . 9. United Kingdom B u i l d i n g S o c i e t i e s Acts 1874-1962 ; New Zealand B u i l d i n g S o c i e t i e s Act 1965, No.22. 10. United Kingdom Trade Union and Labour Relations Act 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, for 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 Act, R.S.C1970, c.T-11, s.6. In A u s t r a l i a , f or 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 Act 1972, No.125. See also, United Kingdom I n d u s t r i a l and Provident Societies Act 1965, c.12 ; New Zealand I n d u s t r i a l and Provident S o c i e t i e s Act 1908, No.81. And see, Registry of Friendly S o c i e t i e s , Guide to the Law of I n d u s t r i a l and Provident S o c i e t i e s (London : H.M.S.O., 1978). - 11 - 11. See generally, Picarda, The Law and Practice r e l a t i n g to C h a r i t i e s (London : Butterworths, 1977) ,- Hanbury & Maudsley, Mo de rn Equ i ty, 11th.ed., eds. R. H. Maudsley & J . E. Martin (London : Stevens, 1981), pp 444-514 ; Waters, Law of Trusts i n Canada (Toronto : Carswell, 1974), pp 419-550. 12. Note that a popular suggestion f o r reform has been a new d e f i n i t i o n of 'charity' to encompass many currently non-charitable purposes. This would a s s i s t many g i f t s for unincorporated associations whose purposes f a l l within the new d e f i n i t i o n . See, Gravells, "Public Purpose Trusts", (1977) 40 Mod.L.R.397 ; Royal Commission on Taxation of 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 of Charity", (1956) 72 L.Q.R.187. See also, Northern Ireland C h a r i t i e s Act 1964, c.33, s.24. 13. There i s an extensive body of recent academic comment on the topic of d i s s o l u t i o n of unincorporated associations. See, Sievers, op.cit. supra, footnote 2 ; Atkin, "Unincorporated Associations - D i s t r i b u t i o n of Surplus Assets on Dissolution", (1978) 8 N.Z.U.L.R. 217; Green, "The Dissolution of Unincorporated Non-Profit Associations', (.1980) 43 Mod.L.R.626. See also, 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] Ch.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 that the reverter i s subject to the rule against p e r p e t u i t i e s : United Kingdom Perpetu i t i e s and Accumulations Act 1964, c.55, s.12. The g i f t must therefore expressly l i m i t the duration of the association's b e n e f i t to the perpetuity period. 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 - I I . THE LEGAL DILEMMA - UNINCORPORATED ASSOCIATIONS 1. The Factual Existence and Legal Nature of an Unincorporated Association As a matter of f a c t , i t i s evident that unincorporated associations do e x i s t . S p e c i f i c examples are Amnesty International \ the International 2 3 Amateur A t h l e t i c Foundation and the National 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 sports associations are also unincorporated associations. Even trade unions were at one time merely unincorporated associations, whose fa c t u a l existence 4 could not be ignored : By forming and supporting 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 organisations, i n d i v i d u a l workers transcend themselves as i n d i v i d u a l s and raise them- selves to the power of a new s o c i a l and economic force The trade union 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 thing, a separate f a c t u a l e n t i t y . The existence i n f a c t of e n t i t i e s which are unincorporated associations i s 5 6 undeniable and i s even acknowledged by statute . Therefore i t i s hardly s u r p r i s i n g that donors name unincorporated associations as the intended re- ci p i e n t s of t h e i r g i f t s . However, as a matter of law, the "fa c t u a l e n t i t y " represented by the 7 unincorporated association i s an " a r t i f i c i a l and anomalous conception" An unincorporated as 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 of i t s own and i s not an e n t i t y at a l l . I t i s merely an aggregate of i n d i v i d u a l s who have chosen to associate together i n terms of time, energy and property to pursue a 8 common purpose , and the association has no l e g a l existence beyond that of i t s constituent members. Thus the association's name i s merely "a conveni- ent means of r e f e r r i n g i n conversation to the persons composing the society" - 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 to time of the term 'unincorporated association' i n an e f f o r t to c l a r i f y i t s status within the l e g a l system. For example : [T]WO or more persons bound together for one or more common purposes, not being business purposes, by mutual undertakings, each having mutual duties and o b l i g a t i o n s , i n an organisation which has rules which i d e n t i f y i n whom control of i t and i t s funds rests and on what terms and which can be joined or l e f t at w i l l . I t must be emphasised that the above d e f i n i t i o n was formulated i n the spec- i f i c context of a p a r t i c u l a r taxing statute and i s for that reason somewhat r e s t r i c t i v e i n i t s view of the type of arrangement caught by the l e g i s - l a t i o n ^ . I t nevertheless makes two important points. F i r s t l y , the unin- corporated association i s a non-profit-making notion, not a commercial enterprise. Its members associate together for the common pursuit of an i d e a l or objective which, though i t may involve the expenditure of funds, i n c i d e n t a l p r o f i t s and ownership of property, 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 nevertheless more than a merely informal group of people who happen to spend time together. Some degree of formality and organisational structure i s necessary to 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 f a m i l i e s . I t i s possible to enumerate at l e a s t s i x c h a r a c t e r i s t i c s of 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 of an unin- corporated association. They are : (i) there must be members of the association; ( i i ) there must be a contract binding the members i n t e r se; ( i i i ) there w i l l normally be some c o n s t i t u t i o n a l arrangement f o r - 14 - meetings of members and for the appointment of committees and o f f i c e r s ; (iv) a member w i l l normally be free to j o i n or leave the association at w i l l ; (v) the association w i l l normally continue i n existence independently of any change that may occur i n the com- p o s i t i o n of the association; and (vi) there must as a matter of hi s t o r y have been a moment i n time when a number of persons combined or banded together to form the association. I t i s submitted that compliance with requirement (vi) should not be seen as e s s e n t i a l before an unincorporated association i s considered to e x i s t i n p r a c t i c e . I t i s l i k e l y that many undoubtedly existent associations were created gradually, and developed from what were merely informal arrangements o r i g i n a l l y into true associations at no i d e n t i f i a b l e "moment i n time". How- ever, at l e a s t three of the other c h a r a c t e r i s t i c s l i s t e d above warrant some discussion i n order to c l a r i f y the nature of the average unincorporated association. In the f i r s t place, one must agree that "there must be members of the association" who are themselves l e g a l persons. The unincorporated associ- ation i t s e l f i s not recognised at law as a l e g a l person d i s t i n c t and separate from i t s members. Without them, therefore, i t can not enjoy even a v i c a r i - ous existence. As a second requirement, the members must be bound to some sort of 13 m u l t i - p a r t i t e contract of asso c i a t i o n which serves to take them outside the realm of a purely informal group of i n d i v i d u a l s . I t indicates t h e i r serious i n t e n t i o n to enter into l e g a l r e l a t i o n s . The terms of t h i s contract are the rules of the association and together form i t s c o n s t i t u t i o n and the ground-plan f o r i t s continuous existence. They are normally written but 14 can be rendered e f f e c t i v e by customary usage . Evidently the extent to which an asso c i a t i o n i s governed and regulated by a formal c o n s t i t u t i o n w i l l - 15 - vary according 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 specify the purposes for which the association has been formed, which are almost unlimited. There are statutory p r o h i b i t i o n s i n the area of 15 conspiracy and public order , and rules which are i l l e g a l because they are contrary to statute 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 of trade ^ w i l l be denied l e g a l force, but otherwise 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 formulating t h e i r r u l e s . The rules w i l l also normally make pr o v i s i o n for procedural matters such as the admission of members, the termination of membership, the v a r i a t i o n of rules, the holding of meetings and the everyday management of the association's a f f a i r s . 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 otherwise, the 17 rules can be a l t e r e d only by the unanimous agreement of a l l members , though 18 i n c e r t a i n circumstances mere acquiescence may be s u f f i c i e n t Thirdly, since the membership of many associations i s large, and even geographically dispersed, the rules of an association often provide for the appointment of committees and o f f i c e r s , who not only perform the day-to-day administrative tasks of the association, but also represent the association's members as t h e i r agents i n t h e i r dealings with the outside world. Above a l l , to the extent that the members themselves co-own the 'association' 19 property , subject to the rules of the association, t i t l e i s often held on t h e i r behalf by appointed committee members as trustees. In t h i s manner, conveyancing i s rendered far more pr a c t i c a b l e and convenient by the existence of a small number of i d e n t i f i e d , named persons. Therefore i t can be seen that many unincorporated associations have a complex structure, with committees, rules, trustees, and so on. However, no amount of administrative 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 detract from or obscure the basic f a c t that the association i t s e l f i s nothing more than the sum of i t s members. I t i s no more capable of bearing l e g a l r i g h t s and obligations i n i t s own name than an animal or tree. 2. The Legal Problems Caused by Unincorporated Associations As compared with the case of corporate bodies which have acquired l e g a l p e r s o n a l i t y and capacity by virtu e of statute, when i t comes to unin- corporated associations there i s no d i s t i n c t area of law, known as 'associ- ation law' as such. Since an unincorporated association has no more capacity or l e g a l existence than the i n d i v i d u a l s by whom i t was created or continued, 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 to t r e a t i t as though i t did e x i s t , have to be solved using the ordinary 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 tator has said, 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 of the law on unin- corporated associations. Commencing with the premise that unincorporated associations are not j u r i s t i c persons, thus having no independent l e g a l i d e n t i t y , the law i s forced to deal i n an haphazard manner with 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 to be encompassed within rules and p r i n c i p l e s which have been developed to deal with other 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 tr u s t s and contracts. 21 The point can be i l l u s t r a t e d by a b r i e f discussion of four examples , i n add i t i o n to the p r i n c i p a l example of donations to unincorporated as s o c i - ations with which the body of t h i s thesis deals. (i) Contractual L i a b i l i t y - 17 - In the area of contract law, an unincorporated association cannot i t s e l f be a contracting party because i t has no contractual capacity. Therefore whenever an asso c i a t i o n purports to buy anything, employ anyone or enter into any other type of contract, resort has to be had to the law of agency to f i x r e s p o n s i b i l i t y on the association's i n d i v i d u a l members. As 22 mentioned above , the rules may expressly confer general authority on s p e c i f i c committee members to enter into contracts on the association's behalf. Every i n d i v i d u a l member impliedly concurs i n t h i s authorisation when he subscribes and becomes contractually bound by the r u l e s . In t h i s manner, the 'association' funds can be reached to compensate the aggrieved outside contracting p a r t i e s . However, i f no general authority i s provided fo r by the rul e s , the personal l i a b i l i t y of any p a r t i c u l a r member, who purports to enter into contractual r e l a t i o n s on behalf of the remainder of the members of the as s o c i a t i o n and i n i t s name can be determined only by the p r i n c i p l e s of the law of agency r e l a t i n g to the extent of h i s authority 23 so to act ( i i ) 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 of t o r t , the wrongs of i n d i v i d u a l members can be imputed to the association's membership i n general only through the law of v i c a r i o u s l i a b i l i t y . The association i t s e l f cannot be held l i a b l e i n 24 t o r t , since i t has no capacity to commit l e g a l wrongs ( i i i ) Procedural D i f f i c u l t i e s Having succeeded i n e s t a b l i s h i n g the substantive l i a b i l i t y (or entitlement) of an unincorporated association through i t s i n d i v i d u a l - 18 - members, one then discovers that the association's lack of l e g a l capacity 25 also causes problems of a procedural nature . However, a l l the common law j u r i s d i c t i o n s with which t h i s thesis deals have procedural devices which operate to prevent unincorporated associations from s e t t i n g up t h e i r l e g a l incapacity to evade l i a b i l i t y , and "to f a c i l i t a t e the bringing of actions 26 against unincorporated aggregates of persons" . In p a r t i c u l a r , i t i s possible f o r representative proceedings to be brought by and against 27 unincorporated associations . Two or more of i t s members can sue or be sued i n t h e i r names, on t h e i r own behalf and on behalf of a l l other members of the association, provided that c e r t a i n requirements are c a r e f u l l y met. The operation and p i t f a l l s of representative actions against the members of an unincorporated association as representative 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 responsible, can be 28 demonstrated by the case of Roche V. Sherrington . There, the p l a i n t i f f was an ex-member of an i n t e r n a t i o n a l unincorporated association c a l l e d Opus Dei which, being an unincorporated association, had no l e g a l existence apart from the members of which i t was composed. The p l a i n t i f f therefore sued two members of the association i n t h e i r representative capacity as represen- t i n g the e n t i r e present membership, wherever they may be. He claimed that the association was l i a b l e to repay c e r t a i n sums of money which he had paid to Opus Dei during his membership and which he alleged had been procured by undue influence. The court would have found i n h i s favour on the substantive issue but i t struck out the s u i t on procedural grounds because i t was not properly constituted as a representative action. The p r i n c i p a l reason was 29 as follows : [T]he present membership of Opus Dei i s by [no] means the same as i t was at the respective dates when the relevant payments were made. I t i s common ground that the present membership must include many persons who - 19 - were not members at those dates. In these circum- stances i t has to be asked on what grounds a person who became a member of Opus Dei a f t e r the date of a relevant payment by the p l a i n t i f f could possible be personally l i a b l e i n equity to make repayment to the p l a i n t i f f . A l l persons covered by a representative action must have the same r i g h t s , or same l i a b i l i t y and same defences as t h e i r named representative. In the present case, on the f a c t s , members at d i f f e r e n t dates, of d i f f e r e n t sex and i n d i f f e r e n t countries would have separate defences against the s u i t , and therefore d i d not have a common i n t e r e s t i n defending the proceedings. The p l a i n t i f f could 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 did not share a common i n t e r e s t with the selected represen- t a t i v e s . The inconvenience, and necessity for precise information and fore- sight when suing an unincorporated a s s o c i a t i o n are apparent. (iv) Occupation The fourth i l l u s t r a t i o n of the l e g a l problems caused by an unincor- porated association'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 f o r rates (or property taxes), based on i t s occupation of premises. As a matter of fa c t , i t i s obvious that unincorporated associations occupy premises i n order to further t h e i r purposes. Associations h a b i t u a l l y use postal add^ resses as mailing addresses and advertise the premises as t h e i r own and i n t h e i r own names. Nevertheless, as a matter of law, the unincorporated a s s o c i a t i o n can occupy nothing and t h i s causes problems for r a t i n g author- i t i e s who attempt to assess and c o l l e c t rates. Two examples from recent cases w i l l demonstrate the point. In i ? . v. Brighton Justices, ex parte Howard , an. unincorporated - 20 - ass o c i a t i o n known as Local Aid appeared to be the occupier of premises for which i t was accordingly assessed to rates. However, as Lord Lance,C.J. 31 put i t , "Local Aid could not occupy anything, because i t was a nonentity". The r a t i n g authority nevertheless managed to e s t a b l i s h t h e i r claim against a member of the as s o c i a t i o n who they found to be i t s e f f e c t i v e c o n t r o l l e r : 32 "his was the hand on the t i l l e r " . He was therefore held personalty l i a b l e as the constructive trustee by conduct of the unincorporated association and therefore l i a b l e on contracts he entered i n t o on the association's behalf. He was i n f a c t imprisoned for eighty-two days f o r f a i l u r e to pay the rates due. i n Verrall v. Hackney London Borough Council , however, the s i t u - a t i o n was not quite as simple. In that case, the r a t i n g authority assessed a prominent member and o f f i c e r of the National Front to rates due i n respect of premises used and, as a matter of fac t , occupied by the National Front, which i s an unincorporated a s s o c i a t i o n . Counsel for the r a t i n g authority 34 had argued as follows : [w]here one can say that although a p a r t i c u l a r a s s o c i - ation i s unincorporated, and thus not 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 properly to be described as i n b e n e f i c i a l occupation of premises used for the purposes of the association and thus l i a b l e f o r general rates i f the necessary f o r m a l i t i e s are complied with. In other words, every member of an unincorporated association can become personally l i a b l e f o r i t s rates, simply by vi r t u e of h i s contract of member- 35 ship. The court disagreed, and held : [T]he National Front was and i s an unincorporated association and as such we do not think i t could occupy anything Most unincorporated associations, such as clubs or c h a r i t i e s , have trustees, or a committee, l e g a l persons with funds available to pay the rates which i t i s recognised w i l l have to be paid. I t i s these persons who, as a matter of law, usually occupy - 21 - the premises which are used for the purposes of t h e i r "club or charity and are l i a b l e as such occupiers f o r the general rates. In our opinion, however, the unincorporated association which, speaking loosely, they run, can never be the occupier of those or any premises [ l ] t follows that the mere f a c t that a person i s a 'member' of an unincorporated 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 material on which to base a findi n g that that person i s the occupier of premises used f o r the purposes of the unincorporated a s s o c i - ation, e i t h e r himself alone, s t i l l less j o i n t l y with the association. The member had therefore been wrongly assessed to rates. Consistently with the Brighton Justices case, the decision demonstrates that the association's i n a b i l i t y to 'occupy' as a matter of law has to be circumvented by assessing i t s trustees or committee members. The p o s i t i o n of r a t i n g a u t h o r i t i e s i s not an enviable one i n that the i d e n t i t y of such persons w i l l not necessar- i l y be a matter of pub l i c record i n any p a r t i c u l a r case. Furthermore, the case leaves unsolved the problem which w i l l a r i s e when an asso c i a t i o n has no trustees at a l l . (v) G i f t s In general, the making of a g i f t i s the simplest of transactions. I t may be made inter vivos or by w i l l , and i n ei t h e r case by a d i r e c t t r a n s f e r to the intended b e n e f i c i a r y or i n d i r e c t l y , using a t r u s t . The rules for es t a b l i s h i n g the capacity of a donor to give and of a donee to receive are simple 3^. Even i n the case of land, the f o r m a l i t i e s that must be observed"^ to e f f e c t a gratuitous t r a n s f e r of ownership are not excessively complicated. However, when the s p e c i f i e d r e c i p i e n t of a g i f t i s an unincorporated as s o c i a t i o n , the appearance of s i m p l i c i t y i s deceptive. The asso 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 of - 22 - t r u s t , 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 to the problem i n the current state of the law because the association cannot be a b e n e f i c i a r y e i t h e r . 3. Conclusion In sum, i t can be seen that the p e c u l i a r status of an unincorporated association 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 personality enables i t to create l e g a l problems by occupying premises, entering into contracts, and so on, but prevents the l e g a l system from providing any s a t i s f a c t o r y solutions. As w i l l be demonstrated i n Part Two, nowhere i s the problem more acute than i n the area of g i f t s to unincorporated associations. * * * * * * * * * * FOOTNOTES : CHAPTER II 1. See, McGovern v. Attorney-General [1981] 3 A l l E . R.493. 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. Grunfeld, Modern Trade Union Law (London : Sweet & Maxwell, 1966), pp 37-38. 5. See also, S t o l j a r , Groups and E n t i t i e s (Canberra : Australian National University Press, 1973), pp 59-60. 6. For example, United Kingdom Interpretation Act 1889, 52 & 53 V i c t . , c.63, s.19 ; United Kingdom Income and Corporation Taxes Act 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 Viscount Simonds [1959] 2 A l l E.R.300 a t 306. 8. See, Rickett, "Unincorporated Associations 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 at 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 at 4. 11. See further, infra, pp 80-82. 12. Per V i n e l o t t , J . , paraphrasing counsel i n Conservative Central Office V. Burrell. [1980] 3 A l l E.R.42 at 58. See also, S t o l j a r , op.cit. supra, footnote 5, pp 38-40 ; Rickett, "Mr. J u s t i c e 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, pp 14-16. 13. See, Green, "The Dissolution of Unincorporated Non-Profit Associations (1980) 43 Mod.L.R.626, pp 629, 631//. Cf. O'Connor, "Actions against Voluntary Associations and the Legal System", (1977) 4 Mon.L.R.87, pp 96-101 ; S t o l j a r , op.cit.supra, footnote 5, pp 43-50 ; Baxt, "The Dilemma of the Unincorporated Association", (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, trade unions were i l l e g a l because they were associations g u i l t y of r e s t r a i n t of trade, u n t i l they were l e g i t i m i s e d by statute. - 24 - Other examples are United Kingdom Unlawful Oaths Acts 1797m 37 G e o . I l l , c.123 and 1812, c.104, which prohib i t e d the taking of oaths to be a member of a seditious society; United Kingdom Seditious Meetings Act 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 for 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 at 562. 17. Reel V. Holder, supra, footnote 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 concerning the nature of members' ownership : see, Green, op.cit.supra, footnote 13 ; Atkin, "Unin- corporated Associations - D i s t r i b u t i o n of Surplus Assets on Dissolution", (1978) 8 N.Z.U.L.R.217, pp 231-233. See also, infra, pp 57-59. Cf. S t o l j a r , op. cit. supra, footnote 5, pp 44-49 ,- Ford, Unincorporated Non-Profit Associations (Oxford : Clarendon, 1959), pp 5-7. 20. Rickett, op.cit.supra, footnote 12, p 13. 21. See also, Baxt, op.cit.supra, footnote 13. 22. Supra, p 15. 23. See, Fletcher, "Unincorporated Associations and Contract : The Development of Committee L i a b i l i t y and the Unresolved Issues", (1979) 11 U.Queensland L.J.53 ; Keeler, "Contractual Actions for Damages against Unincorporated Bodies", (1971) 34 Mod.L.R.615 ; S t o l j a r , op.cit.supra, footnote 5, pp 53-59. 24. See, Lloyd, The Law of Unincorporated Associations (London : Sweet & Maxwell, 1938), pp 133-165. 25. A member wishing to sue h i s own association encounters s i m i l a r problems. See, O'Connor, op.cit.supra, footnote 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 Lord Atkinson [1916] 2 A.C.15 at 30. 27. For example, United Kingdom Rules of 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 Representative Action - The Modern P o s i t i o n " , (1957) 4 U.W.A.L.R.58. In Canada, for example, see B r i t i s h Columbia Supreme Court Rules, Rule 5(11). - 25 - 28. [1982] 2 A l l E.R.426. 29. Per Slade,J., ibid at 433. 30. [1980] R.A.222. 31. Ibid., at 225. 32. Ibid at 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 at 284-285. 35. Per May,L.J., ibid at 285. 36. See, Vaines, Personal Property, 5th.ed., eds. E. L. G. Tyler & N. E. Palmer (London : Butterworths, 1973), pp 299-300. 37. See, Megarry & Wade, The Law of Real Property, 4th.ed. (London : Stevens, 1975), pp 476-489, pp 542-597. - 26 - PART TWO GIFTS TO UNINCORPORATED ASSOCIATIONS - 27 - The aim of Part Two i s two-fold. I t w i l l expound, analyse and assess the various methods whereby g i f t s to unincorporated associations can be con- strued as taking e f f e c t i n the current state of the law, and i t w i l l demon- stra t e that, f o r one reason or another, none of these methods i s t o t a l l y s a t i s f a c t o r y . In t h i s way, Part Two prepares the ground for Part Three, which o f f e r s an a l t e r n a t i v e analysis which i s demonstrably superior to any discussed i n the pages which follow. Part One established that an unincorporated as s o c i a t i o n cannot i t - s e l f be the r e c i p i e n t of a g i f t because i t enjoys no existence independently of i t s members. Yet people continue to donate funds to unincorporated associations. Therefore, having established from an examination of the intended r e c i p i e n t association's structure, c o n s t i t u t i o n and mode of operation that i t i s indeed an unincorporated, unregistered, non-charitable association, any court before which the fate of the g i f t i s presented i s faced with a problem. Over the years, the common law has a r r i v e d at at le a s t nine d i f f e r e n t i n t e r p r e t a t i o n s of the mechanism whereby a g i f t to an unincorporated association can, to a les s e r or greater degree, take e f f e c t . The object of most of them i s to circumvent the problem posed by the unin- corporated association's lack of l e g a l p e r s o n a l i t y . They attempt to do so by permitting the g i f t to take e f f e c t i n favour of persons who do have the recognition of the law, whilst imposing upon them constraints of various degrees of effectiveness i n an e f f o r t to d i v e r t the be n e f i t of the donation to the unincorporated association i n question. The various methods are as follows :- i . An absolute g i f t to the members of the unin- corporated a s s o c i a t i o n "S i i . A g i f t to the members of the unincorporated - 28 - a s s o c i a t i o n which takes e f f e c t s u b j e c t t o a duty, imposed on the members by t h e i r c o n t r a c t o f mem- b e r s h i p 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 , t o use 2 the funds f o r the purposes o f t h e a s s o c i a t i o n ; i i i . A g i f t t o 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 , s u b j e c t t o a mandate arrangement between 3 the donor and those members ; i v . A g i f t t o the members o f t h e a s s o c i a t i o n under and i n a c cordance w i t h the terms o f a c o n t r a c t between 4 the donor and the members ; v. A g i f t t o 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 , s u b j e c t t o 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 owed by them t o the donor ~* ; v i . A 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 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 i . A g i f t 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 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 ; v i i i . A g i f t on t r u s t f o r 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 f which i t s members a r e t h e f a c t u a l bene- . . . . 6 f i c i a r i e s ; i x . A g i f t on t r u s t 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 . A l l b u t one o f the above methods o f 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 w i l l be d i s c u s s e d i n t u r n , though n o t e x a c t l y i n the sequence used above. The e x c e p t i o n i s the case o f t h e g i f t 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 a t i o n . T h i s w i l l n o t r e c e i v e s e p a r a t e t r e a t m e n t as a d i s t i n c t t o p i c b u t 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 , b u t i n l e s s d e t a i l than, the o t h e r s i t u a t i o n s which i n v o l v e a t r u s t o f some k i n d . - 29 - As one p r o g r e s s e s down the l i s t o f methods which are a v a i l a b l e f o r i n t e r p r e t i n g the l e g a l framework 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 , two t r e n d s are p e r c e p t i b l e . On the one hand, t h e r e i s a movement from the a n a l y s i s which least a c h i e v e s the donor's aim o f c o n f e r r i n g b e n e f i t on 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 (method i ) t o the a n a l y s i s which would a c h i e v e i t a lmost t o the l e t t e r (method i x ) . On the o t h e r hand, from method i t o method i x , one's l i k e l i h o o d o f s u c c e s s i n law c o r r e s p o n d i n g l y d i m i n - i s h e s . T h i s i s because, as one moves down the l i s t , one e n c o u n t e r s two p roblems. F i r s t l y , a n a l y s e s i t o v ( i n c l u s i v e ) i n v o l v e i n c r e a s i n g l y f i c - t i o n a l and s t r a i n e d i n t e r p r e t a t i o n s o f the s i t u a t i o n which o b t a i n s . Then, as one attempts a n a l y s e s v i t o i x ( i n c l u s i v e ) , the law as i t c u r r e n t l y s t a n d s throws more and more l e g a l o b s t a c l e s i n the way o f s u c c e s s . I t i s the combined e f f e c t o f the two t r e n d s t h a t makes no one a n a l y s i s t o t a l l y s a t i s f a c t o r y . Which o f the above methods a c o u r t w i l l s e l e c t i n any p a r t i c u l a r case o f an attempted 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 i s p r i n c i p a l l y a q u e s t i o n o f i n t e r p r e t a t i o n . E v i d e n t l y the most s i g n i f i c a n t c o n s i d e r a t i o n i n r e s o l v i n g the q u e s t i o n i s the s p e c i f i c wording o f the g i f t . F o r example, g e n e r a l l y s p e a k i n g , none o f a n a l y s e s i t h r o u g h v, which i n v o l v e d i r e c t g i f t s t o the members o f the a s s o c i a t i o n , i s a v a i l a b l e i f the donor emphatic- a l l y d e c l a r e s t h a t h i s g i f t i s t o take e f f e c t under a t r u s t . However, i n i n t e r p r e t i n g the e f f e c t o f a g i f t , i t s wording i s o f t e n i g n o r e d by the c o u r t s so no h a r d and f a s t r u l e s can be f o r m u l a t e d . Furthermore, more o f t e n than n o t no i n d i c a t i o n i s g i v e n a t a l l i n the wording o f the g i f t as t o i t s i n t e n d e d l e g a l framework, no doubt because the m a j o r i t y o f donors a r e unaware o f the problem o f an u n i n c o r p o r a t e d - 30 - a s s o c i a t i o n ' s l a c k o f s e p a r a t e l e g a l p e r s o n a l i t y . Indeed, i t can be assumed i n each o f the c h a p t e r s which f o l l o w t h a t the g i f t i n q u e s t i o n i s s i m p l y " f o r the 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 s p e c i f i c o r d e t a i l e d i n s t r u c t i o n s . I n such a case, a l l n i n e o f the above approaches a r e r e a s o n a b l y open o f any p a r t i c u l a r g i f t , and a c h o i c e has t o be made. I t i s s u b m i t t e d t h a t the c o u r t ' s c h o i c e may be, and a p p a r e n t l y is, made by a s k i n g one o f two i n i t i a l q u e s t i o n s . On the one hand, a c o u r t may ask : what d i d the donor i n t e n d ? The most p r o b a b l e response, a f t e r con- s i d e r a t i o n o f the donor h i m s e l f , t h e n a t u r e o f the a s s o c i a t i o n and the r e l a t i o n s h i p between the donor and the a s s o c i a t i o n , would be t h a t the donor i n t e n d e d t o f u r t h e r a c o n t i n u i n g group e n t e r p r i s e . In o r d e r t o c a r r y out such an i n t e n t i o n , the g i f t must take e f f e c t , i f a t a l l , under a n a l y s e s v i i i o r i x . The consequence f o r the g i f t i n the c u r r e n t s t a t e o f t h e law would most l i k e l y be t h a t i t would f a i l . On the o t h e r hand, a c o u r t may i n s t e a d ask as i t s i n i t i a l q u e s t i o n : d i d the donor i n t e n d the g i f t t o f a i l ? The ob v i o u s answer must s u r e l y be t h a t the donor d i d n o t i n t e n d h i s g i f t t o f a i l . The c o u r t then has another c h o i c e t o make. I t may choose t o be uns y m p a t h e t i c t o the donor's predicament and u t i l i s e a c o n s t r u c t i o n o f t h e g i f t which, w i l l i n e v i t a b l y l e a d t o i t s f a i l u r e . I f i t chooses t o make a sympa t h e t i c response t o the g i f t , however, i t w i l l attempt t o p u t upon i t an i n t e r p r e t a t i o n which, w i l l r e n d e r i t v a l i d . These v a r i o u s c h o i c e s i n v o l v e a l a r g e element o f j u d i c i a l s u b j e c t i v i t y . I t i s p o s s i b l e t h a t t h e y a r e t a c i t l y made w i t h one eye on whether t h e p a r t i c u l a r g i f t i n q u e s t i o n 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 of sympathy. Apparently there i s no one single analysis which alone i s the corre 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 analyses w i l l now be discussed. In each, s i g n i f i c a n t advantages and disadvantages of the analysis w i l l be pointed out so that the r e l a t i v e merits of each can be assessed as a mechanism to e f f e c t the donation of funds to an unincorporated association. * * * * * * * * * * - 32 - FOOTNOTES : PART TWO, INTRODUCTORY COMMENTS 1. The Absolute G i f t Analysis, infra, PP 33-50. 2. The Contract Analysis, infra, PP 51-78. 3. The Mandate Theory, infra, pp 82-88. 4. The Contractual Undertaking 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 Analysis, infra,PP 132-150. - 33 - I. ABSOLUTE GIFT ANALYSIS 1. Introduction X makes a bequest "to the Blackshire Association for the Shelter of Stray Animals, for the furtherance of i t s purposes". Assume that the Association i s a non-charitable unincorporated association and that i t s purposes include the care of abandoned pets, the operation of an adoption service for such animals and the protection of the people i n Blackshire from animal-ridden s t r e e t s . I t i s funded e n t i r e l y through voluntary contribution. I t i s evident that the Association i t s e l f i s incapable of receiving the donation i n i t s own r i g h t . In the eyes of the law, i t does not e x i s t . In c e r t a i n circumstances, nevertheless, the courts have upheld the donation. They have explained that i t takes e f f e c t as an absolute g i f t to the members of the association who are i n existence at 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 apply the funds to the care of animals or to any other a s s o c i a t i o n purpose. There are two major steps i h the reasoning that permit the Absolute G i f t Analysis. F i r s t l y , the words "for the furtherance of the purposes [of the a s s o c i a t i o n ] " are disregarded and stripped of l e g a l e f f e c t . They are presumed to state merely the motive for making the donation. Secondly, i t i s assumed that the naming of the association i s simply a method of de- f i n i n g the class of intended 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 association. The authority for the use of these two presumptions w i l l be discussed before t h e i r combined e f f e c t i s con- sidered. - 34 - 2. The Re Sanderson P r i n c i p l e There i s r e s p e c t a b l y a n c i e n t a u t h o r i t y 1 f o r t h e view t h a t i f a fund i s g i v e n t o a p e r s o n f o r a purpose, the f u l f i l m e n t o f which would s u b s t a n - t i a l l y exhaust the fund, the p e r s o n t a k e s a b s o l u t e l y , u n c o n s t r a i n e d by any l i m i t a t i o n on the use t o which he p u t s the money. Purposes which would s a t i s f y the t e s t i n c l u d e g e n e r a l b e n e f i t , maintenance, t r a i n i n g f o r a t r a d e 3 and e d u c a t i o n . The presumption i s r e b u t t e d where the purpose i s o n l y one o f the s t a t e d reasons f o r the g i f t , i n d i c a t i n g t h a t the b e n e f i t i n t e n d e d to a c c r u e t o 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 o f the p r i n c i p l e i s found i n Re Sanderson's 4 5 Trust , where the V i c e - c h a n c e l l o r , 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 the whole income o f the p r o p e r t y be g i v e n , and a s p e c i a l purpose be a s s i g n e d f o r t h a t g i f t , t h i s C o u r t always r e g a r d s the g i f t as a b s o l u t e , and the purpose m e r e l y as the motive o f the g i f t , and t h e r e f o r e h o l d s t h a t the g i f t t a k e s e f f e c t as t o the whole sum or the whole income, as the case may be. In t h a t case, s u r p l u s funds from a bequest t o a l e g a t e e r e m a i n i n g a f t e r h i s d e a t h were h e l d not t o be t h e a b s o l u t e p r o p e r t y o f h i s e s t a t e , but f e l l i n t o the r e s i d u e o f h i s b e n e f a c t o r ' s e s t a t e . The bequest was made on t r u s t t o a p p l y "the whole or any p a r t " o f the fund f o r the "maintenance a t t e n d a n c e and comfort" o f t h e l e g a t e e . On c o n s t r u c t i o n o f t h e s e words, i t was h e l d t h a t , a l t h o u g h the s t a t e d p u rposes were e x h a u s t i v e i n n a t u r e , o n l y a p o r t i o n o f the fund was d e d i c a t e d t o them, so the l e g a t e e was not a b s o l u t e l y e n t i t l e d . The p r e s u m p t i o n o f an a b s o l u t e g i f t was t h e r e f o r e r e b u t t e d . The p r i n c i p l e o f Re Sanderson was a p p l i e d r e c e n t l y by the Chancery - 35 - D i v i s i o n and the C o u r t o f Ap p e a l o f England i n Re Osoba . The d i f f i c u l t y i n t h a t case was caused i n the main by the f o l l o w i n g c l a u s e o f Mr. Osoba's w i l l : I bequeath t o my w i f e a l l the r e n t s from my l e a s e - h o l d p r o p e r t y ... f o r her maintenance and f o r the t r a i n i n g o f my daughter A b i o l a up t o U n i v e r s i t y grade and f o r the maintenance o f my aged mother 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 the t e s t a t o r d i e d , h i s mother was a l r e a d y dead and h i s daughter was about t e n y e a r s o l d . F i v e y e a r s l a t e r , the t e s t a t o r ' s widow d i e d , and f i v e y e a r s a f t e r t h a t , when p r o c e e d i n g s were commenced, the daughter had completed her u n i v e r s i t y s t u d i e s . I t t h e r e f o r e appeared t h a t a l l t h e p u r - poses s p e c i f i e d i n the w i l l had e i t h e r f a i l e d o r been a c h i e v e d . Had the 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 purpose t r u s t , t h e r e f o r e , the funds would have f a l l e n i n t o r e s i d u e . The Court o f Ap p e a l h e l d unanimously, however, t h a t the bequest was an a b s o l u t e g i f t t o the t h r e e b e n e f i c i a r i e s as j o i n t t e n a n t s . There b e i n g no e v i d e n c e o f a c t u a l o r i n t e n d e d s e v e r a n c e , the daughter was e n t i t l e d , as s o l e s u r v i v o r under jus accresoendi p r i n c i p l e s , to the whole bequest. In the c i r c u m s t a n c e s , d e s p i t e the f a c t t h a t the purpose o f A b i o l a ' s u n i v e r s i t y e d u c a t i o n was f i n i t e and, as the events which t r a n s p i r e d had proved, n o t e x h a u s t i v e o f t h e bequest, the p r i n c i p l e e s t a b l i s h e d i n the o 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 i n Re Sanderson : I f a g r o s s sum be g i v e n , o r i f the whole income o f the p r o p e r t y be g i v e n , and a s p e c i a l purpose be a s s i g n e d f o r t h a t g i f t , t h i s C o u r t always r e g a r d s the g i f t as a b s o l u t e , and the purpose 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 the g i f t t a k e s e f f e c t as t o the whole sum o r the whole income, as the case may be. 8 Of t h i s , G o f f , L . J . s a i d : [ l ] t i s n o t a r u l e o f law, but, i n the absence o f - 36 - c o n t e x t , t o which o f course i t must y i e l d , o r perhaps v e r y s p e c i a l c i r c u m s t a n c e s , i t i s a l o n g e s t a b l i s h e d and o f t a p p l i e d p r i n c i p l e which I would not seek t o w h i t t l e away. 9 The p r i n c i p l e was r e s t a t e d by B u c k l e y , L . J . i n the f o l l o w i n g terms : I f a t e s t a t o r has g i v e n the whole o f a fund, whether 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 the 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 absence o f any c o n t r a - i n d i c a t i o n , 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 p e r s o n t o the f u l l e x t e n t o f th e s u b j e c t - m a t t e r , n o t w i t h s t a n d i n g t h a t he may have e x p r e s s l y s t a t e d t h a t the g i f t i s made f o r a p a r t i c u l a r purpose, which may p r ove t o be i m p o s s i b l e o f performance o r which may not exhaust the s u b j e c t - m a t t e r . The r e f e r e n c e t o the purpose i s t r e a t e d merely as a statement o f the t e s - 10 t a t o r ' s m otive i n making t h e g i f t . In o t h e r words : The s p e c i f i e d purpose i s r e g a r d e d as o f l e s s s i g - 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 case, the c o u r t f e l t t h a t t h e r e were s u f f i c i e n t i n d i c a t i o n s from the c i r c u m s t a n c e s t o conclude t h a t Mr. Osoba had i n t e n d e d h i s daughter t o take a b s o l u t e l y . One s i g n i f i c a n t f e a t u r e was t h a t the e d u c a t i o n o f someone who was o n l y f i v e y e a r s o l d when the w i l l was d r a f t e d (as A b i o l a was) was a purpose which, would be c o n s i d e r e d l i k e l y t o d e p l e t e the fund s u b s t a n t i a l l y . S e condly, p r o v i s i o n f o r one's e d u c a t i o n ( l i k e one's main- tenance) c o n f e r s an " e x t e n s i v e and c o n t i n u i n g b e n e f i t " ^ e q u i v a l e n t t o an a b s o l u t e g i f t . T h i r d l y , the bequest was o f t h e whole fund, which i n d i - c a t e d t h a t the t e s t a t o r had n o t contemplated any s u r p l u s . T h i s a n a l y s i s i s r e a d i l y a p p l i c a b l e t o the case o f a g i f t f o r the g e n e r a l o r s p e c i f i e d 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 f i t appears from the wording 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 i n t e n d e d the a s s o c i a t i o n 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 from the fund and t h a t f u l f i l m e n t o f . t h e 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 c r e a t i n g a t r u s t f o r the f u l f i l m e n t o f those p u r p o s e s , the statement o f purpose i s seen m e r e l y as e x p l a i n i n g t h e donor's m o t i v e . A c c o r d i n g t o Re Sanderson, the a s s o c i - 12 a t i o n t a k e s a b s o l u t e l y . F o r example, i n Re Ogden , a bequest t o p o l i t i c a l b o d i e s , some o f which were 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 , "having as t h e i r o b j e c t s ... the 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 g i f t t o them. L o r d T o m l i n e x p l a i n e d the p r i n c i p l e t h a t 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 o f p e r s o n s , f o r the g e n e r a l p u rposes 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 g i f t . The statement t h a t the g i f t was f o r the 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 was c o n s i d e r e d t o be o f no l e g a l e f f e c t . I t was merely a statement o f t h e c h a r a c t e r i s t i c i d e n t i f y i n g the b o d i e s t o be s e l e c t e d and o f the t e s t a t o r ' s 14 motxve i n making the bequest However, i t w i l l 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 i t s e l f can not be the r e c i p i e n t o f the g i f t . I t has no l e g a l e x i s t e n c e i n d e p e n d e n t l y o f i t s members. T h e r e f o r e i t i s e v i d e n t t h a t Re Sanderson's p r i n c i p l e a l o n e i s o f l i t t l e a s s i s t a n c e i n f a c i l i t a 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 . I t does not e x p l a i n who a r e the r e c i p i e n t s o f the g i f t . A f u r t h e r p r i n c i p l e , which can combine i n o p e r a t i o n w i t h t h a t o f Re Sanderson, i s r e q u i r e d t o s a l v a g e the g i f t . 3. The Re Smith P r i n c i p l e F o r 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 t h e 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 the common law b e f o r e the date o f t h a t d e c i s i o n . In Re Smith, a bequest o f r e s i d u e " f o r - 38 - the society or i n s t i t u t i o n known as the Franciscan F r i a r s of Clevedon ... absolutely" was held v a l i d even though the Franciscan F r i a r s was an unin- corporated body with no capacity of i t s own to receive g i f t s . Joyce,J. stated the reason f o r t h i s conclusion i n the following terms 1 6 : [A] bequest to any unincorporated society or a s s o c i - ation not charitable i s good because, and only because, i t i s treated as being and i s a bequest to the several members of such society or a s s o c i - ation, who can spend the money as they please. The g i f t took e f f e c t as one to the i n d i v i d u a l F r i a r s who were a l i v e at the date of the testator's death, absolutely. The s i t u a t i o n i s the inverse of that found i n company law. There, except i n c e r t a i n circumstances, one must not 'pierce the corporate v e i l ' to look beyond the l e g a l f i c t i o n 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 person i n i t s own r i g h t , separate and d i s t i n c t from i t s shareholders. In the case of an unincorporated association, one has no choice but to look beyond the a s s o c i a t i o n to i t s constituent persons 17 because the association has no l e g a l i d e n t i t y or existence of i t s own The g i f t therefore takes e f f e c t as one to the members of the association i n existence at the date of an -inter vivos d i s p o s i t i o n or, i f testamentary, at the date of the testator's death. Again, however, as with the p r i n c i p l e In Re Sanderson, t h i s construction i s open to rebu t t a l by the circum- stances of the case. 4. The P r i n c i p l e s Combined The combined e f f e c t of 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 stated as follows : [A] g i f t to an association formed for [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 be 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 purposes and the f a c t t h a t the s t a t e d r e c i p i e n t i s an a s s o c i a t i o n a r e i g n o r e d , and the g i f t i s c o n s t r u e d as a g i f t t o i t s con- s t i t u e n t members a b s o l u t e l y . An e a r l y case i n which t h i s r e s u l t was a c h i e v e d was Cocks V. 19 Manners . There, a bequest f o r the g e n e r a l purposes o f a Dominican convent was u p h e l d as an a b s o l u t e g i f t t o the e x i s t i n g members o r nuns. A p p l y i n g t h e Re Sanderson p r i n c i p l e , i t can be seen t h a t the statement o f the purpose f o r the g i f t was i g n o r e d so t h a t no t r u s t f o r those p u r - poses was i n t e r p o s e d . Combined w i t h t h i s , the p r i n c i p l e a l s o seen a t work i n Re Smith was p u t i n t o o p e r a t i o n . That i s to say, the r e f e r e n c e t o the convent was t r e a t e d m e r e l y as a method o f d e f i n i n g and i d e n t i f y i n g i t s members as the i n t e n d e d r e c i p i e n t s o f the funds. T o g e t h e r , the two p r i n c i p l e s o f c o n s t r u c t i o n e n a b l e d the g i f t f o r the p u rposes o f the a s s o c i a t i o n t o take e f f e c t as an a b s o l u t e g i f t to i t s members. The most r e c e n t , d e t a i l e d e x p l a n a t i o n o f t h i s a n a l y s i s c u r r e n t l y a v a i l a b l e i s p r o v i d e d by V i s c o u n t Simonds i n Leahy V. Attorney-General for 20 New South Wales . T h i s w i l l now be u t i l i s e d as the v e h i c l e f o r d i s - c u s s i o n and c r i t i c i s m o f the combined e f f e c t o f the two p r i n c i p l e s , o t h e r - wise c a l l e d the A b s o l u t e G i f t A n a l y s i s , as a method o f v a l i d a t i n g 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 . - 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 Catholic Church to benefit from his wealth a f t e r h i s death. Unfortunately, he expressed t h i s apparently straightforward desire i n the following clause of h i s w i l l : As to my property known as 'Elmslea' situated at Bungendore ... upon t r u s t f o r such order of nuns of the Catholic Church or the C h r i s t i a n Brothers as my executors and trustees s h a l l s e l e c t and ... the s e l e c t i o n of the order of nuns or brothers as the case may be to benefit under t h i s clause of my w i l l s h a l l be i n the sole and absolute d i s - c r e t i o n of my said executors and trustees. This clause presented several problems. One possible construction of the terminology used was that i t imposed t r u s t s for the purpose of b e n e f i t i n g the r e l i g i o u s orders. However, i t had been established i n the High Court of A u s t r a l i a i n t h i s case, and not l a t e r challenged, that 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 of nuns" i n the w i l l was held to include both contemplative and non- contemplative orders. This meant that the g i f t was not e n t i r e l y charitable : i t had a mixture of charitable and non-charitable elements. Normally, a t r u s t for mixed charitable 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 delete a l l non-charitable elements from i t s terms. The r e s u l t of f i n d i n g the existence of a t r u s t and applying the statute would be that no d i s t r i b u t i o n of funds could be made to any contemplative, non-charitable order. The executors of the w i l l , not wanting such a r e s u l t , argued that another construction of the clause was possible whereby a l l orders, i n c l u d i n g contemplative, would benefit as intended- from the testator's generosity. They argued the Absolute G i f t Analysis. - 41 - The J u d i c i a l Committee of the Privy Council dedicated the larger part of i t s opinion to discussing t h i s analysis but reached the con- clusi o n that the executors' argument f a i l e d i n the circumstances. The analysis would involve two steps. F i r s t l y , the reference to orders of nuns (which are unincorporated associations) would be interpreted merely as a means of defining 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 ben e f i t . The unincorporated as s o c i a t i o n i t s e l f would be incapable of rec e i v i n g the funds i n i t s own name. Secondly, any i n d i - cation that the donees were not to take as absolute donees would be 23 ignored . Viscount Simonds c l a r i f i e d t h i s to mean "absolute both i n 24 q u a l i t y of estate 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 to note that the Privy Council stated that the Absolute G i f t Analysis of g i f t s to unincorporated associations was a 25 26 "fundamental proposition" . Viscount Simonds formulated i t as follows : In law, a g i f t to [an unincorporated] society s i m p l i c i t e r ( i . e . , where ... neither the circum- stances of the g i f t nor the d i r e c t i o n s given nor the objects expressed impose on the donee the character of a trustee) i s nothing else than a g i f t to i t s members at the date of the g i f t as j o i n t tenants or tenants i n common. In other words, the prima facie construction of the clause i n the w i l l was that those i n d i v i d u a l nuns belonging to the orders selected by the executors who were a l i v e and members of the order at the date of Mr. Leahy's death could receive the g i f t absolutely and dispose of i t as they wished. No doubt, i n the circumstances, they would f e e l morally obligated to d i v e r t the g i f t to b e n e f i t the Church or the order. Indeed, many would be further obligated to do so by vows of poverty. Nevertheless, there would be no legal compulsion f o r them to do otherwise than pay the proceeds i n t o t h e i r personal bank accounts. - 42 - However, the Privy Council went on to point out that the prima facie construction could be rebutted by a wide range of considerations : for example, the terms of the w i l l , the nature of the unincorporated association, the association's organisation and rul e s , the subject-matter of the g i f t . In t h i s case, Viscount Simonds concluded that the evidence of rebu t t a l i n t h i s manner was overwhelming i n the circumstances. The 27 28 Absolute G i f t Analysis could not be u t i l i s e d . He concluded : [Hjowever l i t t l e the test a t o r understood the e f f e c t i n law of a g i f t to an unincorporated body of persons by t h e i r society name, h i s inten t i o n was to create a t r u s t not merely for the benefit of the e x i s t i n g members of the selected order but for i t s benefit as a continuing society and for the furtherance of i t s work. The w i l l could not be construed as making an absolute g i f t and the t r u s t i t had set up f a i l e d , c h i e f l y on the ground of perpetuity. The g i f t had to be salvaged by using the statutory p r o v i s i o n , with the consequence that the non-charitable orders of nuns were eliminated from the scope of the g i f t , which then operated i n favour of the non-contemplative orders of nuns only. It i s i n s t r u c t i v e to examine the circumstances which Viscount Simonds considered rebutted the prima facie Absolute G i f t Analysis. They were four i n number. (i) Benefit to a Group The f i r s t was the wording of the clause, whereby the test a t o r had indica t e d that h i s i n t e n t i o n was to benefit a group as a whole and not the 29 30 in d i v i d u a l s comprising i t . Some commentators have argued that t h i s conclusion was correct, p a r t i c u l a r l y i n view of the p e c u l i a r l y 'group' - 43 - nature of Catholic orders. On the other hand, the Absolute 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 case. The very object of the analysis i s to salvage g i f t s to associations, a l l of which are characterised by group a c t i v i t y of some sort or another. No doubt the testator's true i n t e n t i o n was to ben e f i t the group rather than i t s members i n d i v i d u a l l y but, i n view of the im- p o s s i b i l i t y of e f f e c t i n g t h i s i n the current state of the law, i t must surely be conceded that the salvage construction whereby the i n d i v i d u a l members ben e f i t i s closer to the testator's i n t e n t i o n than t o t a l f a i l u r e of his bequest. Following the testator's intentions too c l o s e l y as an aid to construction would mean that every g i f t to an association would f a i l and the Absolute G i f t Analysis would always be rebutted, thus l o s i n g 31 the 'prisma facie status accorded i t by Viscount Simonds himself Therefore, i t i s submitted that, i n the absence of very clear words to the contrary, the mention of an association or other group should not of i t s e l f foreclose use of the Absolute G i f t Analysis. ( i i ) Size of the Group Secondly, Viscount Simonds pointed out that the members of Catholi c orders a l i v e at the testator's death may be very numerous and may be d i s - 32 tr i b u t e d world-wide . Two in t e r p r e t a t i o n s are possible of t h i s statement. On the one hand, he might have meant that large membership rebutted the presumption of an absolute g i f t to the members. In c r i t i c i s m of t h i s , i t i s submitted that the v a l i d i t y of a g i f t to an association should not depend on the size of i t s membership for many reasons. In the f i r s t place, courts do not usually attach importance to d i f f i c u l t i e s i n the administ- r a t i o n of a g i f t by those responsible therefor when considering i t s - 44 - 33 v a l i d i t y . In the second place, the Privy Council had no evidence that 34 the membership was e x t r a o r d i n a r i l y large, and even c i t e d Re Clarke with approval, i n which, apparently, the association had over two thousand 35 members . F i n a l l y , i f the Privy Council was concerned that the size of the membership was relevant i n that i t would mean that each i n d i v i d u a l could only receive a nominal share, surely i t would have discussed or requested evidence to t h i s e f f e c t . Furthermore, since the court's con- cern touches problems with subsequent dealings with the donated funds, i t appears t o t a l l y i r r e l e v a n t to the i n i t i a l v a l i d i t y of the bequest and could produce a r b i t r a r y r e s u l t s . The second possible i n t e r p r e t a t i o n i s that Viscount Simonds was point- ing out that the r e c i p i e n t s would be for the most part unknown to the donor 36 i n such a case . Again, as with the f i r s t c r i t e r i o n discussed above (group b e n e f i t ) , to emphasise such a problem i s to emphasise the court's perception of the in t e n t i o n of the donor. I f the court perceives the donor's i n t e n t i o n as being to benefit each i n d i v i d u a l member, the percep- t i o n i s misconceived, since the donor's true i n t e n t i o n i s to ben e f i t the association. Once t h i s i s recognised, i t i s apparent that the i d e n t i t y of the i n d i v i d u a l members i s i r r e l e v a n t . ( i i i ) Subject-Matter of the G i f t A t h i r d f actor considered s i g n i f i c a n t by the Privy Council was the subject-matter of the g i f t . The J u d i c i a l Committee apparently assumed that nuns and monks could not be intended to become the owners of grazing property and a homestead. Assuming for the sake of argument that i t eould be a relevant factor i n choosing between the Absolute G i f t Analysis and a - 45 - t r u s t for the association, surely the subject-matter would be no more suit a b l e for the purposes of the l a t t e r than for the former. However t h i s may be, the Privy Council d i d not launch into 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 i n the decision. I t i s also suggested that no weight should have been attached to the point since the property could have been sold and the proceeds paid to the nuns anyway. (iv) Capacity of the Recipients In rebutting the presumption that the g i f t should be construed as an absolute g i f t to the members of the association, the Privy Council r e f e r r e d to the p o s s i b i l i t y that the members of the orders would not have the capacity to receive the g i f t . I f t h i s was an a l l u s i o n to the f a c t that most nuns and monks take vows of poverty (as mentioned above), t h i s should have supported the Absolute G i f t Analysis, as a device of i n d i r e c t l y f u l f i l l i n g the t estator's intentions, rather than have rebutted i t . The vows of poverty and other moral obligations to which nuns and monks are bound would no doubt compel the r e c i p i e n t s to devote t h e i r g i f t for the b e n e f i t of the order. A f t e r a l l , the J u d i c i a l Committee had expressed con- cern that the testator's i n t e n t i o n was to benefit the group a c t i v i t y , and t h i s i n t e n t i o n could 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 with approval 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 res- p e c t i v e l y , both of whom take vows of poverty, 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 that contracts and other obligations (including moral) taking 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 of bequests made by i t . - 46 - In summary, therefore, i t i s submitted that the conclusion reached by Viscount Simonds was probably i n c o r r e c t i n the circumstances. Indeed, 39 one commentator has even suggested that the Privy Council 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, since i t seemed to s e l e c t as relevant those very factors most l i k e l y to deny v a l i d i t y to them. What i s more important, however, i s the implication that the above discussion has for the success of the Absolute G i f t Analysis i n general. I f the Privy Council's treatment of the circumstances which could rebut the absolute g i f t presumption were adopted so that the above considerations became canons of construction, successful invocation of the Absolute G i f t Analysis would be very rare. Any i n d i c a t i o n that benefit to a group a c t i v i t y was intended or that the status or number of the i n d i v i d u a l members was i n some way inconsistent with r e c e i p t of the p a r t i c u l a r benefit would rebut i t s use. The.result i n Leahy could only be avoided 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 expressly to the i n d i v i d u a l members of the associ- a t i o n which one hoped to be n e f i t . 6. Conclusion The above suggestion h i g h l i g h t s the major and ove r r i d i n g d i s - advantage of the Absolute G i f t Analysis. The i n d i v i d u a l members take the bequest or inter vivos g i f t absolutely "both i n q u a l i t y of estate 40 and i n freedom from r e s t r i c t i o n " . There i s no guarantee whatsoever that the money w i l l be spent or used according to the testator's or donor's wishes. The members take the funds as co-owners and they can sever t h e i r shares at any time, even after leaving the association. Recognition of t h i s eventuality used to influence the courts i n that they were far more l i k e l y to adopt the Absolute G i f t Analysis i n - 47 - sit u a t i o n s where the members were at l e a s t under a moral o b l i g a t i o n to 41 further the objects of the asso c i a t i o n of which they were members In the absence of moral o b l i g a t i o n , however, the donor has no guarantee 42 whatsoever that the association w i l l receive one penny of h i s money In recognition of these major defects, the Absolute G i f t Analysis i s no longer given serious consideration i n cases on donations to unin- corporated associations. Most of the recent cases on the subject merely 43 mention the analysis i n passing . Its u n r e l i a b i l i t y and f a i l u r e to achieve the aims of the donor, even i n a l i m i t e d form, have apparently been recognised. * * * * * * * * * * FOOTNOTES : CHAPTER I 1 . For example, Barlow V. Grant ( 1 6 8 4 ) , 1 V e r n . 2 5 5 ; 2 3 E.R . 451 ,- Hanson v. Graham ( 1 8 0 1 ) , 6 V e s . J r . 2 3 9 ; 31 E.R . 1 0 3 0 ,- Leake v. Robinson ( 1 8 1 7 ) , 2 Mer.363; 35 E.R . 979 ; Cope v. Wilmot, c i t e d i n note to Thompson V. Thompson ( 1 8 4 4 ) , 1 C o l l . 3 8 1 ; 6 3 E.R . 464 ,- Barton v. Cooke ( 1 8 0 0 ) , 5 V e s . J r . 4 6 1 ; 31 E.R . 682 ; Lewes V. Lewes ( 1 8 4 8 ) , 16 Sim.266 ; 6 0 E.R . 876 ; Noel V. Jones ( 1 8 4 8 ) , 16 Sim.309; 60 E.R . 8 9 3 . 2. Barlow v. Grant, supra, footnote 1. 3 . Presant & Presant v. Goodwin ( 1 8 6 0 ) , 1 Sw. & Tr . 5 4 4 , - 1 6 4 E.R . 852 ; In re Andrew's Trust [ 1 9 0 5 ] 2 Ch . 4 8 . 4 . ( 1 8 5 7 ) , 3 K.& J . 4 9 7 ; 6 9 E.R . 1 2 0 6 . 5 . Ibid 6 9 E.R . 1 2 0 6 at 1 2 0 8 . 6 . [ 1 9 7 9 ] 1 W.L.R . 2 4 7 ; [ 1 9 7 9 ] 2 A l l E.R . 3 9 3 7 . Supra, p 3 4 . 8 . [ 1 9 7 9 ] 2 A l l E.R . 3 9 3 at 3 9 7 . 9 . [ 1 9 7 9 ] 2 A l l E.R . 3 9 3 at 4 0 2 . 1 0 . Per Buckley,L.J., ibid. 1 1 . Per Goff,L.J., ibid at 3 9 8 . 1 2 . [ 1 9 3 3 ] C h . 6 7 8 ; 1 0 2 L.J.Ch . 2 2 6 ; [ 1 9 3 3 ] A l l E.R.Rep .720. 1 3 . [ 1 9 3 3 ] Ch . 6 7 8 at 6 8 1 . 1 4 . See also, Re Turkington [ 1 9 3 7 ] 4 A l l E.R . 5 0 1 . 1 5 . Re Smith [ 1 9 1 4 ] 1 Ch . 9 3 7 ; 8 3 L.J.Ch . 6 8 7 . 1 6 . [ 1 9 1 4 ] 1 Ch . 9 3 7 at 9 4 8 . 1 7 . The same i s true with g i f t s to a partnership i n the partnership name : the g i f t . i s construed at common law as taking e f f e c t for the b enefit of the i n d i v i d u a l partners : Maugham V. Sharpe ( 1 8 6 4 ) , 1 7 C.B.CN.S.) 4 4 3 at 4 6 3 - 4 ; 1 4 4 E.R . 179 at 1 8 7 ; Wray V. Wray [ 1 9 0 5 ] 2 C h . 3 4 9 . 1 8 . Bowman V. The Secular Society [ 1 9 1 7 ] A.C . 4 0 6 ; 86 L.J.Ch.568 , per Lord Parker [ 1 9 1 7 ] A.C . 4 0 6 at 4 4 2 . 1 9 . ( 1 8 7 1 ) , L.R . 12 E q . 5 7 4 ; 4 0 L.J.Ch . 6 4 0 ; 1 9 W.R.1055 . 2 0 . [ 1 9 5 9 ] A.C . 4 5 7 ; [ 1 9 5 9 ] 2 W.L.R . 7 2 2 ; [ 1 9 5 9 ] 2 A l l E.R . 3 0 0 . - 49 - 21. New South Wales Conveyancing Act 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 at 307. 25. Ibid at 306. 26. Ibid. 27. See the s i m i l a r conclusion reached by the High Court of 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 at 312. 29. Ibid at 311. 30. For example, L o v e l l , "Non-Charitable Purpose Trusts - Further Reflections", (1970) 34 Conv.(N.S.)77, p 92. 31. See, Keeler, "Devises and Bequests to Unincorporated Bodies", (1963-1966) 2 Adelaide L.Rev.336, p 344. 32. [1959] 2 A l l E.R.300 at 311. 33. For example, McPhail V. Doulton [1971] A.C424; [1970] 2 W.L.R.1110; [1970] 2 A l l E.R.228, per Lord Wilberforce [1970] 2 A l l E.R.228 at 247. 34. [1901] 2 Ch.110; 70 L.J.Ch.631; 49 W.R.628. 35. Keeler, op.cit.supra, footnote 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 at 98-99. 37. Supra, footnote 19. 38. Supra, footnote 16. 39. McKay, "Re L i p i n s k i and G i f t s to Unincorporated Associations", (1977) 9 V.U.W.L.R.I, p 2. 40. Per Viscount Simonds, supra, footnote 24. 41. For example, Cocks V. Manners , supra, footnote 19 : Dominican s i s t e r s had taken vows of poverty and were bound by r e l i g i o u s conviction to use the donation f or association purposes. Cf. Re Amos [1891] 3 Ch.159 : trade union members d i d not take under the Absolute G i f t Analysis; no moral o b l i g a t i o n to further the trade union's objects. 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, footnote 27. - 50 - 42. At one time, a further objection to the Absolute G i f t Analysis was that i t was impossible to convict an association member for embezzlement of association funds because i t would be a defence f o r the member to say that he was merely disposing of h i s own property. This was so u n t i l the passage of the Larceny and Embezzlement Act 1868, 31 & 32 V i c t . , c.116 under which a prima facie g u i l t y member could be held l i a b l e despite h i s co-ownership. 43. For example, Neville Estates v. Madden [1962] Ch.832; [1961] 3 W.L.R.999; [1961] 3 A l l E.R.769 at 778 ; Re Recher's Will Trusts [1972] Ch.526; [1971] 3 W.L.R.321; [1971] 3 A l l E.R.401 at 404 ; Re Lipinski's Will Trusts [1976] Ch.235; [1976] 3 w.L.R.522; [1977] 1 A l l E.R.33 at 41 ; Re Grant's Will Trusts[1980] 1 w.L.R.360; [1980] 3 A l l E.R.359 at 364. A l l discussed, infra, pp 52-66. - S I - I I . CONTRACT ANALYSIS 1. Introduction A second analysis which has found popularity i n the courts i n recent years as an explanation of the mechanism whereby donations to unincorporated associations take e f f e c t i s c a l l e d , for the sake of con- venience i n discussion, the Contract Analysis. Assume that X makes a g i f t "to the Fairways Golf Club", which i s a non-charitable unincorporated association, incapable of receiving the donation i n i t s own r i g h t because i t lacks l e g a l existence. According to the most straightforward version of the Contract Analysis, the donation i s achieved i n the following manner. An o u t r i g h t t r a n s f e r of the funds takes place from X to the current members of the Golf Club. As i n the case of the Absolute G i f t Analysis from the point of view of property law the mem- bers become the l e g a l co-owners of the funds. However, when they joined the Golf Club each member became (either expressly or by implication) a party to a membership contract and i t i s i n i t s emphasis on the e f f e c t of t h i s contract that the Contract Analysis d i f f e r s from the Absolute G i f t A n alysis. As a matter of contract law, the members of the Golf Club are contractually bound to d i v e r t a l l funds that they receive from donors such as X i n a manner s p e c i f i e d by the terms of the membership contract. In one way or another, the contract assures that the funds are used for the Club's purposes. The members are thus restrained from asserting t h e i r ownership r i g h t s over donations so that the i n t e n t i o n of X to benefit the Golf Club i t s e l f i s f u l f i l l e d . Re Reciter's Will Trusts i s the only case i n which the Contract Analysis has h i t h e r t o been applied d i r e c t l y . I t has therefore 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 courts i n t e r p r e t and u t i l i s e i t . A more d e t a i l e d exposition of the l e g a l framework of the Contract Analysis, and i t s advantages and disadvantages, w i l l then follow. 2. Re Recher's Will Trusts In so f a r as they are relevant to the discussion, 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 a s s o c i a t i o n . I t had permanent headquarters and s t a f f , a membership of nearly three hundred members, o f f i c e r s , a committee and a written c o n s t i t - ution. The rules s t i p u l a t e d that a l l Society funds were held by trustees on what may be c a l l e d an 'administrative t r u s t ' to hold or spend according to the d i r e c t i o n s of the committee who had absolute d i s c r e t i o n i n the matter, provided that they acted "for the protection and advancement of the i n t e r e s t s of the Society". The main objects of the Society, 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 of 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 included the i n o c u l a t i o n of animals f o r experimental purposes", and "to advocate the humane treatment of animals generally". 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 that " E l e c t i o n to Membership s h a l l be taken as conclusive proof of assent to the Rules for the time being of the Society". In other words, every member was bound, by h i s contract of association and membership with the Society, to respect the property-holding arrangements ou t l i n e d above, whereby a l l Society funds were held by the committee for Society purposes. The t e s t a t r i x made a bequest to the Society 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 Society as such had i n f a c t ceased to e x i s t even before the w i l l had been drafted. I t had joined forces with another a n t i - v i v i s e c t i o n society which was subsequently i n c o r - porated. In the process, the o r i g i n a l Society was dissolved and the membership contracts were terminated. As a r e s u l t of t h i s turn of events, the bequest ultimately f a i l e d and the decision of Brightman,J. i n Re Reciter was to that e f f e c t . Nevertheless, Brightman,J. dedicated h a l f of his written reasons i n the case to the question of the v a l i d i t y or other- wise of the bequest, on the hypothesis that the Society had not gone through the transformation and d i s s o l u t i o n outlined above. In other words, he assumed that 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 had s t i l l been i n existence at the date the w i l l came into e f f e c t i n order to analyse the effectiveness of a g i f t to i t . The judge was faced with the argument that the l e g a l e f f e c t of a g i f t to an unincorporated association could only be interpreted i n three ways, a l l of which would operate to i n v a l i d a t e the bequest i n question. The f i r s t i n t e r p r e t a t i o n discussed i n Re Recher was the Absolute 3 G i f t Analysis which has already been explained i n t h i s t hesis . I t may be r e c a l l e d that the overwhelming disadvantage of that analysis i s that the members of the association are absolutely e n t i t l e d to the funds as co-owners thereof. In the present case, Brightman,J. assumed that i t could not have been the i n t e n t i o n of the t e s t a t r i x that her funds be dealt with i n such a manner, since the aim, shared by h e r s e l f and the Society, of the a b o l i t i o n of v i v i s e c t i o n , would i n no way be furthered thereby. He 4 therefore rejected i n summary fashion 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 not a g i f t to the persons who were the members of the London and P r o v i n c i a l Society at the t e s t a t r i x ' s death, as j o i n t tenants or as tenants i n common b e n e f i c i a l l y , so as to 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 that the t e s t a t r i x intended, as soon as the g i f t f e l l i n t o possession, that any such member should be e n t i t l e d , as of r i g h t , to demand an al i q u o t share. I t i s i n t e r e s t i n g to note how d i f f e r e n t t h i s approach i s from that adopted by the Privy Council i n Leahy v. Attorney-General for New South Wales 5. There, the Absolute G i f t Analysis was seen as the prima facie construction of a g i f t to an unincorporated association, subject to re 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 to be that the Absolute G i f t Analysis was not a p p l i c a b l e . As the law stood when Re Recher was decided, two other inte r p r e t a t i o n s were av a i l a b l e of g i f t s to unincorporated associations - that i s , a g i f t on t r u s t f o r present and future members, or a non-charitable purpose t r u s t for the purposes of the association - and these w i l l be discussed i n t h i s t h e s i s i n due course 6 . For the time being, s u f f i c e i t to say that neither would have va l i d a t e d the bequest to the Society i n the present case. As i t was, however, Brightman,J. reviewed the circumstances and wording of the bequest, and concluded that neither i n t e r p r e t a t i o n was dictated thereby anyway. Having decided that none of the above three inte r p r e t a t i o n s was applicable to the bequest, Brightman,J. then went on to explain the fourth p o s s i b i l i t y . This was the Contract Analysis, which had been hinted at i n 7 Leahy v. Attorney-General for NeW South Wales 7 and explained, though, not 8 applied, by Cross,J. i n Neville Estates V. Madden . Brightman,J. - 55 - explained the operation of the Contract Analysis i n the following terms In the case of a donation which i s not accompanied by any words which purport to impose a t r u s t , i t seems to me that the g i f t takes e f f e c t i n favour of the e x i s t i n g members of the association as an accretion to the funds which are the subject-matter of the contract which such members have made i n t e r se, and f a l l s to be dealt with i n p r e c i s e l y the same way as the funds which the members themselves have subscribed. So, i n the case of a legacy. In the absence of words which purport to impose a tr u s t , the legacy i s a g i f t to the members bene- f i c i a l l y , not as j o i n t tenants or as tenants i n common so as to e n t i t l e each member to an immediate d i s t r i b u t i v e share, but as an accretion to the funds which are the subject-matter of the contract which the members have made i n t e r se. In other words, the current members of 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 would be the r e c i p i e n t s of the g i f t but, superimposed on t h i s property t r a n s f e r would be contractual r e s t r i c t i o n s , as contained i n t h e i r contract of membership, which would l i m i t t h e i r future dealings with i t . Assuming that a l l members respected the rules set out i n the Society's c o n s t i t u t i o n , dealings with the fund would be l i m i t e d to those which protected and advanced the i n t e r e s t s of the Society. The i n t e r n a l mechanism whereby t h i s would be achieved was s t i p u l a t e d i n the rules to which each member was contractually bound. The members would transfer the fund to the trustees who would hold them under an 'administrative t r u s t ' , along with a l l other Society property, awaiting i n s t r u c t i o n s from the committee as to t h e i r d i s p o s i t i o n . Brightman,J. acknowledged that the Contract Analysis was, i n e f f e c t , a compromise, a "half-way house" 1 0 . From the point of view of property law, the members take immediate i n t e r e s t s i n the funds as co-owners, j u s t as i n the case of the Absolute G i f t A nalysis. In t h i s way the problems caused by the ce r t a i n t y , perpetuity and ben e f i c i a r y requirements of g i f t s - 56 - on t r u s t are avoided. At the same time, the problem of the Absolute G i f t Analysis i s minimised by the superimposed contractual obligations of membership which prevent members from taking 'absolutely' and enable funds to devolve to successive members i n whatever manner i s provided by the r u l e s . Brightman,J. was quite happy with the compromise between the two a l t e r n a t i v e s presented by the mechanism of the t r u s t on the one hand, and the Absolute G i f t Analysis on the other. Of the argument that only these two extremes were av a i l a b l e as explanations of g i f t s to unincorporated associations he s a i d : I f the argument were correct i t would be d i f f i c u l t , i f not impossible, for a person to make a s t r a i g h t - forward donation, whether i n t e r vivos or by w i l l , to a club or other non-charitable association which the donor desires to b e n e f i t . This conclusion seems to me contrary to common sense. I t was therefore on the basis of "common sense", rather than good auth- 13 o r i t y , that the Contract Analysis came into being as an explanation i n c e r t a i n circumstances of the successful donation of funds to an unin- corporated a s s o c i a t i o n . Brightman,J. concluded that, had 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 been i n existence at the date of the death of the t e s t a t r i x , the bequest to i t would have been va l i d a t e d by the Contract A n a l y s i s . The bequest would have operated as- a legacy to the members- of the society at that time as an accretion to t h e i r funds as a society, subject to the membership contract i n e f f e c t inter se which would have l i m i t e d use of Society funds to the objects and aims of the Society. In the r e s u l t , however, the bequest f a i l e d because the Society had i t s e l f predeceased the t e s t a t r i x . - 57 - 3. Step-by-Step Operation of the Contract Analysis Re Reehev l e f t many problems unsolved and many questions unan- swered i n r e l a t i o n to the Contract Analysis. Furthermore, subsequent 14 cases on the topic have, i f anything, confused the task of i s o l a t i n g and explaining the various elements of the ana l y s i s . The discussion which follows i s therefore based l a r g e l y on speculation, aided both by the bare o u t l i n e which Re Redhev formulated and by general l e g a l p r i n c i p l e s . (i) Step One : The Property Transfer According to the Contract Analysis, when a donor makes a g i f t to an unincorporated association, property i s transferred from the donor to 15 the current members i n good standing of the association . The same i s true whether the g i f t i s made from an external benefactor, or i s a sub- s c r i p t i o n or contribution made by an i n t e r n a l member. The tr a n s f e r may take place i n one of two ways, depending p r i n c i p a l l y on the wording of the g i f t . In the f i r s t place, as i n Re Reehev i t s e l f , the tr a n s f e r may be eff e c t e d by the conveyance of l e g a l t i t l e to the members. They take the property by way of absolute co-ownership and become f u l l y e n t i t l e d to i t . In the eyes of a property lawyer, the members own the donated property i n t h e i r own r i g h t . There being 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 deal with the property as they wish. Should a member transfer h i s share to a t h i r d party, as a matter of property law, the transfer i s good and no one can challenge the t h i r d party's owner- ship. There i s nothing s p e c i a l about the nature of the members' owner- - 58 - ship : they are normal co-owners, and most l i k e l y hold the property as tenants i n common. The second possible method whereby the transf e r may take place from the donor to the members i s through a t r u s t , declared by the donor or implied from the wording of the g i f t , for the current members of 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 certainty, perpetuity and be n e f i c i a r y 17 requirements f o r a v a l i d t r u s t . The selected trustees need not necess- a r i l y be association members themselves. Whoever they are, they hold l e g a l t i t l e to the property whilst b e n e f i c i a l ownership i s held by a l l the current members i n good standing of the association. As such, the members are equitable co-owners of the property and can, as a.group, terminate the tr u s t i f they choose, thus acquiring l e g a l t i t l e . As a matter of property law, they are the e f f e c t i v e owners of the property. This 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 of Be Lipinski 's Will Trust : I f a v a l i d g i f t may be made to an unincorporated body as a simple accretion to the funds which are the subject-matter of the contract which the members have made i n t e r se ... I do not 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 within the powers of the unincorporated body and of which the members of that body are the b e n e f i c i a r i e s , should f a i l . Why are not the b e n e f i c i a r i e s able to enforce the t r u s t or, indeed, i n the exercise of t h e i r contractual r i g h t s , to terminate the t r u s t for t h e i r own benefit? In the Lipinski case, the te s t a t o r attempted to make a bequest of residu- ary estate to a non-charitable, unincorporated association, the Hu l l Judeans (Maccabi) Association, with the further d i r e c t i o n that the money be used to construct or improve the association's b u i l d i n g s . I t was held that the bequest was v a l i d , although the exact basis f o r the decision i s 19 unclear and the case can be severely 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 that - 59 - O l i v e r , J . contemplated the p o s s i b i l i t y that the Contract Analysis may apply to explain a g i f t f o r the purposes of an association which operates v i a a t r u s t for i t s current members and i t i s submitted that he was correct i n t h i s contemplation. Whether the property transfer i s e f f e c t e d by an absolute conveyance of t i t l e OT v i a a t r u s t , the next step i n the Contract Analysis operates i n exactly the same way. ( i i ) Step Two : The Contract Step One i n the Contract Analysis merely transfers t i t l e i n the donated funds to the donees from the donor who then drops out of the p i c - ture. I f the analysis stopped here, i t would achieve l i t t l e more than the Absolute G i f t Analysis i n that i t would provide no l e g a l guarantee what- ever that the donor's i n t e n t i o n to benefit an unincorporated association would be achieved. I t would have to depend on the existence i n the members of some sense of moral duty to d i v e r t t h e i r property to the association's b e n e f i t . Step Two therefore endeavours to create legal r i g h t s and duties circumscribing the ownership of the members. I t involves the recognition of contractual terms which regulate the members' ownership i n a l l respects. More than one method of achieving t h i s i s available within the ambit of the Contract A n a l y s i s . The actual method used i n i n t e r p r e t i n g any p a r t i c - u l a r donation 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 of the a s s o c i a t i o n i n question. Each achieves e s s e n t i a l l y the same r e s u l t . a) Implied Contract - 60 - The f i r s t method e n t a i l s recognition of an embryonic form of 'associ- 21 22 atio n law' . I t i s generally acknowledged that the unincorporated association i s a consensual arrangement and that i t s members are the pa r t i e s to a m u l t i - p a r t i t e membership contract entered into on admission to mem- 23 bership . The terms of t h i s contract are both express and implied. The former are found i n the association's c o n s t i t u t i o n , i f any, to which each member on j o i n i n g consents to be bound. The l a t t e r are formulated as a matter of necessary implication from the nature of an ass 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 written c o n s t i t u t i o n or i f the c o n s t i t u t i o n which i t does have contains no provisions dealing expressly with the topic of donated funds, i t i s submitted that Step Two of the Contract Analysis can nevertheless operate. Property transferred to the members qua a s s o c i a t i o n members under Step One i s subjected to the implied terms of the. membership contract. Since the very object of t h e i r associating together i s to further and perpetuate the purposes f o r which the association was created, c e r t a i n terms which give e f f e c t to t h i s object are r e a d i l y implied i n the contract which they have entered into inter se. In p a r t i c u l a r , i t i s impliedly s t i p u l a t e d that, although each member becomes the co-owner of a l l 'associ- a t i o n ' property as a matter of property law, as a matter of contract law, the property can only be used f o r association purposes. Above a l l , each member i s bound by an implied contractual o b l i g a t i o n to tr a n s f e r h i s share i n 'association' property to the other members when he terminates h i s membership. In t h i s manner, the member i s r e s t r i c t e d i n the exercise of h i s proprietary r i g h t s . b). Express Contract - 61 - Step Two i s evidently more straightforward i f the terms of the membership contract are express. Of course, the members of each unin- corporated a s s o c i a t i o n have t o t a l freedom to s t i p u l a t e whatever rules they consider appropriate. For the purposes of discussion, therefore, some gene r a l i s a t i o n i s necessary and i t i s proposed to consider only two basic models for the express i n t e r n a l property-holding arrangements of an as s o c i a t i o n . I n t e r p o s i t i o n of an 'Administrative Trust' In the f i r s t place, i t i s common, p a r t i c u l a r l y i n larger unincorporated associations, to f i n d the existence of one or more appointed or elected committees which represent the i n t e r e s t s of members of the association both i n i t s dealings with the outside world, and i n t e r n a l l y . Such an arrangement i s convenient and p r a c t i c a b l e . I t i s also common for the rules of an association to s t i p u l a t e that a l l 'association' property must be held by c e r t a i n committee members on trust, to be dealt with as directed from time to time e i t h e r by 24 another committee or the membership at large . I f t h i s i s the case, the Contract Analysis of funds donated to the unincorporated a s s o c i a t i o n operates as follows. Property i n the donated funds i s transferred to the current members i n good standing of the association, as explained i n Step One. The members are bound by t h e i r contract of membership to deal with t h e i r p r oprietary 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 therefore under a contractual o b l i g a t i o n to transf e r h i s i n t e r e s t i n the funds to the relevant committee members. The committee members are likewise bound to deal with the transferred funds, of which they are co-owners, as the rules d i c t a t e . In order to avoid committing a breach of contract, therefore, they must declare themselves trustees of the funds and hold them under the 'administrative t r u s t ' . - 62 - Ownership by Members Expressly Limited by the 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 of an unin- corporated a s s o c i a t i o n does not involve committees or 'administrative t r u s t s ' . Instead, the rules may simply and expressly s t i p u l a t e that each member, whilst r e t a i n i n g ownership over the property, must u t i l i s e any i n t e r e s t he may hold i n that property for the purposes of the association. They may p r o h i b i t any d i v i s i o n of funds between the members for t h e i r own purposes, f o r example. Such provisions have caused two p a r t i c u l a r problems for the v a l i d i t y of g i f t s . Each problem w i l l be stated and i l l u s t r a t e d by reference to case law, and i t w i l l be submitted i n each case that the alleged problem i s based on f a l l a c i o u s reasoning. I t w i l l be concluded that express r e s t r i c t i o n s on the ownership of funds by members of an unincorporated association are i r r e l e v a n t to the v a l i d i t y of a g i f t to i t under the Contract Analysis. The first problem was i d e n t i f i e d by Cross,J. i n the case of 25 Neville Estates V. Madden as a proviso to the successful use of the Contract Analysis of g i f t s to unincorporated associations : [A g i f t to an unincorporated association] may be a g i f t to the e x i s t i n g members not as j o i n t tenants, but subject to t h e i r respective contractual r i g h t s and l i a b i l i t i e s towards one another as members of the association. In such a case a member cannot sever h i s share. I t w i l l accrue to the other members on h i s death or resignation, even though such members include persons who became members af 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 the g i f t , i t w i l l not be open to objection on the score of perpetuity, unless there i s something i n i t s terms or i n the rules of the association which, precludes the members at any given time from d i v i d i n g the subject of the g i f t between them on the footing that they are s o l e l y e n t i t l e d to i t i n equity. - 63 - In o t h e r words, the c o u r t was o f t h e o p i n i o n t h a t an e x p r e s s s t i p - u l a t i o n i n the 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 which r e s t r i c t e d the members' ownership o f ' a s s o c i a t i o n ' p r o p e r t y would mean t h a t any g i f t t o t h a t a s s o c i a t i o n would v i o l a t 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 . 26 T h i s r e s u l t may be i l l u s t r a t e d by Came V. Long where a t e s t a t o r d e v i s e d h i s mansion t o the Penzance P u b l i c L i b r a r y (which 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 ) f o r i t s use, b e n e f i t , maintenance and s u p p o r t . The r u l e s o f t h e a s s o c i a t i o n s t i p u l a t e d t h a t the L i b r a r y had t o remain i n e x i s t e n c e and i t s p r o p e r t y u n d i v i d e d f o r as l o n g as i t had ten members. L o r d Campbell,L.C. e x p l a i n e d the e f f e c t o f t h e s e r u l e s on the 27 v a l i d i t y o f t h e g i f t : I f t h e d e v i s e had been i n f a v o u r o f t h e e x i s t i n g members o f the s o c i e t y , and they had been 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 might t h i n k f i t , then 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 t o 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 the 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 , and the t e s t a t o r must be presumed t o have known what the r e g u l a t i o n s were. 28 The bequest f a i l e d f o r p e r p e t u i t y . I t had v i o l a t e d the law's p r o - s c r i p t i o n a g a i n s t remoteness o f v e s t i n g embodied i n the r u l e a g a i n s t p e r p e t u i t i e s . By way o f c r i t i c i s m , i t i s s u b m i t t e d t h a t the r u l e a g a i n s t p e r - p e t u i t i e s i s i r r e l e v a n t i n t h i s c o n t e x t . As was seen i n the d i s c u s s i o n 29 o f Step One above , t h e r e i s no p o s s i b i l i t y t h a t p r o p e r t y i n t e r e s t s might v e s t o u t s i d e the p e r p e t u i t y p e r i o d . As a m a t t e r o f p r o p e r t y law, they are v e s t e d a t once and subsequent c o n t r a c t u a l r e s t r i c t i o n s can not change the s i t u a t i o n . The r u l e a g a i n s t p e r p e t u i t i e s i s not t r i g g e r e d 30 by t h e C o n t r a c t A n a l y s i s . - 64 - The second problem which courts have perceived the rules of an assoc i a t i o n to pose i n the context of the Contract Analysis i s demon- 31 strated i n the recent case of Re Grant's Will Trusts . In b r i e f , i t i s assumed that, i f the rules of an unincorporated association indicate that i t s members are never to be permitted to receive and d i v e r t for personal use t h e i r i n t e r e s t s i n 'association' property, the donor could not have intended the g i f t to operate under the Contract Analysis. In Re Grant the test a t o r had been an active member of the Labour Party i n his l i f e t i m e so he devised a l l h i s property on h i s death to the l o c a l constituency Labour Party for the benefit of i t s headquarters. The l o c a l Party was an unincorporated association with a complicated and de t a i l e d c o n s t i t u t i o n which regulated the i n t e r n a l mechanism whereby 'association' property was held. One of i t s rules s t i p u l a t e d that the association's members and committee had to accept any a l t e r a t i o n to i t s c o n s t i t u t i o n which the national Labour Party chose to make. It was argued by the proponents of the v a l i d i t y of the bequest that the g i f t should take e f f e c t i n accordance with the Contract Analysis so that the members would take absolute i n t e r e s t s i n the donated fund but be bound contractually to deal with, them as s t i p u l a t e d by the rules regulating the holding of property within the association. In t h i s manner, the g i f t would be v a l i d and the l o c a l Party would benefit as- intended by the te s t a t o r . V i n e l o t t , J . rejected the argument and refused to i n t e r p r e t the bequest i n accordance with the Contract Analysis. He gave the following 32 reason : It 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 [validated by use of the Contract Analysis] - 65 - that the members of the association can by an appropriate majority ( i f the rules so provide), or acting unanimously i f they do not, a l t e r t h e i r rules so as to provide that the funds, or part of them, s h a l l be applied for some new purpose, of even d i s t r i b u t e d amongst the members for t h e i r own be n e f i t . In other words, the members must be able to govern the destination of the funds they hold and to divide them amongst themselves before a court w i l l u t i l i s e the Contract Analysis to explain and val i d a t e a g i f t to the association. i n the present case, the members did not control the property themselves, i n that an external body - the national Labour Party - could a l t e r the r u l e s . The court therefore u t i l i s e d the rules i n the association's c o n s t i t u t i o n concerning 'association' property as a t o o l of construction of the g i f t . They were open to the p o s s i b i l i t y of being a l t e r e d ex- t e r n a l l y , with the r e s u l t that i f the members were construed as holding i n t e r e s t s i n the funds, subject to those rules, the funds could be diverted away from the asso c i a t i o n which was intended to be benefited. Since the t e s t a t o r was well-acquainted with the content of the ru l e s , the court concluded that he could not have intended h i s bequest to be i n t e r - preted i n any manner which would permit t h i s r e s u l t , which included the Contract Analysis. Two observations should be made i n c r i t i c i s m of the court's l i n e of reasoning in Re Grant. F i r s t l y , any re l i a n c e on the court's perception of the donor's i n t e n t i o n i n r e l a t i o n to h i s g i f t i s a r t i f i c i a l . The true i n t e n t i o n of the donor of funds to an unincorporated association i s not to benefit the members i n any way, but to promote the association. No donor 'intends to tr a n s f e r h i s funds to the members, even with, the safe- guards of the Contract Analysis-. Furthermore, the Contract Analysis was formulated as a salvage device to permit the courts to manoeuvre t h e i r - 66 - way around the problem 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 l a c k o f l e g a l p e r s o n a l i t y . As such, i t s aim i s t o evade an anomaly i n the law, not to honour a donor's i n t e n t i o n s , however p e r c e i v e d . The second c r i t i c i s m which may be l e v e l l e d a t a c o u r t ' s use o f 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 as a t o o l o f c o n s t r u c t i o n i s t h a t the con- s t i t u t i o n i s a c o n t r a c t u a l arrangement. I t s terms can not be c a r v e d i n stone o r a b s o l u t e l y and f o r e v e r e n t r e n c h e d . T h e r e f o r e no term which p r o - h i b i t s members from s e v e r i n g t h e i r s h a r e s i n ' a s s o c i a t i o n ' p r o p e r t y i s i n v i o l a b l e . The members can a t any time c a s t o f f t h e c o n t r a c t u a l f e t t e r s on t h e i r ownership o f ' a s s o c i a t i o n ' f u nds. Thus, i n Re Grant i t s e l f , the members o f the l o c a l P a r t y had v o l u n t a r i l y s u b j e c t e d themselves t o the e x t e r n a l c o n t r o l o f the n a t i o n a l Labour P a r t y by e n t e r i n g i n t o a c o n t r a c t u a l term t o t h a t e f f e c t . They c o u l d j u s t as v o l u n t a r i l y have d i s s o c i a t e d themselves from the n a t i o n a l P a r t y by v a r y i n g t h e terms o f t h e i r membership c o n t r a c t . In sum, i t i s s u b m i t t e d t h a t the ex p r e s s 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 s h o u l d not i n f l u e n c e a c o u r t ' s d e c i s i o n t o use o r not t o use the C o n t r a c t A n a l y s i s as a m a t t e r o f i n t e r p r e t a t i o n . In Re Grant had the c o u r t espoused the C o n t r a c t A n a l y s i s , the bequest would have been v a l i d . I n s t e a d the c o u r t d e c i d e d t h a t the r u l e s p r e c l u d e d such a r e s u l t and h e l d t h a t t h e g i f t was i n t e n d e d t o o p e r a t e as a n o n - c h a r i t a b l e p u r - 33 pose t r u s t , which f a i l e d . In t h i s r e g a r d , Re Grant i s an e x t r e m e l y 34 u n s a t i s f a c t o r y d e c i s i o n - 67 - ( i i i ) Step Three : M i s a p p l i c a t i o n o f Funds The d i s c u s s i o n o f Steps One and Two has demonstrated t h a t the r o l e o f p r o p e r t y 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 C o n t r a c t A n a l y s i s i s completed once the t r a n s f e r o f the donated funds has been e f f e c t e d . The law o f c o n t r a c t then t a k e s o v e r . Thus i f any o f the members u t i l i s e s the funds o t h e r than as s t i p u l a t e d i n the r u l e s o f t h e a s s o c i a t i o n , he commits a b r e a c h o f c o n t r a c t . The donor, not b e i n g a p a r t y t o t h a t c o n t r a c t ( u n l e s s he i s h i m s e l f a member 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 ) , has no remedy a g a i n s t him. Only the o t h e r p a r t i e s t o the a s s o c i a t i o n c o n t r a c t , the members, have a cause 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 o n l y o t h e r p o s s i b i l i t y i s t o r e s o r t t o the law o f r e s t i t u t i o n . I t i s p o s s i b l e t o r e g a r d t h e s i t u a t i o n as b e i n g p a r a l l e l t o the t r a - d i t i o n a l view o f the l e g a l p o s i t i o n o f the g r a n t o r o f a l i c e n c e o v e r l a n d . T r a d i t i o n a l l y , i f the owner i n f e e s i m p l e , f o r example, o f a p l o t o f l a n d , Y, g r a n t e d a l i c e n c e t o a l i c e n s e e , X, t o p l a y c r i c k e t on t h e l a n d on Sundays i n r e t u r n f o r c o n s i d e r a t i o n , the e x i s t e n c e o f the l i c e n c e was m e r e l y a m a t t e r o f c o n t r a c t law. I t d i d not a f f e c t Y's p r o p r i e t a r y r i g h t s over h i s l a n d i n any way. However, i f he v i o l a t e d the terms o f t h e l i c e n c e and p r e v e n t e d X from p l a y i n g c r i c k e t by s e l l i n g the l a n d t o a d e v e l o p e r , X 35 would o n l y have a c o n t r a c t u a l remedy a g a i n s t Y . L i k e w i s e , the remedy o f o t h e r 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 (X) i f one member (Y). absconded w i t h funds donated t o the a s s o c i a t i o n would be t o b r i n g an a c t i o n i n damages f o r breach: o f c o n t r a c t , o r t o a p p l y e i t h e r f o r an i n - j u n c t i o n t o r e s t r a i n t h a t breach, o f c o n t r a c t or f o r an o r d e r o f s p e c i f i c p e r formance. - 68 - 4. Advantages of the Contract Analysis The o v e r r i d i n g advantage of the Contract Analysis i s that the i n t e r - p r e t a t i o n of a g i f t to an unincorporated association as operating 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 of the g i f t . The troublesome requirements of t r u s t s law need not be s a t i s f i e d ; the range of purposes f o r which the intended 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 3 6 as the contractual freedom of i t s members ; the analysis i s f l e x i b l e to 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 of the r e c i p i e n t a s s o c i - a t i o n . The analysis operates to v a l i d a t e both testamentary and intev vivos g i f t s , and donations from both external benefactors and the as s o c i - ation 's own members. Although the analysis can not absolutely guarantee that the intentions 37 of the donor w i l l be f u l f i l l e d , i f . h e chooses h i s association c a r e f u l l y and selects one with a record 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 with a rigorous amending formula, he w i l l improve the chances of h i s funds being u t i l i s e d to benefit the as s o c i a t i o n as a continuing enterprise. However, even the p o t e n t i a l f o r change (within reasonable l i m i t s ) by contractual v a r i a t i o n which the Contract Analysis presents may serve a useful purpose from the point of view of pu b l i c p o l i c y , so that one need not view the major weakness of the analysis as u n q u a l i f i e d l y undesirable. A f t e r a l l , the members of an association, who change i t s rules and objects from time to time, may be s e n s i t i v e to current needs i n society and may therefore per- form a contemporaneously useful s o c i a l function. I t i s not an i n e v i t a b l e r e s u l t of the Contract Analysis that funds w i l l stagnate i n the coffers of associations which have o u t l i v e d t h e i r usefulness or which have anachronistic aims. - 69 - 5. Disadvantages of the Contract Analysis I t i s suggested that the p r i n c i p a l disadvantages of the Contract 38 Analysis are three i n number (i) No Legal Guarantee I f h i s g i f t i s interpreted as taking e f f e c t i n accordance with the Contract Analysis, the donor does not enjoy the b e n e f i t of the type of strong guarantee of performance which characterises g i f t s which operate 39 within the l e g a l framework of a v a l i d t r u s t . In the f i r s t place, he may specify a purpose i n the terms of 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 general purposes f or which the r e c i p i e n t a s s o c i - 40 ation e x i s t s . Thus, i n the example used at the very beginning of t h i s 41 discussion , X may specify that h i s g i f t i s "for the Fairways Golf Club for the purpose of funding competitive tournaments". The Club's rules meanwhile permit the whole range of both s o c i a l and sporting a c t i v i t i e s associated with the game of g o l f . In such a case, even due compliance by a l l members, with the terms of t h e i r association contract may not necessa r i l y promote one sing l e tournament. The s p e c i f i e d purpose has no l e g a l force under the Contract Analysis and i s interpreted as merely s t a t i n g the motive for the donation. In e f f e c t , the donor has to take the asso 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 finds them. In the second place, there i s no" guarantee that even the general purposes s t i p u l a t e d i n the association's c o n s t i t u t i o n w i l l be imple- mented. Damages for breach of contract obtained by the association membership against a delinquent member who misapplied funds would - 70 - p r o b a b l y be nominal i n quantum and t h e r e f o r e o f l i t t l e d e t e r r e n t f o r c e . Furthermore, they would c e r t a i n l y p r o v i d e n e i t h e r the donor nor the a s s o c i - a t i o n i t s e l f w i t h a t r u e remedy f o r the n o n - f u l f i l m e n t o f the terms o f th e g i f t . Even more s e r i o u s , however, i s t h e d i s a d v a n t a g e t h a t , j u s t as t h e two p a r t i e s t o an o r d i n a r y b i p a r t i t e c o n t r a c t can v a r y o r t e r m i n a t e i t by mutual a s s e n t , so a l s o can the members o f an a s s o c i a t i o n v a r y o r t e r m i n a t e t h e i r m u l t i - p a r t i t e c o n t r a c t . T h i s can o c c u r by unanimous agreement o r even by a m a j o r i t y v o t e i f the 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 p r o v i d e .. Brightman,J. r e c o g n i s e d the e x i s t e n c e o f t h i s problem i n Re 4 3 Reehev and s a i d : There would be no l i m i t t o the typ e o f v a r i a t i o n o r t e r m i n a t i o n t o which a l l might a g r e e . There i s no p r i v a t e t r u s t o r t r u s t f o r c h a r i t a b l e purposes o r o t h e r t r u s t t o h i n d e r the p r o c e s s 44. The p r i c e o f a v o i d i n g the c o m p l i c a t i o n s o f t r u s t s law i s t h e l o s s o f i t s d e f i n i n g c h a r a c t e r i s t i c : the guarantee o f performance. Thus i f X's g i f t t o the G o l f C l u b i s c o n s t r u e d as t a k i n g e f f e c t under the C o n t r a c t A n a l y s i s , the funds may w e l l be u t i l i s e d t o f i n a n c e the c o n s t r u c t i o n o f a shopping c e n t r e on the s e v e n t e e n t h and e i g h t e e n t h f a i r w a y s i f t h e members f o r the time b e i n g r e s o l v e t o i n t r o d u c e t h i s as one o f the o b j e c t s f o r which the a s s o c i a t i o n e x i s t s . Furthermore, the members may even d e c i d e t o wind 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 . S i n c e the o n l y l e g a l arrangement i n e x i s t e n c e i s a c o n t r a c t between t h e members, no t h i r d p a r t y , such as t h e donor, c o u l d i n t e r v e n e . H i s g e n e r o s i t y may t h e r e f o r e end up f i n a n c i n g a member's new p a i r o f g o l f shoes f o r use a t a r i v a l g o l f c l u b . 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 can ensure a c o n t i n u i n g b e n e f i t t o the a s s o c i a t i o n from donated.funds t o a c e r t a i n e x t e n t o n l y f o r as l o n g as t h e a s s o c i a t i o n e x i s t s . ( i i ) The Search f o r a Contract The existence of a l e g a l l y enforceable contract between the members of an unincorporated as s o c i a t i o n i s c r u c i a l f o r the purposes of the Contract Analysis. P a r t i c u l a r l y when the association i n question has no written, c o n s t i t u t i o n a l membership document, the Contract Analysis runs i n t o prob- lems. The existence of contractual r i g h t s and obligations uniformly applicable to a l l members has to be implied according to what i s reasonable i n the circumstances and taking into account established p r a c t i c e , the 45 general nature of the association and i t s a c t i v i t i e s . The uncertainty inherent i n t h i s process casts doubt on the a v a i l a b i l i t y of the Contract Analysis i n a l l cases other than those in v o l v i n g established and organised associations whose founding members have formulated written membership terms. In the absence of a written contract of some kind, a court i s l i k e l y to refuse to i n t e r p r e t a g i f t as taking e f f e c t under the Contract Analysis. However, even when a written c o n s t i t u t i o n does e x i s t , i t may be d i f f i c u l t to e s t a b l i s h the creation of a contract every time a member joins an association. Presumably when a member applies f o r admission to an ass o c i - ation, he thereby o f f e r s to be bound by i t s e x i s t i n g rules and t h i s o f f e r i s impliedly accepted by a l l the other 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 to explain the 47 arrangement m the following manner : The contract of as 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 transaction, with o f f e r and acceptance blurred by members j o i n i n g t h e i r society at d i f f e r e n t times, po s s i b l y without even having any knowledge of one another's existence or i d e n t i t y . The problem of explaining exactly how i t i s that a l l members can have attained a m u l t i l a t e r a l contractual accord i s perplexing, but not ins o l u b l e . What i s required i s a recognition that the o f f e r and acceptance i n - 72 - these cases are open-ended. When an association i s formed, there i s implied into each member's contract a standing o f f e r to prospective applicants to j o i n on those terms which those e x i s t i n g members have accepted. P a r t i c u l a r l y i n the case of a large or p h y s i c a l l y decentralised organis- ation, the problems posed i n t h i s context by a large membership, most of whom are unaware of the existence and i d e n t i t y of the others, tempt one to conclude that the existence of the m u l t i - p a r t i t e contract necessary for 48 the successful use of the Contract Analysis i s a f i c t i o n Indeed, some commentators would go even further and would deny the f e a s i b i l i t y of the e n t i r e Contract Analysis because of the problem of i n - venting a l e g a l l y enforceable membership contract. For example, S t o l j a r asserts that the structure of an unincorporated a s s o c i a t i o n consists of 49 merely personal and de facto r e l a t i o n s h i p s : Not j u s t because of the procedural d i f f i c u l t i e s that contract might here cause, or because there would be too many contracts to be recognised, or because the law would refuse to have such contracts s p e c i f i c a l l y performed. The contractual explanation f a i l s on rather more fundamental grounds. For ... the r e a l point about the rules i s that they are designed as i n s t r u c t i o n s or as a ground-plan for the continuous running of the association, not to create p r i v a t e l e g a l r i g h t s . If one were to agree with the above point of view, one would be compelled to conclude that the Contract Analysis can not s a t i s f a c t o r i l y v a l i d a t e g i f t s to unincorporated associations. In response, however, i t may be ob- served that the Contract Analysis at l e a s t presents a workable, though f i c t i t i o u s , l e g a l framework to explain an otherwise inexplicable phen- omenon : the successful donation of funds to unincorporated associations. I t was formulated as a salvaging device and was intended to do no more than to improve an unsatisfactory anomaly i n the law. ( i i i ) F i c t i t i o u s Aspects of the Contract Analysis The problem (discussed above) of inventing a l e g a l l y enforceable contract i s not the only f i c t i t i o u s aspect of the Contract Analysis. Several more are r e a d i l y discoverable, which together s t r i k e at the con- ceptual and p r a c t i c a b l e soundness of the ana 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 the f i r s t place, i f the members together own the property, should they not be personally taxable on the transaction and any income a r i s i n g from i t s investment? Without going into any d e t a i l s of taxation law, i n p r a c t i c e members of an unincorporated a s s o c i a t i o n are not assessed per- sonally on 'association' property. Nevertheless, i t has been suggested i n some recent cases on an association's l i a b i l i t y f o r vates that the 50 members may indeed be assessed personally . However, i t i s possible that such l i a b i l i t y r e s u l t s from some perceived 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 asso c i a t i o n i t s e l f , than from a recognition of the member's ownership of 'association' property. The effectiveness of the Contract Analysis i n achieving the donor's aim of b e n e f i t i n g an association depends to a great extent on an ongoing process whereby current members' i n t e r e s t s i n the property w i l l be trans- ferred i n part or i n f u l l to future members as they j o i n . To be operative such a process normally involves that c e r t a i n f o r m a l i t i e s , required by both, property law and the law of contracts, be complied with. For example i f the members of an unincorporated a s s o c i a t i o n receive donated property as the b e n e f i c i a r i e s of a t r u s t i n t h e i r favour, as explained i n the l a t t e part of the discussion of Step One of the Contract Analysis when the - 74 - current members die or resign from the association and impliedly t r a n s f e r t h e i r i n t e r e s t s i n accordance with the terms of t h e i r contract, a d i s - p o s i t i o n of subsi s t i n g equitable i n t e r e s t s has taken place. Unless such . . . . . . 52 a d i s p o s i t i o n i s made i n writing, statute renders i t void. Is i t not u n r e a l i s t i c to assume that members i n such a s i t u a t i o n i n pr a c t i c e dispose 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 unincorporated associations do hold property. 6. Conclusion One i s compelled to conclude that the Contract Analysis does not r e a l i s t i c a l l y explain the mechanism whereby unincorporated associations a c t u a l l y receive and hold donated property, 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 successful donation of funds to unincorporated associations. As such, i t serves a useful pur- pose, but i t s r o l e must be recognised as being l i m i t e d to that of a salvaging device. I t sets up a framework which apparently succeeds i n achieving a r e s u l t which i s otherwise a l l but impossible i n the current state of the law : the donation of funds to an unincorporated association, with a l i m i t e d assurance that the association i t s e l f w i l l b e n e f i t thereby. However, the success of the analysis i s e n t i r e l y s u p e r f i c i a l . * * * * * * * * * * - 75 - FOOTNOTES : CHAPTER II 1. Supra, pp 33-50. 2. [1972] Ch.526; [1971] 3 W.L.R.321; [1971] 3 A l l E.R.401, hereafter r e f e r r e d to as Re Recher. 3. Supra, pp 33-50. 4. [1971] 3 A l l E.R.401 at 406. 5. [1959] supra, A.C.457; [1959] 2 W.L.R.722; pp 40-46. [1959] 2 A l l E.R.300. Discussed 6. Infra, pp 102-163. 7. Supra, footnote 5 [1959] 2 A l l E.R. 300 at 306. 8. [1962] Ch.832; [1961] 3 W.L.R.999; [1961] 3 A l l E.R.769 at 778. 9. [1971] 3 A l l E.R.401 at 408. 10. Ibid. 11. Infra, pp 123-127, pp 152-158. 12. [1971] 3 A l l E.R.401 at 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 to the present topic because the g i f t took e f f e c t on trust for the purposes of the Corps of Commissioners ; Re Ray 's Will Trust [1936] Ch.520 at 524, a dictum which, was again i r r e l e v a n t because i t deals with g i f t s on t r u s t i n general terms ; Leahy V. Attorney-General for Hew South Wales, .supra, footnote 5 [1959] 2 A l l E.R.300 at 307, which was a discussion of the Absolute G i f t Analysis ; and Neville Estates v. Madden, supra, footnote 8 [1961] 3 A l l E.R. 769 a t 778, i n which Cross,J.'s statements were not only obiter, but were also themselves t o t a l l y unsupported by authority. In sum, none of the alleged a u t h o r i t i e s was d i r e c t l y on point. 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: hereafter r e f e r r e d to as Re Grant. 15. An al t e r n a t i v e view i s that the property i s transferred to the trustees of the association. See further, infra, p 61. 16. Cf. Ford, Unincorporated Non-Profit Associations (Oxford : Clarendon, 1959), pp 5-8 ; Keeler, "Devises and Bequests to Unincorporated Bodies", (.1963-1966) 2 Adelaide L.Rev.336, pp 352-356 ; Morris & Leach, The Rule Against 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, footnote 14 [1977] 1 A l l E.R.33 at 43. 19. See, Re Lipinski, supra, footnote 14 [1977] 1 A l l E.R.33 at 46. 20. Cf. I n s a l l , " G i f t s to Unincorporated Associations", (1977) N.Z.L.J. 489 : "Re L i p i n s k i i s a very important case i n that i t states c l e a r l y and unambiguously for the f i r s t time that there can be a v a l i d t r u s t f o r the purposes of an association", p 495. See also, Gravells, " G i f t s to Unincorporated Associations - Where There's a W i l l There's a Way", (1977) 40 Mod.L.R.231. 21. See also, Green, "The Dissolution of Unincorporated Non-Profit Associations", (1980) 43 Mod.L.R.626, pp 627-629. 22. Discussed, supra, pp 14-15. 23. For further discussion of t h i s topic, see infra, pp 71-72. 24. Such was the arrangement i n Re Recher, supra, footnote 2 ; Re Lipinski, supra, footnote 14 ; and Re Grant, supra, footnote 14. 25. Supra, footnote 8 [1961] 3 A l l E.R.769 at 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 at 79-80. 28. See also, 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 that the concern caused by express r e s t r i c t i o n s i n the rules i s not the rule against p e r p e t u i t i e s , but rather the e x i s - tence of impermissible conditions attached to t i t l e . I t i s not easy to derive such an argument from the cases discussed here, but even i f such an argument were made, the g i f t would nevertheless v a l i d l y take place. In other words, i f an association's rules attached conditions to the members' t i t l e , the conditions i n question would be void. 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 conditions, exactly as already discussed i n Step One. 31. Supra, footnote 14. See also, infra, PP 97-98. 32. Ibid [1979] 3 A l l E.R.359 at 366. 33. Infra, PP 105-131. 34. See also the c r i t i c i s m s voiced i n the following : Green, "'Love's Labours Lost': A Note on Re Grant's W i l l Trusts",'(1980) 43 Mod.L.R. 459 ; Tettenborn, "Legacies and Local Labour P a r t i e s " , (1980) 130 - 77 - N.L.J.532 ; Rickett, "Mr. Justice V i n e l o t t on Unincorporated Associ- ations and G i f t s for Non-Charitable 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 contrary to statute, 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 of trade w i l l not be l e g a l l y enforce- able. But of. on the one hand, the i m p o s s i b i l i t y of s e t t i n g up a trust for a p o l i t i c a l purpose ( i n f r a , p l l 3 ) ; and, on the other hand, the Re Grant case, for example, supra, footnote 14. 37. See, supra, pp 69-70. 38. Since Step One of the Contract Analysis involves the same process as that found i n the Absolute G i f t Analysis (supra,pp^33-50 ), the same factors may operate to rebut the a v a i l a b i l i t y of the Contract Analysis 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 to t h i s approach apply as were voiced i n r e l a t i o n to the Absolute G i f t Analysis (supra, ibid) . 39. Infra, P P 102-174. 40. I t i s assumed here that a court i s nevertheless w i l l i n g to use the Contract Analysis and ignore the possible creation of 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), unreported, Christchurch. (N.Z.) Registry, No.A 211/74, p a r t i e . at 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 that the 'administrative t r u s t ' could be terminated by a change i n the rules which created i t . 45. For example, Abbott V. Sullivan [1952] 1 K.B.189; [1952] 1 A l l E.R. 226 : a purely 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; affirmed sub nom. Clarke v. Dunraven [1897] A.C.59. 47. Green, op.cit. supra, footnote 21, p 629. 48. See also, O'Connor, "Actions against Voluntary Associations and the Legal 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 : Australian National University Press, 1973), p 43. See also, Baxt, "The Dilemma - 78 - of the Unincorporated Association", (1973) 47 A.L.J.305, p 307. 50. For example, see Verrall v. Hackney London Borough Council [1983] 2 W.L.R.202 at 213 ; R. v. Brighton Justices, ex parte Howard [1980] R.A.222 at 225. Discussed, supra, pp 19-21. 51. Supra, pp 58-59. 52. United Kingdom Law of Property Act 1925, 15 & 16 Geo.V, c.20, s . 5 3 ( l ) ( c ) . See also, New Zealand Property Law Amendment Act 1980, No.131, s.2 ; i n Canada, see, for example, B r i t i s h Columbia Statute of Frauds, R.S.B.C.1979, c.393, s.2. - 79 - I I I . THE BURRELL THEORIES OF DONATION 1. Introduction For reasons which w i l l be explained i n due course, i t i s only by d i n t of inference and conjecture that the case which most recently dealt with the t o p i c of donations to unincorporated associations i s of s i g - 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 analysing i t s theories than on the others which are d i r e c t l y and auth- o r i t a t i v e l y relevant 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 decision of the English Court of Appeal, affirming the opinion of V i n e l o t t , J . i n the Chancery D i v i s i o n . Each court discussed the issue of donation of funds for s p e c i f i e d purposes and expounded theories on the mechanisms whereby such donations can be e f f e c t i v e . The respective theories of 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 court used i t s theory to explain the donation of funds s p e c i f i c a l l y to unincorporated associations. Nevertheless, the aim of t h i s chapter i s to evaluate the effectiveness and value of these theories as a l t e r n a t i v e analyses of donations to unincorporated associations. The conclusions reached w i l l be : f i r s t l y , that the theories themselves are dubious; secondly, that they are of l i m i t e d usefulness i n the context of g i f t s to unincorporated associations; and t h i r d l y , that they are neither v i a b l e nor superior a n a l y t i c a l tools to the mechanisms already, and presently to be, discussed. In sum, they do not provide 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 at hand, but to omit discussion of them would nevertheless be to present an incomplete view of the t o p i c . 2. The Burrell case Under the United Kingdom Income and Corporation Taxes Act , "companies" are l i a b l e to pay a corporation tax which i s charged at a higher rate than personal income tax. Subsection 526(5) of the same Act 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 defines "company" as follows : '[Cjompany' means ... any body corporate or unin- corporated association, but does not include a partnership, a l o c a l authority or a l o c a l authority association ... Under t h i s d e f i n i t i o n , the Conservative Party was assessed as an unin- corporated association to corporation tax for the years 1972 to 1976, during which i t had acquired substantial investment income and i n t e r e s t . The Party challenged the assessment and the f i n d i n g that i t was an unin- 4 corporated association The Court of Appeal agreed with V i n e l o t t , J . at f i r s t instance i n holding that the Conservative Party was not an unincorporated association f o r the purposes of the Income and Corporation Taxes Act. Lawton,L.J. • 5 o f f e r e d the following d e f i n i t i o n of an unincorporated association : I t i s against [the above] statutory background :that a meaning has to be given to the words 'unincorporated a s s o c i a t i o n ' . I t i s s u f f i c i e n t l y l i k e a 'company' for i t to be put i n the charging section within the ambit of that word. The i n t e r p r e t a t i o n section makes i t c l e a r that the word 'company' has- a meaning extending beyond a body corporate but not as f a r as- a partnership or l o c a l authority. I infer' that by 'unincorporated association' i n this- context Parliament meant two or more persons bound together for one or more common purposes-, not being business- purposes, by mutual undertakings, each having mutual - 81 - duties and obli g a t i o n s , i n an organisation which has rules which i d e n t i f y i n whom control of i t and i t s funds rests and upon what terms and which can be joined or l e f t at w i l l . The bond of union between the members of an unincorporated association has to be contractual. I t i s important to observe that the court confined i t s opinion on the d e f i n i t i o n of an unincorporated association, and the Conservative Party's compliance or otherwise with that d e f i n i t i o n , to the s p e c i f i c statutory context. The court held - but only f o r the purposes of the taxing statute - that the Conservative Party was not an unincorporated association. I t w i l l be submitted that the Party must nevertheless be an unincorporated association i n the general sense of the term and that the Burrell case demonstrates the existence of two types of unincorporated association : one type that i s s u f f i c i e n t l y close i n structure and operation to a com- pany to be taxed as such under the English Act; another type which en- compasses a l l other unincorporated associations. Both the Court of 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 of the composition of the Conservative Party. In p a r t i c u l a r , Lawton,L.J. examined the following features of the Conservative Party : the i n d i r e c t methods- whereby mem- bership may be attained; the complex contractual l i n k s between the Party's various organs.; the lack of 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 of a s p e c i f i c occasion when the o r i g i n a l a ssociation 6 contract was made which f i r s t brought the Party i n t o existence. In sum : In my judgment, however viable such a body [as the Conservative Party] may be as a p o l i t i c a l move- ment, i t lacks the c h a r a c t e r i s t i c s of an unincorporated association for the purposes of the taxing statutes. In other words, the Conservative Party was not an 'unincorporated a s s o c i - ation' within subsection 526(5) of the Income and Corporation Taxes Act, - 82 - and therefore not a 'company' within that statute's charging section, and the assessment to corporation tax had been made i n erro r . Such was the ratio decidendi of the BUTT ell case and a l l other discussion was purely obiter. 3. The Burrell Theories of Donation Had the Conservative Party been held to be an unincorporated a s s o c i - ation i n the l i m i t e d sense discussed above, the court would have had no d i f f i c u l t y i n explaining how donations are received and property i s held 7 by i t . Brightman,L.J. explained : I f the party i s r i g h t l y described as an unincorporated ass o c i a t i o n with an i d e n t i f i a b l e membership bound together by i d e n t i f i a b l e rules ... no problem a r i s e s . In that event, decided cases say that the contribution takes e f f e c t i n favour of the members of the unin- corporated association known as the Conservative Party as an accretion to the funds which are the subject matter of the contract which such members have made i n t e r se. g In other words, the Contract Analysis would have been r e a d i l y a v a i l a b l e to explain the mechanism and consequences of donation to the Party for Party purposes. The a v a i l a b i l i t y of such a straightforward explanation of the Party's fund-holding was used by the Crown to support i t s argu- ment that i t was an unincorporated association i n the f i r s t place. The Crown argued that there was no other f e a s i b l e explanation of how an organ- i s a t i o n such as the Conservative Party received and owned funds i n p r a c t i c e . By contrast, 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 of Appeal i n the Burrell case managed to come up with other analyses of the l e g a l nature of a donation to the Conservative Party. (i) Irrevocable Mandate - 83 - In the Court of Appeal, Brightman,L.J. propounded the 'irrevocable 9 mandate theory' . He explained that when a donor gives funds to the treasurer of an "organisation" to be applied for the purposes of that organisation, a mandate arrangement is . c r e a t e d which becomes irrevocable when the funds are mixed with the other organisation funds already held by the treasurer. In other words, property i n the funds i s transferred once and for a l l to the treasurer. He i s authorised to use them i n the manner s t i p u l a t e d and "the contributor has no l e g a l r i g h t to require the mixed fund to be unscrambled for his b e n e f i t " As a matter of property law, therefore, i t appears that l e g a l t i t l e i s t r a n s f e r r e d to the r e c i p i e n t treasurer who becomes absolutely e n t i t l e d to the funds. Presumably he would be taxed personally on income from the funds. Presumably, also, he i s free and able from the point of view of property law to transfer 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 of the Absolute G i f t Analysis ^ of g i f t s to unincorporated associations-. As Brightman,L.J. explained, however, h i s theory d i f f e r s s i g n i f i c a n t l y from 12 the Absolute G i f t Analysis, with i t s attendant disadvantages , i n the 13 following respect : [T]he contributor has no r i g h t to demand his con- t r i b u t i o n back, once it'has been mixed with.other money under authority of the contributor ..... This does not mean, however, that a l l contributors lose a l l r i g h t s once t h e i r cheques are cashed, with the absurd r e s u l t that the treasurer or other o f f i c e r s can run o f f with, the mixed fund with impunity. I have no doubt that any contributor has a remedy against the r e c i p i e n t ( i . e . the treasurer, or the o f f i c i a l s - at whose d i r e c t i o n the treasurer acts); to r e s t r a i n or make good a misapplication of the mixed fund except so far as- i t may appear on ordinary accounting p r i n c i p l e s that the p l a i n t i f f ' s own contribution was- spent before the threatened or actual misapplication. In the l a t t e r event the - 84 - mandate given by the contributor w i l l not have been breached. Brightman,L.J. did not explain the nature of the irrevocable mandate. The mandate - which or i g i n a t e d i n the c i v i l law of Rome and Scotland - i s an implied contractual arrangement between the donor and the r e c i p i e n t whereby a species of gratuitous bailment i s created. The contract provides for the t r a n s f e r of the funds so that the transferee can u t i l i s e them for a s t i p u l a t e d purpose. Furthermore, as Jowitt's Dictionary of English Law 14 says : A mandatary [ i . e . the recipient/transferee] incurs three obligations : to do the act which i s the object of the mandate, and with which he i s charged; to bring to i t a l l the care and d i l i g e n c e that i t requires; and to render an account of h i s doings to the man- dator. The remedies against the r e c i p i e n t of the fund for i t s misapplication include an action for damages for breach of contract and an action for money had and received, coupled with an account. No doubt the contributor could apply for an injunction to r e s t r a i n a threatened breach of mandate. I t i s p ossible, however, that an a p p l i c a t i o n for s p e c i f i c performance would be denied, since the essence of a mandate i s a contract for services of a personal nature. The s i m i l a r i t y between the Irrevocable Mandate Theory and the Contract 15 Analysis i s s t r i k i n g . In each case, property i s transferred absolutely but the transferee i s constrained by contractual obligations to deal with the property i n a s p e c i f i e d way. In each case, an action for breach of contract i s the remedy a v a i l a b l e to deter or compensate f o r misapplication. The Irrevocable Mandate Theory therefore s u f f e r s a l l the disadvantages of the Contract Analysis enumerated i n the preceding chapter 1 6 , such as the d i f f i - - 85 - c u l t y of inventing contracts i n c e r t a i n circumstances. However, i t also 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 analyses. In the case of the Contract Analysis, the contract i s implied from the nature of membership of an ass o c i a t i o n and subsists between members : the donor moves out of the p i c t u r e e n t i r e l y . By contrast, the Irrevocable Mandate Theory demands the implication of a contract between the r e c i p i e n t of funds and the donor himself. Brightman, 17 L.J. recognised the unfortunate consequence of t h i s aspect of h i s theory : The only problem which might a r i s e i n p r a c t i c e under the mandate theory would be the case of an attempted bequest to the Central O f f i c e funds, or to the treasurers thereof, or to the [Conservative Party], since no agency could be set up at the moment of death between a tes t a t o r and h i s chosen agent. A discussion of t h i s problem i s outside the scope of t h i s appeal and, although I think that the answer i s not d i f f i c u l t to f i n d , I do not wish to prejudge i t . In other words, the Irrevocable Mandate Theory only provides a ready s o l - ution i n the case of •inter vivos g i f t s to an "organisation" f or i t s purposes. One can only speculate on the answer Brightman,L.J. would have given to the problem of a testamentary donation. Presumably i t would involve the imp l i c a t i o n of a contract with the testator's estate. In response to t h i s , two submissions are made : f i r s t l y , that'.the s o l u t i o n i s hardly s a t i s - factory or r e a l i s t i c , and betrays a somewhat f i c t i t i o u s element of the whole Irrevocable Mandate Theory; secondly, that the suggested s o l u t i o n i s inconsistent with the nature of the mandate arrangement which i s normally personal to the o r i g i n a l contracting p a r t i e s . Indeed, Brightman,L.J. him- s e l f was aware of t h i s l a t t e r f a c t when he pointed out a second drawback of the Irrevocable Mandate Theory. Quite apart from the problem posed by bequests he recognised 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 of inter . ^ 1 8 VVVOS g i f t s : - 86 - A complaining contributor might encounter problems under the law of contract a f t e r a change of the o f f i c e holder to whom h i s mandate was o r i g i n a l l y given. Perhaps only 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 malpractices of h i s successors. Brightman,L.J. nevertheless dismissed the p r a c t i c a l s i g n i f i c a n c e of t h i s problem as a merely "procedural i n t r i c a c y " . Despite the disadvantages of the Irrevocable Mandate Theory, Brightman,L.J. and the other judges of the Court of Appeal who expressed concurrence i n h i s opinion 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 within which the Conservative Party held and adminis- tered i t s donated funds. In t h e i r opinion, when a donor gives money to the Party, an implied contract comes into existence which authorises the donee to take absolute t i t l e to the funds, but d i r e c t s him - on pain of an action for breach, of contract - to use them for the purposes of the Party. ( i i ) Revocable Mandate Throughout the course of i t s decision, the Court of Appeal made no 19 reference to the opinion of V i n e l o t t , J . i n the court below other than to a f f i r m h i s holding that the Conservative Party was not an unincorporated as s o c i a t i o n for the purposes of the Income and Corporation Taxes Act. In espousing the Irrevocable Mandate Theory neither approval nor disapproval was expressed by the appellate court of his discussion of the l e g a l nature of a donation for 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 of the Mandate 20 Theory . He used as the vehicle for his discussion the example of an' explorer who " i n v i t e [ s ] subscriptions to a fund to finance an expedition to explore some unexplored area of the world" . He off e r e d the follow- ing a n alysis as a possible i n t e r p r e t a t i o n of the l e g a l s i t u a t i o n i n such 22 a case : [T]he subscribers would remain the b e n e f i c i a l owners of the money subscribed, the explorer having no more than a revocable mandate'to use them for the stated purpose. In other words, ownership and possession of the funds are separated. Un- l i k e the case of the irrevocable mandate, i t appears that the donor retains ownership of the property and i s therefore presumably taxable on income therefrom u n t i l the funds are spent for the s p e c i f i e d purpose, and t i t l e i s t r a n sferred from the donor to a t h i r d party. Meanwhile the explorer has merely the r i g h t to hold and use the funds under the terms of an implied contract between himself and the owner to that e f f e c t unless and u n t i l the mandate constituted thereby i s revoked. By way of comparison with the Irrevocable Mandate Theory, i t i s pointed out that the p o s i t i o n of the donor i s both more and less favour- able than that of the donor who i s construed as having created an i r - revocable mandate. The advantage to the donor of the revocable over the irrevocable mandate i s that he retains more control over the funds, and can change his mind at any time before the funds are a c t u a l l y used, and revoke the mandate. The disadvantage, however, of h i s retention of ownership i s that he i s s t i l l taxable on income a r i s i n g from, or d i s - p o s i t i o n s of, the property. Otherwise, the l i m i t a t i o n s and drawbacks of t h i s theory as an analysis of the l e g a l framework of donations for speci- f i e d purposes are the same as those suffered by the Court of Appeal's Irrevocable Mandate Theory. Above a l l , i t i s applicable only with d i f f i - c u l t y to donations of a testamentary nature. - 88 - Indeed, as i f i n r e c o g n i t i o n o f the l i m i t e d scope o f h i s t h e o r y , V i n e l o t t , J . d i d n o t d e v e l o p h i s s u g g e s t i o n i n any d e t a i l . He merely mentioned the p o s s i b i l i t y o f a r e v o c a b l e mandate i n p a s s i n g . He then went on t o expound a n o t h e r t h e o r y , o f which a t l e a s t two i n t e r p r e t a t i o n s a r e p o s s i b l e , each o f which w i l l now be d i s c u s s e d i n t u r n . ( i i i ) C o n t r a c t u a l U n d e r t a k i n g The Crown had argued i n the Burrell case t h a t i f the C o n s e r v a t i v e P a r t y d i d n o t r e c e i v e and h o l d d o n a t i o n s 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 under the C o n t r a c t A n a l y s i s , t h e r e were o n l y two o t h e r a n a l y s e s a v a i l a b l e o f the l e g a l mechanism whereby a d o n a t i o n t o t h e P a r t y c o u l d take e f f e c t . In c o u n s e l f o r the Crown's view, either the P a r t y t r e a s u r - 23 e r s h e l d the funds on an i n v a l i d n o n - c h a r i t a b l e purpose t r u s t , or e i t h e r they o r the P a r t y l e a d e r h i m s e l f were the a b s o l u t e owners o f a l l d o n a t i o n s . V i n e l o t t , 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 the o n l y 24 p o s s i b l e 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]he dilemma on which t h i s argument r e s t s i s ... i n my o p i n i o n a f a l s e one. I t i s s i m p l y n o t the case t h a t the l e g a l owner o f p r o p e r t y must always h o l d the 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 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 ... be produced by c o n t r a c t and may p o s s i b l y a r i s e i n o t h e r c i r c u m s t a n c e s . The l a s t s e ntence o f t h i s q u o t a t i o n i s e x t r e m e l y troublesome and, as 25 mentioned above , no a s s i s t a n c e can be d e r i v e d from the C o u r t o f A p p e a l ' s o p i n i o n which makes no r e f e r e n c e whatever t o the r e a s o n i n g o f V i n e l o t t , J . One 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 words l e a d s t o a r e s u l t which, does n o t d i f f e r s u b s t a n t i a l l y from Brightman,L.J.'s I r r e v o c a b l e Mandate - 89 - 26 Theory, discussed above . That i s to say, i t i s possible to read V i n e l o t t , J . ' s judgment as propounding a theory whereby, although no mandate as such i s created, the donor of property and i t s r e c i p i e n t are bound co n t r a c t u a l l y . As a matter of property law, the donee i s absolute owner of the t r a n s f e r r e d property but he i s r e s t r i c t e d by the terms of an implied contract with 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 that funds are misapplied, the donor has retained no proprietary i n t e r e s t i n them which he can assert against the donee : his remedy sounds s o l e l y i n contract. This Contractual Undertaking 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 theory i s supported by two f a c t o r s . In the f i r s t place, some of the terminology he uses i n explaining h i s theory i s contractual i n nature. For example, 2 7 he says : I t appears to me that i f someone i n v i t e s subscrip- tions on the representation that he w i l l use the fund subscribed for a p a r t i c u l a r purpose, he under- takes to use the fund f o r that purpose and no other and to keep the subscribed fund and any accretions to i t (including any income earned by investing the fund pending i t s a p p l i c a t i o n i n pursuance of the stated purpose) separate from h i s own moneys. As w i l l be mentioned below, he also speaks of the "remedy of s p e c i f i c 2 8 performance", mentions "consideration f o r [a] contractual undertaking" 29 and "the implication of contractual undertakings" A second reason for reading V i n e l o t t , J . ' s theory donation as i n - v o l v i n g a contractual r e l a t i o n s h i p between donor and donee i s that i t em- bodies a v i a b l e , recognised and undisputed l e g a l concept. The same can not be s a i d for 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 - Viable as the Contractual Undertaking Theory may be as a matter of law, however, i t i s nevertheless highly unsatisfactory as a general s o l u t i o n to the problem of donations of funds for s p e c i f i e d purposes. To begin with, i t cannot be denied that i t s u f f e r s the p r i n c i p a l drawback already observed of the two Mandate Theories. In the words of V i n e l o t t , J . [l]n the case of a testamentary g i f t there i s no room for the i m p l i c a t i o n of any contract between the t e s t a t o r and the persons who are to receive the bequest. As mentioned above, i t i s conceivable, but u n l i k e l y , that a contract could be implied between the donor's estate and the donee. Otherwise, the theory i s a v a i l a b l e only to explain inter vivos donations for s p e c i f i e d purposes. Another aspect of the same problem i s that the donor and donee may be one and the same person. For example, i f the member of an unin- corporated a s s o c i a t i o n i s also i t s treasurer who receives funds on the association's behalf, under the Contractual Undertaking Theory that member's subscription must become impressed with a contract between the member as donor and himself as donee. A second problem i s that of discovering the existence of implied con t r a c t s between the p a r t i e s to a donation. In p a r t i c u l a r , i n order to be l e g a l l y enforceable, a contract must have been entered into with the inten tion of entering 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 struck by the a r t i f i c i a l i t y of interposing a contract between gratuitous donors and donees. The t h i r d problem stems from the f a c t that the donor gives up a l l proprietary 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 to apply them for the s p e c i f i e d purpose i n accordance with the terms of the implied - 91 - contract, the donor has no guarantee that h i s true intentions w i l l be f u l f i l l e d . Damages for breach of contract might be recoverable i n such a case although the donor may be awarded nominal damages only. However, the remedies of s p e c i f i c performance, compelling due a p p l i c a t i o n of funds i n accordance with the contract terms, and injunction, preventing t h e i r misapplication, are also a v a i l a b l e i n l i m i t e d circumstances, 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 well defined, and i f the order would not necessitate constant and possibly i n e f f e c t i v e supervision by the court, the court should not make an order d i r e c t i n g [the r e c i p i e n t of donated funds] to apply the subscribed fund and any accretions to i t for the stated purpose. V i n e l o t t , J . expressed the opinion that h i s example of an explorer who receives subscriptions to finance an expedition would not s a t i s f y 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 subscribers 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]part from the possible remedy of s p e c i f i c per- formance I can see no reason why the court should not r e s t r a i n the r e c i p i e n t of such a fund from applying i t (or any accretions to i t such as i n - come of investments made with i t ) otherwise than i n pursuance of the stated purpose. Again, however, there 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 discretionary remedy. The r e c i p i e n t ' s ownership of the funds i s therefore hedged about by contractual l i m i t a t i o n s of l i m i t e d effectiveness i n guaranteeing that the funds reach the destination intended by t h e i r donor. (iv) Suspended B e n e f i c i a l Ownership I t i s evident from the c r i t i c i s m s i t e r a t e d above that V i n e l o t t , J . ' s - 92 - theory might become more acceptable i f i t can operate without the necessity of implying a contract between donor and donee. Each of the three problems with the Contractual Undertaking Theory i s traceable to the f a c t that i t i s operating within the framework of contract law rather than property law. An analysis which put more emphasis on the l a t t e r might be more successful i n achieving 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 of V i n e l o t t , J . 1 s judg- ment which attempts to do exactly that. The c r u c i a l sentence i n V i n e l o t t , J . ' s exposition of h i s theory ran 33 as follows : [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 of property which i s not held by trustees 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 also be produced by contract 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 of V i n e l o t t , J . ' s meaning offered above emphasised the contractual method of impeding a donee's ownership of donated funds. The second i n t e r p r e t a t i o n , on the other hand, emphasises the property concepts i n the above-quoted sentence. I t may be r e c a l l e d that V i n e l o t t , J . was faced with the argument that b e n e f i c i a l ownership of the Conservative Party funds must be i n the r e c i p i e n t of those funds e i t h e r as a trustee or as absolute owner. The Contractual Undertaking i n t e r p r e t a t i o n merely modified the l a t t e r a l t e r n a t i v e by the superimposition of contractual r e s t r a i n t s . The second i n t e r p r e t a t i o n , however, o f f e r s a true a l t e r - native : the notion of suspended b e n e f i c i a l ownership. In other words, the donee of the funds holds bare l e g a l t i t l e and i s denied b e n e f i c i a l ownership of them; b e n e f i c i a l ownership, being vested i n no-one at a l l , apparently hovers u n t i l the funds are duly u t i l i s e d i n accordance with 34 the s p e c i f i e d purpose. In the meantime, the following s i t u a t i o n obtains - 93 - [T]he r e c i p i e n t of the fund i s c l e a r l y not the b e n e f i c i a l owner of i t and ... the income of i t i s not part of his t o t a l income for tax purposes. Equally, whilst the purpose remains unperformed and capable of performance the subscribers are c l e a r l y not the b e n e f i c i a l owners of the fund or of the income ( i f any) derived from i t . I f the stated purpose proves impossible to achieve or i f there i s any surplus 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 return the fund and any accretions thereto to the subscribers i n proportion to 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 that a proportion of the fund representing subscriptions made anonymously or i n circumstances i n which the subscribers receive some ben e f i t (for instance, by subscription to a whist drive or r a f f l e ) might then devolve as bona vacantia. 35 One commentator has argued that the "implied o b l i g a t i o n " , f a r from being contractual 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 of f e r e d above), i s "rather a type of general equitable o b l i g a t i o n im- posed as a remedy to deal with an otherwise d i f f i c u l t i f not impossible s i t u a t i o n " . According to t h i s view, the donee of funds i s under a "general equitable o b l i g a t i o n " to deal with them as directed, which i s owed to the donors i f they are a l i v e and i d e n t i f i a b l e , to t h e i r estates i f they are dead, and to the Crown i f the donors are i d e n t i f i a b l e . Further advantages argued for t h i s theory of donation by way of suspended b e n e f i c i a l ownership coupled with an equitable o b l i g a t i o n are said to be that there i s no l i m i t to the duration of the dedication of property for the s p e c i f i e d purposes and that the scope of purposes which can be . . 37 benefited thereby i s unlimited Ideal as the analysis and i t s consequences may sound, the objections to t h i s 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 theory are many. In the f i r s t place, the notion of suspended b e n e f i c i a l ownership at the l e a s t i s un- supported, or, more l i k e l y , p r o h i b i t e d by authority. The precedent quoted - 94 - 38 by V i n e l o t t , J . to support his concept were cases on the meaning of 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 statutory context and provide l i t t l e backing for h i s cause. Furthermore, the whole concept of 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 to have overlooked. This i s that there can never be suspended b e n e f i c i a l ownership : absolute t i t l e i s e i t h e r e f f e c t i v e l y transferred, or any b e n e f i c i a l i n t e r e s t which comes in t o existence reverts back to the purported transferor. The most c l e a r authority for t h i s proposition can be found i n the House of Lords' decision i n Vandervell V. Inland Revenue 39 Commtsstoners where Lord Reid explained the basis of the r e s u l t i n g t r u s t 40 doctrine i n the following manner : The basis of the rule i s , I think, that the bene- f i c i a l i n t e r e s t must belong to or be held for somebody : so, i f i t was not to belong to the donee or be held by him i n t r u s t f o r somebody, i t must remain with the donor. 41 And Lord Wilberforce emphasised that : The equitable, or 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 theory of 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 analysis of the l e g a l framework within which a donation such as that for the purposes of the Conservative Party can take e f f e c t cuts d i r e c t l y across the grain of h i t h e r t o accepted conceptual a n a l y s i s . A second objection to 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 theory of donation i s recognised by i t s main supporter as being not merely i t s "lack of pedigree" as discussed above, but also " i t s apparent 42 width" . The general, equitable o b l i g a t i o n has no foundation i n auth- o r i t y and i s apparently of a purely remedial nature, to be implied when- ever the equity of the s i t u a t i o n demands i t . Far from being an advantage - 95 - 43 of the analysis , i t i s submitted that i t introduces 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 to an area of the law that already requires c l a r i f i c a t i o n . I t i s suggested' by way of conclusion that 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 of 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 . 1 s discussion of donations for s p e c i f i e d purposes. Further- more, i t may be r e c a l l e d that the discussion was purely obiter, was i n no way recognised as of value by the Court of Appeal and apparently has not a t t r a c t e d attention from any subsequent t r i b u n a l . 4. The Burrell Case and G i f t s to Unincorporated Associations The object of the discussion thus f a r has been to explain the four theories of donation o f f e r e d d i r e c t l y and by way of inference from the Burrell l i t i g a t i o n , and to demonstrate t h e i r respective weaknesses and l i m i t a t i o n s . Each of the four analyses can explain the l e g a l framework of a successful donation only i n l i m i t e d circumstances, but discussion of them has not been t o t a l l y i n vain. Provided that i t i s recognised that none of the theories i s the i d e a l explanation of all g i f t s for s p e c i f i e d purposes, the contribution of the Burrell l i t i g a t i o n to the law of 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 conceptual frameworks within which the courts'had h i t h e r t o worked. I t may be r e c a l l e d that the discussion of the various theories i n the Burrelt case was predicated on a f i n d i n g that the Conservative Party was not an unincorporated association. On t h i s one might base an argument - 96 - that the theories are inapplicable to explain the l e g a l basis of g i f t s for the purposes of such associations. However, i t i s suggested that three propositions are a v a i l a b l e to refute such an argument and show that the theories are a v a i l a b l e to explain not only donations i n general, but also g i f t s s p e c i f i c a l l y f or the purposes of unincorporated associations. In appropriate (though q u a l i f i e d ) circumstances, one or other of them can explain and therefore v a l i d a t e a g i f t for an unincorporated association, where other analyses, such as the Contract Analysis or the Absolute G i f t Analysis, have f a i l e d . 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 being u t i l i s e d i n the Burrell l i t i g a t i o n was s p e c i a l i s e d . I t was r e s t r i c t e d to the s p e c i f i c context of 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 consideration. Thus, i n the Burrell cases, i t was decided that, as a matter of statute law, the Conservative Party was not an unincorporated association. I t does not follow, however, that the Party i s not such an a s s o c i a t i o n i n other l e g a l contexts. Since there i s no such general l e g a l e n t i t y as an unincorporated association, the issue of whether or 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 facts alone. Looking at the Conservative Party i n t h i s manner, how else can i t s f a c t u a l existence be explained i f not as an unincorporated association? Secondly, the theories discussed above are i n no way l i m i t e d by conceptual necessity to the s i t u a t i o n of a g i f t by one i n d i v i d u a l to another for abstract purposes. Each analysis i s equally applicable to the s i t u a t i o n where a donor gives funds to an association f o r i t s purposes. As i n a l l the other analyses discussed 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 of the funds. I t must there- fore be decided as a matter of construction and i n t e r p r e t a t i o n of the g i f t and i t s circumstances whether the intended donees are the association's o f f i c e r s or i t s members. Once t h i s has been resolved, the p a r t i c u l a r theory selected to explain the mechanism of donation operates exactly i n the same manner as f o r a g i f t to an i n d i v i d u a l . Thus, the Irrevocable Mandate Theory, f o r example, can be extended to the case of unincorporated a s s o c i - ations i n the general sense of the word. Indeed, Brightman,L.J. i n the Court of Appeal talked i n terms of a g i f t to an "organisation" 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 expressly contemplated the a p p l i - cation of h i s theory (however interpreted) to g i f t s to unincorporated associations, although he recognised that i t could only succeed i f the g i f t took e f f e c t inter vivos. In the case of a testamentary g i f t , r esort would have to be had, i n his opinion, to the analyses discussed i n the preceding 45 chapters : A testamentary g i f t to a named society which i s not an incorporated body must f a i l unless i t can be con- strued as a g i f t to the members of an unincorporated association e i t h e r as j o i n t tenants [Absolute G i f t Analysis] or as an accretion to the funds of the association to be applied i n accordance with i t s rules (commonly with a view to the furtherance of i t s objects) [Contract Analysis] . But i n the case of a testamentary g i f t there i s no room for the i m p l i c a t i o n of any contract between the tes- t a t o r and the persons who are to receive the bequest. In the case of an i n t e r vivos subscription the i n - tention of the subscriber can be given e f f e c t by the i m p l i c a t i o n of contractual undertakings of the kind I have described. Indeed V l n e l o t t , J . r e t r o a c t i v e l y explained a statement he made concerning 46 inter vivos.gifts i n the e a r l i e r case of Re Grant's Will Trusts , where a bequest to a constituency Labour Party f a i l e d , on the basis of - 98 - his Contractual Undertaking Theory. One commentator has even extracted the following passage from Re Grant as a statement of V i n e l o t t , J . ' s theory, as applied to an unincorporated association, " i n i t s embryonic form" : [sjubscriptions by members of the Chertsey and Walton CLP must be taken as made on terms that they w i l l be applied by the general committee i n accordance with the rules for the time being, i n c l u d i n g any modifications imposed by the annual party conference or the NEC. V i n e l o t t , J . then went on to state that the funds would revert to the sub- sc 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 of the party, and i t was t h i s statement which he r e t r o a c t i v e l y amended i n the Burrell case to incorporate h i s new theory. Of course, i t i s also possible to read the above quotation as merely r e i t e r a t i n g the operation of the Contract Analysis which V i n e l o t t , J . had j u s t been discussing. In sum, one can s a f e l y conclude that each of the Burrell theories of donation i s applicable i n the context of a g i f t for the purposes of an unin- corporated a s s o c i a t i o n . However, i f a court chose (as a matter of con- s t r u c t i o n of the g i f t and i t s relevant surrounding circumstances) to es- pouse e i t h e r the Irrevocable Mandate Theory, or the Revocable Mandate Theory, or the Implied Contractual Undertaking 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 of an inter vivos donation. In each case, a contract would be implied between the donor and e i t h e r an o f f i c e r (or officers.) or members of the a s s o c i a t i o n . One of the terms of t h i s contract would be a promise on the part of the donee or donees to u t i l i s e the donated funds for a s t i p u l a t e d purpose. In the absence of express l i m i t a t i o n s i n the terms of the g i f t , the implied s t i p u l a t e d pur- pose would be the general objects of the association. Testamentary g i f t s , - 99 - on the other hand, would f a i l . Furthermore, even i n the case of inter vivos g i f t s , the donor's guarantee that 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 personal contractual remedies. Proprietary remedies against the funds themselves would not be a v a i l a b l e . Should a court choose to espouse the Suspended B e n e f i c i a l Ownership Theory, i t i s submitted that a g i f t for an unincorporated association would take e f f e c t i n the following manner. Factors such as the wording of the g i f t and the structure of the association would d i c t a t e whether members or representative o f f i c e r s of the ass o c i a t i o n were the actual donees of the donated funds. They would hold bare l e g a l t i t l e to them and would be under a general equitable o b l i g a t i o n to u t i l i s e them i n the s p e c i f i e d manner. In case of misapplication, presumably the donor or h i s estate would have locus standi to invoke the court's remedial j u r i s d i c t i o n over the matter. I t has been suggested, however, that any a p p l i c a t i o n of the theory's proposed framework for g i f t s f o r s p e c i f i e d purposes - whether to donations i n general, or to those for unincorporated associations i n p a r t i c u l a r - would be l e g a l l y unacceptable. * * * * * * * * * * - 100 - FOOTNOTES : CHAPTER III 1. [1982] 1 w.L.R.522; [1982] 2 A l l E.R.I, affirming 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 : hereafter r e f e r r e d to as "the Burrell case". See, Rickett, "Mr.Justice V i n e l o t t on Unincorporated Associations and G i f t s f o r Non-Charitable Purposes", (1981) 12 V.U.W.L.R.I. 2. 1970, c.10, s.238 (1) . 3. I t a l i c s added. 4. Both courts of f e r e d d e f i n i t i o n s and l i s t s of c h a r a c t e r i s t i c s of unin- corporated associations. Interesting as these are and i n s t r u c t i v e as they might be to analyse, t h i s portion of the case i s dealt with i n b r i e f outline, only. The reason for t h i s apparent omission i s that t h i s thesis i s written throughout on the hypothesis that an unincorporated 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 at 525. 6. Ibid at 527. 7. Ibid at 529. 8. Supra, pp 51-78. 9. [ 1 9 8 2 ] 1 W.L.R.522 at 529. 10. Ibid. 11. Supra, pp 33-50. 12. Supra, pp 46-47. 13. [1982] 1 W.L.R.522 at 529. 14. Jowitt & Walsh., Jowitt's Dictionary of English 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 at 530. 18. Ibid. 19. Supra, footnote 1. 20. See also, Gray, " G i f t s f o r a Non-Charitable Purpose", (1901-1902) 15 Harvard.L.R.509, p 525 ; Lloyd, The Law of Unincorporated Associations (London : Sweet & Maxwell, 1938), pp 173-174. - 101 - 21. [1980] 3 A l l E.R.42 a t 62. 22. Ibid. 23. Infra, pp 105-131. 24. [1980] 3 A l l E.R.42 a t 61. 25. Supra, p 86. 26. Supra, pp 83-86. 27. [1980] 3 A l l E.R.42 a t 62. I t a l i c s 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. I t a l i c s added. 35. . R i c k e t t , op.cit.supra, f o o t n o t e 1, pp 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 Tax.cas.112; and 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. R i c k e t t , op.cit.supra, f o o t n o t e 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 , "Purpose .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. GIFTS TO UNINCORPORATED ASSOCIATIONS ON TRUST In many i n s t a n c e s , the t e r m i n o l o g y used by a donor who wishes t o make 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 w i l l e x p r e s s l y c r e a t e a t r u s t under which he i n t e n d s h i s d o n a t i o n t o take e f f e c t . The major a l t e r n a t i v e s which he may attempt a r e as f o l l o w s : "on t r u s t f o r the W A s s o c i a t i o n " ; "on t r u s t f o r the purposes o f t h e X A s s o c i a t i o n " ; " o n t r u s t f o r the p r e s e n t 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 the p r e s e n t and f u t u r e members o f the Z A s s o c i a t i o n " . However, the t e r m i n o l o g y used i s never con- c l u s i v e and, j u s t as the 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 f a v o u r 2 3 o f t h e A b s o l u t e G i f t A n a l y s i s o r the C o n t r a c t A n a l y s i s , so may a su p e r - f i c i a l l y a b s o l u t e g i f t be i n t e r p r e t e d as imposing a t r u s t . I t i s a l l a q u e s t i o n 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 f a c t o r s , i n c l u d i n g the c i r c u m s t a n c e s s u r r o u n d i n g t h e g i f t and the wording o f t h e remainder o f the deed o r w i l l , i f any, i n an attempt t o a c h i e v e the p e r c e i v e d i n - t e n t i o n s o f the donor. The f a c t t h a t the donor e v i d e n t l y aimed t o d e d i c a t e the p r o p e r t y s u b j e c t t o a l e g a l , and n o t merely moral, o b l i g a t i o n t o the p u r s u i t o f t h e e x p r e s s e d purpose i s a weighty c o n s i d e r a t i o n i n f a v o u r o f i m p l y i n g a t r u s t . From the 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 b e i n g a n a l y s e d as o p e r a t i n g w i t h i n t h e framework o f a v a l i d t r u s t a r e s u b s t a n t i a l . F i r s t l y , the t r u s t e e s a r e under a l e g a l o b l i g a t i o n t o d i v e r t t h e funds as d i r e c t e d . In t h i s manner the donor r e c e i v e s a guarantee t h a t h i s 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 the funds i s not a t the whim o f p e r s o n s under a mer e l y moral o b l i g a t i o n t o d e a l w i t h them i n a c e r t a i n way; nor s u b j e c t t o the p o s s i b i l i t y o f b e i n g r e d i r e c t e d i n a c c o r d - ance w i t h v a r i e d c o n t r a c t u a l o b l i g a t i o n s . Secondly, from t h e t a x p o i n t o f - 103 - view, the donor divests himself of a l l ownership of the funds while r e t a i n i n g some control, v i a the terms of the t r u s t , over t h e i r u t i l i s a t i o n In order to enjoy these advantages, however, the donor's attempts to create a v a l i d t r u s t must of course be successful. I t i s the theme of t h i chapter that, i n the current state of the law, the donation of funds to an unincorporated association subject to a v a l i d t r u s t arrangement i s no easy task. Three requirements, 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 objects of the t r u s t must be defined with certainty; ( i i ) The t r u s t must not i n f r i n g e the rule against p e r p e t u i t i e s ; and ( i i i ) The t r u s t must be enforceable. The discussion which follows deals with, three major sub-categories of g i f t on t r u s t f o r an unincorporated association, each of which has to s a t i s f y a l l three of the above requirements i n order to be v a l i d . The f i r s t i s the non-charitable purpose trust which, i f successful, would most nearly achieve the donor's true aim of guaranteeing that the association i t s e l f (not i t s members) derives a continuing benefit from the g i f t . As the law stands at present, 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 not 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 trustees of the terms of the t r u s t . The emphasis on the 'purpose' aspect of 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 of g i f t on t r u s t therefore s h i f t s i t s em- phasis s l i g h t l y away from the 'purpose' aspect of the t r u s t i n an attempt - 104 - to s a t i s f y the t h i r d r e q u i r e m e n t . I f the t r u s t i s a non-abstract purpose trust, i n t h a t 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 d e r i v e b e n e f i t from the g i f t , i t can succeed. I t must, o f c o u r s e , s a t i s f y the o t h e r two r e q u i r e m e n t s a l s o b e f o r e s u c c e s s i s a s s u r e d , and i t i s o n l y i n l i m i t e d f a c t s i t u a t i o n s t h a t the s l i g h t s h i f t i n emphasis w i l l be s u f f i c i e n t . The t h i r d s u b - c a t e g o r y r e p r e s e n t s a t o t a l de-emphasis on the 'purpose' a s p e c t o f th e g i f t . I t attempts i n s t e a d t o c o n f e r a c o n t i n u i n g b e n e f i t on the a s s o c i a t i o n by g i v i n g the fund to i t s present and future members on trust. A l t h o u g h t h i s method r e a d i l y s a t i s f i e s the t h i r d r e q u i r e m e n t o f e n f o r c e a b i l i t y o f t h e t r u s t , i t causes problems 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 ( r e q u i r e m e n t ( i l ) ) and i s r a r e l y s u c c e s s f u l . Above a l l , i t does not guarantee t o the donor t h a t the a s s o c i a t i o n ' s purpose w i l l be f u r t h e r e d . I t w i l l be seen t h a t the law on 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 a s s o c i a t i o n s i s such t h a t l e g a l v a l i d i t y can o n l y be bought a t the p r i c e o f s a c r i f i c i n g t h e donor's t r u e i n t e n t i o n s . The d i s c u s s i o n w i l l p r o c e e d as f o l l o w s : ( i ) . The case o f the i n v a l i d n o n - c h a r i t a b l e pure purpose t r u s t w i l l be a n a l y s e d f i r s t . The o r i g i n s o f the ' b e n e f i c i a r y p r i n c i p l e ' , which d i c t a t e s t h a t purpose t r u s t s must f a i l f o r l a c k o f e n f o r c e a b i l i t y , w i l l be sought. The h i s t o r i c a l , and p r e s e n t , reasons f o r the 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 u r poses 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 i l l be c r i t i c a l l y s e t o u t . ( i i ) Next, the n o t i o n o f t h e v a l i d n o n - a b s t r a c t purpose t r u s t w i l l be i n v e s t i g a t e d . I t s l i m i t e d and as y e t u n c e r t a i n a b i l i t y t o f a c i l i t a t e the d o n a t i o n 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 w i l l be d i s c u s s e d . ( i i i ) F i n a l l y , the p o s s i b i l i t y o f making d o n a t i o n s on t r u s t t o an a s s o c i - - 105 - ation's present and future members (in the hope that t h i s may further the association's purposes) w i l l be explored. Since the major obstacle to the v a l i d i t y of such g i f t s i s the rule against p e r p e t u i t i e s , some suggestions w i l l be made whereby the obstacles may be overcome. The aim of t h i s chapter i n pursuing the above l i n e of argument i s two-fold. In the f i r s t place, i t sets out a c r i t i c a l analysis of the current law on the subject of g i f t s on t r u s t for unincorporated associations. Secondly, and more importantly, i t aims to demonstrate how unsatisfactory i s the present state of a f f a i r s i n t h i s area of the law. A. Pure Purpose Trusts 1. Introduction A makes a bequest on t r u s t to further the aims and purposes of the Sportstown Rugby F o o t b a l l Club. The Club i s an unincorporated association dedicated to the promotion and organisation of the town's rugy team and the p r o v i s i o n of f a c i l i t i e s , both a t h l e t i c and s o c i a l , for the team and i t s friends and supporters. A l t e r n a t i v e l y , A makes a bequest "to the Sportstown R.F.C." simpXisCitev and, i n the circumstances, the only reasonable construc- t i o n which a court would give of the g i f t would be one on t r u s t i n the above terms. For example, the number of members i n the association may, i n the opinion of the court, render any other construction, 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 procure a guarantee that the f r u i t s of h i s generosity w i l l be enjoyed by the association i t s e l f , as an e n t i t y , on a long-term basi s . In order to f u l f i l t h i s i n t e n t i o n , he has selected as the mechanism - 106 - whereby h i s donation w i l l take e f f e c t the creation of a purpose t r u s t i n favour of the association. 5 In the present state of the law on the subject , since the a c t i - v i t i e s of the association and therefore the nature of the purpose i t s e l f are not char i t a b l e , h i s in t e n t i o n to bring into being a non-charitable purpose t r u s t w i l l be fr u s t r a t e d . :This i s because there i s i n t r u s t s law a p r i n c i p l e which has been re f e r r e d to recently as the 'beneficiary p r i n c i p l e ' 6 . According to t h i s p r i n c i p l e , a t r u s t for non-charitable purposes i s void because a t r u s t must be f o r the benefit of 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 exercise r i g h t s of control over the trustees. This p r i n c i p l e has serious repercussions i n the area of unincorporated associations. Such an association, not being a l e g a l e n t i t y , lacks the capacity i t s e l f to be the ben e f i c i a r y of the t r u s t and the t r u s t i s construed as one for the purposes of the association, which therefore lacks 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 for Amnesty International (an unincorporated association) f a i l e d recently because of 7 the 'beneficiary p r i n c i p l e 1 . S i m i l a r l y , A's hypothetical bequest to the Sportstown R.F.C. would f a i l . In t h i s section i t w i l l be shown that, u n t i l 1952, there was no support i n the cases f o r the 'beneficiary p r i n c i p l e 1 , and that i f t r u s t s f o r non-charitable purposes were held void i t was e i t h e r because the objects, of the t r u s t were uncertain or because the t r u s t was of unlimited duration and therefore i n v a l i d as creating a perpetuity. - 107 - 2. Before 1952 : The Requirement of Certainty and the Origins of the 'Beneficiary P r i n c i p l e ' (i) Movice v. The Bishop of Durham 3 The case of Movice V. The Bishop of Durham i s taken as the s t a r t i n g point for t h i s discussion. In that case, a bequest of the residue of the personal estate of the t e s t a t r i x was i n terms of a t r u s t f or "such objects of benevolence and l i b e r a l i t y as the Bishop of Durham [the trustee] i n h i s own d i s c r e t i o n s h a l l most approve of". The next-of-kin of the t e s t a t r i x applied to have the t r u s t declared void on the ground that i t was not charitable and was so vague and i n d e f i n i t e that i t f a i l e d f o r uncertainty. They succeeded. The Master of the R o l l s , S i r William Grant, focussed his attention on the question whether the bequest created a v a l i d t r u s t for charitable objects. I f so, any uncertainty of expression could be resolved using the administ- r a t i v e machinery set up for the purpose by the State i n recognition of the 9 value of charitable g i v i n g . I f not, the non-charitable t r u s t , to which the same leniency would not be shown, had to f a i l for uncertainty. The reason for the requirement of c e r t a i n t y i n such a case was explained i n the following terms : That i t i s a t r u s t , unless i t be of 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 exercise of which t h i s Court w i l l not assume a control; f o r an uncontrollable power of d i s p o s i t i o n would be owner- ship, and not t r u s t . I f there be a c l e a r t r u s t , but for uncertain objects, the property that i s the subject of the t r u s t , i s undisposed of, and the benefit of such t r u s t must r e s u l t to those, to whom the law gives the ownership i n default - 108 - of d i s p o s i t i o n by the former owner. But t h i s doctrine does not hold good with regard to t r u s t s for c h a r i t y . Every other 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 Court can decree performance. Fundamental to the t r u s t arrangement i s the requirement that a t r u s t be subject to the control of the courts. The trustee i s l e g a l owner of the property and, unless restrained and regulated i n h i s dealings with i t , he might d i v e r t i t to h i s own use or f a i l to perform altogether. The obligations imposed upon him by the terms of the t r u s t might be ignored. Therefore equity w i l l not permit a t r u s t to e x i s t unless the courts can prevent such non-performance. The courts, however, must first know the nature of the t r u s t o bligations that have been created. I f they are not expressed with c l a r i t y and certainty, control becomes impossible : hence, the requirement of ce r t a i n t y of objects ^ . A s i m i l a r analysis was offe r e d by the Lord Chancellor, Lord Eldon, 12 who affirmed the decision of S i r William Grant i n t h i s case : As i t i s a maxim, that the execution of a t r u s t s h a l l be under the controul of the Court, i t must be of such a nature, that i t can be under that controul; so that the administration of i t can be reviewed by the Court; or, i f the trustee dies, the Court i t s e l f can execute the t r u s t : a tr u s t therefore, which, i n case of maladministration could be reformed; and a due administration directed; and then, unless the subject and the objects can be ascertained, upon p r i n c i p l e s , f a m i l i a r i n other cases, i t must be decided, that the Court can neither reform maladministration, nor d i r e c t a due administration. In t h i s instance, "objects of benevolence and l i b e r a l i t y " was an ex- tremely vague concept. No matter how the trustee applied the funds, no court which attempted to control h i s administration of the t r u s t would be able to say with conviction whether the a p p l i c a t i o n f e l l within or without the terms of the t r u s t . Control would not be possi b l e . The - 109 - tr u s t therefore f a i l e d . I t i s important to observe that no objection was voiced to the f a c t that the t r u s t was a non-charitable purpose t r u s t per se and had no bene- f i c i a r i e s . Uncertainty was the only issue once the t r u s t ' s non-charitable nature had been asserted. Neither court commented on the lack of human 13 b e n e f i c i a r i e s . No 'beneficiary p r i n c i p l e ' was invoked ( i i ) Bowman v. The Secular Society The next point i n t h i s h i s t o r i c a l review i s the case of Bowman v. The 14 Secular Society . At the outset, i t i s submitted that the case i n f a c t had very l i t t l e to do with t r u s t s law. Nevertheless, i t cannot be omitted from discussion since dicta from i t are often c i t e d as alleged authority for 15 the 'beneficiary p r i n c i p l e ' , the o r i g i n s of which are here being sought In Bowman V. The Secular Society, the te s t a t o r made a bequest of hi s residuary estate to and for the purposes of the Secular Society, which was not an unincorporated association, but a registered company l i m i t e d by guarantee under the Companies Acts. The next-of-kin of the te s t a t o r d i s - puted the v a l i d i t y of t h i s g i f t on the ground that the society's objects were unlawful. They f a i l e d . The House of Lords held that the bequest was v a l i d . The objects of the r e c i p i e n t company (as stated i n i t s memorandum of association) which were challenged by the next-of-kin, included the follow- ing : "(A) To promote, i n such ways as may from time to time be determined, the p r i n c i p l e that human conduct should be based upon natural knowledge, and - 110 - not upon super-natural b e l i e f , and that human welfare i n t h i s world i s the proper end of a l l thought and action (C) To promote the secular- i s a t i o n of the State, so that r e l i g i o u s tests and observances may be banished from the Legislature, and Executive, and the J u d i c i a r y (G) To promote the recognition by the State of marriage as a purely c i v i l con- t r a c t , leaving i t s r e l i g i o u s sanctions to 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 recognition of Sunday by the State as a purely c i v i l i n s t i t u t i o n f o r the benefit of the people, and the repeal of a l l Sabbatarian laws devised and operating i n the i n t e r e s t of r e l i g i o u s sects, r e l i g i o u s observances, or r e l i g i o u s ideas (O) To do a l l such other lawful things as are conducive or i n c i d e n t a l to the attainment of a l l or any of the above objects". The House of Lords held unanimously that, although these objects i n - volved a denial of C h r i s t i a n i t y , they were not criminal i n nature because the propagation of a n t i - C h r i s t i a n doctrines did not constitute the offence 16 of blasphemy. Furthermore, a majority of t h e i r Lordships held that the objects were not i l l e g a l on the ground that they prevented the company from acquiring property by way of absolute g i f t . In the course of t h e i r respective judgments, Lord F i n l a y d i d not mention the law of t r u s t s at a l l , Lord Dunedin emphatically stated that the bequest did not impose a t r u s t but was an absolute g i f t to the l e g a l e n t i t y , and Lord Sumner only discussed the question of whether a charitable t r u s t 17 had been created. Lord Buckmaster concluded h i s opinion with, the words : I t i s a mistake to t r e a t the company as a trustee, for i t has no b e n e f i c i a r i e s , and there i s no difference between the capacity i n which i t receives a g i f t and that i n which i t obtains payment of a debt. In e i t h e r case the money can only be - I l l - used f o r the purposes o f t h e company, and i n n e i t h e r case i s t h e money h e l d on t r u s t . He d i d not e l a b o r a t e on t h e s e s t a t e m e n t s . I t can be seen t h a t t h e q u e s t i o n s o f t h e 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 and the nec- e s s i t y 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 t h e view o f t h e s e j u d g e s . I t i s t h e judgment o f L o r d P a r k e r , however, which causes i n t e r e s t and which has been adopted by the s u p p o r t e r s 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 ' as a u t h o r i t a t i v e . In f a c t , L o r d P a r k e r came t o the c o n c l u s i o n t h a t t h e bequest i n q u e s t i o n was an a b s o l u t e g i f t t o t h e company. The t e s t a t o r had merely s t a t e d h i s motives f o r making the d o n a t i o n and had n o t imposed a t r u s t . Indeed, a t r u s t was u n n e c e s s a r y s i n c e the performance o f the purposes f o r which the g i f t was donated would be almost g u a r a n t e e d by t h i s arrangement, because t h e y echoed the o b j e c t s o f the 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 . D e s p i t e t h i s c o n c l u s i o n , L o r d P a r k e r went on to d i s c u s s a t l e n g t h , obitev, what would have happened i f the bequest had been made on t r u s t . He began as f o l l o w s : [o]n the f o o t i n g t h a t the s o c i e t y 'takes i n the 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 the t r u s t i s c l e a r l y v o i d A trust to be valid must be for the benefit of i n d i v i d u a l s , which t h i s i s c e r t a i n l y not, o r must 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 the l e g a l as opposed t o the p o p u l a r sense 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 t o a p p l y t r u s t p r o p e r t y f o r purposes some o f which are and some are 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 c l a u s e i n i t a l i c s seems t o be the s o l e mention i n the case 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 ' . No a u t h o r i t y was c i t e d f o r i t . Nor was i t mat- e r i a l t o h i s L o r d s h i p ' s r e a s o n i n g o r d e c i s i o n . The d i s c u s s i o n c e n t r e d - 112 - instead on the issue whether the bequest was charitable or not. He concluded not that the t r u s t , had i t existed, would have been void for lack of b e n e f i c i a r i e s , but that i t s objects were e i t h e r too vague and uncertain to render i t v a l i d as a charitable t r u s t , or were p o l i t i c a l and therefore non-charitable. The judgment does not contain any auth- o r i t a t i v e , well-reasoned statement of the proposition that a non-charitable purpose t r u s t i s void for want of i n d i v i d u a l b e n e f i c i a r i e s . Be that 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 applied over and over again and, although o r i g i n a l l y i t claimed to state no fundamental p r i n c i p l e of law, i t gradually a t t a i n s t h i s status through the cases. The process i s part of the development of the common law. I t may therefore be i n s t r u c t i v e to survey cases that have applied Bowman V. Secular Society, both i n England and throughout the Commonwealth, j u r i s d i c t i o n s , to ascertain whether or not i t r e a l l y was the o r i g i n a l source of the 'beneficiary p r i n c i p l e ' . At the outset i t can be stated by way of summary that the Bowman case has been quoted as authority for many propositions but, apart from the cases s p e c i f i c a l l y discussed hereafter, i t i s not extensively discussed i n connection with the necessity of b e n e f i c i a r i e s for a v a l i d non-charitable t r u s t . 19 In the recent case of Reg%na V. Lemon , the Court of Appeal 20 adopted and u t i l i s e d Bowman's discussion on the offence of blasphemy 21 I t has also been quoted i n England as authority for the proposition that, i f a company i s registered with a memorandum of association which sets out the objects of the company, neither the documents preliminary to inc o r - - 113 - poration nor the actions of the di r e c t o r s a f t e r i t s formation can be 22 received i n evidence to determine what the objects of the company are 23 S i m i l a r l y , i n New Zealand, i t has been quoted for 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 of incorporation are conclusive proof that a l l conditions precedent to the making of an a l t e r a t i o n to the rules of an incorporated society have been duly f u l f i l l e d and the courts 24 • cannot go behind those c e r t i f i c a t e s In Canada and A u s t r a l i a , the Bowman case i s c i t e d as authority f o r fourth proposition. To quote Davey,J.A. i n the B r i t i s h Columbia Court of Appeal case of Roman Catholic Archiepiscopal Corporation of Winnipeg v. 25 . 2 6 Ryan as an example : [T]he reasoning of Lord Parker of Waddington supports the proposition that a g i f t to a cor- poration to be used for some s t i p u l a t e d purposes embraced within the corporate objects does not by implication create a t r u s t f o r that purpose any more than a g i f t to a natural person to be used for some purpose benefiting him alone implies a t r u s t c u t t i n g down the absolute i n t e r e s t . F i f t h l y , the Canadian courts have derived from Bowman the general p r i n - 27 c i p l e that the enforcement of r e l i g i o u s b e l i e f s as such i s not a 28 legitimate concern of the cri m i n a l law of the realm Above a l l , Bowman i s renowned for i t s affirmation that a g i f t on 29 t r u s t f or p o l i t i c a l objects can not be charitable : The a b o l i t i o n of r e l i g i o u s t e s t s , the d i s - establishment of the Church, [etc.] ... are purely p o l i t i c a l objects. Equity has always refused to recognise such: objects as charitable [A] t r u s t for the attainment of p o l i t i c a l objects has always been held i n v a l i d , hot because i t i s i l l e g a l , f o r every one i s at l i b e r t y to advocate or promote by any lawful means a change i n the law, but because the Court has no means of judging whether a proposed change i n the law - 114 - w i l l or w i l l not be for the public benefit, and therefore cannot say that a g i f t to secure the change i s a charitable g i f t . 30 This p r i n c i p l e has been applied again and again and alone has elevated the Bowman case to the status of an important decision. With a few exceptions, however, i t s s o l i t a r y dictum on the need i n a non-charitable t r u s t f or human b e n e f i c i a r i e s has remained obscure. I t has not evolved through the cases to become an accepted p r i n c i p l e of the common law. I t must therefore be concluded that the source of the 'bene- f i c i a r y p r i n c i p l e ' i s not traceable to Bowman v. The Secular Society a f t e r a l l . ( i i i ) Re Diplock One of the exceptional instances i n which Lord Parker's dictum i n 31 Bowman was c i t e d , however, i s worthy of discussion . This was In re 32 Diplock where the tes t a t o r ' s w i l l provided, inter a l i a , that h i s exec- utors should "apply the residue for such charitable i n s t i t u t i o n or i n - s t i t u t i o n s or other charitable or benevolent object or objects i n England as my acting executors or executor may i n t h e i r or his absolute d i s c r e t i o n s e l e c t " . The bequest f a i l e d f o r uncertainty, 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- o r i t i e s . The uncertainty inherent i n the phrase "charitable or benevolent" prevented the t r u s t from f a l l i n g within the l e g a l d e f i n i t i o n of cha r i t y so, as a non-charitable purpose t r u s t , i t also f e l l f o u l of "a fundamental 34 p r i n c i p l e of the law r e l a t i n g to 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 or v a l i d authority i s given for i t s promotion to the rank of "fundamental p r i n c i p l e " . S i r - 115 - W i l f r i d Greene merely explained i t s r a t i o n a l e : In order that a t r u s t may be properly constituted, 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 ascertained or must be ascertainable The Crown has never assumed the r i g h t to come to the Court and ask for the execution of a philanthropic t r u s t ; i t has only assumed the r i g h t to come to the Court and ask for the execution of a charitable t r u s t , and accordingly, i f there i s a g i f t for philanthropic purposes, i t suffers from the vice of not having a b e n e f i c i a r y , ascertained or ascer- tainable, i n whose i n t e r e s t the Court can administer the t r u s t . The point made above i s that a non-charitable purpose t r u s t appears to lack an i n - b u i l t mechanism for d i r e c t c o n t r o l . : that i s , someone who could go to court and ask that the t r u s t be executed. Yet the Master of the Rol l s then proceeded to deal only with the c e r t a i n t y aspect of the problem, with which there i s no dispute. I f a court does not know what constitutes due and v a l i d performance by a trustee of the terms of the t r u s t , the t r u s t must f a i l f o r 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 of funds was or was not within the terms of the t r u s t . This was the essence of the d e c i s i o n . "Benevolent or charitable object" embodies no d e f i n i t e concept. This being so, the absence of a b e n e f i c i a r y was immaterial to the f a i l u r e of t h i s p a r t i c u l a r t r u s t . The case therefore does l i t t l e to explain or i l l u s t r a t e the oper- ati o n of the 'beneficiary p r i n c i p l e ' . This submission i s supported by the analysis used by the House of Lords on appeal i n that case i n reaching the same conclusion 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. F i r s t l y , the terms of a t r u s t must be expressed with c e r t a i n t y so that a 37 court can e f f e c t i v e l y control a trustee i n h i s administration of them Secondly, a t e s t a t o r may not delegate h i s testamentary power to h i s trustees - 116 - 38 b u t must s p e c i f y i n c l e a r terms the d e s t i n a t i o n o f h i s funds . Nowhere can any o b j e c t i o n to the bequest on the ground t h a t i t was a purpose t r u s t be found. There i s no a s s e r t i o n o f the ' b e n e f i c i a r y p r i n c i p l e ' as t h a t term i s used here t o denote the a l l e g e d r e q u i r e m e n t o f human b e n e f i c i a r i e s f o r a v a l i d n o n - c h a r i t a b l e t r u s t . I t s s o u r c e i s t h e r e f o r e s t i l l unknown. ( i v ) In Re Wood 39 In ve Wood i s a n o t h e r case t h a t appears a t f i r s t g l a n c e to a s s e r t t h a t t h e r e e x i s t s i n the law a ' b e n e f i c i a r y p r i n c i p l e ' which o p e r a t e s t o i n v a l i d a t e n o n - c h a r i t a b l e purpose t r u s t s by demanding the p r e s e n c e o f human b e n e f i c i a r i e s . A g a i n , however, on c l o s e r i n s p e c t i o n , i t becomes apparent t h a t no such a s s e r t i o n i s i n f a c t made. The t e s t a t r i x i n t h a t case d i r e c t e d t r u s t e e s t o pay t h e income o f a "B.B.C. T r u s t Fund" £.2 p e r week "towards the f u n d o f t h e s o c i e t y , i n s t i t u t i o n o r body c o r p o r a t e o r i n c o r p o r a t e on b e h a l f o f which, an a p p e a l s h a l l have been t r a n s m i t t e d on the Sunday from the N a t i o n a l s t a t i o n o f t h e B r i t i s h B r o a d c a s t i n g C o r p o r a t i o n " . The b e quest f a i l e d . S i n c e the "Week's Good Cause" was not n e c e s s a r i l y c h a r i t a b l e , the b e q uest had t o meet a l l the r e q u i r e m e n t s o f a v a l i d n o n - c h a r i t a b l e t r u s t . 40 T h i s i t f a i l e d t o do. Harman,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 must have a cestui que trust, and t h e r e b e i n g here no cestui que trust the g i f t must f a i l . In view o f the f a c t t h a t "cestui que trust" i s n o r m a l l y used synonymously w i t h " b e n e f i c i a r y " , Harman,J.'s judgment has been i n t e r p r e t e d as d e c i d i n g t h a t the g i f t f a i l e d as a purpose t r u s t per se. However, i n t r u t h , the r e a s o n f o r the b e q u e s t ' s f a i l u r e was t h a t i t was u n c e r t a i n and t h a t , as 41 t h e i r L o r d s h i p s had p o i n t e d out i n the Viplock case , t h i s u n c e r t a i n t y 42 c o u l d n o t be c u r e d by d e l e g a t i n g one's t e s t a m e n t a r y power : - 117 - I hold that t h i s g i f t i s bad because i t i s wholly uncertain 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 given. I t can only be made c e r t a i n by the decision of some t h i r d party. That i s a delegation of testamentary power which, except i n the case of a charity, i s not permitted. In t h i s passage, Harman,J.'s use of the 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 existence i n tr u s t s law of a 'beneficiary p r i n c i p l e 1. I t i s prepared to permit a non-charitable purpose t r u s t to ex i s t , subject to perpetuity rules, provided that the purpose i s ex- pressed with c l a r i t y and ce r t a i n t y . (v) Summary In l i g h t of t h i s b r i e f h i s t o r i c a l review, i t i s pointed out that no case was decided s o l e l y on the basis of a rule that 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 that, u n t i l 1952, i t was pos s i b l e and correct to say that non-charitable purpose t r u s t s i n general were v a l i d , provided that the purpose was defined with c e r t a i n t y and that p u b l i c p o l i c y considerations, such as the rule against 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 : Trusts f o r Non-Charitable Purposes, the Rule against Perpetuities and G i f t s to Unincorporated Associations I t was on the ground of the r u l e against p e r p e t u i t i e s that most g i f t s f o r the non-charitable purposes of unincorporated associations were held to 44 founder . However, one important point i s apparent from the a u t h o r i t i e s , - 118 - 45 and has been the subject of many learned comments . This i s that the courts i n t h i s context are not expressly concerned with the remoteness of vesting problems with which the rule against p e r p e t u i t i e s s t r i c t l y speaking deals, but with a more general notion of i n a l i e n a b i l i t y , based on a public p o l i c y "to prevent the mischief of making property i n a l i e n a b l e , unless for 46 objects which are i n some way useful or b e n e f i c i a l to the community" , that i s , within the l e g a l d e f i n i t i o n of 'charitable'. Thus, i f the object of the t r u s t i s merely non-charitable, i t i s f e l t that funds must not be withdrawn from commercial u t i l i t y to stagnate. In these circumstances, the p o l i c y appears to override any countervailing p o l i c y of giving e f f e c t to the expressed int e n t i o n of the donor. Most of the cases on t h i s subject date from the l a t e nineteenth century and are a maze of confused terminology, defective reasoning and 47 inappropriate cross-references to the remoteness of vesting rule . I t i s not proposed to discuss them i n any d e t a i l . Insofar as c r y s t a l l i s a t i o n of a guiding p r i n c i p l e i s possible from such a source, i t may be stated as follows. I f the donor makes i t c l e a r from the terms of the t r u s t that the c a p i t a l of the g i f t i s to be retained as an endowment f o r the association i n d e f i n i t e l y , the g i f t w i l l f a i l as 'tending to a perpetuity'. One case where the donor did exactly that, with the r e s u l t that the 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 follows : I bequeath, to the Oxford Angling and Preservation Society the sum of £200 free of duty, on condition that Mr. George Mallam or the president thereof for the time being, and the committee of the society undertake to invest and keep the same invested i n his and t h e i r names as c a p i t a l moneys, and to apply the income or dividends to a r i s e therefrom to the purpose of restocking t h e i r waters, or for such other purposes as the president and committee for the time being s h a l l resolve upon. - 119 - The Chancery D i v i s i o n , i n declaring the g i f t void, held that an endow- ment had been expressly created. To f a c i l i t a t e the success of h i s g i f t on t r u s t , therefore, the know- ledgeable donor needs to specify expressly that both c a p i t a l and income are to be made av a i l a b l e f o r the s p e c i f i e d purpose or purposes. I t has been held that one method whereby t h i s can be achieved i s the phrase 'on t r u s t for the association's purposes absolutely', or words to that e f f e c t . In Re Ray's Will Trusts 4 9 , Clauson,J. made the following comments about 50 use of the word 'absolutely' i n t h i s context : 'Absolutely' means free of a f e t t e r of some kind I t i s r e a l l y saying : 'This i s not to be fet t e r e d by the f a c t that i t i s to be an endowment and i s to be a g i f t of income only. I t i s to go int o the funds of the society and to be used without f e t t e r s for any purpose for which the funds of the society can be used'. In the absence of express words along these l i n e s , the fate of the g i f t v i s - a - v i s the rule against i n a l i e n a b i l i t y w i l l depend upon the court's i n t e r p r e t a t i o n of the g i f t as a whole. Many of the ancient cases considered (erroneously, i t w i l l be argued) that a g i f t on t r u s t to an as s o c i a t i o n had to f a i l f o r perpetuity i f i t was the association's rules rather than the terms of 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 association's rules that "the i n s t i t u t i o n s h a l l not be dissolved without the consent of nine-tenths i n number of the members present at a general meeting" and that "no member, on withdrawing from t h i s i n s t i t u t i o n ... s h a l l be e n t i t l e d to claim any share or i n t e r e s t i n 52 the property of the i n s t i t u t i o n " would mean that a g i f t to that a s s o c i - ation, taking e f f e c t according to those rules-, would be void f o r perpetuity. - 120 - It i s submitted that the error of t h i s reasoning l i e s i n the fac t that any association can change i t s rules v i a i t s members at any time. An association i s contractual i n nature. I t i s created by the consensus of i t s founding members. S i m i l a r l y , i t s rules are formulated, i t s existence i s terminated, i t s operation i s di 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 of i t s members. Thus, f or example, amend- ments to the rules could render a previously 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 inherent i n the f a c t that an association's c o n s t i t u t i o n cannot be absolutely entrenched. I t i s subject to possibly frequent change. Therefore i t should not d i c t a t e the v a l i d i t y or otherwise of a g i f t . On the other hand, i f the donor succ- e s s f u l l y u t i l i s e s a t r u s t to e f f e c t the donation, the terms with which he impresses h i s g i f t are f i x e d and binding on the trustees once and for a l l . They, alone, should be relevant. Admittedly, i n c e r t a i n s i t u a t i o n s , i t may be possible to conclude from the fact s and circumstances of the g i f t that the donor had not only acquainted himself with the d e t a i l s of the intended r e c i p i e n t association's c o n s t i t u t i o n but had also impliedly incorporated i t s r u l e s into the terms of the g i f t upon t r u s t . It i s submitted, however, that the courts i n the o l d cases were somewhat over-eager i n a r r i v i n g at 53 this: implication In summary, the old pre-1952 cases show that a g i f t on t r u s t for the non-charitable purposes (general or s p e c i f i c ) of an unincorporated a s s o c i - ation was v a l i d and guaranteed s a t i s f a c t i o n of the donor's wishes, provided that the t r u s t terms neither expressly nor impliedly attempted to set up a 5-perpetual endowment f o r the as s o c i a t i o n by r e s t r i c t i n g use of the c a p i t a l To take the example used at the very beginning of t h i s section, a - 121 - bequest by A on t r u s t to further the aims and purposes of the Sportstown R.F.C. would be v a l i d i f A had died and any consequent l i t i g a t i o n had gone to court before 1952, even i f the association i n f a c t chose to 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 or i f the association's rules s t i p u l a t e d that t h i s occur, provided A had made no express or implied 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 t h i s e f f e c t . The c a p i t a l could be u t i l i s e d and thus was not'inalienable. There would be no tendency to a perpetuity. 4. A f t e r 1952 : Re Astov 55 In 1952, the decision i n Re Astov's Settlement Trusts was handed down. I t enunciated as a general p r i n c i p l e that a t r u s t f o r non-charitable purposes without human b e n e f i c i a r i e s i s void. In l i g h t of t h i s important development, the case must be analysed i n some d e t a i l . In 1945, shareholders i n the corporate proprietor of The Observer and other newspapers dire c t e d trustees of the s e t t l e d shares to apply the income towards c e r t a i n non-charitable purposes. These included "1. The establishment maintenance and improvement of good understanding sympathy and co-operation between nations ... 2. The preservation of the indepen- dence and i n t e g r i t y of newspapers and the encouragement of the adoption and maintenance by newspapers of f e a r l e s s educational and constructive p o l i c i e s . 3. The promotion of the freedom independence and i n t e g r i t y of the Press i n a l l i t s a c t i v i t i e s 5. The protection of newspapers ... from being absorbed or co n t r o l l e d by combines or being t i e d by finance or otherwise to s p e c i a l or l i m i t e d views or i n t e r e s t s inconsistent with the highest i n t e g r i t y or independence 7. The establishment assistance or support of any cha r i t a b l e p u b l i c or benevolent schemes t r u s t s funds associations or bodies - 122 - for or i n connection with the (a) improvement of newspapers or journalism or (b) the r e l i e f or benefit of persons (or the f a m i l i e s or dependents of persons) a c t u a l l y or formerly engaged i n journalism or i n the newspaper business or any branch thereof or (c) any of the objects 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 duration of the t r u s t and t h i s was within the confines permitted by the rule against p e r p e t u i t i e s . A f t e r the expir- a t i o n of the period, there was a residuary g i f t i n favour of "the younger of the two persons who s h a l l at such end be re s p e c t i v e l y the warden of A l l Souls College Oxford and the master of T r i n i t y College Cambridge or i f the younger of them s h a l l disclaim t h i s b enefit then for the other of them or i f e i t h e r o f f i c e (of warden or master) s h a l l be vacant at such end then for the person who s h a l l hold the other o f f i c e at such end". On being warned of the p o s s i b i l i t y that the t r u s t s of the 1945 s e t t l e - 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 of r e s u l t i n g t r u s t i n the s e t t l e d shares. The t r u s t s of t h i s second settlement were cha 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 of the 1945 settlement, on the other hand, were challenged from two sides and on two grounds. Both the trustees of the 1951 s e t t l e - ment and the Attorney-General, as the administrative body i n charge of the enforcement of charitable t r u s t s on behalf of the Crown, had an i n t e r e s t i n the welfare of the 1945 settlement. Only the f a i l u r e of t h i s l a t t e r would bring into existence the t r u s t s f or which, they were responsible. They would be redundant i n the future h i s t o r y of the shares i f the 1945 settlement - 123 - had created v a l i d t r u s t s . They therefore challenged the v a l i d i t y of the tru s t s on two grounds : f i r s t l y , that they were non-charitable t r u s t s f o r purposes, not i n d i v i d u a l s ; and secondly, that they were void f o r uncertain- ty. They succeeded on both counts. I t i s the f i r s t contention with which we are p r i n c i p a l l y concerned i n t h i s section. For the sake of convenience, therefore, the second ground w i l l be discussed i n b r i e f f i r s t . (i) Certainty I t was contended, and held, that the t r u s t s f a i l e d f o r uncertainty of objects. At the outset, i t i s admitted that the decision i n Re Astov was correc t on t h i s point. Roxburgh,J. stated the requirement of c e r t a i n t y f o r 56 the creation of a v a l i d t r u s t i n the following terms : [T]he purpose must, i n my judgment be stated i n phrases which embody d e f i n i t e concepts, and the means by which the trustees are to t r y to a t t a i n them must also be prescribed with a s u f f i c i e n t degree of c e r t a i n t y The purposes must be so defined that, i f the trustees surrendered t h e i r d i s c r e t i o n , the court could carry out the purposes declared, and not a s e l e c t i o n of them ar r i v e d at by eliminating those which are too uncertain to be c a r r i e d out. As has already been mentioned i n the discussion of Movioe V. The Bishop of 57 Duvham , a t r u s t for purposes i s v a l i d only i f i t can be said with cer- t a i n t y that any p a r t i c u l a r u t i l i s a t i o n of funds i s or i s not within the 58 d e f i n i t i o n of the purpose to be benefited . Before a trustee can perform the terms of a purpose t r u s t or a court can control or correct such per- formance, the conceptual content of the intended purpose must be c l e a r . I t i s here that one finds a major difference between trusts f o r charitable purposes and tr u s t s for non-charitable purposes-. Because charity - 124 - i s considered worthy of s p e c i a l treatment, once a court has found that the purposes come within the l e g a l d e f i n i t i o n of charity, f a i l u r e to specify p a r t i c u l a r c h a r i t a b l e objects does not i n v a l i d a t e the t r u s t . This i s because the state has established elaborate administrative machinery to 59 f a c i l i t a t e the control and due administration of charitable t r u s t s Furthermore, the courts have j u r i s d i c t i o n to e s t a b l i s h schemes for the app- l i c a t i o n of funds for charitable objects. Such i s not the case with t r u s t s for non-charitable objects. The t r u s t i n Re Astor therefore could not be saved : Counsel for the trustees of the 1945 settlement suggested that the trustees might apply to the court ex parte for a scheme. I t i s not, I think, a mere coincidence that no case has been found outside the realm of c h a r i t y i n which the court has yet devised a scheme of ways and means f o r a t t a i n i n g enumerated t r u s t purposes. If i t were to assume t h i s (as I think) novel j u r i s d i c t i o n over p u b l i c , but not charitable, t r u s t s , i t would, I believe, n e c e s s a r i l y require the assistance of a custodian of the p u b l i c i n t e r e s t analogous to the Attorney General i n c h a r i t y cases who would not only help to formulate schemes but could be charged with the duty of enforcing them and preventing maladministration. There i s no such person. With t h i s i n mind, i t becomes evident that the Astor t r u s t had to f a i l f o r uncertainty. I t i s r i d d l e d with statements of vague i d e a l s , such, as "the establishment maintenance and improvement of good understanding sympathy and cooperation between nations". Without further guidelines, no trustee could be sure that any p a r t i c u l a r payment was within the terms of the t r u s t . Above a l l , the courts, on being requested to exercise c o n t r o l over the trustees, would be i n no better p o s i t i o n . E f f e c t i v e c o n t r o l over the t r u s t would be impossible. ( i i ) Beneficiary P r i n c i p l e - 125 - The other ground on which the Astov t r u s t f a i l e d was that i t i n - fringed the 'beneficiary p r i n c i p l e ' . In other words, i t was a non-charit- able t r u s t f or purposes, whereas, to be v a l i d , a non-charitable t r u s t had to have human b e n e f i c i a r i e s . Roxburgh,J. explained t h i s conclusion by applying to t r u s t law Hohfeldian-like reasoning on the nature of obliga-' 61 tions : every duty i s balanced by a c o r r e l a t i v e r i g h t . Therefore, a trustee, as pvima facie l e g a l owner of t r u s t property, can only be f i x e d with an equitable o b l i g a t i o n to deal with 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 . 6 2 Roxburgh,J. explained the s i t u a t i o n as follows : The t y p i c a l case of a tr u s t i s one ;in which the l e g a l owner of property i s constrained by a court of equity so to deal with i t as to give e f f e c t to the equitable r i g h t s of another. These equitable r i g h t s have been hammered out i n the process of l i t i g a t i o n i n which a claimant on equitable grounds has s u c c e s s f u l l y asserted r i g h t s against a l e g a l owner or other person i n control of property. Prima f a c i e , therefore, a trustee would not be expected to be subject to an equitable o b l i g a t i o n unless there was somebody who could enforce a cor- r e l a t i v e equitable r i g h t and the nature and extent of that o b l i g a t i o n would be worked out i n pro- ceedings f o r enforcement. A t r u s t must be subject to j u d i c i a l c o n t r o l . For 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 of many a u t h o r i t i e s . Roxburgh,J. then discussed cases i n which equitable r i g h t s of t h i s nature did e x i s t but were located not i n b e n e f i c i a r i e s but 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, despite the absence of beneficiaries- Roxburgh,J. denied that those cases, where "the court had i n d i r e c t means 65 of enforcing the execution of the non-charitable purpose" , were rep- 66 resentative of the law and c a l l e d them "anomalous and exceptional" - 126 - I t i s submitted that t h i s was the c r u c i a l step i n the reasoning i n Re Astor and was p r i m a r i l y responsible for the b i r t h of the 'beneficiary p r i n c i p l e ' . He concluded that the true p r i n c i p l e was that a t r u s t must have human b e n e f i c i a r i e s . This, he said, was "a proposition which traces descent from or through S i r William Grant,M.R. [Morice V. The Bishop of Durham 6 7 ] , through Lord Parker of Waddington [Bowman V. The Secular Society 6 8 ] , to Harman,J. [Ee Wood These cases have already been discussed i n an attempt so to trace the descent of the proposition. I t was found that no such proposition could i n f a c t be derived from the cases. P r i o r to Re Astor, i t was possible to reconcile the "anomalous" cases with cases l i k e Morice v. The Bishop of Durham. A t r u s t could be v a l i d despite the absence of b e n e f i c i a r i e s , provided that there was, inter alia, s u f f - i c i e n t c e r t a i n t y to permit e f f e c t i v e control by the courts. In Re Astor, however, Roxburgh,J. would not accept t h i s and, without any v a l i d authority, held that the t r u s t f a i l e d as a purpose t r u s t on the ground that i t was not f o r the ben e f i t of i n d i v i d u a l s . ( i i i ) Impact on G i f t s f o r Unincorporated Associations A f t e r Ee Astor the 'beneficiary p r i n c i p l e ' stands for the proposition that a non-charitable t r u s t i s v a l i d only i f i t has human b e n e f i c i a r i e s who can exercise d i r e c t control over the trustees. B e n e f i c i a r i e s , by v i r t u e of t h e i r entitlement under the terms of the t r u s t , have locus standi to i n i t i - ate proceedings against the trustees, whether with the aim of preventing maladministration of funds or of ensuring payment to themselves. Thus the 70 t r u s t i s p o t e n t i a l l y under t i g h t c ontrol. This requirement means that s e t t l o r s or tes t a t o r s must l i m i t the boundaries of t h e i r generosity to ascertained or ascertainable i n d i v i d u a l s . Any attempt to benefit a non- - 127 - charitable purpose not expressed or, indeed, inexpressible i n terms of i n d i v i d u a l s , w i l l be defeated. An unincorporated association 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 unincorporated association must therefore take e f f e c t as a t r u s t , lacking i n b e n e f i c i a r i e s , f or the purposes (whether s p e c i f i c a l l y l i m i t e d or general) of the association, assuming that those purposes are non-chari- table, such a t r u s t w i l l likewise be defeated. 5. Current Status of the 'Beneficiary P r i n c i p l e ' I t now becomes necessary to ask the question : Given that Re Astov has not been overruled, to what extent has i t s spurious 'beneficiary p r i n c i p l e ' been applied and integrated i n t o the common law since 1952? The answer, i n b r i e f , as the following summary w i l l show, i s that 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 root. Many cases over the l a s t t h i r t y years have, i n one way or another, u t i l i s e d the 'beneficiary p r i n c i p l e ' without s p e c i f i c mention of Re Astov i t s e l f ; others have s p e c i f i c a l l y 71 a t t r i b u t e d i t s modern formulation to Roxburgh,J. i n that case 72 In Re Endaoott , for example, a testamentary g i f t of residuary estate "to North. Tawton Devon Parish Council for the purpose of providing some useful memorial to the t e s t a t o r " f a i l e d . The purpose did not come within the l e g a l d e f i n i t i o n of c h a r i t y and did not meet the requirement of having human b e n e f i c i a r i e s . Counsel for the Parish had argued that the case was a v a l i d , non-charitable purpose t r u s t , within the category of 73 cases which Roxburgh,J. had l a b e l l e d "anomalous" i n Re Astov . The Court of Appeal was not impressed by t h i s argument. Its approval of Roxburgh,J.'s - 128 - ' b e n e f i c i a r y p r i n c i p l e ' 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 n o n - c h a r i - 74 t a b l e purpose t r u s t a r e unambiguous. In the words o f L o r d E v e r s h e d : No p r i n c i p l e perhaps has 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 b e h i n d i t than the g e n e r a l 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, not 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 , must have 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 b e n e f i c i a r i e s . 75 S i m i l a r l y , Harman,L.J. : I a p p l a u d the ort h o d o x s e n t i m e n t s e x p r e s s e d by Roxburgh,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 and I t h i n k , as I t h i n k he d i d , t h a t though one 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 perhaps merely o c c a s i o n s when Homer has nodded, a t any r a t e t h e se cases s t a n d by themselves and ought n o t t o be i n c r e a s e d i n number, nor i n d e e d f o l l o w e d 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 c o u r t t h e r e f o r e s o l i d l y e n d o r s e d the ' b e n e f i c i a r y p r i n c i p l e ' and the 76 t r u s t f a i l e d The endorsement o f t h e Re AstoT d e c i s i o n found i n the e a r l i e r case 77 o f Re Shaw , however, was made w i t h g r e a t e r r e l u c t a n c e . George B e r n a r d Shaw had i n c l u d e d i n h i s w i l l a d i r e c t i o n t o t r u s t e e s t o undertake c e r t a i n i n q u i r i e s and s u r v e y s i n t o 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 a l p h a b e t and t o t r a n s l i t e r a t e 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 t r u s t was c h a l l e n g - ed by t h e r e s i d u a r y l e g a t e e s under the w i l l . I t was e v i d e n t l y a purpose t r u s t , 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 c l a i m e d ? 78 The c o u r t c o n c l u d e d t h a t the purpose was not c h a r i t a b l e i n n a t u r e , 79 f i r s t l y because i t c o u l d be c o n s t r u e d as p o l i t i c a l i n n a t u r e and second- l y , because i t was not p u r e l y f o r the advancement o f e d u c a t i o n . Harman,L.J. c o n c l u d e d t h a t the t r u s t t h e r e f o r e had t o f a i l because i t was an i m p e r s o n a l t r u s t f o r a n o n - c h a r i t a b l e purpose : i t had no human b e n e f i c i a r y . He f e l t c o m p e l l e d t o f o l l o w Re Astor, but was aware o f the d e f e c t s o f the 'bene- . . , , 80 f i c i a r y p r i n c i p l e ' : - 129 - [o]ne cannot have a t r u s t , other than a charitable t r u s t , f o r the benefit, not of i n d i v i d u a l s , but of objects. The reason has often been stated, that the court cannot control the t r u s t An object cannot complain to the court, which, therefore, cannot control the t r u s t , and, therefore, w i l l not allow i t to con- tinue. I must confess that I f e e l some reluctance to come to t h i s conclusion. I agree at once that, i f the persons to take i n remainder are unascertainable, the court i s deprived of any means of c o n t r o l l i n g such a t r u s t , but i f , as here, the persons taking the u l t i - mate residue are ascertained, I do not f e e l the force of t h i s objection. They are e n t i t l e d to the estate except i n so far as i t has been devoted to the i n d i - cated purposes, and i n so far as i t i s not devoted to those purposes, the money being spent i s the money of the residuary legatees, or the ultimate remaindermen, and they can come to court and sue the executor for a devastavit, or the trustee f o r a breach of t r u s t , and thus, though not themselves interested i n the purposes, enable the court i n d i r e c t l y to control them. This l i n e of reasoning i s not, I think open to me. In other words, Harman,J. f e l t that the "anomalous" cases discussed and d i s - c r e d i t e d i n Re Astor represented the true p o s i t i o n . Indirect control v i a residuary legatees or remaindermen would, i n h i s view, s u f f i c e to create a v a l i d t r u s t . Re Astor, however, i n s i s t e d that t h i s was not enough and that only d i r e c t control 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 'beneficiary 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 pertinent to the subject-matter of t h i s t h e s i s are the post-1952 cases on donations to unincorporated associations where the 'bene- f i c i a r y p r i n c i p l e ' has been affirmed. Leahy V. Attorney-General for New 82 South Wales has been selected as an example, even though Re Astor was not i n f a c t c i t e d as authority. In the Leahy case, the te s t a t o r made a bequest of c e r t a i n property of h i s i n the following terms : As to my property known as 'Elmslea' ... and the whole of the lands comprising the same and the whole of the fu r n i t u r e ocntained i n the homestead thereonupon t r u s t f o r such order of nuns of the Catholic Church or the C h r i s t i a n Brothers as my executors and trustees s h a l l s e l e c t . - 130 - An order of nuns constitutes an unincorporated a s s o c i a t i o n . I t was held that the t r u s t would have f a i l e d at common law because i t was a non-charit^ able 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 statutory p r o v i s i o n . The greater part of Viscount Simonds' opinion dealt with the law of donations to unincorporated a s s o c i - ations i n general. He enunciated c l e a r l y how the 'beneficiary p r i n c i p l e ' had been adopted i n t h i s area and operated to i n v a l i d a t e g i f t s on t r u s t for 84 the purposes of unincorporated associations : If the words 'for the general purposes of the as s o c i - ation' were held to import a tr u s t , the question would have to be asked, what i s the t r u s t and who are the be n e f i c i a r i e s ? A g i f t can be made to persons ... but i t cannot be made to a purpose or to an object : so also, a t r u s t may be created f o r the ben e f i t of persons as cestuis que t r u s t but not for a purpose or object unless the purpose or object be c h a r i t a b l e . For a purpose or object cannot sue, but, i f i t be char i t a b l e , the Attorney General can sue to enforce i t . Trusts for non-charitable purposes must f a i l , i n cluding those for unin- corporated associations, because no d i r e c t control mechanism i s a v a i l a b l e . Under the 'beneficiary p r i n c i p l e ' , they must be declared void. 6. Conclusion It has been demonstrated that the 'beneficiary p r i n c i p l e ' as a p r i n c i p l e of law o r i g i n a l l y rested on unsteady foundations. The develop- ments of the l a s t t h i r t y years have nevertheless rendered the p r i n c i p l e un- shakeable. Widespread acceptance of the 'beneficiary p r i n c i p l e ' i n the area of donations to unincorporated associations has been the major c u l p r i t i n confusing and complicating the subject. Faced with, the problem of deter- mining the l e g a l e f f e c t of an attempt to make such, a donation, the j u d i c i a r y now takes- the 'beneficiary p r i n c i p l e ' f or granted. The following example i s taken from the most recent case of the subject, Conservative and Unionist - 131 - Central Office v. Burrell (Inspector of Taxes) O J : [ l ] t i s said, as there cannot be a trust for a non- charitable purpose, e f f e c t can only be given to the donor's i n t e n t i o n i f i t i s possible to construct out of the material before the court some unin- corporated association which can be s a i d to be the owner of moneys given for the purposes of the Conservative Party. The purpose which the owner wishes to further i s then achieved ... 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 existence of an unincorporated association, the members of which can be treated as the owners of those moneys and the rules of which w i l l i n prac- t i c e ensure that the moneys w i l l be devoted to the intended purpose 86. The p o s s i b i l i t y of analysing the g i f t as a non-charitable purpose t r u s t i s automatically discounted. Because the 'beneficiary p r i n c i p l e ' pre- vents the successful use of the t r u s t device i n such a s i t u a t i o n , other 87 devices are attempted , some of which do, and some of which do not, succeed i n e f f e c t i n g the donation. In addition to the confusion that t h i s state 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 true i n t e n t i o n : to further the association's purposes by f i n a n c i a l benefit, coupled with a guarantee that t h i s w i l l occur. A t r u s t f o r the purposes of the association would achieve 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 f a l l s f o u l of the 'beneficiary p r i n c i p l e ' . In summary, i t cannot be doubted that, however obscure i t s o r i g i n s might have been, today the 'beneficiary p r i n c i p l e ' appears f i r m l y rooted i n the current law, with the unfortunate consequence for the law on dona- tions to unincorporated associations that i t prevents the operation of the one mechanism which could achieve the deceptively simple aim of en- suring the enrichment of unincorporated associations. - 132 - B. G i f t s on T r u s t f o r Non - A b s t r a c t Purposes : The Denley A n a l y s i s 1. I n t r o d u c t i o n A makes a bequest i n h i s w i l l i n g e n e r a l terms t o t h e l o c a l v o l u n - t a r y y o u t h 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 and makes the bequest i n the f o l l o w i n g terms : "I bequeath $x on 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 A s s o c i a t i o n t o f u r t h e r i t s purposes f o r as l o n g 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 n o n - c h a r i t a b l e c l u b , o f which membership i s open t o a l l r e s i d e n t s o f t h e l o c a l i t y between t h e ages o f n i n e and twenty-one. I t s o b j e c t s , as s t a t e d i n i t s f o u n d i n g c o n s t i t u t i o n and c u r r e n t l y executed, i n c l u d e the p r o v i s i o n o f r e c r e a t i o n a l and s o c i a l f a c i l i t i e s and the o r g a n i s a t i o n o f s p o r t i n g and l e i s u r e programmes f o r i t s members. On A's death, t h e t r u s t e e s o f h i s w i l l a p p l y t o c o u r t f o r d i r e c - t i o n s on the v a l i d i t y o f t h e bequest, on t h e assumption t h a t the c l u b i s a n o n - c h a r i t a b l e n o n - p r o f i t - m a k i n g 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 . L e t us assume, f o r t h e purposes o f argument, t h a t the c o u r t , on e x a m i n a t i o n o f t h e a s s o c i - a t i o n , i t s c o n s t i t u t i o n , t h e terms o f the bequest and o t h e r r e l e v a n t c i r - cumstances, c o n c l u d e s as a m a t t e r o f c o n s t r u c t i o n t h a t n e i t h e r the A b s o l u t e 88 G i f t A n a l y s i s nor the C o n t r a c t A n a l y s i s i s a p p l i c a b l e . Nor does i t i n t e r p r e t t h e g i f t as i n t e n d e d t o o p e r a t e as i f i t r e a d as a g i f t on t r u s t f o r the members o f t h e a s s o c i a t i o n . I t s p o s s i b l e r e a s o n s f o r so d o i n g need no t c o n c e r n us h e r e . F o r whatever r e a s o n , the c o u r t s h o l d s t h a t t h e bequest must o p e r a t e a s a g i f t on t r u s t f o r the purposes o f 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 A s s o c i a t i o n . In the o p i n i o n o f our h y p o t h e t i c a l c o u r t , the mechanism whereby the g i f t can t a k e e f f e c t , i f a t a l l , i s v i a a n o n - c h a r i t a b l e purpose t r u s t . - 133 - As d i s c u s s e d i n the immediately p r e c e d i n g s e c t i o n o f t h i s c h a p t e r , c ases such as 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 t h a t a g i f t f o r the p r o m o t i o n o f the n o n - c h a r i t a b l e p u r poses 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 prima facie i n - v a l i d because 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 ' . In o t h e r words, a t r u s t must f a i l i f i t has no human b e n e f i c i a r y . T h e r e f o r e , the view which p r e v a i l s i n the c u r r e n t law i s t h a t , i f t h e o n l y p e r m i s s i b l e c o n s t r u c t i o n o f a g i f t i s t h a t i t c r e a t e s a t r u s t f o r t h e purposes o f the a s s o c i a t i o n , then the g i f t must f a i l u n l e s s t h e a s s o c i a t i o n ' s purposes a r e c h a r i t a b l e i n n a t u r e . A p p l y - i n g t h e ' 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 t o the Blanktown A s s o c i a t i o n , the g i f t would f a i l and the funds would f a l l i n t o r e s i d u e on r e s u l t i n g t r u s t . However, the above statement o f the law c o n c e r n i n g purpose t r u s t s i s s u b j e c t t o one q u a l i f i c a t i o n , the scope and s i g n i f i c a n c e o f which are un- c e r t a i n b ut which n e v e r t h e l e s s w a rrants some d i s c u s s i o n . In b r i e f , i t was 92 h e l d i n Re Denley's Trust Deed 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 ' i s con- f i n e d t o t h o s e n o n - c h a r i t a b l e purpose t r u s t s where the p u rposes a r e a b s t r a c t and i m p e r s o n a l i n n a t u r e . In o t h e r words, a t r u s t which, though e x p r e s s e d i n terms o f a purpose t r u s t , 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 t h e b e n e f i t o f one o r more i n d i v i d u a l s may n e v e r t h e l e s s be v a l i d . I t w i l l be s u b m i t t e d t h a t t h i s l i m i t a t i o n o f t h e 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 ' can be o f l i m i t e d a s s i s t a n c e i n f a c i l i t a t i n g 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 e r e f o r e the s o u r c e o f the Re Denley q u a l i f i c a t i o n and i t s i m p l i c a t i o n s w i l l now be d i s c u s s e d . - 134 - 2. Re Denley's Trust Deed (i) Facts A company by the name of H. H. Martyn & Co. owned a p l o t of land i n Cheltenham. In 1936 i t conveyed the land to trustees by a complicated inter vivos deed of settlement which s p e c i f i e d the trustees' powers and otherwise regulated i n d e t a i l any future dealings with the property. In p a r t i c u l a r , the trustees were instructed to hold the land for the duration of a s p e c i f i e d period on the following terms : The said land s h a l l be maintained and used as and for the purpose of a recreation or sports ground p r i m a r i l y for the benefit of the employees of the company. When, i n 1966, the company proposed to s e l l a portion of the lands to r a i s e proceeds f o r the renovation of the remainder, i t had to challenge the v a l i d i t y of the above clause so that the land could revert to the company, free of 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 that the clause created a non-charitable purpose t r u s t and was consequently void for having v i o l a t e d the 'beneficiary p r i n c i p l e ' . I t was i n t h i s manner that the scope of the 'beneficiary 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 of the High Court of England. . ( i i ) The Decision Goff,J. rejected the argument of the company and held, inter alia, that the clause created 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 for a non-charitable purpose, the p r i n c i p a l issue of course was the a p p l i c a t i o n to the case at bar of the 'beneficiary p r i n c i p l e ' as - 135 - formulated i n Re Astov's Settlement Tvusts . Whilst not questioning the correctness of that decision, Goff,J. nevertheless gave i t a narrow i n t e r - 94 p r e t a t i o n , as follows : [Tlhere may be a purpose or object t r u s t , the carrying out of which would benefit an i n d i v i d u a l or i n d i v i d u a l s , where that benefit i s so i n d i r e c t or intangible or which i s otherwise so framed as not to give those persons any locus standi to apply to the court to enforce 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, apply to i n v a l i d a t e the t r u s t , quite apart from any question of uncertainty or perpetuity. In other words, assuming that 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 of a t r u s t i s that i t be sub- j e c t to the control of the court. According to Goff,J., i f the t r u s t i s set up for a t o t a l l y abstract purpose or by i t s terms confers no s i g n i f i - cant benefit on anyone, then no-one has loous standi to invoke the court's j u r i s d i c t i o n . The t r u s t can not be c o n t r o l l e d and i s i n v a l i d . As Goff,J. explained, i t i s only i n these circumstances that the 'beneficiary p r i n - . , , 95 c i p l e ' operates : [ l ] n my judgment the beneficiary p r i n c i p l e of In ve Astov 's Settlement Tvusts ... i s confined to purpose or object trusts which are abstract or impersonal. The objection i s not that the t r u s t i s f o r a purpose or object per se, but that there i s no b e n e f i c i a r y or cestui que t r u s t . G o f f , J . then went on to elaborate on the sense i n which he was using the 96 phrase "beneficiary or cestui que t r u s t " : Where, then, the t r u s t , though expressed 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 or the benefit 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 that i t i s i n general outside the mischief of the b e n e f i c i a r y p r i n c i p l e . By way of paraphrase, therefore, i t appears that a t r u s t which i s a non- charitable purpose t r u s t on i t s face may be v a l i d i f i n d i v i d u a l s derive some kind of benefit from i t s operation. - 136 - On the fact s of Re Denley i t s e l f , the t r u s t was designed to benefit the employees of the company. They were e n t i t l e d to use and enjoy the land i n question as a sports ground. In the opinion of Goff,J., the t r u s t was therefore " d i r e c t l y or i n d i r e c t l y for the benefit of" the employees and was v a l i d . Locus standi to invoke the courts' j u r i s d i c t i o n to control the t r u s t i f necessary was vested i n the employees. 3. Questions Unanswered At f i r s t blush, one might conclude that Re Denley has solved the problem of A's hypothetical bequest to the Blanktown Youth Assistance and Recreation Association. Although the g i f t prima facie sets up a t r u s t f o r non-charitable purposes, i t i s arguable that the t r u s t i s neither "abstract" nor "impersonal" and that i t therefore escapes the influence of 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 point out the presence of the members of the Association. They are i n d i v i d u a l s who benefit d i r e c t - l y by the t r u s t and - the argument might continue - they therefore have standing to apply to court to control the t r u s t . I f the v a l i d i t y of t h i s argument were accepted, the hypothetical court would conclude that the bequest was v a l i d . However, i t i s submitted that Re Denley l e f t many questions as yet unanswered which preclude so straightforward a conclusion and subsequent 97 cases have done l i t t l e to d i s p e l the doubts. I t i s not proposed to attempt solutions of the many problems raised by Re Denley i n t h i s d i s - cussion. Instead, the plan i s merely to pose some of the questions which i t r a i s e s , i n order to i l l u s t r a t e the issues which remain outstanding i n the area of donations on t r u s t for the purposes of unincorporated a s s o c i - ations . - 137 - (i) A uthoritative Weaknesses of Re Deriley The f i r s t question which Re Denley i n v i t e s i s : from what source did Goff,J. derive the p r i n c i p l e that 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 or the benefit of 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 should be apparent from the discussion of Re Astov i n the preceding section that 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 personal and impersonal such as that asserted by Goff,J. i n Re Denley. I t i s submitted that the foundations on which the new p r i n c i p l e was b u i l t were very weak. Three cases were put forward as a u t h o r i t i e s i n Re Denley each of 98 which merits b r i e f discussion. The f i r s t was In re Harpur's Will Trusts which dealt with, a d i r e c t i o n to trustees to pay and divide residue "between such i n s t i t u t i o n s and associations having for t h e i r main object 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 other members of H.M.Forces who had been wounded or incapacitated during the recent world wars". I t i s submitted that the case i s no authority for Goff,J.'s ratio decidendi i n Re Denley for the following reasons : the p r i n c i p a l issue turned 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 'beneficiary p r i n c i p l e ' of Re Astor was not discussed; c e r t a i n ambiguous comments made by Lord Evershed and Harman,J. In the case concerning purpose trusts were plucked by Goff, J . t o t a l l y out of context. In short, the case provides no support for the p r o p o s i t i o n that the 'beneficiary p r i n c i p l e ' operates to 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 question of a t r u s t of the income of s e t t l e d land established for the purpose of "securing and a s s i s t i n g and developing the use of the gardens at Bodnant for the c u l t i v a t i o n of plants and flowers of home and foreign countries of botanical and h o r t i c u l t u r a l i n t e r e s t " . Again the case turned p r i n c i p a l l y on a question of statutory i n t e r p r e t a - 102 t i o n . The v a l i d i t y of non-charitable purpose t r u s t s was a minor issue since i t was apparently assumed by the court that the t r u s t for the garden had been v a l i d u n t i l terminated by the operation of the settlement terms. Thus the case may represent an assertion of the possible v a l i d i t y of non- charitable purpose t r u s t s , though the point was neither argued nor d i s - cussed. However, even i f t h i s i s so, i t i s important to observe that no d i s t i n c t i o n was drawn between abstract purpose trusts on the one hand, and purpose t r u s t s for the benefit of i n d i v i d u a l s on the other. The court assumed that all non-charitable purpose t r u s t s were v a l i d . Therefore i t i s submitted that the case contains no support for the q u a l i f i c a t i o n of the operation of the 'beneficiary p r i n c i p l e ' put forward by Goff,J. i n Re Henley. 103 The t h i r d case, by contrast, was Re Bowes . The decision con- cerned a t r u s t for p l a n t i n g trees and indeed contains dicta to the e f f e c t that the t r u s t was v a l i d because the purpose was of i n d i r e c t benefit to those e n t i t l e d to the land on which the trees were to be planted. The dicta are ambiguous, however, and neither analysis nor discussion of the 'beneficiary p r i n c i p l e ' i s present. Therefore, i n l i g h t of the precedent- based process of development of the common law, i t must be concluded that Re Henley i s dubious. As yet, however, i t has not been challenged by subsequent courts. - 139 - ( i i ) D irect or Indirect Benefit Nevertheless, assuming that Re Denley was c o r r e c t l y decided and did lay down a v a l i d l e g a l p r i n c i p l e , the next question i s : exactly what l e g a l p r i n c i p l e did i t create? The decision was summarised i n the follow- <- 1 0 4 ing statement : Where ... the t r u s t , though expressed 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 ben 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 that i t i s i n general outside the mischief of the bene- f i c i a r y p r i n c i p l e . In other words, provided that the f u l f i l m e n t of a purpose somehow benefits an i n d i v i d u a l , a t r u s t f o r that purpose i s v a l i d . The scope of the p r i n c i p l e must, however, be uncertain unless the meaning of " d i r e c t l y or i n d i r e c t l y for the benefit of 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 the t r u s t presumably conferred on the employees a licence of some kind to use the property as a sports ground. Such a licence has many elements,: i t confers both f i n a n c i a l and f a c t u a l benefit and i s of immediate and tangible advantage to the employees. Would a merely de facto advantage, such, as the pleasure of being able to look at a b e a u t i f u l work of ar t , be s u f f i c i e n t to bring a purpose t r u s t within the scope of Re Denley, or would t h i s be too "intangible"? Would the benefit to the population at large of a t r u s t f o r "the preservation of the independence and i n t e g r i t y of newspapers and the encouragement of the adoption and maintenance by newspapers of f e a r l e s s educational and constructive p o l i c i e s " as attempted i n Re Astor be too i n d i r e c t to be saved by the Denley Analysis? Does the i n d i v i d u a l have to have a l e g a l i n t e r e s t of the type necessary 105 to a t t a i n standing i n other c i v i l actions ? Even on the fact s of Re - 140 - Denley i t s e l f , was the licence irrevocable and contractual? I f so, would i t have been s u f f i c i e n t otherwise? These are but a few examples of the ,106 questions one might ask The scope of the p r i n c i p l e l a i d down i n Re Denley and the extent to which i t w i l l f a c i l i t a t e the v a l i d i t y of non-charitable purpose t r u s t s can only be determined by successive j u d i c i a l decisions on the subject. The development which w i l l thereby occur w i l l no doubt be dictated by p o l i c y considerations and j u d i c i a l value judgments on the s o c i a l u t i l i t y of the p a r t i c u l a r purpose t r u s t s i n question. Over the course of the fourteen years since the Denley decision, no guidelines have been f o r t h - coming. The questions therefore remain unanswered. ( i i i ) The Nature of a V a l i d 'Personal' Purpose Trust 107 According to the Denley Analysis, a purpose t r u s t i s v a l i d i f i t 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 benefit of an i n d i v i d u a l or i n d i v i d u a l s " . Another question which t h i s formulation l e f t unanswered was whether the t r u s t thus v a l i d a t e d operated as a purpose t r u s t or as a di 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 other words, are the i n d i v i d u a l s whose a b i l i t y to control the t r u s t renders i t v a l i d merely 'factual bene- f i c i a r i e s ' of a purpose t r u s t , or are they true t r u s t b e n e f i c i a r i e s stvioto sensu? Goff,J. l e f t both i n t e r p r e t a t i o n s open, yet the consequences and implications of each d i f f e r enormously. These w i l l be discussed i n bare o u t l i n e only to demonstrate the p o t e n t i a l problems. - 141 - On the one hand, throughout h i s a n a l y 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 ' and h i s f o r m u l a t i o n o f t h e dichotomy between those purpose t r u s t s which v i o l a t e i t and those which do not, G o f f , J . spoke i n terms o f " b e n e f i c i a r i e s o r c e s t u i s que t r u s t " . The d i s t i n c t i o n he drew between an i n v a l i d a b s t r a c t purpose t r u s t and a v a l i d p e r s o n a l purpose t r u s t was t h a t the former had no b e n e f i c i a r y o r cestui que trust w h i l e the l a t t e r 109 d i d . The i n f e r e n c e which may be drawn from the use o f such t e r m i n o l o g y i s t h a t a purpose t r u s t may be 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- v e r t e d i n t o a d i s c r e t i o n a r y t r u s t w i t h human b e n e f i c i a r i e s i n t h e t r a d i t - ' i o n a l sense o f the word. In o t h e r words, the g i f t ' s o p e r a t i o n may be p a r a - p h r a s e d as f o l l o w s : 'on t r u s t f o r X, Y, Z, t o be used f o r purpose W. On the o t h e r hand, G o f f , J . a l s o spoke on o c c a s i o n i n terms o f d i r e c t 110 o r i n d i r e c t b e n e f i t f o r one 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 the words ' b e n e f i c i a r y o r cestui que trust1. The i n f e r e n c e which may be drawn from the use o f such n o n - l e g a l t e r m i n o l o g y i s t h a t a purpose t r u s t may o p e r a t e v a l i d l y i f i t has mer e l y ' f a c t u a l b e n e f i c i a r i e s ' . Meanwhile, i t r e t a i n s i t s 'purpose t r u s t ' l a b e l and i t s immediate o b j e c t i s the purpose, n o t the i n d i v i d u a l s . In o t h e r words, t h e g i f t o p e r a t e s as one 'on t r u s t f o r purpose W, f b r the b e n e f i t o f X, Y, Z'. I f one f a v o u r s t h e former i n t e r p r e t a t i o n , i t i s s u b m i t t e d t h a t one i s then committed t o the f o l l o w i n g consequences o f one's a n a l y s i s . In the f i r s t p l a c e , the b e n e f i c i a r i e s have, a t the v e r y l e a s t , a spes o f owner- s h i p . In o t h e r words, i f the p e r s o n a l purpose t r u s t o p e r a t e d as a d i s - c r e t i o n a r y t r u s t i n Re Denley, the employees must have h e l d e q u i t a b l e i n t e r e s t s o r some o t h e r form o f 'ownership' i n the l a n d - 142 - Secondly, i f the above conclusion i s correct, i t follows that the t r u s t guarantee that the purpose w i l l be c a r r i e d out i s l o s t . The bene- 112 f i c i a r i e s may invoke the p r i n c i p l e of Saunders V. Vautier and together terminate the t r u s t by demanding the t r a n s f e r of the t r u s t property or fund to them by the trustees. Thus, on the hypothesis that a discretionary t r u s t for human b e n e f i c i a r i e s i s created 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 at the expense of future and continuing f u l f i l - 113 ment of the expressed purpose Thirdl y , i n order for a discretionary t r u s t to s a t i s f y the r u l e against p e r p e t u i t i e s , the i n t e r e s t s of the b e n e f i c i a r i e s must vest within 114 the applicable perpetuity period Fourthly, i f the Denley Analysis converts a purpose t r u s t into a d i s c r e t i o n a r y t r u s t , i t s constituent words must s a t i s f y the c e r t a i n t y requirements for such t r u s t s as formulated i n MoPhail V. Doulton . The t e s t i s as follows : The t r u s t i s v a l i d i f i t can be said with c e r t a i n t y that any given i n d i v i d u a l i s or i s not a member of the c l a s s . P r i o r to MoPhail V. Doulton, the standard demanded had been f a r more rigorous. The House of Lords i n that case overruled Inland Revenue 117 Commissioners v. Broadway Cottages which had l a i d down the s t r i c t r u l e that a d i s c r e t i o n a r y t r u s t was too uncertain unless a l l of the e l i g - i b l e b e n e f i c i a r i e s were ascertained or ascertainable. I t i s i n t e r e s t i n g to note that Goff,J., deciding Re Denley before the MoPhail V. Doulton decision, 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 issue. This indicates that Goff,J. may have perceived the r e s u l t of h i s analysis to be the conversion of - 143 - purpose t r u s t s i n t o discretionary t r u s t s . By contrast, i f one favours the second i n t e r p r e t a t i o n of the e f f e c t 118 of Re Deriley - that the purpose t r u s t undergoes no transformation but operates as a t r u s t for a purpose provided i t has 'factual b e n e f i c i a r i e s ' - the following are the major consequences. F i r s t l y , the 'factual b e n e f i c i a r i e s ' have no equitable i n t e r e s t i n the t r u s t fund or property. They have no form of ownership nor even spes os ownership. Secondly, they can only enforce the purpose t r u s t : they can not put an end to i t s operation. Thir d l y , the rule against p e r p e t u i t i e s does not as such demand of a purpose t r u s t that i n t e r e s t s vest at any p a r t i c u l a r time. Instead, the rule controls the duration of the t r u s t . Fourthly, 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, but i n a d i f f - 119 erent fashion from di s c r e t i o n a r y t r u s t s The common law. has not yet produced an answer to the question : into which of the two conceptual frameworks discussed here does the Denley-type t r u s t f i t . Strong arguments can be made for and against each p o s s i b i l i t y , yet the answer i s of more than merely academic i n t e r e s t because, as the rough o u t l i n e above shows, the problem touches p r a c t i c a l as well as con- ceptual issues. Without an answer, the value of Re Denley to the develop- ment of t r u s t s law i s l i m i t e d . As w i l l become apparent, the present writer's preference i s for the view that the purpose t r u s t which i s s a l - vaged by the Denley q u a l i f i c a t i o n of the scope of the 'beneficiary p r i n c i p l e 1 retains the nature and c h a r a c t e r i s t i c s of a purpose t r u s t ; and that the 'factual b e n e f i c i a r i e s ' are merely the necessary instruments of enforcement; no di 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 Unincorporated Associations A further question hitherto unanswered i n the course of t h i s d i s - cussion i s whether or not A's hypothetical bequest to the Blanktown Youth Assistance and Recreation Association 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 Analysis of purpose t r u s t s . I t w i l l be r e c a l l e d that the bequest prima facie f a i l s . Being a g i f t on t r u s t f o r the promotion of the non- charitable purposes of an unincorporated association, i t appears to f a l l f o u l of the 'beneficiary p r i n c i p l e ' . No unincorporated association was involved i n Re Denley i t s e l f . The employees of H. H. Martyn & Co. merely constituted a class of i n d i v i d u a l s linked by the contract of employment they each held i n common with the company. They were not formally associated inter se by any contract of membership. Therefore, the reasoning i n Re Denley would have to be ex- tended to a s s i s t A's hypothetical donation to the Blanktown Association. Whether or not Re Denley1s generous i n t e r p r e t a t i o n of the scope of the 'beneficiary p r i n c i p l e ' can be applied i n the context of g i f t s to unin- corporated associations i s an issue which has apparently come before the courts, on only two occasions. The uncertainty i s increased by the f a c t that the answer given i n each of those two instances was d i f f e r e n t . 120 A negative answer was given i n Re Grant's Will Trusts . That case dealt with, a bequest to a branch, of the Labour Party for 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 various mechanisms, (already canvassed here), whereby g i f t s to unincorporated associations could be v a l i d In p a r t i c u l a r circumstances. On the subject of non-charitable purpose trusts:, however, he asserted a s t r i c t a p p l i c a t i o n - 145 - pf 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 to further the purpose ... by purporting to impose a t r u s t [T]he g i f t w i l l f a i l on the ground that the court cannot compel the use of the property i n furtherance of a stated purpose unless, of course, the purpose i s a charitable one. The existence of i n d i v i d u a l s or, more s p e c i f i c a l l y , of members of the association who derived a d i r e c t or i n d i r e c t benefit from the t r u s t 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 s a i d That case on a proper analysis, i n my judgment, f a l l s altogether outside the categories of g i f t s to unincorporated associations and purpose t r u s t s . Without the assistance of Re Denley, the bequest would v i o l a t e the 'bene- f i c i a r y p r i n c i p l e ' , i f construed i n the circumstances as imposing a pur- pose t r u s t . In the r e s u l t , the bequest also f a i l e d to s a t i s f y the pre- r e q u i s i t e s of a l l the other mechanisms currently a v a i l a b l e i n the law for e f f e c t i n g a successful donation to an unincorporated as s o c i a t i o n . The funds therefore devolved as on intestacy. In Re Grant's Will Trusts, therefore, 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 of control to s a t i s f y the 'bene- f i c i a r y 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- f i c i a r i e s ' , p a r t i c u l a r l y i n the area of g i f t s to unincorporated a s s o c i - 123 ations. His reasons for so doing 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 to permit a c l a s s defined by reference to employment to use and enjoy land i n accord- ance with rules to be made at the d i s c r e t i o n of trustees on the one hand, and, on the other hand, a t r u s t to d i s t r i b u t e income at the d i s c r e t i o n of trustees amongst a c l a s s , defined by reference to, for example, r e l a t i o n s h i p to the s e t t l o r . In other words, V i n e l o t t , J . interpreted Re Denley as t r e a t i n g the t r u s t 124 i n that case as a d i s c r e t i o n a r y personal t r u s t and not l a y i n g down - 146 - any general 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 are seen as .orthodox cestuis que trust to whom, at the trustees' 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 at a l l . Each member of the class of employees therefore had at l e a s t a spes of actual ownership i n the property and could terminate the t r u s t i n c e r t a i n circumstances; he was not merely the r e c i p i e n t of a f a c t u a l benefit 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 of Re Denley has been c r i t i c i s e d as 125 "unfortunate and retrogressive" . I t also ignores the second case on the current issue - the extension of the Denley Analysis of the 'bene- f i c i a r y p r i n c i p l e ' to g i f t s f or unincorporated associations - which held that a t r u s t f o r the purposes of an association can succeed because of Re Denley. 126 Re Lipinski's Will Trusts involved a bequest to a youth a s s o c i - ation on t r u s t , with the a d d i t i o n a l s t i p u l a t i o n that the funds be used to construct new, or improve the e x i s t i n g , premises of the association. A l - though the exact basis f o r O l i v e r , J . ' s decision that the g i f t was v a l i d 127 i s unclear, he treated Re Denley as " d i r e c t l y on point" and "[in] 12 8 accord with authority and with common sense" . Applying Re Denley to the facts of Re Lipinski, the bequest was v a l i d as a purpose t r u s t which was neither abstract nor impersonal, but was for the benefit of ascer- tained i n d i v i d u a l s , namely, the members of the association. In other * 129 words : [T]he case appears to me to be one of the spec- i f i c a t i o n of a p a r t i c u l a r purpose for the be n e f i t of ascertained b e n e f i c i a r i e s , the members of the assoc i a t i o n for the time being. - 147 - The presence of the members meant that the trustees could be con- t r o l l e d and that 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 to note that the court was w i l l i n g to ignore the express s t i p u l a t i o n of the test a t o r i n the Lipinski case that the funds be expended on the association's premises. Therefore i t i s possible to regard i t as a further relaxation of the 'beneficiary p r i n c i p l e ' . To expand. The f i r s t step i n the process of a l l e v i a t i n g the r i g i d i t y of the 'beneficiary p r i n c i p l e ' was that taken i n Re Denley : the presence of i n d i v i d u a l s who benefit, d i r e c t l y or i n d i r e c t l y from the performance of the purpose t r u s t was held s u f f i c i e n t to constitute a v a l i d t r u s t . I t i s submitted that a second step was taken i n Re Lipinski i n that the in d i v i d u a l s who benefit i n t h i s manner were held e n t i t l e d to override the expressed purpose. By v i r t u e of t h i s second step, the court was per- mitted to ignore the tes t a t o r ' s s t i p u l a t i o n and deny that i t constituted a f e t t e r on i t s u t i l i s a t i o n of the Denley Analysis. O l i v e r , J . concluded I do not think the f a c t that the te s t a t o r has directed 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 force to 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 of the association for the time being, are the persons who could enforce the purpose and they must, as i t seems to me, be e n t i t l e d not to enforce i t or, indeed, to vary i t . In sum, the bequest was v a l i d and apparently took e f f e c t as a g i f t on t r u s t for the general purposes of the association (not merely for the s p e c i f i c purpose of construction or improvement of i t s b u i l d i n g s ) . The members of the association f o r the time being would derive a benefit from the t r u s t i n t h i s form so i t was "outside the mischief of the 131 b e n e f i c i a r y p r i n c i p l e " and could be c o n t r o l l e d . I t was therefore v a l i d . - 148 - As a r e s u l t of Re Lipinski, i t i s possible to say that the members of an unincorporated as s o c i a t i o n can s a t i s f y the t e s t formulated by Re Denley for a v a l i d , c o n t r o l l a b l e purpose t r u s t . On one i n t e r p r e t a t i o n of the Denley Analysis, g i f t s on non-charitable purpose t r u s t for unin- corporated associations require the existence of 'factual b e n e f i c i a r i e s ' who are interested i n the disposal of the donated funds because of t h e i r d i r e c t or i n d i r e c t benefit therefrom, even though they are not cestuis que trust i n the t r a d i t i o n a l and s t r i c t sense of the term. The a s s o c i - ation's members can f i t t h i s d e s c r i p t i o n . I t i s submitted, however, that t h i s w i l l not always be the case. 132 I t i s worth repeating the words of Goff,J. i n Re Denley : I think there may be a purpose or object t r u s t , the carrying out of which would benefit an i n - d i v i d u a l or i n d i v i d u a l s , where that benefit i s so i n d i r e c t or intangible or which i s otherwise so framed as not to give those persons any locus standi to apply to the court to enforce 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, apply to i n v a l i d a t e the t r u s t , quite apart from any question of uncertainty or perpetuity. Applying t h i s l i m i t a t i o n to the unincorporated as s o c i a t i o n context, the t r u s t w i l l f a i l i f the s p e c i f i e d purpose i s abstract or impersonal and no tangible nor s u f f i c i e n t l y d i r e c t benefit accrues to i n d i v i d u a l s . Likewise i f a g i f t i s given on t r u s t for the general purposes of a society, i t w i l l f a i l i f those purposes are abstract and impersonal. To borrow 133 the terminology 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 g i f t to an 'inward looking association' w i l l be v a l i d because i t i s set up to provide b e n e f i t to i t s own members. By contrast, a g i f t to an 'out- ward looking association' which pursues external, a l t r u i s t i c goals of no benefit 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 types of association, and consequently between v a l i d and i n v a l i d g i f t s , - 149 - evidently depends on the scope of 'benefit' i n t h i s context, a problem 134 to which no r e s o l u t i o n has yet been found . For example, take the f a c t u a l s i t u a t i o n of Re Grant's Will Trusts. Assuming that V i n e l o t t , J . had acknowledged Re Denley's salvaging e f f e c t i n the context of unin- corporated associations, would the bequest f o r the purposes of the Head- quarters of a l o c a l Labour Party have nevertheless f a i l e d ? The answer would depend on the court's i n t e r p r e t a t i o n of 'benefit' and 'factual 135 b e n e f i c i a r y ' . On the one hand, i t might have concluded that the fa c t u a l benefit to members of the rec e i p t of funds to a s s i s t the running of t h e i r p o l i t i c a l party's administrative centre was too remote and i n - tangible; the nature of the benefit was far d i f f e r e n t from that enjoyed by the employees through the pro v i s i o n of re 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 other hand, the purpose may not have been seen i n so 136 abstract a l i g h t . The members must derive some tangible b e n e f i t from the boosting of t h e i r association's c o f f e r s . Even a g i f t on t r u s t to an 'outward looking association' may succeed by v i r t u e of the Denley Analysis. Although, the association'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 supply the r e q u i s i t e element of c o n t r o l , the association's purposes may well be of d i r e c t or i n d i r e c t b e n e f i t to ascertainable i n d i v i d u a l s who are not members of the ass o c i - a t i o n . Presumably the g i f t would be v a l i d i n such, a case. For example, take the case of a g i f t on t r u s t for the purposes of Blanktown Association for the Provision of Recreational F a c i l i t i e s to Deprived Children. The hypothetical members are not themselves deprived c h i l d r e n and therefore derive no tangible benefit from the furtherance of the association's pur- poses. Yet the t r u s t may succeed, because the deprived children of Blank- town do benefit, i n the same way as. the employees i n Re Denley i t s e l f . - 150 - 5. Conclusion I f the Denley Analysis i s accepted, A's bequest "on t r u s t for the Blanktown Youth Assistance and Recreation Association to further i t s pur- poses for as long as the law permits" w i l l be v a l i d . The Association i s an 'inward looking association' and i t s members are the d i r e c t r e c i p i e n t s of the tangible benefits produced by the Association's operation. The bequest i s squarely within the confines of He Denley and thus escapes the scope of the 'beneficiary p r i n c i p l e ' . However, the Denley Analysis i s not the perfect s o l u t i o n to the prob- lem of g i f t s on t r u s t for non-charitable unincorporated associations. Two points must be emphasised. In the f i r s t place, c l a r i f i c a t i o n of the scope and e f f e c t of Re Denley i s necessary before i t can play a useful and prac- t i c a l r o l e . 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 g i f t s are already c l e a r . The most important of these i s that i t must be possi b l e to construe the g i f t as being f o r a non-abstract purpose before the Denley Analysis w i l l be of any assistance i n e f f e c t i n g the donor's ' '.'. wishes. C. G i f t s on Trust f o r the Present and Future Members of an Association 1. Introduction In h i s desire not only to confer a continuing pecuniary b e n e f i t upon an unincorporated association, but also to ensure that h i s largesse be remembered f o r some considerable period i n the future, a wealthy garden - 151 - enthusiast, X, includes i n h i s w i l l a bequest of h i s residuary estate i n the following terms : "I bequeath my residuary estate, henceforth to be known as the X memorial fund, upon t r u s t for the present and future members of the Greenthumb V i l l a g e Gardening Society so that they may continue to carry out i t s aims and objects f o r as long as poss i b l e " . A l t e r n a t i v e l y , X merely bequeaths h i s estate on t r u s t f o r the Gardening Society simplic- itev, which i n i t s e l f and i n the current state of the law i s an impossible t r u s t , but the circumstances of the bequest are such that they rebut a l l presumptions that the g i f t can take e f f e c t i n any way other than on t r u s t for present and future members of the Society, i d e n t i f i e d by the reference 137 to the Society i t s e l f . In other words, as a matter of i n t e r p r e t a t i o n , a court would conclude that t h i s was the r e s u l t intended by X. In each s i t u a t i o n , X has attempted to create a t r u s t f o r a c l a s s com- p r i s i n g the e x i s t i n g and future members of an unincorporated association i n the hope that they w i l l d i v e r t the funds to the advantage of the ass o c i a t i o n . I f the t r u s t stands up, he has the guarantee that they and no one else w i l l b e n e f i t from the g i f t . He has no guarantee, however, that they w i l l indeed d i v e r t the funds as directed. Although the problem of an unincorporated association's lack of l e g a l p e rsonality i s su c c e s s f u l l y avoided by creat- ing such a t r u s t , equally troublesome problems are created i n i t s place. In recent cases dealing with, the issue of donations to unincorporated associations, i t i s accepted without discussion as t r i t e law that a t r u s t 138 for present and future members of an association must f a i l . As a mechanism for e f f e c t i n g a donation, such a t r u s t i s considered t o t a l l y un- successful and a l t e r n a t i v e l e g a l analyses of the s i t u a t i o n have to be sought i n an attempt to achieve a r e s u l t approximating to the donor's wishes. - 152 - The three major 'potential reasons f o r the f a i l u r e of t r u s t s i n general w i l l be reviewed i n t h i s section : the 'beneficiary p r i n c i p l e ' , uncertainty and the r u l e against p e r p e t u i t i e s . I t i s the l a t t e r which i s generally treated as the c u l p r i t i n the case of a g i f t on t r u s t f o r the present and future members of an association. Some comments w i l l be offe r e d on t h i s subject and i t w i l l be suggested that the recent cases which accept with- out question that such a t r u s t must f a i l on t h i s ground are not necessar- i l y c o rrect. At the outset, however, i n the i n t e r e s t s of completeness, the manner i n which the ben e f i c i a r y and ce r t a i n t y requirements are satis- fied w i l l be explained i n b r i e f . 2. The 'Beneficiary P r i n c i p l e ' The operation and scope of the 'beneficiary p r i n c i p l e ' have already 139 been discussed at length . A g i f t on t r u s t f o r the members, present and future, of an unincorporated a s s o c i a t i o n evidently has human b e n e f i c i a r - ies who can enforce due execution of the terms of the t r u s t should the need a r i s e . Therefore i t i s not, nor has i t ever been contended to be, on the basis of the 'beneficiary p r i n c i p l e ' that g i f t s on t r u s t for present and future members have con s i s t e n t l y f a i l e d . 3. Certainty of Objects 140 In the words of Lord Upjohn i n Ee Gulberikian's Settlement Trusts , "the Court of Chancery, which, acts i n default of trustees, must know with s u f f i c i e n t certainty the objects of the beneficence of the donor so as to 141 execute the t r u s t " . I t i s a requirement of the law of t r u s t s that the donor express h i s intentions with 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 - trustees, b e n e f i c i a r i e s and the court to be able to know, and to do or 142 cause to be done what the donor intended when he formulated h i s g i f t 143 The requirement has been the subject of a great deal of refinement and 144 academic comment i n recent years and of i t s e l f could be the subject of volumes of analysis and conjecture. Here the aim i s far more modest. It i s proposed merely to 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 to time of 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 objects. The discussion w i l l proceed on the hypothesis that the notion of 145 c e r t a i n t y can be subjected to 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 of c e r t a i n t y i s the most important : t r u s t objects must be described with 'conceptual c e r t a i n t y ' . In other words, the terminology used to des- cribe the t r u s t b e n e f i c i a r i e s must have precise boundaries of meaning, and i t must be possible to state c l e a r l y what are the c r i t e r i a which any con- ceivable claimant must f u l f i l i n order to f i t the d e s c r i p t i o n . C l a s s i c examples of conceptually uncertain terminology are phrases such as "old f r i e n d s " and "good c i t i z e n s " . By contrast, i n the present case of a t r u s t for the e x i s t i n g and future members of an unincorporated association, the words admit l i t t l e doubt as to t h e i r meaning. In order to be within t h i s c l a s s and thus e s t a b l i s h entitlement as a bene f i c i a r y , the necessary and s u f f i c i e n t 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, within the relevant time period, have entered into a contract of member- ship with the a s s o c i a t i o n i n accordance with, the rules of i t s c o n s t i t u t i o n ( i f any), concerning admission. The g i f t therefore s a t i s f i e s the require- ment of conceptual c e r t a i n t y . The second type of c e r t a i n t y required of a non-charitable t r u s t i s - 154 - ' e v i d e n t i a l c e r t a i n t y ' . Assuming that conceptual ce r t a i n t y i s present, i t may nevertheless be impossible as a matter of f a c t u a l evidence to i d e n t i f y s p e c i f i c people as having s a t i s f i e d the c r i t e r i a involved i n the d e f i n i t i o n of the c l a s s . I t i s here that 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 d i s c r e t i o n - 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 of h i s g i f t that every member of the defined class of b e n e f i c i a r i e s i s to have a s p e c i f i c share i n the donated funds. The t r u s t i s then 'fixed', as compared, on the other hand, with a 'discretionary t r u s t ' , where trustees, though obliged to d i s t r i b u t e , have an element of choice i n the matter of who w i l l b enefit and to what extent. Although the same degree of conceptual c e r t a i n t y i s required for both f i x e d and d i s - cretionary t r u s t s , the requirement of e v i d e n t i a l c e r t a i n t y i s t o t a l l y d i f f - erent. I f , as a matter of 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 created, i t i s necessary for the trustees to be able to draw up a complete l i s t of names of everyone i n the class of b e n e f i c i a r i e s since the t r u s t can not be duly executed unless every single person b e n e f i t s . This l i s t must be com- p i l e d within the perpetuity period i n order 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 of the g i f t by X to the present and future members of the Gardening Society, a complete l i s t can be drawn up by consulting the membership records of the association from the date the 146 t r u s t becomes e f f e c t i v e , for the duration of the perpetuity period More often, however, i t i s submitted that a g i f t on t r u s t for the members of an a s s o c i a t i o n 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 i n t e n t i o n i s normally to benefit the association i t s e l f and the t r u s t for i t s members i s merely a device to approximate to the desired r e s u l t . - 155 - In such a case, "equal d i v i s i o n i s surely the l a s t thing the s e t t l o r ever intended; equal d i v i s i o n among a l l [members of the association] may, 147 probably would, produce a r e s u l t b e n e f i c i a l to none" . Nor are a l l pot- 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 to be considered. There i s therefore no need for a complete l i s t of e l i g i b l e r e c i p i e n t s before the trustees and the court can execute the terms of the t r u s t and e v i d e n t i a l uncertainty i n draw- 148 ing i t up i s not important . The t r u s t can be v a l i d even i n the absence 149 of e v i d e n t i a l c e r t a i n t y : The court i s never defeated by e v i d e n t i a l c e r t a i n t y Once the clas s of persons to be benefited i s conceptually c e r t a i n i t then becomes a question of f a c t to be determined on evidence whether any postulant has on enquiry been proved to be within i t ; i f he i s not so proved then he i s not i n i t . In other words, i f a person claiming to be within the conceptually 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 claim, he i s e n t i t l e d to the ri g h t s of a bene- f i c i a r y ; i f he can not, then he i s not so e n t i t l e d . Nevertheless, 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- ta i n t y , i t i s v a l i d and no further requirement need be met ^ ® . In the case of a member from time to time of an association, provided he can es- t a b l i s h by documentary or other evidence that he d i d indeed enter into a contract of membership, he i s a be n e f i c i a r y . In the case, however, of someone attempting to e s t a b l i s h that he i s the r e l a t i v e of X, for example, when a l l relevant b i r t h and marriage records have been destroyed, X's p a r t i c u l a r claim may f a i l because the 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 "for the r e l a t i v e s of X" would be v a l i d , since a di s c r e t i o n a r y t r u s t i s not defeated by e v i d e n t i a l uncertainty. The third type of uncertainty a r i s e s i f there i s doubt concerning - 156 - 151 "the whereabouts or continued existence of some members [of the c l a s s ] " who are nevertheless c l e a r l y within the d e f i n i t i o n of the cla s s of objects as a matter of conceptual c e r t a i n t y . Such uncertainty i s not important and both fixed and dis c r e t i o n a r y t r u s t s are v a l i d notwithstanding the lack of 1 a s c e r t a i n a b i l i t y 1 . The fouvth type of uncertainty causes a problem "where the meaning of the words used i s clear but the d e f i n i t i o n of 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 not to form 'anything l i k e a c l a s s ' , so that the t r u s t i s 152 administratively unworkable" . In such a case, the t r u s t w i l l f a i l . The exact scope of t h i s category i s unclear. To borrow the words of Prof- 153 essor Emery , i t appears that a t r u s t w i l l be held to be administratively unworkable "where the s e t t l o r has i n e f f e c t set h i s trustees an impossible task" with the r e s u l t that "the extent and nature of the duty i s ... so nebulous as to make i t unenforceable". For example, a dis c r e t i o n a r y t r u s t 154 for " a l l the residents of Greater London" would f a i l on the ground of administrative unworkability : the size and generality of the d e f i n i t i o n renders the t r u s t uncontrollable; there are no metes nor bounds set to the 155 exercise by the trustees of t h e i r d i s c r e t i o n ; no court would be able to judge whether or not trustees were performing t h e i r o bligations properly i n di 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 of an unincorporated association, on the other hand, gives trustees an easy task. In conclusion, therefore, i t i s apparent that the reason for the con- s i s t e n t f a i l u r e of g i f t s on t r u s t f o r the present and future members of an unincorporated a s s o c i a t i o n has not been the ce r t a i n t y requirements of a v a l i d t r u s t . The major hurdle under the head of c e r t a i n t y i s the need for conceptual certainty, and the notion of membership of an association - 157 - embodies a concept which admits of no doubt. 4. The Rule against Perpetuities The main problem with a g i f t on t r u s t for present and future mem- bers of an asso c i a t i o n i s the ru l e against p e r p e t u i t i e s . For example, an old I r i s h instance of a g i f t to the members of a society which f a i l e d be- cause i t was held to contemplate future as well as present members as bene- 156 f i c i a r i e s , was the case of Morrow V. M1 ConviVle where a g i f t of property fo r the use and benefit of a Roman Catholic convent was held to be non- 157 c h a r i t a b l e and void. Chatterton,V.-C. gave the reason as follows : [ A] g i f t , not char i t a b l e , to a r e l i g i o u s community, inclu d i n g not only the e x i s t i n g members, but also a l l persons who should be, or become thereafter, members of i t , during a period capable of extending beyond the l e g a l l i m i t s prescribed by the rule against p e r p e t u i t i e s , i s void. Future members may j o i n the society and become ascertained and t h e i r i n t e r e s t s i n the g i f t may vest at a time too remote from the date that the g i f t 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 discussion of the operation of the rule against p e r p e t u i t i e s i s beyond the scope and s i z e of t h i s t h e s i s , some comments are appropriate. (i) The Rule at Common Law The common law ru l e against remoteness of vesting (otherwise known as the ru l e i n The Duke of Norfolk's Case 1 5 8 ) runs as follows 1 5 9 : No i n t e r e s t i s good unless i t must vest, i f at 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 being at the creation of the i n t e r e s t . - 158 - It i s apparent with a g i f t to future members of an association that i n t e r e s t s w i l l probably vest more than twenty-one years 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 requires none of the exploration of improbable hypothetical s i t u a t i o n s , to which the courts are accustomed when dealing with the ru l e against p e r p e t u i t i e s , to r e a l i s e that c e r t a i n t y of vesting within the permitted period i s lacking. Furthermore, even i f the i n t e r e s t s of e x i s t i n g members w i l l vest i n time, a class g i f t can not be p a r t l y good and p a r t l y bad. I f , at the time the instrument comes int o operation, some members of the cl a s s , such as future members, are not c e r t a i n to be ascertained within the perpetuity period, then the whole g i f t i s too remote ^ ® m In sum, a g i f t on t r u s t for present and future members of an unincorporated association v i o l a t e s the common law rule 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 years, most common law j u r i s d i c t i o n s have passed 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 modifies the common law pe 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 that the l e g a l e f f e c t of a g i f t on t r u s t f o r the present and future members of an unincorporated a s s o c i - ation may have changed accordingly. Two provisions i n p a r t i c u l a r of the United Kingdom l e g i s l a t i o n may be relevant. I t was mentioned above that, at common law, an i n t e r e s t must, as of the date the g i f t takes e f f e c t , be absolutely c e r t a i n to vest within the perpetuity period. Under the l e g i s - l a t i o n , however, i f t h i s common law rule would render a g i f t void, i t i s nevertheless treated as v a l i d u n t i l events prove that the i n t e r e s t w i l l , 162 indeed, vest ( i f at a l l ) a f t e r the end of the perpetuity period . In the meantime, one waits to see what developments the passage of time - 159 - might bring. To use the example of a g i f t on t r u s t f o r the e x i s t i n g and future members of an unincorporated association, such a g i f t would, i n the absence of l e g i s l a t i v e reform, be struck down by the common law r u l e . This eventuality t r i g g e r s the operation of 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 to salvage the g i f t f o r the time being by pretending that the d i s p o s i t i o n i s not subject to the rule against p e r p e t u i t i e s at a l l . Prima facie and for at l e a s t the duration of the perpetuity period, the g i f t to the association's members i s v a l i d . The period of 'waiting and seeing' i s ca l c u l a t e d by reference to 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 current members i n good standing of the unincorporated as s o c i a t i o n at the date of the g i f t i n the case of an inter vivos donation, or a l l curr- ent members i n good standing of the association at the date of the donor's death i n the case of a testamentary donation are relevant l i v e s i n 163 being . However, t h i s assertion must be read subject to the provision that "the l i v e s of any description of persons f a l l i n g within paragraph (b) ... of [subsection 5] s h a l l be disregarded i f the number of persons of that d e s c r i p t i o n i s such as to render i t impracticable to ascertain the date of 164 death of the survivor" . I f t h i s p r o v i s i o n operates to render e x i s t i n g members unavailable as relevant measuring l i v e s , and the donation i s t e s t a - 165 mentary, "the period s h a l l be twenty-one years" . I t seems that future members of the association, though "pot e n t i a l members of the c l a s s " defined by the donor , do not q u a l i f y as statutory l i v e s i n being since they would not be " i n d i v i d u a l s i n being and ascertainable at the commencement of • ... 167 the perpetuity period The second p r o v i s i o n of the United Kingdom l e g i s l a t i o n which may - 160 - be relevant i n f a c i l i t a t i n g the i n i t i a l v a l i d i t y of a g i f t to the present and future members of an unincorporated association reverses the common law 168 ru l e that the share of every member of the donor's c l a s s of intended r e c i p i e n t s must be ascertainable within the perpetuity period. The pro- 169 v i s i o n runs e s s e n t i a l l y as follows : Where i t i s apparent at the time the d i s - p o s i t i o n i s made or becomes apparent at a sub- sequent time that, apart from t h i s subsection, the i n c l u s i o n of any persons, being p o t e n t i a l members of a clas s ... would cause the d i s p o s i t i o n to be treated as void f o r remoteness, those persons s h a l l , unless t h e i r exclusion would exhaust the cla s s , thenceforth be deemed for a l l the purposes of the d i s p o s i t i o n to be excluded from the c l a s s . In other words, the l e g i s l a t i o n permits separation of the good from the bad and probably reforms the g i f t to comply more c l o s e l y than was possible under the common law rule with the donor's intentions, who undoubtedly would have preferred part of the clas s to take i n the event that i t was impossible to give f u l l e f f e c t to h i s complete i n t e n t i o n with respect to the cl a s s as a whole. In the case of a g i f t to the present and future members of an unincorporated association, since there i s no time r e s t r a i n t placed upon the date of membership of future members, t h e i r i n c l u s i o n i n the class of r e c i p i e n t s w i l l evidently cause problems r e s u l t i n g i n the g i f t ' s being struck down for remoteness even at the end of the 'wait and see' period. In t h i s event, they should be excluded at that time from the cl a s s so that the g i f t can operate v a l i d l y i n favour only of a l l those who might be members of the association at that time. In order to summarise the perceived (though as yet untested) com- bined e f f e c t of the statutory reform on g i f t s on t r u s t f o r present and future members of unincorporated associations, i t i s h e l p f u l to r e f e r back to the example posed at the beginning of t h i s section of X's bequest - 161 - to A and B for the present and future members of the Greenthumb V i l l a g e 170 Gardening Society. Assuming that X died a f t e r July 15, 1964 , i t i s submitted that the correct approach i s , firstly, to apply the common law rule against p e r p e t u i t i e s to 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 that an infringement has indeed taken place. Since t h i s i s so, the second step i s to apply the statutory 'wait and see' provisions, with the r e s u l t that the g i f t i s given i n i t i a l v a l i d i t y . A v a l i d t r u s t has been created, at l e a s t for the time being, and A and B, the trustees, can proceed to 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 of future i n v a l i d i t y and without fear of such acts being 171 subsequently i n v a l i d a t e d . At the end of the 'wait and see' period (twenty-one years a f t e r the death of the l a s t surviving person who was a member of the Gardening Society on X's death), one can asce r t a i n whether or not, i n the events which have a c t u a l l y transpired, i n t e r e s t s under the g i f t have i n f a c t vested. I t i s possible, f o r example, that the Greenthumb V i l l a g e Gardening Society has been dissolved 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 could not prevent such a contingency. In such a turn of events, i n t e r e s t s i n the g i f t w i l l have vested i n time and the 'waiting and seeing' w i l l not have been i n vain, since X's wishes w i l l have been complied with for a p o t e n t i a l l y considerable period of time. At common law, they would have been f r u s t r a t e d ab initio. Assuming, however, that the Gardening Society i s s t i l l f l o u r i s h i n g i h Greenthumb at the end of the 'wait and see' period, i t i s then apparent that the third step must be taken. The i n t e r e s t s of future members ev i d - e n t l y w i l l not vest i n time so they must be excluded from the c l a s s . The prospective shares of those members then accrue f o r the benefit of the 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 donation - 162 - then vests. These members may then choose to terminate the t r u s t and d i v e r t the funds f o r t h e i r own personal use so, ultimately, X's wish to bene f i t the Gardening Society v i a i t s members w i l l be defeated. In the meantime, however, the statute has permitted the achievement of h i s aims. This conclusion i s subject, of course, to one q u a l i f i c a t i o n . In view of the wording of the g i f t as one to the members themselves, whether or not the members i n f a c t channel the income they receive under the t r u s t to the good of the Society 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 f e e l morally bound to do so but, i n the absence of obligations imposed upon them independently of the g i f t (for example, i n t h e i r contract of membership), they are under no legal o b l i g a t i o n . ( i i i ) Conclusion Recent cases have continued to t r e a t g i f t s on t r u s t for the present and future members of unincorporated associations as automatically i n v a l i d even when they take e f f e c t a f t e r 1964, disregarding the p o t e n t i a l l y s a l - vaging impact of the l e g i s l a t i v e reform discussed above. I t i s submitted that the courts i n so doing are i n error. By way of conclusion, i t i s submitted that i f , i n a l l the circumstances and on a f a i r construction of the donation, the true i n t e r p r e t a t i o n of i t s intent i s that a t r u s t f o r present and future members has been created, the above analysis of the e f f e c t of the l e g i s l a t i o n should be u t i l i s e d to permit the g i f t i n i t i a l 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 duration. The major disadvantage of arguing that a g i f t to an association should be interpreted as taking e f f e c t as one on t r u s t f o r i t s present and future members i s , of course, that the effectiveness and accuracy of - 163 - the above analysis are untested. Apparently the a p p l i c a b i l i t y of the statutory reform of the ru l e against p e r p e t u i t i e s has not been thoroughly 172 analysed by the courts, . Nevertheless, i t i s submitted that at l e a s t two considerations argue i n favour of i t s acceptance. In the f i r s t place, there i s nothing i n the l i t e r a l wording of the statute to prevent i t s a p p l i c a t i o n to g i f t s on t r u s t f o r the present and future members of unin- corporated associations. Secondly, p o l i c y arguments i n i t s favour are strong. The aim of the statutory provisions reforming the ru l e against 173 p e r p e t u i t i e s i n general has been summarised as follows : No longer w i l l family d i s p o s i t i o n s containing no threat to the pu b l i c i n t e r e s t , and reason- able bargains between business men, continue to be struck down i n the name of pu b l i c p o l i c y . Surely t h i s argument applies equally to g i f t s by well-meaning donors to the members of unincorporated associations? Whilst arguing the d e s i r a b i l i t y of the above analysis, i t i s at the same time acknowledged that i t by no means solves a l l the problems of e f f e c t i n g donations to unincorporated associations. As mentioned above, although i t permits a continuing benefit to be conferred by way of t r u s t , the b e n e f i t goes to the members, and w i l l accrue to the as s o c i a t i o n i t - s e l f only i f the members, present and future, f e e l morally compelled to 174 d i v e r t the funds i n t h i s manner . As a matter of t r u s t s law, the b e n e f i c i a r i e s are the members as i n d i v i d u a l s , not the ass o c i a t i o n . - 164 - FOOTNOTES : CHAPTER IV 1. If a g i f t i n these terms succeeds, prima faoie the present members of the as s o c i a t i o n acquire equitable i n t e r e s t s i n the fund. Once the trustees 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 terminated by the action of the bene- f i c i a r i e s (the members of the association) who can then, as a matter of t r u s t s law, d i v e r t the funds to t h e i r own use away from the association. I t i s possible, however, that the Contract Analysis may Intervene at t h i s stage : supra, pp 51-78. In other words, i t may be apparent as a matter of i n t e r p r e t a t i o n from the circumstances of the donation that the donor intended the as s o c i a t i o n and not i t s present members to derive a continuing benefit and that the nomination of the present members as b e n e f i c i a r i e s was merely a convenient device to i d e n t i f y the association as the r e c i p i e n t a c t u a l l y intended. In such a case, the nature of the as s o c i a t i o n as a contractual arrangement between the members w i l l p r e v a i l and the members' equitable i n t e r e s t s w i l l be subjected to contractual 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 other words, the Contract Analysis is- equally applicable whether the i n i t i a l method of donation to the members i s d i r e c t , giving them l e g a l t i t l e , or whether the i n i t i a l mechanism i s v i a a t r u s t , giving members equitable i n t e r e s t s . Since the operation of the Contract Analysis i s purely a matter of contract law, the property issue of l e g a l t i t l e versus equitable 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. Discussed supra, pp 51-78. 5. Subject to what w i l l be said i n the next section, 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 Goff,J. [1969]1 Ch.373 at 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, affirming (1804), 9 Ves.Jr.399; 32 E.R.656. 10. • For example, the Charity Commissioners, the Attorney General. 11. See generally, Hanbury & Maudsley, Modern Equity, l l t h . e d . , eds. R. H. Maudsley & J . E. Martin (London: Stevens, 1981), pp 210-216 ; Emery, "The Most Hallowed P r i n c i p l e - Certainty of B e n e f i c i a r i e s of Trusts and Powers of Appointment", (1982) 98 L.O.R.551. 12. 13. (1805), 10 Ves.Jr.522 at 539-540. See also, Leigh, "Trusts of Imperfect Obligation", (1955) 18 Mod'.L.R. 120. - 1 6 5 - 1 4 . [ 1 9 1 7 ] A.C . 4 0 6 ; 8 6 L.J.Ch.568 . 1 5 . For example, In re Diplock [ 1 9 4 1 ] Ch . 2 5 3 ; [ 1 9 4 1 ] 1 A l l E.R.193 , [ 1 9 4 1 ] Ch . 2 5 3 at 2 5 9 ; Re Astor's Settlement Trusts [ 1 9 5 2 ] Ch.534 ; [ 1 9 5 2 ] 1 A l l E.R.1067 at 1 0 7 0 . 16. Lords Dunedin, Parker of Waddington, Sumner and Buckmaster. Lord F i n l a y , L.C. dissented. 1 7 . [ 1 9 1 7 ] A.C . 4 0 6 at 4 7 8 . 1 8 . Ibid at 4 4 1 . I t a l i c s added. 1 9 . [ 1 9 7 9 ] 1 Q.B .10 ; [ 1 9 7 8 ] 3 A l l E.R.175 , affirmed, sub nom. Whitehouse V. Lemon [ 1 9 7 9 ] A.C . 6 1 7 ; [ 1 9 7 9 ] 1 A l l E.R.898. 2 0 . [ 1 9 1 7 ] A.C . 4 0 6 at 4 6 4 - 4 6 7 , per Lord Sumner. 2 1 . Ibid at 4 6 8 per Lord Buckmaster. 2 2 . Tennant Plays v. I.R.C. [ 1 9 4 8 ] 1 A l l E.R.506 . 2 3 . [ 1 9 1 7 ] A.C . 4 0 6 at 4 2 0 - 4 2 1 , per Lord F i n l a y , L.C. 2 4 . Bouzaid v. Horowhenua Indoor Bowls Centre Inc. [ 1 9 6 4 ] N . z.L.R . 1 8 7 . 2 5 . ( 1 9 5 8 ) , 12 D.L.R.(2d) 2 3 at 3 0 . 2 6 . S i m i l a r l y , Re Inman [ 1 9 6 5 ] V.R . 2 3 8 . 2 7 . [ 1 9 1 7 ] A.C . 4 0 6 at 4 6 4 - 4 6 7 , per Lord Sumner. 2 8 . Re Boardwalk Merchandise Mart Ltd. and the Queen ( 1 9 7 3 ) , 31 D.L.R. (3d). 1 6 2 at 1 8 0 . 2 9 . [ 1 9 1 7 ] A.C . 4 0 6 at 4 4 2 , per Lord Parker. 3 0 . For example, Re Shaw [ 1 9 5 7 ] 1 W.L.R.729; [ 1 9 5 7 ] 1 A l l E.R.745 ; Re Cooperative College of Canada and Saskatchewan Human Rights Commission ( 1 9 7 5 ) , 64 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, footnote 7 . 3 1 . Another example i s The Public Trustee v. Nolan ( . 1 9 4 3 ) , 4 3 State Reports (N.S.W.) 1 6 9 . There, income was dir e c t e d to be held on t r u s t "to erect a c a r i l l o n on s i m i l a r l i n e s to the one at Avalon . :.: Ca t a l i n a Island, C a l i f o r n i a , at such, place on Sydney Harbour, or on the foreshores thereof, or at Park H i l l , North. Head, as my: trustees may deem expedient, or to j o i n with any other person or persons- or p u b l i c body i n erecting such c a r i l l o n , and i t is- my desire that such, c a r i l l o n should be played i f possible on the a r r i v a l of and to welcome oversea l i n e r s coming into Sydney Harbour". The Supreme Court of New South Wales held that the t r u s t was void 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 and Bowman v. The Secular Society, supra, f o o t n o t e 14. Per Roper,J.: "That 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 the 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 and i s v o i d " (At 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, pp 107-114. 34. [1941] Ch.253 a t 259, per S i r W i l f r i d Greene, 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 M a c m i l l a n . 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, pp 114-116. 42. [1949] Ch.498 a t 502. I t a l i c s added. 43. The a u t h o r s o f Hanbury & Maudsley, op.cit.supra, f o o t n o t e 11, agree, p 429. See a l s o . P o t t e r , " T r u s t s f o r N o n - C h a r i t a b l e Purposes", (1949) 13.Conv.(N.S.)418. 44. F o r example, 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.Ch. 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 example, 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 , ' 2 n d . e d . (London: Stevens, 1962), pp 316-317 ,- Widdows, " T r u s t s i n Favour o f A s s o c i a t i o n s and 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 Conv.(N.S.)179 ; H a r t , "Some R e f l e c t i o n s on the Case o f Re Chardon", (.1937) 53 L.Q.R.24, pp 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 N o n - P r o f i t A s s o c i a t i o n s (Oxford : Cla r e n d o n , 1959), pp 27-28. 46. Per S i r Montague E. Smith i n leap Cheah Neo v. Ong Cheng Neo (1875) L.R.6 P.C.381 a t 394. - 1 6 7 - 4 7 . For example, i n Carne V. Long, supra, footnote 4 4 , the Lord Chan- c e l l o r ' s concern was not merely that the fund was rendered i n a l i e n - able (which alone was s u f f i c i e n t ground for s t r i k i n g down the g i f t ) but that i t would be i n a l i e n a b l e f or longer than the period of a l i f e i n being, plus twenty-one years - the perpetuity period r e l e - vant to, and borrowed from, remoteness of vesting r u l e s . 4 8 . Supra, footnote 4 4 . 4 9 . [ 1 9 3 6 ] Ch . 52 '0 ; 1 0 5 L.J.Ch.257 ; [ 1 9 3 6 ] 2 A l l E.R.93. 5 0 . [ 1 9 3 6 ] 2 A l l E.R.93 at 9 9 . 5 1 . For example, Re Button, supra, footnote 4 4 ; Re Clarke [ 1 9 0 1 ] 2 C h . 1 1 0 ; 70 L.J.Ch.6 3 1 . 5 2 . Re Button, ibid. 5 3 . For example, Carne V. Long, supra, footnote 4 4 . 5 4 . As i n , for example, Re Drummond [ 1 9 1 4 ] 2 Ch . 9 0 ; 83 L.J.Ch.817 : a g i f t to trustees to hold on t r u s t for an old boys' club, to be u t i l i - sed as the club's committee should think best for the school and the club ; Re Prevost [ 1 9 3 0 ] 2 C h . 3 8 3 ; 99 L.J.Ch.425 : a bequest to the trustees of the London Library on t r u s t for the general purposes of the l i b r a r y , i n c l u d i n g the benefit of the s t a f f . 5 5 . Supra, footnote 1 5 . See generally, Marshall, "The F a i l u r e of the Astor Trust", ( 1 9 5 3 ) 6 C.L.P . 1 5 1 ,- Leigh, op. ait. supra, footnote 1 3 . 5 6 . [ 1 9 5 2 ] 1 A l l E.R.1067 at 1 0 7 4 - 1 0 7 5 . 5 7 . Supra, pp 1 0 7 - 1 0 9 . 5 8 . This i s an adaptation to purpose t r u s t s of the t e s t of ce r t a i n t y i n dis 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 [ 1 9 7 1 ] A.C . 4 2 4 ; [ 1 9 7 0 ] 2 W.L.R.1110; [ 1 9 7 0 ] 2 A l l E.R.228. See further, infra, pp 1 5 2 - 1 5 7 . 5 9 . Supra, footnote 9 . 6 0 . Per Roxburgh,J. [ 1 9 5 2 ] 1 A l l E.R.1067 at 1 0 7 5 . 6 1 . W. N. Hohfeld, "Some Fundamental Legal Conceptions as Applied i n J u d i c i a l Reasoning", ( 1 9 1 3 ) 2 3 Yale L.J. 1 6 ; ( 1 9 1 7 ) 26 Yale L . J . 7 1 0 . 6 2 . [ 1 9 5 2 ] 1 A l l E.R.1067 at 1 0 7 1 . I t a l i c s added. 6 3 . Supra, footnote 8 . 6 4 . Pettingall v. Pettingall ( 1 8 4 2 ) , 1 1 L.J.Ch . 176 ; Mitford v. Reynolds ( 1 8 4 8 ) , 16 Sim.105 ; 17 L.J.Ch.238 ; 6 0 E.R.812 ; Re Dean ( 1 8 8 9 ) , 4 1 Ch..D.552 ; 58 L.J.Ch.693 ; Pirbright v. Salwey [ 1 8 9 6 ] W.N.86 ; Re Hooper [ 1 9 3 2 ] 1 Ch . 3 8 ; 1 0 1 L.J.Ch.61 ; Re Thompson [ 1 9 3 4 ] C h . 3 4 2 ; 1 0 3 L.J.Ch.162 . Discussed, infra, pp 2 2 0 - 2 2 6 . - 1 6 8 - 6 5 . [ 1 9 5 2 ] 1 A l l E.R.1067 a t 1 0 7 1 . 6 6 . Ibid a t 1 0 7 4 . See, Evans, "Purpose T r u s t s - F u r t h e r Refinements", ( 1 9 6 9 ) 32 Mod.L.R.96. Note t h a t M e s s r s . M o r r i s & Leach i n c l u d e ( a d m i t t e d l y w i t h r e s e r v a t i o n s ) i n t h e i r s u b - c l a s s i f i c a t i o n o f t h e s e 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 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 ( d i s c u s s e d supra,. pp 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 e x c e p t i o n s to t h e ' b e n e f i c i a r y p r i n - c i p l e ' : " ( 1 ) t r u s t s f o r the e r e c t i o n o r maintenance o f monuments o r graves; (2) t r u s t s f o r the 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 such t r u s t s are not 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 the maintenance 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 the 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 (though t h i s group 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 " . 6 7 . Supra, f o o t n o t e 8 . 6 8 . Supra, f o o t n o t e 1 4 . 6 9 . Supra, f o o t n o t e 3 9 . 7 0 . I t i s always 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 choose not t o i n i t i a t e p r o c e e d i n g s . 7 1 . Note, however, t h a t Re Astor has a l s o been d i s t i n g u i s h e d on the ' 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.33 a t 4 3 - 4 4 . D i s c u s s e d infra pp 1 3 2 - 1 5 0 . 7 2 . [ 1 9 6 0 ] C h . 2 3 2 ; [ 1 9 5 9 ] 3 W.L.R.799; [ 1 9 5 9 ] 3 A l l E.R.5 6 2 . 7 3 . [ 1 9 5 2 ] 1 A l l E.R.1 0 6 7 a t 1 0 7 1 - 1 0 7 4 . Supra, pp 1 2 5 - 1 2 6 . 7 4 . [ 1 9 5 9 ] 3 A l l E.R.562 a t 5 6 8 . 7 5 . Ibid, a t 5 7 0 - 5 7 1 . 7 6 . Note, however, t h a t L o r d Evershed,M.R. used r a t h e r an i n t e r e s t i n g c ase 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 (unreported) was v e r y s i m i l a r t o t h a t i n Endacott, y e t the t r u s t was u p h e l d . I t s r e l i g i o u s o v e r t o n e s 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, Roxburgh, J . (of Re Astor fame) seemed p r e p a r e d to u p h o l d i t even as a n o n - c h a r i t a b l e p urpose t r u s t , d e s p i t e t h e absence 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 have 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 a r e v e r y f i n e . I c o u l d c o n s t r u e the words as meaning such purposes (of a r e l i g i o u s c h a r a c - t e r ) as they may t h i n k f i t , b e i n g s u i t a b l e as a memorial; 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 meaning any purpose 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 ground on which t h i s t r u s t can 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 went 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 . Purpose must embody a d e f i n i t e c o n c e p t " . (Quoted by 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 at 569. 77. Supra, footnote 30. 78. Ibid, at 753-757. 79. Bowman v. The Secular Society, supra, footnote 14, and pp 109-114. 80. [1957] 1 A l l E.R.745 at 758. 81. Constrained by Re Astor from upholding the bequest as a t r u s t , Harman,J. had wanted to hold i t v a l i d as a power (at 759). Though there could be no guarantee of performance, at l e a s t t h i s would more c l o s e l y approximate to the testator's intentions than t o t a l f a i l u r e . There was strong authority against t h i s course of action, 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 undertaking from the trustees that trey would carry out the purposes. This was achieved by a compromise, the v a l i d i t y of which was affirmed by the Court of Appeal : Re Shaw [1958] 1 A l l E.R.245. 82. Supra, footnote 44. Discussed f u l l y , supra, pp 33-50. 83. New South. Wales Conveyancing Act 1919-1954, S.37D. 84. [1959] A.C.457 at 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 . at 60. I t a l i c s added. 87. Discussed i n the preceding chapters, pp 33-78. 88. Discussed supra, pp 33-50 & pp 51-78. 89. Supra, footnote 15. 90. Supra, footnote 73. 91. Supra, footnote 44. 92. Supra, footnote 6. See generally, Evans, op.cit.supra, footnote 66 ; McKay, "Trusts for Purposes - Another View", (1973) 37 Conv.(N.S.) 420. 93. Supra, pp 121-12 7. 94. [1969] 1 Ch.373 at 382-383. 95. Ibid at 383. 96. Ibid at 383-384. 97. S p e c i f i c a l l y , Re Lipinski's Will Trusts, supra, footnote 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. United Kingdom Charitable Trusts (Validation) Act 1954, 2 & 3 E l i z . I I , c.58, s . l ( l ) . 100. [1962] Ch.78 at 91 and 96, re 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. United Kingdom S e t t l e d Land Act 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 at 383-384. 105. See, McKay, op.ait.supra, footnote 92. 106. For an attempt at answering them, see, McKay, op.cit. supra, foot- note 92. 107. [1969] 1 Ch.373 at 383. 108. Another a l t e r n a t i v e i s that i t creates a f i d u c i a r y power - not a t r u s t at a l l . Another suggestion i s that the Denley-type t r u s t represents a convergence of pr i v a t e and purpose t r u s t s : L o v e l l , "Non-Charitable Purpose Trusts - Further Relections", (1970) 34 Conv.(N.S.)77, pp 78-80. 109. [1969] 1 Ch.373 at'383 C. 110. Ibid at 383 G. 111. This i s evidently the view of McKay,"Re L i p i n s k i and G i f t s to Unincorporated Associations", (1977) 9 V.U.W.L.R.I, pp 8-12. 112. [1841] Cr.s Ph.240; 10 L.J.Ch.354. See also, 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. For a review of the rule's a p p l i c a t i o n i n Canada, see, Waters, Law of Trusts i n Canada (Toronto: Carswell, 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, footnote 71 [1977] 1 A l l E.R.33 at 42-46. 114. For a b r i e f discussion of t h i s topic, see infra, pp 157-162. 115. Supra, footnote 58. 116. Per Lord Wilberforce [1970] 2 A l l E.R.228 at 246. For a recent and thorough analysis of the c e r t a i n t y requirement, see, Emery, op.cit. supra, footnote 11. See also, 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 their 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. Cri t i c i s e d on this issue in, Green, "'Love's Labours Lost': A Note on Re Grant's Will 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 Oliver,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 distinction was rejected in that context in 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 did Rickett, "Mr. Justice Vinelott on Unincorporated Associations and Gifts 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 criticism 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, footnote 44 [1959] 2 A l l E.R.300 at 306 ,- Re Recher's Will Trusts, supra, footnote 133 [1971] 3 A l l E.R.401 at 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 at 524. 142. See also the discussion, supra, pp 123-124. 143. For example, McPhail v. Doulton, supra, footnote 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. For example, Hopkins, "Certain Uncertainties of Trusts and Powers", (1971) 29 C.L.J.68 ; Harris, "Trust, Power and Duty", (1971) 87 L.Q.R.31 ; McKay, "Re Baden and the Third Class of Certainty", (1974) 38 Conv.(N.S.)269 ; Emery, op.cit.supra, footnote 11. 145. A c l a s s i f i c a t i o n used by Emery, op.cit.supra, footnote 11. 146. Discussed presently, infra,pp 157-163. 147. Per Lord Wilberforce, McPhail V. Doulton, supra, footnote 58 [1971] A.C.424 at 451. 148. McPhail v. Doulton, ibid, overruling Inland Revenue Commissioners v. Broadway Cottages Trust, supra, footnote 117, which, had held that a complete l i s t of b e n e f i c i a r i e s was necessary i n both, cases. Also discussed, supra, pp 142-143. 149. Per Sachs, L.J. i n Re Baden's Deed Trusts (No.2), supra, footnote 143 [1973] Ch.9 at 20. 150. Cf. Megaw,L.J., ibid at 24 and Stamp,L.J., ibid at 27-28. 151. Per Lord Upjohn i n Re Gulbenkian's Settlement Trusts, supra, footnote 140 [1970] A.C.508 at 524. 152. Per Lord Wilberforce i n McPhail V. Doulton, supra, footnote 58 [1971] A.C.424 at 457. 153. Op.cit.supra, footnote 11, p 558. 154. Per Lord Wilberforce i n McPhail V. Doulton, supra, footnote 152. 155. see Blausten v. Inland Revenue Commissioners [1972] Ch.256 discussed i n Re Ray's Settlement Trusts, supra, footnote 143. 156. (.1883), 11 L.R.Ir.Eq.236. - 173 - 157. Ibid a t 246. 158. (1683), 2 Swan.454; 3 C h . C a s . l ; 22 E.R.931. 159. Gray, The Rule 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., 1942), i 201. 160. Leake V. Robinson (1817), 2 Mer.363; 35 E.R.979. See, M o r r i s & Leach, op.ait.supra, f o o t n o t e 45, pp 101 f f ; Leach, "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 C l a s s e s " , (1938) 51 Harv.L.R.1329. 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.55; i n Canada, f o r example, B r i t i s h Columbia P e r p e t u i t y A c t , R.S.B.C. 1979, c.321; 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 Law Reform ( P r o p e r t y , P e r p e t u i t i e s and 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 o f r e f o r m e n a c t e d i n o t h e r j u r i s d i c t i o n s see, Maudsley, The Modern Law o f P e r p e t u i t i e s (London : B u t t e r w o r t h s , 1979), pp 247-256. 162. U n i t e d Kingdom A c t , s . 3 ( l ) . 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 , ss.4, 5; New Z e a l a n d A c t , s.8; Western 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 ) . 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.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 A c t , 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 ) . I t a l i c s added. 168. Supra, pp 157-158. 169. U n i t e d Kingdom A c t , s . 4 ( 4 ) . 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 . 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 A c t , s . 1 0 . 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.Regs.464/78, January 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 ) . 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.13; New Z e a l a n d A c t , s . 8 ( l ) . 172. I t appears 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 the s u p e r i o r c o u r t s o n l y i n the 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 Reform-at L a s t " , (1964) 80 L.Q.R.486, p 5 34. - 174 - 174. This problem may be solved i n p a r t by the members' c o n t r a c t of a s s o c i a t i o n which may compel members to u t i l i s e funds given d i r e c t l y or on t r u s t i n a s p e c i f i e d manner or be sued f o r breach of c o n t r a c t i n d e f a u l t . For the operation, advantages and d i s - advantages of t h i s mechanism, see supra, pp 51-78. I t i s em- phasised, however, th a t any guarantee secured to 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 nothing to do w i t h the i n i t i a l mechanism of donation by way of t r u s t ; i t i s superimposed subsequently by v i r t u e of 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 nature of 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 - Part One explained the nature of the problem posed by the f a c t that an unincorporated as s o c i a t i o n does not have the l e g a l capacity i t s e l f to be the r e c i p i e n t of a donation. Various analyses are nevertheless a v a i l a b l e i n the current law of the mechanism whereby donations can be made to an unincorporated association. The purpose of Part Two was to o u t l i n e nine such analyses. The aim of Part Three i s to 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 to the problem. As was explained i n Part Two, none of the nine analyses of g i f t s to unincorporated associations which have been formulated from time to time i s s a t i s f a c t o r y . At present, the common law has no analysis which provides a donor with both of the two r e s u l t s for which he aspires : that i s , both the v a l i d i t y of his: g i f t to the unincorporated association, and a guarantee that h i s g i f t w i l l e f f e c t i v e l y benefit the association, and no one e l s e . The Absolute G i f t Analysis e n t a i l s that the g i f t take e f f e c t as one to the current members of the association who are then under no more than a moral o b l i g a t i o n to u t i l i s e the funds for the purposes of the association. The same i s true of a g i f t on t r u s t for the current members of the a s s o c i - a t i o n . A g i f t on t r u s t for present and future members of the association i s l i k e l y to f a i l i n the current state of the law. Even i f t h i s were not the case, such an analysis of a g i f t to the association would be unsatis- factory i n that, although i t introduces an element of continuity to the "benefit derived from the g i f t which i s lacking i n the Absolute G i f t Analysis and the analysis of the g i f t as one on t r u s t for only the present members of the association, again the r e c i p i e n t s of the g i f t are merely under moral obligations: to use the fund to the advantage of the association of which they are members. There i s no l e g a l guarantee of benefit to the association - 177 - i t s e l f . If the Contract Analysis i s used, again the actual r e c i p i e n t s of the g i f t are the present members of the association and i t i s only by v i r t u e of personal contractual obligations that they are restrained from using the donated funds f o r t h e i r own gain. This r e s u l t s i n both concep- t u a l and p r a c t i c a l weaknesses, and by no means guarantees that the intended r e c i p i e n t - the association i t s e l f - w i l l benefit from the donation. Generally speaking, the Mandate Theory suffers from the same defect and provides only the l i m i t e d guarantee of due performance furnished by a contractual bond. Furthermore, each, of the four B u r r e l l Theories of Dona- t i o n i s a v a i l a b l e only i n the case of inter vivos g i f t s and provides no general s o l u t i o n to the problem of g i f t s to unincorporated associations. I t i s to the law of t r u s t s that one must turn to 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 Part Two, a t r u s t f or the non-charitable purposes of an unincorporated a s s o c i a t i o n shares the fate of a l l non-charitable purpose t r u s t s i n the current state of the law. Such t r u s t s are v a l i d only i n narrowly defined, exceptional cases which, are inadequate f o r general use. In a l l other cases, a non-charitable 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 . Part Three therefore o f f e r s an analysis which would permit a g i f t on t r u s t f o r the non-charitable purposes of an unincorporated association to be v a l i d , thus furnishing the guarantee of performance i n favour of the a s s o c i a t i o n I t s e l f which a l l current analyses lack. I t i s an uncontested and basic p r i n c i p l e that a t r u s t must be enforceable to 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 with 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 also contain some mech- - 178 - anism whereby the d u t i e s o f i t s t r u s t e e s can be e n f o r c e d . T h i s t h e s i s i n no way q u e s t i o n s t h e v a l i d i t y o f t h e s e n t i m e n t t h a t " i t i s not p o s s i b l e t o c ontemplate w i t h e q u a n i m i t y t h e c r e a t i o n o f l a r g e funds d e v o t e d t o non- c h a r i t a b l e purposes which no c o u r t and no department o f S t a t e can c o n t r o l , o r , i n the case o f m a l a d m i n i s t r a t i o n , r e f o r m " However, the ' b e n e f i c i a r y p r i n c i p l e ' , which has p r e v a i l e d i n the common law f o r o v e r t h i r t y y e a r s , s t a n d s f o r t h e p r o p o s i t i o n t h a t t h i s r e q u i r e m e n t o f e n f o r c e a b i l i t y can be s a t i s f i e d only- by- t h e p r e s e n c e o f d i r e c t b e n e f i c i a r i e s o f t h e t r u s t . I t w i l l be. argued t h a t t h i s t a k e s t o o r e s t r i c t e d a view o f the need f o r c o n t r o l o v e r t r u s t e e s , and t h a t t h e ' b e n e f i c i a r y p r i n c i p l e ' s h o u l d be s u p p l a n t e d by the s o - c a l l e d ' c o n t r o l p r i n c i p l e ' . In b r i e f , the ' c o n t r o l p r i n c i p l e ' , l i k e t h e ' b e n e f i c i a r y p r i n c i p l e ' , acknowledges t h a t a t r u s t must be e n f o r c e a b l e . As compared w i t h the 'bene- f i c i a r y p r i n c i p l e ' , however, i t argues t h a t the r e q u i s i t e element o f con- t r o l can be s u p p l i e d by any one o f numerous c l a s s e s o f p e r s o n s 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 , p r o v i d e d t h a t t h e y p o t e n t i a l l y have a c l a i m o v e r , o r i n t e r e s t i n , the s u b j e c t - m a t t e r o f t h e t r u s t . I t w i l l be contended t h a t such, p e r s o n s i n c l u d e t h e f o l l o w i n g c a t e g o r i e s , each o f which w i l l be d i s - c u s s e d i n th e pages which f o l l o w :- i . D i r e c t b e n e f i c i a r i e s o f t h e t r u s t : t h a t i s , t r a d i t i o n a l cestuis que trust 2; i i . 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 t r u s t : t h a t i s , i n d i v i d u a l s who, though not d i r e c t b e n e f i c i a r i e s , n e v e r t h e l e s s e n j o y a de facto advantage from 3 t h e e x i s t e n c e and 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 ; i i i . The s e t t l o r who c r e a t e s an inter vivos t r u s t and who, b e i n g i d e n t i f i a b l e , s tands t o r e g a i n - 179 - the funds by way of reverter on r e s u l t i n g 4 t r u s t ; i v . The representatives of the estate of a tes- tator who creates a testamentary t r u s t who likewise stand to receive the funds under the 5 r e s u l t i n g t r u s t doctrine : v. A testator's legatees who may benefit by way of r e s u l t i n g t r u s t ^; v i . Those e n t i t l e d on the intestacy of a deceased donor who creates the t r u s t i n question over his residuary estate with no further p r o v i s i o n 7 f o r undisposed-of funds ; v i i . The Crown, i n the case of t r u s t s created by anon- ymous or u n i d e n t i f i a b l e persons, and so on, 8 because of the notion of bona vacantia ; v i i i . The residuary legatees or remaindermen ( i f any) 9 named i n the t r u s t deed I t w i l l be argued that each of the above classes of persons has standing to go to court and control the trustee i n h i s dealings with the funds entrusted to him. The existence of any one i n d i v i d u a l within any of the above classes s u f f i c e s to 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 non-charitable purpose t r u s t which lacks human b e n e f i c i a r i e s . This use of the 'control p r i n c i p l e 1 to analyse g i f t s which v a l i d l y take e f f e c t by way of non-charitable purpose t r u s t w i l l be c a l l e d the Control Analysis. The Control Analysis as thus formulated i s consistent with the basic p r i n c i p l e that a t r u s t must be enforceable. I t i s also desirable - 180 - as a matter of pu b l i c p o l i c y i n that, generally speaking, non-charitable purpose t r u s t s are created to further causes which are at worst unobject- ionable, and at best b e n e f i c i a l to society as a whole. I t i s submitted that the present a t t i t u d e towards non-charitable purpose t r u s t s s t i f l e s harmless displays of generosity without good reason. Consistent as i t may be with basic 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 that the Control Analysis may run in t o prac- t i c a l problems. The objection can be v a l i d l y made that, as a matter of p r a c t i c e and f a c t , c e r t a i n of the above classes of persons i n p a r t i c u l a r could not be r e l i e d upon to exert e f f e c t i v e control over trustees. This may be so f o r eit h e r of two reasons: the expense of l i t i g a t i o n may out- weigh, the p o t e n t i a l f i n a n c i a l advantage ( i f any), to the i n d i v i d u a l of due administration of 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 benefit from maladministration of the t r u s t (classes 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 that such considerations- are strong arguments against the v a l i d i t y of the 'control p r i n c i p l e ' as a general p r i n c i p l e of the law of 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 analysis of a l l g i f t s on non-charitable purpose t r u s t . In the s p e c i f i c area of donations to unincorporated associations, however, the objection loses i t s force e n t i r e l y . This i s because, to the classes i i through v i i i of 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 following i n the case of a g i f t to an unincorporated a s s o c i a t i o n : - i x . The members of the unincorporated association I t w i l l be demonstrated that the members of an unincorporated 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 of the trustees who hold funds on - 181 - t r u s t f o r that association. Since t h i s i s so, the t r u s t i s enforceable. As a matter of 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 , therefore, a g i f t on t r u s t f o r the non-charitable purposes of an unincorporated a s s o c i a t i o n ought to be v a l i d . Above a l l , i f a g i f t to an unincorporated association were i n t e r - preted i n accordance with the Control Analysis, the analysis would suff e r from none of the d e f i c i e n c i e s observed i n Part Two as inherent i n a l l nine analyses discussed there. In the f i r s t place, as compared with the current analyses of g i f t s on non-charitable purpose t r u s t , which i s based on the 'beneficiary p r i n c i p l e ' , under the Control Analysis the g i f t would be v a l i d . Secondly, as- compared with the Absolute G i f t Analysis, the Contract Analysis and the analyses whereby the g i f t takes e f f e c t on t r u s t f o r members, under the Control Analysis no l e g a l r i g h t s over the donated funds would accrue to the association's members. Although the members might i n d i r e c t l y enjoy the advantage of membership of an enriched a s s o c i - ation, the benefit accrues to the association i t s e l f . T h i r d l y , as com- pared with, the Burrell Theories of Donation, and (again) the Contract Analysis, under the Control Analysis enjoyment by the as s o c i a t i o n of that benefit i s guaranteed by the machinery and remedies of t r u s t s law. The discussion w i l l proceed i n three chapters. The f i r s t chapter w i l l explain the nature and s i g n i f i c a n c e of the 'control p r i n c i p l e ' and i t s r o l e within the Control Analysis. The second w i l l demonstrate the operation of the Control Analysis as an analysis of at~l non-charitable purpose t r u s t s . The t h i r d w i l l deal s p e c i f i c a l l y with, the Control Analysis of g i f t s on t r u s t f o r the non-charitable purposes of an unincorporated association. * * * * * * * * * * - 1 8 2 - FOOTNOTES : PART THREE, INTRODUCTORY COMMENTS 1 . [ 1 9 5 2 ] 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 2 0 3 - • 2 0 8 . 5 . Infra,pp 2 0 8 - • 2 0 9 . 6 . Infra, p p 2 0 8 - • 2 1 3 . 7 . 8 . Infra,pp 2 1 3 - • 2 1 7 . 9 . Infra, p p 2 1 7 - • 2 2 7 . 1 0 . Infra,pp 2 3 3 - • 2 5 3 . - 183 - I. THE CONTROL PRINCIPLE 1. Introduction In order to be v a l i d , a t r u s t must s a t i s f y at l e a s t three major requirements. I t s objects must be described with s u f f i c i e n t c e r t a i n t y 1 ; 2 i t must comply with the r u l e against p e r p e t u i t i e s ; and i t must be en- forceable. Throughout t h i s chapter, i t i s assumed that the f i r s t two requirements have been met i n any p a r t i c u l a r instance, and the emphasis f a l l s t o t a l l y on the requirement of e n f o r c e a b i l i t y . The f a c t that the obligations of a trustee must be subject to enforcement by the courts of equity i s a basic and fundamental p r i n c i p l e 3 of the law of t r u s t s . The reason i s simple : There can be no t r u s t , over the exercise of which t h i s Court w i l l not assume a control; for an uncontrollable power of 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 "control" that the p r i n c i p l e which demands a t r u s t to be c o n t r o l l a b l e i s r e f e r r e d to here as the 'control p r i n c i p l e ' . This chapter w i l l examine the meaning and nature of 'control' i n t h i s con- text . 4 I t may be r e c a l l e d that the 'beneficiary p r i n c i p l e ' demands that a t r u s t be subject 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 e n f o r c e a b i l i t y . I t w i l l be argued that t h i s i s an o v e r l y - r e s t r i c t i v e i n t e r p r e t a t i o n of the need for control and that the 'beneficiary p r i n c i p l e ' i s , i n f a c t , merely one i l l u s t r a t i o n of the broader and more f l e x i b l e 'control p r i n c i p l e ' . The 'control p r i n c i p l e ' w i l l be formulated as follows : 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 the - 184 - need for e n f o r c e a b i l i t y , 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 at l e a s t one i d e n t i f i a b l e person i n existence who has s u f f - i c i e n t i n t e r e s t i n the operation of the t r u s t that he may draw a court's att e n t i o n to the trustees' conduct i n r e l a t i o n thereto i f the need a r i s e s . 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 perform the nec- essary function of c o n t r o l l i n g the execution of a t r u s t i n t h e i r favour, i t w i l l be seen that exactly the same function can be performed by other i n d i v i d u a l s whose i n t e r e s t i n the.trust confers upon them the standing to 5 exert co n t r o l . 2. The Need for Control In the eyes of the law, when a trustee i s appointed by a t r u s t deed, w i l l or declaration of t r u s t and the property which i s the subject-matter of the t r u s t i s transferred to him, the trustee becomes the l e g a l owner of that property. The l e g a l estate i s vested i n h i s name and he holds l e g a l t i t l e . Yet, i f the t r u s t i s v a l i d , the law of 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 t r u s t . No contract 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 representatives i n the case of a testamentary t r u s t . Furthermore, i f the t r u s t has d i r e c t b e n e f i c i a r i e s , 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 trustee necessarily bound by contractual duties- of t h i s nature. How then, can: the t r u s t .arrange- ment function to achieve the expressed purposes of the trust? How can there be any guarantee that the trustee w i l l not exercise the l e g a l r i g h t s and p r i v i l e g e s which, he enjoys as- owner and d i v e r t the property to h i s own use? - 185 - 6 The key l i e s i n the notion of f i d u c i a r y o b l i g a t i o n : Equity has intervened and not simply to prevent s e l f - i n t e r e s t e d action. I t has imposed a general 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 deals with and exercises his d i s c r e t i o n s . The key word i s "c o n t r o l " . By conferring on a trustee the s p e c i a l status of f i d u c i a r y , equity has recognised the need for control over his owner- ship. "Control" i s used above and throughout t h i s discussion i n i t s every- day, non-legal sense to denote a simple concept. In the words of the Short- er Oxford English Dictionary, to " c o n t r o l " someone means "to exercise r e - s t r a i n t or d i r e c t i o n upon the free action of" that person. Therefore, control by the courts of equity over the trustee as l e g a l owner, without which a t r u s t would not v a l i d l y e x i s t , i s achieved by the imposition of a f i d u c i a r y o b l i g a t i o n upon the trustee by those courts. The statement that the trustee owns the t r u s t property i s only true to the ex- tent that 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 to the property. Without t h i s c o n t r o l , the trustee's ownership would be absolute and he could d i v e r t t r u s t funds to h i s own use. As a f i d u c i a r y , on the other hand, the trustee i s r e s t r a i n e d from dealing with the t r u s t property as h i s own or otherwise i n breach of the terms of the t r u s t , both by controls implied by equity once the t r u s t comes into being and by the s p e c i f i c and express l i m i t s set out i n the t r u s t deed or stated i n the declaration of t r u s t . The parameters of the trustee's own- ership of t r u s t property are thus determined by the extent and scope of equity's c o n t r o l . In sum, therefore, the 'control p r i n c i p l e ' stands for the p r o p o s i t i o n that, i f an arrangement confers l e g a l ownership on a person but lacks a mechanism of c o n t r o l l i n g that 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 universal and holds true for both non-charitable and charitable t r u s t s . Insofar as charitable t r u s t s are concerned, i t was 7 pointed out at the very beginning of t h i s thesis that any d e t a i l e d d i s - cussion of the law r e l a t i n g to charitable t r u s t s would be omitted. This was because, i n general, they stand quite apart, i n a category of t h e i r own, and are given quite d i f f e r e n t treatment from t r u s t s f o r purposes and people of g a non-charitable nature . Nevertheless, the presence of con t r o l over the actions of the trustees i s as important to the v a l i d i t y of a charitable t r u s t as i t i s to the v a l i d i t y of a non-charitable t r u s t and a charitable t r u s t can only be v a l i d i f i t i s subject to the control of the courts of equity. However, co n s i s t e n t l y with the 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 recognition of t h e i r value to society and the State, a mechanism of control i s automatically a v a i l a b l e v i a the Crown. The Master of the R o l l s , S i r W i l f r i d Greene, explained the p o s i t i o n with c l a r i t y 9 i n Re Diplook -. [T]he Crown, as parens pa t r i a e taking a l l c h a r i t i e s under i t s protection, i s i n a p o s i t i o n to enforce the t r u s t ; and therefore, although there may be no s p e c i f i e d c haritable b e n e f i c i a r y who can come to the Court and i n s i s t on having the t r u s t performed, nevertheless the Attorney-General can appear and i s e n t i t l e d to i n s i s t on the t r u s t being c a r r i e d out, i f necessary, by a scheme cy pres. Equity's concern that the t r u s t be under control i s s a t i s f i e d by the presence of someone who has r i g h t s of con t r o l over the arrangement. In the case of non-charitable t r u s t s , however, the i d e n t i f i c a t i o n of a method of con t r o l to s a t i s f y the 'control p r i n c i p l e ' can be more problem- a t i c . The f a c t that the current law acknowledges that the existence of human b e n e f i c i a r i e s provides adequate control i s of l i t t l e assistance unless the basis of t h e i r a b i l i t y to control i s understood. Again, i t i s submitted - 187 - that the key l i e s i n the notion of 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 , the existence of an o b l i g a t i o n i s meaningless unless i t i s perfected by the exis- tence of a corresponding r i g h t . In order to ascer 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 of the trustee'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 that the over r i d i n g o b l i g a t i o n of a trustee as a f i d u c i a r y i s to deal with the property to which he holds t i t l e i n accordance with the terms of the t r u s t , which a l l o c a t e to numer- ous p a r t i e s t h e i r respective i n t e r e s t s i n the t r u s t property. I f he broke h i s o b l i g a t i o n and used the funds f o r h i s own benefit, that a l l o c a t i o n would be upset. Therefore, i t i s submitted that each of those p a r t i e s to whom i n t e r e s t s have been a l l o c a t e d should have the r i g h t to prevent such an eventuality. They should be e n t i t l e d not to have those i n t e r e s t s impaired or i n t e r f e r e d with by the trustee. Only i f the existence of these r i g h t s can be found does the f i d u c i a r y o b l i g a t i o n become enforceable and control over the 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 that the 'control p r i n c i p l e ' i s s a t i s f i e d and the tr u s t is- v a l i d . That t h i s i s the true basis of the a b i l i t y of d i r e c t b e n e f i c i a r i e s to s a t i s f y the 'control p r i n c i p l e ' w i l l now be demonstrated. 3. Control by Direct B e n e f i c i a r i e s S conveys land to X and Y on t r u s t for h i s children, A,B and C to set up i n business when they reach twenty-one. A,B and C are d i r e c t bene- f i c i a r i e s of the t r u s t to whom p o t e n t i a l i n t e r e s t s i n the t r u s t property have been a l l o c a t e d . I t i s evident that, whatever else they may have ^ , they have a pecuniary i n t e r e s t i n the t r u s t property. I f X.,and Y broke - 188 - t h e i r f i d u c i a r y obligations and sold the land to P, a bona fide pur- chaser of the l e g a l estate for value without notice, A, B and C would s u f f e r a pecuniary l o s s . They therefore have a r i g h t to r e s t r a i n the trustees from dealing with the property otherwise than i n accordance with the terms of the t r u s t . This r i g h t gives them standing to go to court and exert con- t r o l over them. Inter alia, they may ask for an i n j u n c t i o n or, i f the breach has already occurred, an account. The t r u s t therefore contains a c o n t r o l mechanism and i n t h i s manner s a t i s f i e s the 'control p r i n c i p l e ' . The t r u s t i s enforceable and v a l i d . I t i s unfortunate that the law of income tax - the "cuckoo i n equity's nest" ^ - has caused some confusion i n t h i s area by r e d e f i n i n g the p o s i t i o n of the d i r e c t b e n e f i c i a r y within the t r u s t arrangement. In Bahev V. Avoher- 12 Shee , f o r example, trustees were treated, not as l e g a l owners of the s e c u r i t i e s that comprised the t r u s t fund, but as a mere conduit for the passage of funds to the t r u s t ' s b e n e f i c i a r y . As a r e s u l t , the l a t t e r became taxable on the income received from the t r u s t . This was equivalent to saying that the trustee was: an agent of the b e n f i c i a r y . This s t r i k e s at the very essence of trusteeship since i t places the beneficiary, not the trustee, at the heart of the r e l a t i o n s h i p . I t makes the b e n e f i c i a r y the owner of the 13 t r u s t property, which destroys the whole concept of a t r u s t As Viscount Sumner stated i n h i s dissenting 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, for income tax purposes, i n my view own and i s not en- t i t l e d to any of the stocks, shares, s e c u r i t i e s or r e a l property that form part of the V.. t r u s t estate. These belong to the trustee company A l l that she has i s a r i g h t , i n the forum of the trustee and of the t r u s t fund, to have the t r u s t - 189 - executed i n her favour under an order to be made for her benefit by the appropriate Court of equity. As the 'control p r i n c i p l e 1 asserts, the true p o s i t i o n of the d i r e c t bene- f i c i a r y of a t r u s t i s as a right-holder, capable of c o n t r o l l i n g the trustee i n case of misapplication of funds, but otherwise merely the passive r e - c i p i e n t of any benefits to which he i s e n t i t l e d . He can not i n s t r u c t the trustees on matters i n v o l v i n g the t r u s t , nor can he become personally l i a b l e to t h i r d p a r t i e s for the actions of the trustees. Any resemblances between the agent/principal r e l a t i o n s h i p and the trustee/beneficiary r e l a t i o n s h i p are amply outweighed by fundamental differences ^ . I t i s therefore to be hoped that the view that a b e n e f i c i a r y holds a proprietary i n t e r e s t i n the t r u s t property i t s e l f which i s administered for him by a trustee as a mere agent w i l l be r e s t r i c t e d to taxation 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 to the income which was the subject-matter 16 of the t r u s t . Whenever the issue involves the working and supervision of 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 of u l t i - mate ownership i n the property derived from the a l l o c a t i o n of i n t e r e s t s expressed i n the terms of the t r u s t . Meanwhile he evidently has a pecuni- ary i n t e r e s t i n the due administration of the t r u s t and i s thereby e n t i t l e d to go to court and assert control over the trustee to ensure that he exer- cises f a i t h f u l l y and without-negligence.the administrative r o l e held 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 thereby exercise the control r i g h t s that are e s s e n t i a l to the t r u s t arrangement. I t i s for t h i s reason that a t r u s t which has d i r e c t b e n e f i c i a r i e s i s v a l i d . 4. Control by Persons Other Than Di 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 s a t i s f y the 'control p r i n c i p l e ' , i t becomes apparent that t h i s i s not exclusive to d i r e c t b e n e f i c i a r i e s alone. Their r i g h t to exercise control i s derived from t h e i r pecuniary i n t e r e s t i n the operation of the t r u s t . The a l l o c a t i o n of t r u s t funds i n the terms of the t r u s t gave them an i n t e r e s t i n ensuring that the trustees 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 a l l o c a t i o n . Such an i n t e r e s t s u f f i c e s to give them standing to invoke the j u r i s d i c t i o n of a court of equity and thus control the trustee. However, standing to appeal to the equitable j u r i s d i c t i o n of a court i s not only accorded to those who, l i k e d i r e c t b e n e f i c i a r i e s , have a spes of ownership i n the t r u s t property. Equitable p r i n c i p l e s are f l e x i b l e and expansive, and "any attempt to found the j u r i s d i c t i o n to grant injunctions [for example] e x c l u s i v e l y upon the existence of property or proprietary 17 r i g h t s cannot be j u s t i f i e d " . Thus i t i s that Spry, speaking of injunc- tions but using words equally applicable to equitable remedies i n general, 18 says : [A] somewhat d i f f e r e n t basis f o r the grant of i n - junctions i s found where what i s i n question i s , not the prevention of a breach of the l e g a l r i g h t s of the p l a i n t i f f , but rather a need to prevent the defendant from acting i n a manner which i s not i n breach of h i s l e g a l obligations but which i s nonethe- less unconscionable,• as being contrary to established 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 rules r e l a t i n g to the administration of t r u s t s , i n the rules 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 trustee 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 of the t r u s t , any such i n t e r - ference i n breach of that o b l i g a t i o n must surely be considered "unconscion- able". A court of equity would therefore grant a remedy to any person a f f e c t e d by such unconscionable behaviour. This includes all those whose - 191 - pecuniary i n t e r e s t s are affected by the existence of the t r u s t and not merely those who are d i r e c t b e n e f i c i a r i e s of the t r u s t . I t w i l l be demonstrated i n the next chapter i n the context of a g i f t on t r u s t f o r a non-charitable purpose, that the actions of the trustee 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 of 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 various persons who stand to benefit, e i t h e r a f t e r the t r u s t has duly run i t s course or i f i t f a i l s f o r some reason. As such, they are as e n t i t l e d to be granted standing to control the trustees as are the d i r e c t 19 b e n e f i c i a r i e s of a t r u s t , and, as Lawson says "ubi remedium l b i ]us : where there's a remedy there's a r i g h t " . . In other words, i t i s submitted that the f a c t that these i n d i v i d u a l s are e n t i t l e d to invoke the courts' remedial equitable j u r i s d i c t i o n to remedy an unconscionable s i t u a t i o n re- veals that they possess r i g h t s of c o n t r o l . Their pecuniary i n t e r e s t s i n the execution of the t r u s t give them a r i g h t to enforce the trustee's f i d u c i - ary o b l i g a t i o n to deal with the trust property l e g a l l y and i n accordance with the terms of the t r u s t . His o b l i g a t i o n i s thus rendered meaningful and he i s e f f e c t i v e l y subject to co n t r o l . In t h i s manner, the 'control p r i n c i p l e ' i s s a t i s f i e d , and the t r u s t should be considered enforceable and therefore v a l i d . In sum, i t i s submitted that the basic p r i n c i p l e that a t r u s t must be enforceable to be v a l i d can be complied with i n exactly the same manner by persons other 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 b e n e f i c i a r i e s 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 the need f o r en- f o r c e a b i l i t y , 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 at l e a s t one i d e n t i f i a b l e person i n existence who has s u f f i c i e n t pecuniary i n t e r e s t i n the operation of the t r u s t that he can be said to hold a r i g h t - 192 - of control over the trustee. Furthermore, i t i s argued that he has a s u f f - i c i e n t pecuniary i n t e r e s t i f he i s presently or 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 of funds, s t i p u l a t e d by the terms of the t r u s t . I t i s the terms of the t r u s t that define the trustee's f i d u c i a r y o b l i g a t i o n of which control i s e s s e n t i a l . The next chapter w i l l t e s t t h i s analysis i n the context of non-chari- table purpose t r u s t s by examining the p o s i t i o n of several categories of person who have i n t e r e s t s i n such t r u s t s . 5. The Nature of the Control Exercised The re-examination of the r o l e of the d i r e c t b e n e f i c i a r i e s of a t r u s t i n the context of the 'control p r i n c i p l e ' raises a few points about the nature of the control which they exercise which should be c l a r i f i e d . Firstly, i t has been said that, whenever a trustee acts, or f a i l s to act, i n such a way that he breaks, a term of the f i d u c i a r y o b l i g a t i o n , the persons whose pecuniary i n t e r e s t s are thereby a f f e c t e d have standing to ask that the trustee be c o n t r o l l e d or rest r a i n e d . However, i t should be emphasised that t h i s need not a c t u a l l y happen before the t r u s t can be declared v a l i d . The p o t e n t i a l f o r co n t r o l , should such an eventuality at some time occur, is- s u f f i c i e n t to enable a v a l i d t r u s t to e x i s t , assuming that a l l other requirements f o r a v a l i d t r u s t have been complied with. Likewise, i f a person whose pecuniary i n t e r e s t has been damaged by the trustee's actions chooses not to go to court i n v i n d i c a t i o n of t h i s r i g h t of co n t r o l , 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 that the d i r e c t b e n e f i c i a r i e s of a t r u s t might not, i n case of breach, enforce t h e i r r i g h t s against the trustee has always existed, yet has never l e d to the suggestion - 193 - that the t r u s t i s i n v a l i d . Take the example, used by Maitland, of a t r u s t which he sets up by paying over to trustees a sum of money upon t r u s t f or , . 20 . , his son . As Maitland 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 constituted although he knows nothing about i t . He perhaps i s a baby i n arms, or perhaps he i s i n A u s t r a l i a , or even perhaps he i s unborn, for you may have a t r u s t for an unborn person or an unascertained person. Here i t can not be said that cestui que trust places any t r u s t or r e l i a n c e i n the trustee. The p o s s i b i l i t y of control 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 for v a l i d - i t y ab initio. Secondly, the f a c t that control by a pecuniary i n t e r e s t - h o l d e r may 21 not occur does not turn the t r u s t into a mere power . The e s s e n t i a l d i f f - erence between the two phenomena i s that a t r u s t i s imperative whilst a power i s permissive. A t r u s t retains i t s imperative nature even i f no one takes the steps necessary to compel performance by the trustee. The nature of the arrangement can not depend on the chance that someone may or may not commence l i t i g a t i o n . The important f a c t i s that, should the oper- ation of the t r u s t be brought to the attention of the court, the trustee, i f found to be out of l i n e , w i l l be commanded to perform h i s f i d u c i a r y o b l i g a - t i o n s . Thirdly, the court should be w i l l i n g to exercise general control of 22 both a p o s i t i v e and a negative nature over the trustee . In other words, once i t s attention 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 of the t r u s t , i t should not f e e l r e s t r i c t e d to g i v i n g only the remedy requested by the i n d i v i d u a l who happens to come to court (assuming he has established his entitlement). I t should oversee the t r u s t i n gener- a l and make whatever orders i t considers appropriate. For example, take - 194 - the case of a fund transferred to trustees S and T to.Invest and pay the income thereon to A, B and C u n t i l they marry, with d i s t r i b u t i o n of the c a p i t a l thereafter amongst X, Y and Z. If X goes to court and complains that the trustees' mode of investment i s eroding the c a p i t a l to which he may one day become e n t i t l e d , he may q u a l i f y f o r and get an i n j u n c t i o n . However, i f at the same time, on examining the operation of the t r u s t , the court notices that the trustees are depriving A, B and C of t h e i r f u l l entitlement by unauthorised payments to T, i t should also order T to account to A, B and C. The mere f a c t that the d i r e c t b e n e f i c i a r i e s , A, B and C, are s i t t i n g on t h e i r r i g h t s and are not before the court as p l a i n t i f f s should not prevent the court from exercising general equitable co n t r o l 23 over i t s f i d u c i a r y r e l a t i o n s h i p with S and T 6. Conclusion I t has been argued that the 'control p r i n c i p l e ' merely restates the basic p r i n c i p l e of t r u s t s law that a t r u s t must be enforceable. Under the 'control p r i n c i p l e ' , the f i d u c i a r y o b l i g a t i o n imposed by equity on a trustee must be converted into an e f f e c t i v e control mechanism by the e x i s - tence of persons who are e n t i t l e d to enforce i t . An otherwise v a l i d t r u s t i s enforceable i f there i s at l e a s t one person who has the standing to exercise t h i s c o n t r o l over the trustee. D i r e c t b e n e f i c i a r i e s of the t r u s t are merely one example of the many classes of 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 p r i n c i p l e ' , thus formulated, i s the basis of the Control Analysis of g i f t s on non-charitable purpose t r u s t which follows. * * * * * * * * * * - 195 - FOOTNOTES : CHAPTER I 1. Discussed supra, pp 107-108, pp 123-124. 2. Discussed supra, pp 117-121. 3. Moriae V. The Bishop of Durham (1804), 9 Ves.Jr.399; 32 E.R.656. Affirmed (1805), 10 Ves.Jr.522; 32 E.R.947. Discussed supra,ppl07-l Per S i r W. Grant, (1804),9 Ves.Jr.399 at 404-405. 4. See supra, pp 125-126. 5. See also, Harris, "Trust, Power and Duty", (1971) 87 L.Q.R.31, pp 36-39, pp 53-57. 6. Finn, Fiduciary Oligations (Sydney: The Law Book Company Limited, 19 p 8. I t a l i c s added. 7. Supra, p 7. 8. See generally, Hanbury & Maudsley, Modern Equity, 11th.ed., eds. R. H. Maudsley & J . E. Martin (London: Stevens, 1981), pp 447-452. 9. [1941] 1 Ch.253 at 259. 10. For a d e t a i l e d discussion of the p o s i t i o n of b e n e f i c i a r i e s , see, Waters, "The Nature of the Trust Beneficiary's Interest", (.1967). 45 Can.Bar Rev.219. 11. Waters, "The Law of Trusts 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 at 856. 15. See, Fridman, The Law of Agency, 4th..ed. (London: Butterworths, 1976).., pp 15-18; Waters, op. cit. supra, footnote 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 Lord Sands, (1929), 14 T.C.512 at 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 . at 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, Equitable Remedies, 2d.ed. (London: Sweet & Maxwell, 1980), p 316. 18. Ibid, p 317. I t a l i c s added. See also, Kerr, Injunctions, 6th.ed., - 196 - ed. J . M. Paterson ( F l o r i d a : Gaunt, 1981), pp 506-512. 19. Lawson, Remedies of English Law, 2d.ed. (London: Butterworths, 1980), pp 1-2. 20. Maitland, Equity, 2d.ed.reprint (London: Cambridge University Press, 1969), p 44. 21. Cf. The s o l u t i o n to the problem o f f e r e d by, Ames, "The F a i l u r e of the 'Tilden Trust'", (1891-1892) 5 Harv.L.Rev.389 ; Scott, "Trusts for Charitable and Benevolent Purposes" (1944-1945) 58 Harv.L.Rev. 548 ; and rejected by Gray, " G i f t s f o r a Non-Charitable 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 at 246; [1959] 3 W.L.R.799;"[1959] 3 A l l E.R.562. See supra, p 129, footnote 81. 22. Cf. McKay, "Trusts for Purposes - Another View", (1973) 34 Conv. (N.S.)420. 23. In a n t i c i p a t i o n of an objection that might be made to t h i s suggestion, i t i s pointed out that t h i s general control i s not equivalent to the day-to-day supervision of t r u s t s of which the courts are so wary. - 197 - I I . THE CONTROL ANALYSIS AND NON-CHARITABLE PURPOSE TRUSTS 1. I n t r o d u c t i o n X s e t t l e s funds on A and B on t r u s t t o pay the income t h e r e f r o m f o r the purpose o f b e a u t i f y i n g the p a r k i n g l o t s o f C o n c r e t e C i t y f o r as l o n g as the law p e r m i t s , and t o r e s e t t l e t h e c a p i t a l a t the end o f t h a t p e r i o d on t r u s t f o r h i s f r i e n d s , Y and Z (who a r e p a r k i n g l o t a t t e n d a n t s ) . Assuming f o r the sake o f argument t h a t the b e a u t i f i c a t i o n o f p a r k i n g l o t s i s a n o n - c h a r i t a b l e purpose, i n the c u r r e n t s t a t e o f the law the t r u s t would f a i l and the i n t e r e s t s o f Y and Z would be a c c e l e r a t e d . However u n o b j e c t i o n - a b l e i n terms o f p u b l i c p o l i c y the e x p r e s s i n t e n t i o n s o f X might be, they would be d e f e a t e d . T h i s i s because Re Astor's Settlement Trusts 1 and t h e 2 l i n e o f 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 p r i n c i p l e t h a 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 because t h e y have no human b e n e f i c i a r - i e s . T h i s s o - c a l l e d ' b e n e f i c i a r y p r i n c i p l e ' i n s i s t s not m e r e l y t h a t a 3 t r u s t be e n f o r c e a b l e (a p r o p o s i t i o n w i t h which t h e r e can be no d i s p u t e ) b u t t h a t t h e element o f e n f o r c e a b i l i t y can only be p r o v i d e d by the p r e s e n c e o f 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 ' b e n e f i c i a r y p r i n - c i p l e ' i s v i o l a t e d because t h e r e are no human b e n e f i c i a r i e s o f the t r u s t , so the t r u s t f a i l s db initio. 4 The ' c o n t r o l p r i n c i p l e ' , on the o t h e r hand , 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 , which s a t i s f i e s the r e q u i r e m e n t s o f c e r t a i n t y and c o m p l i a n c e 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 , i s v a l i d p r o v i d e d t h a t some- one e x i s t s who has a p e c u n i a r y i n t e r e s t i n the e x e c u t i o n o f the t r u s t and who can t h e r e f o r e e x e r c i s e c o n t r o l o v e r the t r u s t e e s . I f t h i s p r i n c i p l e i s used t o a n a l y s e 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 purpose t r u s t (the - 198 - Control A n a l y s i s ) , the t r u s t w i l l not f a i l . As a matter of p r i n c i p l e , i t would be enforceable under the Control Analysis. This i s because numerous 5 . classes of persons e l i g i b l e to exercise control e x i s t i n the law of t r u s t s 6 generally and only one class - d i r e c t b e n e f i c i a r i e s - i s lacking i n the s p e c i f i c case of non-charitable purpose t r u s t s . Therefore, i n any p a r t i c u l a r instance of a non-charitable purpose t r u s t , at!: l e a s t one c l a s s w i l l be a v a i l - able to supply the necessary c o n t r o l . Take the above example of X's s e t t l e - ment i n favour of the b e a u t i f i c a t i o n of parking l o t s . As w i l l be demons- trated i n t h i s chapter, X, Y and Z and the c i t i z e n s of Concrete Ci t y are a l l a f f e c t e d by the a l l o c a t i o n of funds attempted by the t r u s t and there- fore have a pecuniary 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 of 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 v a l i d . Four classes of persons whose existence i n p r i n c i p l e can v a l i d a t e a 7 8 non-charitable purpose t r u s t w i l l be discussed: 'factual b e n e f i c i a r i e s ' ; the donor (or his estate) ^; the Crown ; and residuary b e n e f i c i a r i e s However, the discussion w i l l reveal not only the operation of the Control Analysis i n p r i n c i p l e and i t s a u t h o r i t a t i v e support, but also the p r a c t i - c a l problems to which i t gives r i s e i n many instances. 2. 'Factual B e n e f i c i a r i e s ' S donates funds to X and Y on t r u s t to b u i l d and maintain a squash court f o r the use of law students at a named school for a s p e c i f i e d period of time. Since i t i s assumed that t h i s would not be considered a c h a r i - 12 table t r u s t and since there are no d i r e c t human b e n e f i c i a r i e s , S has created a non-charitable purpose t r u s t . - 199 - 13 Re Denley ' s Trust Deed n e v e r t h e l e s s h e l d t h a t such a t r u s t would be v a l i d , because i t c o n f e r s a f a c t u a l b e n e f i t on i n d i v i d u a l s : hence the term ' f a c t u a l b e n e f i c i a r i e s ' . I n the above example, the f a c t u a l bene- f i c i a r i e s a r e t h e law s t u d e n t s . A l t h o u g h they have no spes o f ownership 14 i n the t r u s t fund (as compared w i t h d i r e c t b e n e f i c i a r i e s ), on the a u t h - o r i t y o f Re Denley, the t r u s t i s e n f o r c e a b l e by them and t h e r e f o r e v a l i d . A l t h o u g h such was not the e x p r e s s b a s i s o f t h e d e c i s i o n i n Re Denley, the above c o n c l u s i o n can be r e a d i l y e x p l a i n e d i n terms o f t h e ' c o n t r o l p r i n c i p l e ' . F a c t u a l b e n e f i c i a r i e s e n j o y a de facto advantage from t h e t r u s t ' s e x e c u t i o n , and the p e c u n i a r y b e n e f i t o f not h a v i n g t o 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 c o n f e r s . They a r e t h e r e f o r e a f f e c t e d by the a l l o c a t i o n o f funds e f f e c t e d by the t r u s t and have ' i n t - e r e s t s i n t h e due and p r o p e r , c o n t i n u e d performance o f t h e i r o b l i g a t i o n s by t h e t r u s t e e s . I n the above example, i f X and Y c l o s e d down the squash c o u r t and s o l d the p r o p e r t y i n i t t o commercial c o n c e r n s , i n b r e a c h 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 , the 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 t r u s t would s u f f e r 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 b r e a c h 15 o f t r u s t would be " u n c o n s c i o n a b l e " . T h i s s u f f i c e s t o g i v e the f a c t u a l b e n e f i c i a r i e s s t a n d i n g f o r the d u r a t i o n o f t h e t r u s t t o go t o c o u r t and a s s e r t t h e i r r i g h t s o f c o n t r o l t o s e c u r e p r o p e r performance o f t h e t r u s t e e s ' o b l i g a t i o n s s h o u l d they f e e l 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 , e q u i t y i s s a t i s f i e d t h a t the p o s s i b i l i t y o f c o n t r o l i n t h i s manner e x i s t s ab •initio and t h a t the t r u s t i s under s u r v e i l l a n c e . From the p r a c t i c a l p o i n t o f view, i t i s more l i k e l y t h a n n o t t h a t f a c t u a l b e n e f i c i a r i e s would i n d e e d 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 such a s i t u a t i o n . The c o n t i n u - a t i o n o f t h e advantages which, t h e y a r e e n t i t l e d t o e n j o y under t h e t r u s t can o n l y be a s s u r e d by 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 , which they a r e - 200 - e n t i t l e d to compel. The 'control p r i n c i p l e ' i s therefore 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 Analysis of a non-charitable pur- 17 pose t r u s t can be seen i n operation i n Re Trusts of the Abbott Fund In that case, a sum of money was c o l l e c t e d and held on t r u s t for the main- tenance of two deaf and dumb lad i e s who subsequently died. I t was held that they had had no proprietary 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 v a l i d . 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 during t h e i r l i f e t i m e s . They had derived the b e n e f i t of f i n - a n c i a l assistance and medical care under the t r u s t and were therefore e n t i t - 18 led to exercise r i g h t s of c o n t r o l over the trustees. As S t i r l i n g , J . said : [ l ] f the trustees had not done t h e i r duty - i f they eit h e r f a i l e d to exercise t h e i r d i s c r e t i o n or exer- cised i t improperly - the l a d i e s might su c c e s s f u l l y have applied to the Court to have the fund adminis- tered according to the terms of the c i r c u l a r . The t r u s t had therefore been enforceable and v a l i d , and only f a i l e d when the ladies died, leaving surplus funds a v a i l a b l e . Other cases which i l l u s t r a t e the Control Analysis i n operation 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 English. Court of 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 trustees to pay and divide her residu- ary estate "between such i n s t i t u t i o n s and associations having for t h e i r main object the assistance and care of s o l d i e r s , s a i l o r s , airmen, and other members of His: Majesty's Forces who have been wounded or incapacitated - 201 - 23 during the recent world wars". Lord Evershed said that t h i s non- ch a r i t a b l e t r u s t f or the f a c t u a l benefit of the war veterans 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 f a i l e d for lack of c o n t r o l l a b i l i t y . The benefit conferred upon the veter- ans by the due administration of the t r u s t would have given them standing to secure continued and proper performance by the trustees of t h e i r o b l i g - ations. Had the need arisen, they could have c o n t r o l l e d the t r u s t ' s exe- cution. The benefit conferred was presumably by way of medical, r e h a b i l i - t a t i v e and f i n a n c i a l a i d . The r e c i p i e n t s would not thereby acquire any i n t e r e s t i n the t r u s t property i t s e l f . Their benefit was of a purely pecuniary nature. 24 In Re Aberconway's Settlement Trusts , the t r u s t created by Lady Aberconway was on terms to apply the income of s e t t l e d land, of which her son was tenant for l i f e , inter alia " i n or towards securing and a s s i s t i n g and developing the use of the ... gardens at Bodnant for the c u l t i v a t i o n of plants and flowers of home and foreign countries of botanical and hor- t i c u l t u r a l i n t e r e s t and for experiments i n the production and h y b r i d i z a t i o n of foreign and domestic flowers and plants of a l l kinds". I t was assumed that t h i s non-charitable t r u s t was v a l i d despite the absence of d i r e c t human b e n e f i c i a r i e s , because there 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 of the trustees. Lord Evershed,M.R. explained 25 the nature of the benefit i n question : In t h i s case, the provisions of 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 for the benefit of the tenant for l i f e , at any rate so long as the tenant for l i f e happens to enjoy the amenities of a good garden or happens to be an amateur of 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 of the income" . Neverthe- - 202 - le s s , the terms of the t r u s t conferred upon him the f a c t u a l and pecuni- ary benefit of enjoying a garden maintained at the expense of the t r u s t . This e n t i t l e d him to exercise r i g h t s of control over the trustees and was the basis of the t r u s t ' s v a l i d i t y . 21 In Re Bowes , a t r u s t "to expend-^ 5,000 i n pla n t i n g trees for sh e l t e r " on s e t t l e d land of which the te s t a t o r was tenant for l i f e was held to be a v a l i d t r u s t . I t i s submitted that t h i s was because the Control Analysis was used. The court concluded that the t r u s t was "a v a l i d t r u s t to lay out money for the benefit of the persons e n t i t l e d to 28 the estate" . The benefit there was that of an improvement to the value of the estate 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 ten- ant i n t a i l , owned. They therefore had a pecuniary i n t e r e s t i n due per- formance of the t r u s t and ho doubt would have taken the necessary steps to ensure that the trustees acted accordingly, had the need aris e n . The t r u s t was therefore under control and the 'control p r i n c i p l e ' s a t i s f i e d . To summarise t h i s section, i t i s concluded that a g i f t on non- cha r i t a b l e purpose t r u s t i s v a l i d (provided the c e r t a i n t y and perpetuity requirements f o r v a l i d i t y are satisfied), i f there are i n d i v i d u a l s who derive a f a c t u a l , pecuniary benefit from the g i f t . In the current state of the law, t h i s i s explained i n terms of the 'beneficiary p r i n c i p l e ' . It i s submitted, however, that i t i s rather an i l l u s t r a t i o n of the v a l i d i t y of the Control A n a l y s i s . The r e c e i p t of the benefit gives the 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 the due performance of the t r u s t . On a p p l i - c ation to a court of equity, they would be accorded standing to ask for preventive or r e s t i t u t i v e remedies against trustees who threatened or com- mitted any breach, o f . t r u s t . Meanwhile, throughout the existence of the - 203 - t r u s t , 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 trustees. The l e g a l ownership of the trustees can be restrained thereby i n the manner demanded by equity of those i n the p o s i t i o n of f i d u c i a r i e s . Thus con t r o l l e d , the t r u s t i s v a l i d . Under the Control Analysis, therefore, S's g i f t to X and Y to b u i l d a squash court for use by law students would be enforceable and v a l i d . S i m i l a r l y , i f one ref e r s back to the hypothesis used i n the introduction to 29 . t h i s chapter , i t i s possible to argue that the g i f t to A and B on t r u s t to beautify parking l o t s also 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 of 30 Concrete C i t y 3. The Donor S makes an irvbev vivos settlement of funds on A and B on t r u s t to achieve purpose X. I f purpose X i s duly achieved without exhausting the funds designated therefor, the surplus funds are held on t r u s t f o r , and 31 r e s u l t to, S . Therefore, quite apart from the natural, emotional i n - ter e s t a donor has i n the destination of 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 set up. The case i s s i m i l a r i f T makes a bequest of funds to C and D on t r u s t to be applied f o r purposes Y and Z. For the sake of discussion, assume that purpose Y i s described with i n s u f f i c i e n t c e r t a i n t y and that purpose Z has become impossible by the date of T's death. The t r u s t for those purposes f a i l s . C and D must then hold the funds on r e s u l t i n g t r u s t f o r T's execu- tors to be d i s t r i b u t e d by them eit h e r as residue i f T's w i l l so provides, or as undiposed-of funds i f not, or i f the bequest i t s e l f was of residue. - 204 - T's residuary legatees and intestate successors r e s p e c t i v e l y therefore 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 addition, 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 are i n i t i a l l y under a f i d u c i a r y duty to ensure due administration of T's estate. Obvious- l y t h e i r i n t e r e s t w i l l cease when the estate has been administered and they have discharged t h e i r duty. Both examples i l l u s t r a t e the doctrine of r e s u l t i n g t r u s t : whenever someone intends to create a t r u s t but, as i t turns out, the t r u s t i s i n e f f - e c t u a l l y created, not expressed at a l l , or f a i l s , a r e s u l t i n g t r u s t a r i s e s i n favour of the creator. The operation of the doctrine i s demonstrated 34 by the Vandervell l i t i g a t i o n , where the s e t t l o r was held l i a b l e to income tax because, having overlooked the p o s s i b i l i t y of reverter on r e s u l t i n g t r u s t when he granted an option on t r u s t without naming b e n e f i c i a r i e s , he had f a i l e d to dive s t himself absolutely of h i s i n t e r e s t i n the shares 35 which were the subject of that option. As Lord Wilberforce said : The conclusion, on the facts found, i s simply that the option was vested i n the trustee company as a trustee on t r u s t s , not defined at the time, po s s i b l y to be defined l a t e r . The equitable, • or beneficial interest, however, cannot remain in the air-, the consequence i n law must be that i t remains i n the s e t t l o r . I t i s unnecessary f o r present purposes to discuss the Vandervell l i t i g a t i o n i n d e t a i l . The long and short of i t was that the s e t t l o r was demonstrated to have retained a pecuniary i n t e r e s t i n the t r u s t which he had set up. I t i s submitted that the r e s u l t i n g t r u s t doctrine, l i k e the 'bene- f i c i a r y p r i n c i p l e ' , i s merely an i l l u s t r a t i o n of the fundamental p r i n c i p l e upon which the 'control p r i n c i p l e ' i s based, that a t r u s t must be enforce- able. The r a t i o n a l e behind the doctrine of r e s u l t i n g t r u s t s i s that - 205 - " e q u i t y abhors a b e n e f i c i a l vacuum" ^ . In o t h e r words ^ : A r e s u l t i n g t r u s t comes i n t o e x i s t e n c e wherever t h e r e i s a gap i n the b e n e f i c i a l owner- s h i p . I t c e a s e s t o e x i s t whenever t h a t gap i s f i l l e d by someone becoming b e n e f i c i a l l y e n t i t l e d . As soon as the gap i s f i l l e d by t h e c r e a t i o n o r d e c l a r a t i o n o f a v a l i d t r u s t , the r e s u l t i n g t r u s t comes t o an end. A l t h o u g h the law does not always succeed i n e x p l a i n i n g the l o c a t i o n o f the 38 l e g a l f e e s i m p l e , i t i n s i s t s upon b e i n g a b l e t o l o c a t e ' e q u i t a b l e owner- s h i p ' when l e g a l t i t l e and ' e q u i t a b l e ownership' a r e d i v i d e d , as i n the 39 c a s e o f a t r u s t . T h i s i s because, as a l r e a d y d i s c u s s e d , when a t r u s t i s c r e a t e d the t r u s t e e i s the l e g a l owner. The r o l e o f e q u i t y i n d e v e l o p i n g t h e n o t i o n o f the t r u s t was t o r e c o g n i s e t h a t the l e g a l ownership o f the t r u s t e e as f i d u c i a r y had t o be s u b j e c t t o r e s t r a i n t s . O t h erwise, the t r u s t - ee would be f r e e t o d e a l w i t h the t r u s t p r o p e r t y as i f i t were h i s own, con- t r a r y t o h i s u n d e r t a k i n g as t r u s t e e and c o n t r a r y t o the i n t e n t i o n s o f t h e s e t t l o r o r t e s t a t o r . T h e r e f o r e e q u i t y demands t h a t the t r u s t e e ' s owner- s h i p be c i r c u m s c r i b e d by r e s t r a i n t s o r r i g h t s o f c o n t r o l , l o o s e l y termed ' e q u i t a b l e ownership'. A gap i n t h i s l a t t e r i s not p e r m i t t e d . The whole 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 s i m i l a r l y based on e q u i t y ' s demand f o r c o n t r o l o v e r the t r u s t e e s as l e g a l owners. As has been ex- p l a i n e d , when a v a l i d t r u s t i s s e t up, the t r u s t e e owns the t r u s t p r o p e r t y a t law, but he i s c o n s t a n t l y s u b j e c t t o r e s t r a i n t by- p e r s o n s who h o l d r i g h t s o f c o n t r o l . T h i s element o f p o t e n t i a l c o n t r o l l a b i l i t y i s c r u c i a l t o the s u c c e s s f u l o p e r a t i o n o f t h e t r u s t . However, even when the t r u s t comes t o an end because i t s o b j e c t s have been a c h i e v e d , o r f a i l s , and t h e r e are s u r - p l u s t r u s t funds, the t r u s t e e can not be p e r m i t t e d t o e x e r c i s e h i s f u l l r i g h t s o v e r the funds as l e g a l owner o f them: he i s s t i l l i n the p o s i t i o n o f a f i d u c i a r y and can not become a b s o l u t e l y e n t i t l e d a t any t i m e . - 206 - T h e r e f o r e e q u i t y imposes a n o t h e r t r u s t upon him: a r e s u l t i n g t r u s t . The t r u s t e e has t o h o l d the funds on b a r e t r u s t f o r the s e t t l o r o r t e s t a t o r ' s 40 e s t a t e , whose s i t u a t i o n i s t h e n analogous t o t h a t o f a d i r e c t b e n e f i c i a r y The s e t t l o r o r t e s t a t o r has a d i r e c t p e c u n i a r y i n t e r e s t i n the r e s u l t i n g t r u s t and i s t h u s 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 o v e r t h e t r u s t e e . In t h i s manner, the gap i n c o n t r o l i s f i l l e d . With the p o s s i b l e e x c e p t i o n o f t h e s i t u a t i o n which w i l l be d i s c u s s e d 41 i n due c o u r s e , a r e s u l t i n g t r u s t might a r i s e a t any time d u r i n g t h e i n t e n d e d e x i s t e n c e o f the o r i g i n a l t r u s t . Even i f the t r u s t i n i t i a l l y t a k e s e f f e c t , t h e r e i s always 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 . Those who would become e n t i t l e d t o t h e s u r p l u s funds as b e n e f i c i a r i e s o f t h e r e s u l t - i n g t r u s t on such an o c c u r r e n c e s t a n d t o b e n e f i t a t any t i m e . They t h e r e - f o r e have 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 o r i g i n a l t r u s t from i t s i n c e p t i o n . ( i ) Inter' Vivos G i f t . To i l l u s t r a t e t h i s f i r s t l y i n the c o n t e x t o f an inter vivos t r u s t , 42 t a k e the h y p o t h e s i s posed above o f a g i f t by S t o A and B on t r u s t t o a c h i e v e purpose X which does not exhaust t h e f u n ds. I f A and B p e r f o r m t h e i r d u t i e s under t h e t r u s t p r o p e r l y and i n a c c ordance w i t h the s t a n d a r d s imposed upon them as f i d u c i a r i e s , when a r e s u l t i n g t r u s t a r i s e s a f t e r a c h i e v i n g p urpose X, and S r e c e i v e s the s u r p l u s funds, he can have no ground t o c h a l l e n g e t h e quantum o f h i s p e c u n i a r y b e n e f i t . However, i f t h e t r u s t e e s were p e r m i t t e d to squander the fund i n a p p l y i n g i t f o r p u r - pose X, thus d e p l e t i n g the s u r p l u s a v a i l a b l e t h e r e a f t e r , S would s u f f e r a p e c u n i a r y l o s s . T h i s e v e n t u a l i t y i l l u s t r a t e s t h a t S has an i n t e r e s t - 207 - i n the due administration of the t r u s t . In the event of an actual or threatened breach of duty by the trustees, i t i s submitted that t h i s i n - t e r e s t s u f f i c e s to give S standing to appear before a court of equity and invoke r i g h t s of control over the trustees. The t r u s t therefore s a t i s f i e s the 'control p r i n c i p l e ' and i s v a l i d . I t i s submitted that Roxburgh,J. 43 was mistaken 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 retained no b e n e f i c i a l i n t e r e s t and could not i n i t i a t e [proceedings]. As a matter of p r i n c i p l e , i t i s submitted that 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 pecuniary i n t e r e s t i n the t r u s t which he has set up, which suffr. 1 i c e s to render the t r u s t c o n t r o l l a b l e . Furthermore, as a matter of f a c t , a s e t t l o r can be expected i n p r a c t i c e to exercise h i s r i g h t s of control to ensure that the funds which he has donated reach t h e i r intended des- t i n a t i o n , and not the pockets of the trustees. Under the Control Analysis, therefore, the t r u s t i s v a l i d . The Control Analysis of a non-charitable purpose t r u s t can be i l l u s - t r a ted by the case of In re Hobourn Aero Components Limited's Air Raid 44 Distress Fund , where the trustees were subjected to control v i a the r e s u l t i n g t r u s t doctrine. In that case, a war emergency fund was estab- l i s h e d through voluntary contributions and deductions from the wages of a company's employees. This was held by trustees on t r u s t "to help 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 of enemy a c t i o n " . As the end of the war drew closer and the purposes of the fund became redundant, the fund was l i q u i d a t e d and representatives of the donors applied to court for i t s decision on what should be done with the surplus. I t was held that the contributors 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 of the fund returned to them. At f i r s t instance , - 208 - 46 Cohen,J. explained the basis of t h i s decision : [T]he basis on which the contributions are re- turned i s that each donor retained an i n t e r e s t i n the amount of h i s contributions except so far as they are applied f o r the purposes for which they were subscribed. The s e t t l o r s retained 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 which furnished them with control r i g h t s over the trustees. The t r u s t was there- fore c o n t r o l l a b l e and v a l i d ab initio since the 'control p r i n c i p l e ' had been s a t i s f i e d . The case also demonstrates how s e t t l o r s do i n p r a c t i c e exercise t h e i r control r i g h t s when the need a r i s e s . The Control Analysis of g i f t s on non-charitable purpose t r u s t i s therefore s a t i s f a c t o r y both as a matter of 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 takes e f f e c t intev vivos. ( i i ) Testamentary G i f t The operation of the Control Analysis i n the context of a testamentary 47 g i f t can be i l l u s t r a t e d by the hypothesis posed above of a bequest by T to C and D on t r u s t for purpose Y which f a i l s to s a t i s f y c e r t a i n t y require- ments, and purpose Z which i s impossible. On f a i l u r e of the bequest, the funds revert by way of r e s u l t i n g t r u s t to T's estate. I n i t i a l l y , therefore, i t i s T's executors who have an i n t e r e s t i n the administration of the t r u s t . They r e t a i n 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 funds because of 48 the p o s s i b i l i t y of a r e s u l t i n g t r u s t . Under the 'control p r i n c i p l e ' , t h i s means that they are e n t i t l e d to exercise r i g h t s of con t r o l over the trustees, to r e s t r a i n them from v i o l a t i n g the terms of the bequest. As a matter of p r i n c i p l e , therefore, the Control Analysis of the bequest leads, to the r e s u l t that the t r u s t i s c o n t r o l l a b l e and therefore v a l i d . As, a matter of p r a c t i c e , the duty of an executor as f i d u c i a r y i s to the - 209 - 49 estate as a whole , so one might expect executors to keep a watchful 50 eye on trustees who hold funds of the estate and to ensure that the terms of the bequest are duly adhered to. Since executors do not gener- a l l y stand to benefit personally 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 doctrine, they are l i k e l y to be as i n t e r e s t e d i n due administration of 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 only persons with p o t e n t i a l i n t e r e s t s i n a non-charitable purpose t r u s t created by a w i l l , and t h e i r i n t e r e s t s cease on completion of the administration of the estate anyway. If , on t o t a l f a i l u r e of the t r u s t or i n the event of surplus funds remain- ing, funds revert to the estate by way of 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 to residuary legatees or to the testator'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 of t r u s t funds by the terms of the bequest a f f e c t s residuary legatees 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 pecuniary 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 ' , therefore, they can be regarded as p o t e n t i a l c o n t r o l l - ers of the trustees. Their presence 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 Control Analysis can not be assessed only at the theor- e t i c a l l e v e l . I t must not only comply with basic 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 to the problem of the enforcement of non-charitable purpose t r u s t s . D i r e c t b e n e f i c i a r i e s , f a c t u a l b e n e f i c i a r i e s and s e t t l o r s are a l l l i k e l y to exercise t h e i r r i g h t s of control i n p r a c t i c e because they are a l l personally interested 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 objection can be v a l i d l y made that residuary legatees and i n t e s t a t e successors are unsuitable and u n r e l i - - 210 - able c o n t r o l l e r s to the extent that t h e i r r i g h t s of control are depen- dent on the r e s u l t i n g t r u s t doctrine. Since such an objection has impor- tant consequences for the f e a s i b i l i t y of the Control Analysis of g i f t s by way of non-charitable purpose t r u s t , i t warrants some discussion. An opponent of the Control Analysis can f o r c e f u l l y argue that there i s only one s i t u a t i o n i n which residuary legatees and i n t e s t a t e successors are l i k e l y to act to ensure compliance with the terms of the t r u s t . This i s the s i t u a t i o n i n which the trustee's actions are exhausting the t r u s t funds, whilst due administration would not. In such a case, the residuary lega- tees and i n t e s t a t e successors would have s u f f i c i e n t pecuniary i n t e r e s t i n c o n t r o l l i n g the trustee to exercise t h e i r r i g h t s so to do. Unless checked, the trustee's actions would diminish the surplus 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 favour of the t e s t a t o r ' s estate. Otherwise, however.(the opponent's argument might continue), due execution of the terms of a bequest i s surely the last thing residuary legatees and i n t e s t a t e successors want. Their i n t e r e s t i n the fund i s , more often than not, contingent on the failure of the t r u s t . Therefore they are l i k e l y to exercise the r i g h t s of control which, i n p r i n c i p l e , they hold, only when the v a l i d i t y of the t r u s t i n question i s subject to doubt. They can derive no personal f i n a n c i a l b enefit from s i t u a t i o n s where the trustee i s misapplying the funds of a . v a l i d t r u s t . They therefore have no incentive to act i n the very s i t u a t i o n when action i s e s s e n t i a l : when there is- no ground for challenging the v a l i d i t y of the t r u s t , but the trus-. tee is: abusing his; p o s i t i o n . In p r a c t i c e , i n the absence of other con- tro l l e r s : , the t r u s t i s then uncontrollable. - 211 - The point 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 next-of-kin of the t e s t a t r i x applied to court to assert t h e i r 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 or "such objects of benevolence and l i b e r a l i t y as the Bishop of Durham [the trustee] i n h i s d i s c r e t i o n s h a l l most approve of" f a i l e d for uncertainty. They succeeded, and the funds reverted to 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 , therefore, they established 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 control they exercised was of the most negative type. 52 S i m i l a r l y , i n Re Diptodk , the next-of-kin of the t e s t a t o r , v i a h i s executors, challenged the actions of the trustees i n d i s t r i b u t i n g over a quarter of 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 benevolent objects and i n s t i t u t i o n s . The t e s t a t o r had given the residue of h i s estate to h i s executors on t r u s t "to apply the residue for such charitable i n s t i t u t i o n or i n s t i t u t i o n s or other c h a r i - table or benevolent object or objects i n England as my acting executors or executor may i n t h e i r or h i s absolute d i s c r e t i o n s e l e c t , and to be paid to or for 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 or executor may think proper". The House of Lords held that the t r u s t was void for uncertainty and a r e s u l t i n g t r u s t arose i n favour of the next-of-kin. Again, therefore, i t can be seen that the next- o f - k i n undoubtedly held p o t e n t i a l pecuniary i n t e r e s t s i n the testamentary t r u s t , but that i n p r a c t i c e the c o n t r o l which they were thereby e n t i t l e d to exercise was of a l i m i t e d nature. I f one supports the Control Analysis, however, two arguments are a v a i l a b l e to mitigate the p r a c t i c a l defect of the Control Analysis pointed - 212 - out by our hypothetical opponent and which the above cases i l l u s t r a t e . In the f i r s t place, i t i s arguable that the court i n each case might have disagreed with the assertions of the next-of-kin and found that the pur- pose t r u s t was expressed with s u f f i c i e n t c e r t a i n t y . I t might then have di r e c t e d the trustee to perform his 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 to the stated purposes . In t h i s s i t u a t i o n , the Control Analysis operates s a t i s f a c t o r i l y . The 'control 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 pecuniary i n t e r e s t (derived under the r e s u l t i n g t r u s t doctrine) gave them standing to assert t h e i r r i g h t s of c o n t r o l . Fur- thermore, as a matter of p r a c t i c e , the f a c t that they launched the s u i t demonstrated that 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 follows: 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 his r i g h t s and yet not destroy the conceptual basis of the Control Analysis. A f t e r a l l , the p o s s i b i l i t y that a d i r e c t b e n e f i c i a r y might choose not to exercise his control r i g h t s i n any p a r t i c u l a r instance does not i n v a l i d a t e 54 the t r u s t . I t i s arguable that the f a c t 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 act i n the event of an actual or threatened breach of t r u s t should likewise not matter: t h e i r mere existence s a t i s f i e s the 'control p r i n c i p l e ' . In order to reach a conclusion i n t h i s section, one has to weigh the r e l a t i v e strengths of the arguments out l i n e d above of the hypothetical op- ponent and the hypothetical supporter of the Control Analysis r e s p e c t i v e l y . I t i s submitted that, although the r e s u l t i n g t r u s t doctrine can solve the problem of the e n f o r c e a b i l i t y of non-charitable purpose t r u s t s i n c e r t a i n circumstances, i t i s not a general s o l u t i o n . As a matter of 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 enforceable by - 213 - the existence of 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 t r u s t funds because of the p o s s i b i l i t y of reverter on r e s u l t i n g t r u s t . In f a c t , however, the Control Analysis can only operate s u c c e s s f u l l y i n l i m i t e d f a c t s i t u a t i o n s . For example, the hypothetical g i f t described i n the i n t r o - duction to t h i s chapter would be v a l i d under the Control Analysis, even though i t i s a non-charitable purpose t r u s t without 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 or the purpose of beautifying 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 that h i s wishes be c a r r i e d out, would supply the control necess- ary for v a l i d i t y under the Control Analysis. In other s i t u a t i o n s , however - as when residuary legatees and i n t e s t a t e successors are the only 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 extent that i t has to r e l y on the r e s u l t i n g t r u s t doctrine for i t s effectiveness, the Control Analysis 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 contrast with the above section, some cases have altogether rejected the a p p l i c a t i o n of the r e s u l t i n g t r u s t doctrine to p a r t i c u l a r types 56 of donation for non-charitable purposes . In c e r t a i n circumstances, the donation i s seen as an out-and-out transfer, so that when the purpose i s achieved without exhausting the funds or when the purpose becomes impossible of achievement, the donor i s considered to have given up all i n t e r e s t i n the funds. The surplus funds are deemed to be ownerless. I t i s submitted that the p o s s i b i l i t y of such an occurrence gives 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 donation which confers upon i t standing to bring l i t i - gation concerning the administration of the donated funds. In c e r t a i n c i r - cumstances, therefore, the necessary element of c o n t r o l over a donation can - 214 - 57 be provided by the Crown The point 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 that case, a fund was accumulated for the purpose of granting allowances to the widows and c h i l d r e n of deceased members of the West Sussex constabulary. Funds were given, intev alia, v i a entertainment, r a f f l e s , sweepstakes and c o l l e c - ting-boxes. When doubt arose as to the fate of the fund on the amalgamation of the West Sussex Constabulary with another p o l i c e force, the trustees proposed to use a portion of i t i n order to purchase annuities for c e r t a i n widows and c h i l d r e n and to d i s t r i b u t e the remainder to members of the o l d West Sussex Constabulary. They applied to court for j u d i c i a l approval of t h e i r scheme. The Treasury S o l i c i t o r appeared as one of many defendants, on behalf of the Crown,,and challenged the proposed scheme, arguing instead that the fund was bona vacantia. The p o t e n t i a l pecuniary i n t e r e s t of the Crown i n the fund gave i t standing to c o n t r o l the actions of the trustees i n t h i s manner. In the event, the Crown succeeded i n i t s claim over so much of the fund as had been subscribed v i a such events as r a f f l e s , and collecting-boxes. 59 In reaching t h i s conclusion, the court adopted the following dictum : So f a r as regards the contributors to e n t e r t a i n - ments, str e e t c o l l e c t i o n s , etc., I have no h e s i t a t i o n i n holding that they must be taken to have parted with t h e i r money out-and-out. I t i s inconceivable that any person paying for a concert t i c k e t or placing a coin i n a collecting-box presented to him i n the str e e t should have intended that any part of the money so contributed should be returned to him when the immediate object f o r which the concert was given or the c o l l e c t i o n made had come to an end. To draw such an inference would be absurd on the face of i t . The presumption of r e s u l t i n g t r u s t to the donors was rebutted. - 215 - Therefore, i n those circumstances 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 achieved, or aban- doned, or rendered impossible, the 'control p r i n c i p l e ' can be s a t i s f i e d by the Crown. I t has an i n t e r e s t i n preventing misapplication of funds. However, i t i s submitted that the circumstances i n which the bona Vacantia argument i s appropriate are l i m i t e d and exceptional. 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 present. In the f i r s t place, funds generally devolve as bona vacantia only when they were not as such donated at a l l . I f funds are.given i n return for a concert, or r a f f l e t i c k e t , and so on, a contractual r e l a t i o n s h i p of sorts comes into existence, and the contributor retains no further i n t e r e s t i n the funds because he receives i n return a l l that f or which he contracted. This i s as compared with a true donation 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 of which the funds return to 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 portion of the fund which had been ra i s e d by the sale of t i c k e t s , entertainment, and so on, devolved as bona vacantia whilst .the portion of the fund which had been r a i s e d by donation reverted on r e s u l t i n g t r u s t to the contributors. A second factor which argues i n favour of designating surplus funds as bona vacantia i s a s t i p u l a t i o n i n the instrument which i n v i t e d the con- t r i b u t i o n s to the e f f e c t that the surplus w i l l not be returned to the 61 contributor A t h i r d factor which appears to 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 held to be subject to the 62 r e s u l t i n g t r u s t doctrine . This can be seen p a r t i c u l a r l y when there are - 216 - a large number of contributors to a common fund, many of whom are unidenti- f i a b l e or anonymous, as when funds are accumulated using c o l l e c t i n g boxes, or when the r e s u l t i n g t r u s t would not a r i s e u n t i l some considerable period of time had elapsed since the c o n s t i t u t i o n of the 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 that the surplus funds devolve on the Crown as bona vacantia. In Re GiUingJiam Bus Disaster Fund , however, the court was not prepared to hold that the Crown's entitlement to surplus funds could be based merely on convenience and p r a c t i c a l i t y . In that case, a fund was set up to defray the funeral expenses of Royal Marine cadets who were k i l l e d , and pay f o r the care of others who were disabled, i n a road a c c i - dent. The pu b l i c contributed to the fund both by s i g n i f i c a n t donations and by anonymous, smaller contributions, when surplus funds were found remaining, the Crown argued that the trustees should pay them over as bona Vacantia. The court disagreed and held that the surplus should be held 64 on r e s u l t i n g t r u s t f o r the donors : In my judgment the Crown has f a i l e d to show that t h i s case should not follow the ordinary rule merely because there was a number of donors who ... are unascertainable. I see no reason myself to suppose that the small giver who i s anonymous has any wider i n t e n t i o n than the large giver who can be named. They a l l give f o r the one object. If they can be found by inquiry 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 favour. I f they cannot I do not see how the money could then ... change i t s d e s t i n a t i o n and become bona vacantia. I t w i l l be merely money held upon a t r u s t f o r which no ben e f i c i a r y can be found. Such cases are common and where i t i s known that there are bene- f i c i a r i e s the f a c t that they cannot be ascer- tained does not e n t i t l e the Crown to come i n and claim. An inquir y was ordered to ascertain, i f possible, the i d e n t i t y of the donors. - 217 - In sum, even i f one agrees with the admittedly more p r a c t i c a b l e so l u t i o n of declaring surplus funds bona vacantia i n such circumstances, i t can be seen that the types of cases i n which the Crown w i l l be able to e s t a b l i s h i t s r i g h t to control the trustees of donated funds are l i m i t e d . Only i f one or more of the above factors i s present i n any p a r t i c u l a r case w i l l the Control Analysis be applicable to the g i f t v i a the bona vacantia doctrine. Therefore the conclusion must be reached that 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 provide a general 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 non-charitable purpose t r u s t . 5. Residuary B e n e f i c i a r i e s There are at l e a s t four 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 to t r u s t funds as the residuary b e n e f i c i a r y of a g i f t which pur- ports to take e f f e c t as a non-charitable purpose t r u s t . (i) Entitlement to Residue Dependent on Success of G i f t S transfers funds to A and B to use the income for the maintenance of h i s p r i v a t e park for as long as the law permits, and to pay over the c a p i t a l to W when t h i s d i r e c t i o n has been complied with. Although the donor has created a non-charitable purpose t r u s t , i t i s submitted that, i f i n t e r p r e t e d i n accordance with the Control Analysis, i t would be v a l i d . In cases such as t h i s the entitlement of W, the residuary b e n e f i c i a r y , i s dependent upon due administration of the t r u s t fund by the trustees, and he therefore has a p o t e n t i a l pecuniary i n t e r e s t i n the.trust 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 of funds s t i p u l a t e d i n the terms of the t r u s t , he has the r i g h t to control the trustees 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 ' i s s a t i s f i e d . Further- more, W has every incentive a c t u a l l y to ensure that the trustees 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 maintain the p r i v a t e park. Therefore, as a matter of 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 of Residue Dependent on Success of G i f t T bequeaths funds to C and D to apply the income thereof for the maintenance of h i s p r i v a t e park for twenty-one years, and to pay the c a p i t a l and any accumulated income to X thereafter. Again, the wording of the g i f t has created a non-charitable purpose t r u s t . Again, however, i t i s submitted that the Control Analysis may a s s i s t . I t i s evident that X, as residuary legatee, has a pecuniary i n t e r e s t i n the administration of the t r u s t . The actions of the trustee w i l l d i r e c t - 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 to exercise r i g h t s of control over the performance by C and D of t h e i r f i d u c i a r y o bligations i n r e l a t i o n to the t r u s t fund. X has good reason to check on any dealings C and D may have with the t r u s t property throughout the duration of the t r u s t . Therefore the r e q u i s i t e element of 65 control i s present, equity 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 quite as simple. This may be demonstrated by posing two hypothetical sequences of events, one of which i l l u s t r a t e s the Control Analysis operating e f f e c t i v e l y , and the other of 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 . F i r s t l y , C and D may invest the t r u s t fund so f o o l i s h l y that there w i l l be i n s u f f - i c i e n t income to maintain the park adequately, leave alone to accumulate - 219 - f o r X. A l t h o u g h X w i l l r e c e i v e t h e c a p i t a l whatever happens, he e v i d e n t l y has an i n t e r e s t i n p r e v e n t i n g t h e t r u s t e e s ' m i s a p p l i c a t i o n o f income i n t h i s manner. I n such a case, t h e r e f o r e , X would have a p o s i t i v e i n c e n t i v e t o e x e r c i s e h i s r i g h t 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. A l t h o u g h X's a p p l i c a t i o n t o c o u r t would 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 o f t r u s t funds, the c o u r t would presumably be f r e e t o a s s e r t a f f i r m a t i v e c o n t r o l o v e r t h e t r u s t e e s as w e l l , i f n e c e s s a r y ^ . In t h i s manner, due p e r f o r m - ance c o u l d be c o m p e l l e d . The second sequence o f e v e n t s changes 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 r e s p e c t . Assume t h a t C and D s i m p l y i n v e s t t h e t r u s t fund and e i t h e r i g n o r e t h e d i r e c t i o n t o u t i l i s e t h e income f o r t h e maintenance o f T's par k t o t a l l y , o r me r e l y a p p l y m i n i m a l amounts t o t h a t purpose. Such a breach, o f t r u s t i s m a n i f e s t l y in, r a t h e r than c o n t r a r y t o the f i n a n c i a l i n t e r e s t s o f X, s i n c e t h e v a l u e o f h i s r e s i d u e i s enhanced t h e r e b y . A l - though i n p r i n c i p l e X has s t a n d i n g t o e x e r c i s e c o n t r o l o v e r C and D, i n f a c t i t would be f u t i l e t o e x p e c t any e f f e c t i v e c o n t r o l by him. He has 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 m i s a p p l i c - 6 7 a t i o n o f funds . Indeed, he i s more l i k e l y t o attempt t o have the t r u s t d e c l a r e d t o t a l l y i n v a l i d . Thus, as w i t h t h e case o f r e s i d u a r y l e g a t e e s o r i n t e s t a t e s u c c e s s o r s whose p o t e n t i a l i n t e r e s t s depend not on the terms o f 68 t h e g i f t , b u t on 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 , the C o n t r o l A n a l y s i s runs i n t o p r a c t i c a l problems. In c e r t a i n c i r c u m s t a n c e s , the c o n c e p t u a l v a l i d i t y o f t h e a n a l y s i s i s robbed by c o n s i d e r a t i o n s o f a r e a l i s t i c and p r a c t i c a l n a t u r e . The o p e r a t i o n i n p r i n c i p l e o f t h e C o n t r o l A n a l y s i s i n t h i s c o n t e x t can be i l l u s t r a t e d by a case, which a l s o demonstrates how the p r a c t i c a l - 220 - 69 problems can be overlooked 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 of money to a trustee to be applied as the trustee thought f i t towards the promotion and furtherance of fox-hunting. His residuary estate was to go to the Master and Fellows of T r i n i t y H a l l , Cambridge f or the benefit of the college. I t i s evident that there are no human b e n e f i c i a