AN INTRODUCTION TO TORT
Tort law determines who bears the loss which result from defendant action based on the following principles
a) Compensation
b) Fault
c) Retributive justice (punishment)
d) Deterence
e) Economic efficiency (market deterence)
f) Loss distribution (spreading losses in a socially fair way)
Interest Protected by Tort
Tort laws aims to protect individaul from actual or threatened harm to certain specific interests such as
a) Personal harm
b) Harm to property
c) Harm to reputation
d) Harm to financial interests
e) Harm to the due process of law - Martin v Watsone D maliciously made a groundless accusation on indecent exposure against the plaintiff.
The Role of Tort in the law of obligations
Its mixed aims are the inevitable result of common law system where law is develoed on a case-by-case bases. Although compensation is the most common reason for bringing a tort action, claimant may have a number of other reasons including deterence and retribution. In Hill v Chief Constable of West Yorkshire for example, the mother of the last visito of Peter Sutchliffe (a serial killer) sued the police for negligence for their carelessness in apprehending the killer and to point out the need to improve the practice. In Lord Templeman's view the action was misconceived pointing out that "an action for damages for alleges acts of negligence by individual police officers in 1980 could not determine whether and in what respects the West Yorkshore police force can improve in 1988.
INTERESTS PROTECTED BY TORT
Tort law aims to protect the individual from actual or threatened hardm to certain specific interest interest such as:
a) Personal Harm: - Tort law responded to the the threats to the safety of individual brought about by industrial revolution. This supplemented the existing protection provided by trespass to the person, where the torts of assault, battery and false imprisonment serve to protect indvidual fron intentional interference with their personal freedom and bodily intergrity.
b) Harm to property - protection against property remain important. Personal property is protected by the torts of trespass to goods and conversion (civil theft). Real property is protected by a number of torts including trespass to land nuisance and the rule in Rylands v Fletcher,
c) Harm to reputation -
In practice the distinction between contract law and tort is by asking that Have the rule of contract law been complied with? If the answer is no, the obligation or wrong in question cannot be classified as contractual, but may be classified as tortius. There are other compensation system that are often used rather than tort such as the Criminal Injuries Compensation Scheme. These other scheme are use in consideration of the cost, time, risk, difficulty associated with the implementation of tort law. This is also in addition to the absence of litigation consciousness of a greater majority of people.
There are various proposals for reform which include a mixture of tort law and social security, no fault-liability, insurance
TORT OF NEGLIGENCE - DUTY OF CARE
Lord Atkin's 'Neighbour Principle' in Danoghue v Stevenson formulated a general principle for determining the existing of duty of care in the following instances; where the defendant owes a duty to the victim, where the defendend neglected in the performance of that duty and where the negligence resulted in harm or injury to the victim.
Thereafter Lord Wilberfoce set out a 'two stage test' These are
Stage 1: Is there between the claimant and the defendant, a sufficient relationship of 'proximity' or 'neighbourhood' such that the defendant can reasonably foresee that carelessness on his or her part would be likely to cause damage to the claimant? if the answer to this question is affirmative, then a prima facie duty of care arises.
Stage 2: Are there other considerations which should nevertheless lead the court to deny duty of care, or to limit its scope, in these particular circumstance?
The test was later abandoned because on interpretation it did no truly reflect the ways the courts decided the existence of duty of care. This is because of the difficulty for judges to avoid explicit reference to political and economical consideration when answering the 2nd question in the two way test.
The modern approach to duty of care was espoused by the House of Lords in Capara v Dickman and the creteria were:
1) The damage must be forceable
2) There must be a sufficiently proximate relationship between the parties.
3) It must be 'fair, just and reasonable' for the court to impose a duty of care in the light of policy consideration which the court is concerned.
The main feature of Caparo are forceability (what a reasonable person in the circumstance of the defendant ought to have forseen (objective test); foreseeable claimant (someone who is closely and directly affected by defendant's conduct Bourhill v Young); proximity (closeness of relationship between the defendant ant the claimant); fair, just and reasonable (policy concern are relevant to the degree of proximity - this enables to court to determine liability on the basis of policy. In applying thge caparo criteria, it is necessary to determine the type of harm the claimant has suffered i.e.
a) Whether the damage is question is caused by a positive act )misfeasance), or by an omission (non-feasance);
b) the type of defendant being sued.
MISFEASANCE AND NON-FEASANCE
Lord Atkin in Donoghue v Stevenson spoke of a duty of care arising in respect of 'acts or omissions' yet as Lord Goff notes in Smith va Littlewoods Organisation Ltd '.... the common law does not impose liability for what are called pure omissions.' The laws draws a distinction between a positive act which causes harm (misfeasance) and a mere failure to prevent harm from arising (non-feasance. In Curman v Northern Ireland Housing Association Lord Bridge pointed out that duties to prevent harm being caused (as opposed to duties to refrain from causing harm) would normally only arise whre one person, under a contract, had promised to make another person better off and that it may not be appropriate for such duties to be imposed in tort. Similar reasoning was employed by the House of Lords in Sutradhar v Natural Environment Research Council. Misfeasance or non-feasance depends essentially on the nature of the relationship between claimant and defendant. In English law in contrast to civil law jurisdictions, there is no general duty to rescue another (unless there a prior relationship of care has existed between the defendant and person who needs rescuing); and there is no general duty to prevent others people from causing damage. There are four particular situations as mentioned below where liability for the acts of third parties can arise:
a) Special relationship betweeen the defendant and the claimant - Where D assumed responsibility to look after the claimant's property (Stanbie v Troman)contractual relationship when the plaintiff employed a decorator who left the premises unsecured.
b) Special relationship between the defendant and the third party - In (Home Office v Dorset Yacht) the defendant were liable because they have control over the third party who caused the damage.
c) Special relationship betweeen the defendant and the claimant - Where D assumed responsibility to look after the claimant's property (Stanbie v Troman)contractual relationship when the plaintiff employed a decorator who left the premises unsecured.
d) Special relationship between the defendant and the third party - In (Home Office v Dorset Yacht) the defendant were liable because they have control over the third party who caused the damage.
Tuesday, November 25, 2008
Tuesday, November 18, 2008
EQUITY & TRUSTS LAW
`EQUITY& TRUSTS LAW - AN OVERVIEW
The term 'trust' describes a particular form (or forms) of property holding. Where there is a trust, the legal title holder must apply the property for the benefit of someone else unlike the standard absolute ownership where the owner is free to use the property howsoever he wishes. The person holding the property is a trustee and the person for whose benefit he holds it is the beneficiary and the person who set up the trust is usually referred to as the settlor. In a typical trust, the beneficiary has right against the trustee that the property be applied solely for his benefits, he also have equitable title to the trust property.
Trust could either be expressed (what the owner wanted), while other are impossed by law irrespective of the property owner's wishes. These are resulting or constructive trusts. For a long time English law had both the common law applied by the king's courts and equity applied by the chancery court. These two were merged in 1875.
Trusts are extremely versatile legal devise. Settlors may use them both to provide for family members and to secure their commercial interest. The law imposed trusts ti ensure a just division of the family home upon relationship breakdown, to strip gains from wrongdoers, and to return misapplied property. It is for this reason that trusts play such a central role in English law.
CERTAINTY
To create a valid express trust, the settlor must have intended to create a trust, the trust property must be sufficiently certain and the beneficiaries must have been adequately identified. These are know as the three certainties; intention, subject matter and objects. The purpose of this is to enable the court have adequate information. Trust is intentional and failed gift will not be re-interpreted as trust. No trust will be created if the settlor intended merely to impose some moral obligation on the trustee to use the property for another's benefit. The intention must be legal obligations. The court in establishing whether a settlor intended to create a trust would adopt objective rather than subjective approach. Trust object and subject matter may be uncertain in a variety of ways and to differing degrees. These could be either inexact words (conceptual uncertainty) and not enough factual information (evidential uncertainty).
In respect to certainty of subject matter, the general principle is that the precise identity and location of the trust property, what parts are to go to which beneficiaries must be clearly stated. There is however an exception with homogeneous intangible property, where it is sufficient to identify the source of the trust property from the proportion of that bulk which is to be held on trust. Where a trust if x£ to each of my friend, the trust will succeed so long as any one person can be found who falls within the defined class of beneficiaries. However, where it is x£ to be shared among certain beneficiaries, the trust will only succeed if it is possible to draw-up a complet list of all those who falls within the defined class of beneficiaries.
Where a settlor creates a discretionary trust, the trust will success only if it can be said of any given person that he is or he is not a members of the class of beneficiaries. A discretionary trust will fail, even if its objects are sufficiently certain, it is held to be administratively unworkable or capricious. This is where the class is too big (administrative) and settlor reason for chosing the beneficiaries (capriciousness.) It may be possible to cure uncertainty of subject matter or objects by stipulating for a third party to fix the problem (most useful of evidential uncertainty). If the settlor seeks to make a self declaration of trust, then any uncertainty will result in him continuing to hold the property absolutely, where the property is transferred to a trust, then uncertainty of objects or subject will lead to the trustee holding the property on trust for the settlor.
PURPOSE TRUST
Purpose trusts are set up to use property to promote a particular objective rather than benefit certain individuals. GHowever, the basic rule of English trusts law is that trust must have beneficiaries, where there is no beneficiaries it is not possible to create a purpose trust. This rule is known as the beneficiary principle firmly established in Re Ebdacott (1960) Probition applies only to purpose trust and not to powers for purpose (Re. Douglas (1887. There are however a number of exceptions to the beneficiary princile.
The most frequently cited explanation for the rules come from Marice v Bishop of Durham, which ruled that for trust to be valid it must be capable of being supervised by the courts to ensure that the trustees duties are enforced and the settlor's intentions respected. This is based on the reasoning that i) if a trust cannot be enforced it must fail; and b) it is only beneficiaries that can enforce a trust.
Enforcement of Trusts
The general rule is that a settlor is divorced from the trust once it is created and the trustees and the beneficiary are then left to enforce the trust. There is a counter arguement that if a settlor is still alive, he should be able to enforce the trust in addition to other interested parties.
Must trust be enforceable
There is need to find an enforcer to ensure that the trustees perform their duty. It my be possible however for an honest settlor to enforce a purpose trust to allow if from failure. The difficulty in finding a beneficiary to enforces Sauders v Vaulier right is one the things militating against enforcement of purpose trusts.
Re. Bowes (£5,000 for planting shelter trees for Wemmegil Estate) the court interpreted the owners of the estate as the beneficiary of the trust and gave them the discretion to use the money as they saw fit. In re Andrew's Trusts, a trust for children's education was interpreted to mean the general use of the childred since their education has been provided for.
EXCEPTIONS TO PURPOSE TRUSTS
Anomalous Purposes Trusts - These trust are created by accidents of legal history and they are:
a) Trusts to look after or provide for certain animals - Re Dean (Trust for the maintenance of testator horses and hounds
b)Trust for the contruction and or maintenance of graves and funeral monuments - Re Hooper
c) Trust for saying or private masses - Bourne v Keane.
A second exception is found in Re Denley's Trust Deed provided that the carrying out of the purpose must benefit an individual in a way which is not to remote or indirect; and it must be possible to identify all those who would beneftit.
Other requirements of purpose trusts are that it must be defined with sufficient certainty for the courts to be able to enforce it. Morice v Bishop of Durham; Re. Astor's Settlement Trusts. Secondly, where the purpose is regarded as capricious or unlawful a clearly defined purpose trust will fail e.g. Brown v Burdett (1882), a trust to block up the rooms of a house for 20 years. Finally purpose trust will fail if they do not satisfy the rule against perpetuities (there must be time limit.
UNINCORPORATED ASSOCIATIONS
Two or more people bound together for one or more common purpose. Three issues arising from unincorporated association are:
a) How they acquire such properties
b) How it is held once acquired
c) What happens to it after the association comes to an end.
Features of unincorporated associations;
Members generally understand that they are not free to treat the groups property as if it were their own.
How unincorporated association owns property.
The property is held on trust on behalf by a few people for the association and members agreed to its being used exclusively for the association. The trust contains power to add or remove members based on exigencies of time. The assest are beneficially owned by the members under a trust where the Treasure or a committee is the trustee. In addition there is a contract between all the members governing the application of the property - This is known as contract holding theory recognised in Neville Estates Ltd v Madden (1962); Re. Rechers Will Trust (1972). It is open to the members as a whole to vary the contract to remove the legal restriction.
Gift to Unincorporated Association
This could be transferred to the current members beneficially, the current and future members and on trust for the purpose of the association. The donor transfer the property to the members as a whole, they in turn receive it as a group property and its usage is guided by the contract that it would be used for the purpose of the association. Such property are treated as transferred on trust for the members generally.
Distribution of Property Upon Dissolution of the Association
Upon dissolution of the association, the property could either revert back to the owner or it becomes ownerless and be vested in the crown as as bona vacantia. Re. West Constabulary's Widows Children and Benevolent (1930) fund trust. The property were treated as follows:
Subscrition - Bona vacantia
Raffle and sweepstake - bona vacantia
Collection box - bona vacantia
Donation & Legal - Could return to the owner.
However in Re. Bucks Constabulary Widows and Orphan Fund Trust Society, the court ruled that upon dissolution, members at the time of the dissolution are entitled to an equal share in the association's property precisely because they are equally beneficially entitled to that property. The exception is that where the association is reduced by death or resignation to one person, the property become bona vacantial Re. Bucks.
Political Parties
Contract holding theory of unincorporated association does not apply to political parties Re. Grant Will Trust & Conservative and Unionist Central Office v Bureel Personal Agency Relationship, where the owner donated the property to the treasure to use for political purpose.
The beneficiary principle is satisfied if an apparent purpose trust turn out, on closer examination, a persons trust. The interpretation is that it is to benefit those individual who would benefit from the purpose being pursued.
CHARITABLE TRUST
Charitable trust is an exception to the rule that trusts must have beneficiaries. Charities Act 2006 sets out 13 categories of charitable purpose and modify how to apply the test of public benefit.
Charities enjoys numerous taxation advantages, recognitions is viewed by many as a state-sanctioned stamp of legitimacy or approval. Charities are registered with the Charity Commission and provide information to the Commission on periodic basis. Duge v Turner set out qualification for charity
Traditional Approach - Charitable Uses Act 1601:
Relief of Poverty
Advancement of Education
Advancement of Religion
Other purposes beneficial to the the community
The above are known as Pensel head of charity
Charity Act 2007
Sets out 13 purposes of charity and s.2(2) confirms the case laws on the defintion of charity.
1. The Prevention or Relief of Poverty - Joseph Rowtree Memorial Trust Housing Association v Attorney General - provision of houses for the aged at below market rate
2. The Advancement of Education - Inland Revenue Commissioner v McMuller (1981) Football academic recognised, Research recognised in Re. Hopkins Will Trust
3. Advancement of Religion: s.2(3)changes made to the definition of relition by the Act do not dispense with the requirement of worship in Re. South Place Ethical Society (1980). The trust must not be just religions, but also for the advancement of religion United Grand Lodge of Ancient Free and Accepted Masons v Holborn Borough Council (1975)
4. Advancement of Health or the saving of lives. s.2(2) - Reliefs to the sick is charitable (Re. Resch's Will Trust (1969) Relief of the sick was extended to spritual healing in Funnell v Stewart (1996).
5. Advancement of Citizenship or Community Development s.2(3)(c) - The Charity Commission include providing financial assistance to the port, housing to those in need; helping unemployed to find work, providing education and training, providing financial and technical assistance
6. Advancement of Arts, culture, heritage or science - these were dealt with unde Pemsel classification. Horticulture was recognised as science in Re. Pleasnts
7. The Advancement of Amateur Sport - Starting point is Re. Nottage, where yatch race was no recognised. However more sports and games such as chess, monopoly, etc have been recognised
8. Advancement of human rights, conflict resolution or reconciliation, or the promotion of religious or racial harmony or equality and diversity - these are new areas recognised.
9. Advancement of environmental protection or improvement - For the purpose of trust to be recognised as charitable it must be demonstrated by independent expert evidence that such species of part of environment are worthy or preservation.
10. Relief of those in need by reason of youth, age, ill-health, disability, financial hardship and other disadvantage - s.2(2)(j) introduced by IRC v City of Glasgow Police Athletic Association (1953) and IRC V Baddelley (1955)
11. Advancement of Animal Welfare - recognised in cases such as Re. Moss, Re. Murawski's Will Trust (1971)
12. Promotion of the efficiency of the armed forces of the crown, or of the efficiency of the police, fire and rescue serices or ambulance services - Re. Cray
13. Other purposes s.2(4) - Scotish Burial Reform and Cremation Society v Glasgow Corporation
The 2006 Act removes the presumption of public benefit that previously operated and put the onus on the trust to prove the the charitable trust is for public benefit. Trust for political purpose cannot be charitable and tho include trust for supporting particular politcal party, change of laws in foreign country. Charitable purposes cannot be positively harmful to the public. If it is impossible to carry out the charitable purpose, the cy-pres (as close as possible) doctrine may operate to keep the funds in charitatble domain. In the case of initial failure, it is necessary to show a paramount charitable intention on the part of the settlor befor cy-pres can apply, in case of subsequent failure, cy-pres applies automatically. The perpetuality rule do not apply in same way to charitaable trust as to private trusts. The rule against inalienability does not apply at all and there is a limited exception from the rule against remote vesting.
The beneficiary principle does not apply to charitable trust and the enforcement is carried out by the Attorney-General of the Charity Commission.
FORMALITIES AND THE CONSTITUTION OF TRUSTS
The general rule is that certain transaction must be conducted in certain way for it to have legal effect. This rules means that a party must do more than simply form an intention to make a particular disposition of his property for the disposition to be effect. Courts sometime in trying to ameliorate apparent to which such rules can give rise on individual fact ofter create exception to formality requirement such as in Re. Vanderwell's Trust (No. 2) (1974)
Equity will not perfect an imperfect gigt. Milroy v Lord (1962) A shareholder using deed rather than transfer form was regardes as ineffective declaration of trust. The harshness of this rule was avoided in T Cholthram International SA v Pagavani (2001) - the trust succeed because the donor himself was to be one of the trustees.
Principlein Re. Rose (1952) relying on transfers of shares. When he died the title passed to the beneficiary. When you set to make outright transfer of shares, once all the steps have been taken the sharesare held on trust until the third party completes the process.
Mascall v Mascall (1984) Father and son where the land was transferred and the father later changed his mind. Pennington v Waine (2002) transfer of 400 shares where form was given to the representative of the company's auditors, who did not pass it to the company. It was held that the trust was agreen even when there are still some things to be done.
Other exceptions to the rule that equity will not perfect an imperfect gift are:
a) The rule in Strong v Bird (1874) Where a tranfer property to B and when A dies, B was also made the executioner of A's will
b) Deathbed gifts - donationes mortis cause - donation made on death bed.
Where a promise made by a deed but not supported by consideration is breach the other party can only recover damages for loss caused by the breach. By contract, where consideration has been given, ther is possibilility of specific performance. Equity will not assist a volunteer (one who has provided no consideration. Equity will not allow statute to be used as instrument of fraud (secret trust (full and half secret).
Sometimes if you wannt to make a transfer or other disposition of property all you need to do is to make clear that this is what you want and the tranfer then takes effect. However, often, more is needed. For intance you may beed to express your intenton in a particular form such as in writing, or registration of the new owner. If you want to pass the benefit of property to someone else, there are three basic ways - outright transfer (gift); declare yourself trustee of the property; or you can transfer the property to some third party to hold on trust for your intended beneficiary. A trust cannot arise until the intended trust is properly vested in the intended trustee. An intended beneficiary may also enforce a promise to create a trust if despite not having provided consideration or being a party to the deed, the person who did provide the consideration or the party to the deed holds his right to enforce the promise on trust for the beneficiairy. Trust can usually be created without formality. There are however, two principal exception; trusts of land and testamentary trusts. S.53(1)(b) of the Law of Property Act requires your intention to be evidenced in writing. You can create trust to take effect on your death and this must satisfy the requirement of s.9 of Will Act 1937, which requires the trust to be in writing and signed. A beneficiary trust will usually have an equitable title to the trust property, this interest like other proprietary interest can be transfert to others. An outright transfer of a beneficiary's equitable interest clearly counts as a disposition. So tho where the benefiiciary directes his trustee now to hold the property on trust for someone else. However, there is no such disposition where beneficiary tells his trustee to transfer the trust property outright to someone else, thus bring the trust to an end. Neither is there a disposition where the beneficiary declares himself a trustee of his equitable interest in favour of another, save perhaps where there is a bare trust.
Direction to the trustee to transfer the property to another outright - An equitable interest is like proprtiatary interest which can be a subject matter.
A bare trust is one where your only duty as a trustee is to hold it to the beneficiary's order, to do with it as he directes. Declarations of sub-trust are bot disposition of beneficiary's equitable intrest, and do do not require writing, unless the sub-trust is a bare trust in which care there is a disposition and writing is required. Where a beneficiary surrenders his interest, this does amount to a disposition and so would require writing to be effective under s.53(1)(c) - Newtlon Housing Trust V Al-Suleimen (1999). Disclaimer, where would be beneficiaries rejects any interest under the trust from the onset, does not require writing to be effective - Re. Paradise Motor Co. Ltd (1968)
RESULTING TRUSTS
of trustVandervell v IRCReliefs to the sick is charitable (Re. Resch's Will Trust (1969) Relief of the sick was extended to spritual healing in Funnell v Stewart (1996).
The term 'trust' describes a particular form (or forms) of property holding. Where there is a trust, the legal title holder must apply the property for the benefit of someone else unlike the standard absolute ownership where the owner is free to use the property howsoever he wishes. The person holding the property is a trustee and the person for whose benefit he holds it is the beneficiary and the person who set up the trust is usually referred to as the settlor. In a typical trust, the beneficiary has right against the trustee that the property be applied solely for his benefits, he also have equitable title to the trust property.
Trust could either be expressed (what the owner wanted), while other are impossed by law irrespective of the property owner's wishes. These are resulting or constructive trusts. For a long time English law had both the common law applied by the king's courts and equity applied by the chancery court. These two were merged in 1875.
Trusts are extremely versatile legal devise. Settlors may use them both to provide for family members and to secure their commercial interest. The law imposed trusts ti ensure a just division of the family home upon relationship breakdown, to strip gains from wrongdoers, and to return misapplied property. It is for this reason that trusts play such a central role in English law.
CERTAINTY
To create a valid express trust, the settlor must have intended to create a trust, the trust property must be sufficiently certain and the beneficiaries must have been adequately identified. These are know as the three certainties; intention, subject matter and objects. The purpose of this is to enable the court have adequate information. Trust is intentional and failed gift will not be re-interpreted as trust. No trust will be created if the settlor intended merely to impose some moral obligation on the trustee to use the property for another's benefit. The intention must be legal obligations. The court in establishing whether a settlor intended to create a trust would adopt objective rather than subjective approach. Trust object and subject matter may be uncertain in a variety of ways and to differing degrees. These could be either inexact words (conceptual uncertainty) and not enough factual information (evidential uncertainty).
In respect to certainty of subject matter, the general principle is that the precise identity and location of the trust property, what parts are to go to which beneficiaries must be clearly stated. There is however an exception with homogeneous intangible property, where it is sufficient to identify the source of the trust property from the proportion of that bulk which is to be held on trust. Where a trust if x£ to each of my friend, the trust will succeed so long as any one person can be found who falls within the defined class of beneficiaries. However, where it is x£ to be shared among certain beneficiaries, the trust will only succeed if it is possible to draw-up a complet list of all those who falls within the defined class of beneficiaries.
Where a settlor creates a discretionary trust, the trust will success only if it can be said of any given person that he is or he is not a members of the class of beneficiaries. A discretionary trust will fail, even if its objects are sufficiently certain, it is held to be administratively unworkable or capricious. This is where the class is too big (administrative) and settlor reason for chosing the beneficiaries (capriciousness.) It may be possible to cure uncertainty of subject matter or objects by stipulating for a third party to fix the problem (most useful of evidential uncertainty). If the settlor seeks to make a self declaration of trust, then any uncertainty will result in him continuing to hold the property absolutely, where the property is transferred to a trust, then uncertainty of objects or subject will lead to the trustee holding the property on trust for the settlor.
PURPOSE TRUST
Purpose trusts are set up to use property to promote a particular objective rather than benefit certain individuals. GHowever, the basic rule of English trusts law is that trust must have beneficiaries, where there is no beneficiaries it is not possible to create a purpose trust. This rule is known as the beneficiary principle firmly established in Re Ebdacott (1960) Probition applies only to purpose trust and not to powers for purpose (Re. Douglas (1887. There are however a number of exceptions to the beneficiary princile.
The most frequently cited explanation for the rules come from Marice v Bishop of Durham, which ruled that for trust to be valid it must be capable of being supervised by the courts to ensure that the trustees duties are enforced and the settlor's intentions respected. This is based on the reasoning that i) if a trust cannot be enforced it must fail; and b) it is only beneficiaries that can enforce a trust.
Enforcement of Trusts
The general rule is that a settlor is divorced from the trust once it is created and the trustees and the beneficiary are then left to enforce the trust. There is a counter arguement that if a settlor is still alive, he should be able to enforce the trust in addition to other interested parties.
Must trust be enforceable
There is need to find an enforcer to ensure that the trustees perform their duty. It my be possible however for an honest settlor to enforce a purpose trust to allow if from failure. The difficulty in finding a beneficiary to enforces Sauders v Vaulier right is one the things militating against enforcement of purpose trusts.
Re. Bowes (£5,000 for planting shelter trees for Wemmegil Estate) the court interpreted the owners of the estate as the beneficiary of the trust and gave them the discretion to use the money as they saw fit. In re Andrew's Trusts, a trust for children's education was interpreted to mean the general use of the childred since their education has been provided for.
EXCEPTIONS TO PURPOSE TRUSTS
Anomalous Purposes Trusts - These trust are created by accidents of legal history and they are:
a) Trusts to look after or provide for certain animals - Re Dean (Trust for the maintenance of testator horses and hounds
b)Trust for the contruction and or maintenance of graves and funeral monuments - Re Hooper
c) Trust for saying or private masses - Bourne v Keane.
A second exception is found in Re Denley's Trust Deed provided that the carrying out of the purpose must benefit an individual in a way which is not to remote or indirect; and it must be possible to identify all those who would beneftit.
Other requirements of purpose trusts are that it must be defined with sufficient certainty for the courts to be able to enforce it. Morice v Bishop of Durham; Re. Astor's Settlement Trusts. Secondly, where the purpose is regarded as capricious or unlawful a clearly defined purpose trust will fail e.g. Brown v Burdett (1882), a trust to block up the rooms of a house for 20 years. Finally purpose trust will fail if they do not satisfy the rule against perpetuities (there must be time limit.
UNINCORPORATED ASSOCIATIONS
Two or more people bound together for one or more common purpose. Three issues arising from unincorporated association are:
a) How they acquire such properties
b) How it is held once acquired
c) What happens to it after the association comes to an end.
Features of unincorporated associations;
Members generally understand that they are not free to treat the groups property as if it were their own.
How unincorporated association owns property.
The property is held on trust on behalf by a few people for the association and members agreed to its being used exclusively for the association. The trust contains power to add or remove members based on exigencies of time. The assest are beneficially owned by the members under a trust where the Treasure or a committee is the trustee. In addition there is a contract between all the members governing the application of the property - This is known as contract holding theory recognised in Neville Estates Ltd v Madden (1962); Re. Rechers Will Trust (1972). It is open to the members as a whole to vary the contract to remove the legal restriction.
Gift to Unincorporated Association
This could be transferred to the current members beneficially, the current and future members and on trust for the purpose of the association. The donor transfer the property to the members as a whole, they in turn receive it as a group property and its usage is guided by the contract that it would be used for the purpose of the association. Such property are treated as transferred on trust for the members generally.
Distribution of Property Upon Dissolution of the Association
Upon dissolution of the association, the property could either revert back to the owner or it becomes ownerless and be vested in the crown as as bona vacantia. Re. West Constabulary's Widows Children and Benevolent (1930) fund trust. The property were treated as follows:
Subscrition - Bona vacantia
Raffle and sweepstake - bona vacantia
Collection box - bona vacantia
Donation & Legal - Could return to the owner.
However in Re. Bucks Constabulary Widows and Orphan Fund Trust Society, the court ruled that upon dissolution, members at the time of the dissolution are entitled to an equal share in the association's property precisely because they are equally beneficially entitled to that property. The exception is that where the association is reduced by death or resignation to one person, the property become bona vacantial Re. Bucks.
Political Parties
Contract holding theory of unincorporated association does not apply to political parties Re. Grant Will Trust & Conservative and Unionist Central Office v Bureel Personal Agency Relationship, where the owner donated the property to the treasure to use for political purpose.
The beneficiary principle is satisfied if an apparent purpose trust turn out, on closer examination, a persons trust. The interpretation is that it is to benefit those individual who would benefit from the purpose being pursued.
CHARITABLE TRUST
Charitable trust is an exception to the rule that trusts must have beneficiaries. Charities Act 2006 sets out 13 categories of charitable purpose and modify how to apply the test of public benefit.
Charities enjoys numerous taxation advantages, recognitions is viewed by many as a state-sanctioned stamp of legitimacy or approval. Charities are registered with the Charity Commission and provide information to the Commission on periodic basis. Duge v Turner set out qualification for charity
Traditional Approach - Charitable Uses Act 1601:
Relief of Poverty
Advancement of Education
Advancement of Religion
Other purposes beneficial to the the community
The above are known as Pensel head of charity
Charity Act 2007
Sets out 13 purposes of charity and s.2(2) confirms the case laws on the defintion of charity.
1. The Prevention or Relief of Poverty - Joseph Rowtree Memorial Trust Housing Association v Attorney General - provision of houses for the aged at below market rate
2. The Advancement of Education - Inland Revenue Commissioner v McMuller (1981) Football academic recognised, Research recognised in Re. Hopkins Will Trust
3. Advancement of Religion: s.2(3)changes made to the definition of relition by the Act do not dispense with the requirement of worship in Re. South Place Ethical Society (1980). The trust must not be just religions, but also for the advancement of religion United Grand Lodge of Ancient Free and Accepted Masons v Holborn Borough Council (1975)
4. Advancement of Health or the saving of lives. s.2(2) - Reliefs to the sick is charitable (Re. Resch's Will Trust (1969) Relief of the sick was extended to spritual healing in Funnell v Stewart (1996).
5. Advancement of Citizenship or Community Development s.2(3)(c) - The Charity Commission include providing financial assistance to the port, housing to those in need; helping unemployed to find work, providing education and training, providing financial and technical assistance
6. Advancement of Arts, culture, heritage or science - these were dealt with unde Pemsel classification. Horticulture was recognised as science in Re. Pleasnts
7. The Advancement of Amateur Sport - Starting point is Re. Nottage, where yatch race was no recognised. However more sports and games such as chess, monopoly, etc have been recognised
8. Advancement of human rights, conflict resolution or reconciliation, or the promotion of religious or racial harmony or equality and diversity - these are new areas recognised.
9. Advancement of environmental protection or improvement - For the purpose of trust to be recognised as charitable it must be demonstrated by independent expert evidence that such species of part of environment are worthy or preservation.
10. Relief of those in need by reason of youth, age, ill-health, disability, financial hardship and other disadvantage - s.2(2)(j) introduced by IRC v City of Glasgow Police Athletic Association (1953) and IRC V Baddelley (1955)
11. Advancement of Animal Welfare - recognised in cases such as Re. Moss, Re. Murawski's Will Trust (1971)
12. Promotion of the efficiency of the armed forces of the crown, or of the efficiency of the police, fire and rescue serices or ambulance services - Re. Cray
13. Other purposes s.2(4) - Scotish Burial Reform and Cremation Society v Glasgow Corporation
The 2006 Act removes the presumption of public benefit that previously operated and put the onus on the trust to prove the the charitable trust is for public benefit. Trust for political purpose cannot be charitable and tho include trust for supporting particular politcal party, change of laws in foreign country. Charitable purposes cannot be positively harmful to the public. If it is impossible to carry out the charitable purpose, the cy-pres (as close as possible) doctrine may operate to keep the funds in charitatble domain. In the case of initial failure, it is necessary to show a paramount charitable intention on the part of the settlor befor cy-pres can apply, in case of subsequent failure, cy-pres applies automatically. The perpetuality rule do not apply in same way to charitaable trust as to private trusts. The rule against inalienability does not apply at all and there is a limited exception from the rule against remote vesting.
The beneficiary principle does not apply to charitable trust and the enforcement is carried out by the Attorney-General of the Charity Commission.
FORMALITIES AND THE CONSTITUTION OF TRUSTS
The general rule is that certain transaction must be conducted in certain way for it to have legal effect. This rules means that a party must do more than simply form an intention to make a particular disposition of his property for the disposition to be effect. Courts sometime in trying to ameliorate apparent to which such rules can give rise on individual fact ofter create exception to formality requirement such as in Re. Vanderwell's Trust (No. 2) (1974)
Equity will not perfect an imperfect gigt. Milroy v Lord (1962) A shareholder using deed rather than transfer form was regardes as ineffective declaration of trust. The harshness of this rule was avoided in T Cholthram International SA v Pagavani (2001) - the trust succeed because the donor himself was to be one of the trustees.
Principlein Re. Rose (1952) relying on transfers of shares. When he died the title passed to the beneficiary. When you set to make outright transfer of shares, once all the steps have been taken the sharesare held on trust until the third party completes the process.
Mascall v Mascall (1984) Father and son where the land was transferred and the father later changed his mind. Pennington v Waine (2002) transfer of 400 shares where form was given to the representative of the company's auditors, who did not pass it to the company. It was held that the trust was agreen even when there are still some things to be done.
Other exceptions to the rule that equity will not perfect an imperfect gift are:
a) The rule in Strong v Bird (1874) Where a tranfer property to B and when A dies, B was also made the executioner of A's will
b) Deathbed gifts - donationes mortis cause - donation made on death bed.
Where a promise made by a deed but not supported by consideration is breach the other party can only recover damages for loss caused by the breach. By contract, where consideration has been given, ther is possibilility of specific performance. Equity will not assist a volunteer (one who has provided no consideration. Equity will not allow statute to be used as instrument of fraud (secret trust (full and half secret).
Sometimes if you wannt to make a transfer or other disposition of property all you need to do is to make clear that this is what you want and the tranfer then takes effect. However, often, more is needed. For intance you may beed to express your intenton in a particular form such as in writing, or registration of the new owner. If you want to pass the benefit of property to someone else, there are three basic ways - outright transfer (gift); declare yourself trustee of the property; or you can transfer the property to some third party to hold on trust for your intended beneficiary. A trust cannot arise until the intended trust is properly vested in the intended trustee. An intended beneficiary may also enforce a promise to create a trust if despite not having provided consideration or being a party to the deed, the person who did provide the consideration or the party to the deed holds his right to enforce the promise on trust for the beneficiairy. Trust can usually be created without formality. There are however, two principal exception; trusts of land and testamentary trusts. S.53(1)(b) of the Law of Property Act requires your intention to be evidenced in writing. You can create trust to take effect on your death and this must satisfy the requirement of s.9 of Will Act 1937, which requires the trust to be in writing and signed. A beneficiary trust will usually have an equitable title to the trust property, this interest like other proprietary interest can be transfert to others. An outright transfer of a beneficiary's equitable interest clearly counts as a disposition. So tho where the benefiiciary directes his trustee now to hold the property on trust for someone else. However, there is no such disposition where beneficiary tells his trustee to transfer the trust property outright to someone else, thus bring the trust to an end. Neither is there a disposition where the beneficiary declares himself a trustee of his equitable interest in favour of another, save perhaps where there is a bare trust.
Direction to the trustee to transfer the property to another outright - An equitable interest is like proprtiatary interest which can be a subject matter.
A bare trust is one where your only duty as a trustee is to hold it to the beneficiary's order, to do with it as he directes. Declarations of sub-trust are bot disposition of beneficiary's equitable intrest, and do do not require writing, unless the sub-trust is a bare trust in which care there is a disposition and writing is required. Where a beneficiary surrenders his interest, this does amount to a disposition and so would require writing to be effective under s.53(1)(c) - Newtlon Housing Trust V Al-Suleimen (1999). Disclaimer, where would be beneficiaries rejects any interest under the trust from the onset, does not require writing to be effective - Re. Paradise Motor Co. Ltd (1968)
RESULTING TRUSTS
of trustVandervell v IRCReliefs to the sick is charitable (Re. Resch's Will Trust (1969) Relief of the sick was extended to spritual healing in Funnell v Stewart (1996).
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