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Charities/ Private Purpose – Essay 1100 words
Summary (Slight moderation):
The facts of the case at hand reveal that Harvey has passed away, leaving behind
a will that includes four dispositions. The matter at hand pertains to the validity of
these dispositions as testamentary trusts. Assuming that Harvey's will has
complied with Section 9 of the Wills Act 1837, the key issue revolves around the
concept of certainties. It is evident from the facts of the case that, although there
is clarity regarding the intention and subject matter of the testamentary trusts,
the identity or specification of the objects or beneficiaries remains uncertain. In
light of the authoritative precedent set by the Re-Wright case (1936), it is
probable that these dispositions may not meet the requirements for valid trusts.
Thus, we need to evaluate if the dispositions in Harvey’s will can acquire the
status of Charitable Trust. In addition to this, it would be analyzed if the
application of the cy-près doctrine can ensure Harvey's intention to create a
charitable trust is upheld in the event of a purpose's failure.
Law (no moderation):
It had been argued that Charity and Trusts are two separate concepts. The case of
Mathews(1996) added to this “It’s a historical accident that Chancery
hijacked charitable gift and squeezed it into pre-existing framework of
trust.”
Charitable trusts enjoy numerous fiscal advantages, including exemptions from
tax liabilities on their income. However, in order to maintain their charitable
status and avail themselves of these benefits, certain requirements must be
fulfilled. If a charitable trust fails to meet these requirements, it risks losing its
charitable status. It is essential for a charitable trust to obtain the recognition of
charitable status from the Charity Commission in order to be deemed valid and
eligible for the associated privileges.
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First Requirements Law (no moderation):
For a charitable or public purpose trust to be deemed valid, it must meet three
distinct requirements outlined in Sections 1-4 of the Charities Act (CA). These
prerequisites encompass the trust's purpose and must possess a charitable
character, public benefit, and exclusively charitable nature. Prior to this
legislation, the list of charitable purposes was outlined in the Statute of Elizabeth
1601 (Charitable Uses Act 1601), which was ambiguously drafted. The courts
provided clarification in the landmark case of Commissioners of Income Tax v.
Pemsel (1891), where Lord MacNaughten established a comprehensive fourfold
characterization of charitable purposes. This judicial interpretation played a
crucial role in elucidating the definition and scope of charitable objectives.
Subsequently, the Parliament further clarified and refined the legal framework for
charities with the enactment of the Charities Act 2006.
Thus, we will analyze each of the disposition individually under the non-
exhaustive list of charitable purposes provided in Section 3 of the Charities Act
2011.
Second Requirement Law (no moderation):
As highlighted earlier, the second requirement pertains to the aspect of public
benefit. Initially, under common law, there was a presumption of public benefit
for purposes related to poverty, education, and religion. However, this
presumption was eliminated following the enactment of Section 4(2) and the
landmark case of Catholic Care (2010). Consequently, under the 2011 Act, the
Charity Commission has issued guidelines that outline the two key aspects of
public benefit: the benefit aspect and the public aspect.
In line with this, the satisfaction of the benefit aspect requires the charitable
purpose or trust to be recognizable and supported by substantial evidence.
Additionally, the overall benefits derived from the purpose or trust must
outweigh any potential detriments. This principle was established in the
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Antivivisection Society case (1947). Additionally, the second aspect, the public
aspect, incorporates the principles outlined in the Re-Compton case (1945) and is
fulfilled when the charitable purpose or trust benefits the public at large or a
significant portion thereof. Importantly, the purpose should not have a personal
nexus or exclusively benefit specific individuals. This requirement ensures that the
charitable trust operates for the greater public good and avoids any personal or
private interests.
Third Requirement Law (no moderation):
Lastly, it is crucial to address the final requirement for a charitable trust, which is
the exclusive charitable nature of all its purposes. This requirement is firmly
established by the precedent set in Morice (1805), which states that every
purpose must be charitable in nature. Additionally, as per the ruling in McGovern
(1782), it is clear that a purpose cannot be political in order to qualify as
charitable.
Cy-près Doctrine: (no moderation):
In certain instances, the enforcement of a charitable trust may face challenges.
This is evident in the application of the "Cy-près Doctrine," derived from the
French term meaning "as near as possible." This doctrine comes into play when a
trust becomes unworkable or impossible to execute according to the settlor's
specified means. In such cases, the court may utilize the Cy-près Doctrine to
modify the trust in a manner that closely aligns with the settlor's original
charitable intent, despite the impracticality or impossibility of the initial terms.
In cases of initial failure, where the designated charitable institution ceases to
exist before the settlor's demise, the court will prioritize the settlor's paramount
intent. The court will then invoke the Cy-près doctrine to redirect the charitable
amount to a similar organization, aligning with the settlor's original intention.
Furthermore, the application of the Cy-près doctrine extends to cases of
subsequent failure, where the designated charitable organization ceases to exist
after the settlor's passing. In such instances, the courts have the authority to
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modify the purpose of the trust and seek a suitable alternative, similar to the
approach taken in cases of initial failure. However, if no appropriate remedy can
be found, the courts may opt to transfer the charitable amount back to the
settlor's estate.
complying with the principle established in McGovern (1782). However, the
amount designated in the last disposition will become part of Harvey's estate
through a Resulting Trust, in accordance with the precedent set forth in Re-
Harwood (1936).
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1) PRIVATE PURPOSE TRUST: (rephrase)
A trust is Anomalous testamentary / private purpose trust when it does not meet
the requirement of charitable/public purpose trust but is for:
1) Maintenance of monuments to the memory of deceased persons (Musset).
Also (Re-Endacott);
2) Upkeep of Pet (Re Dean);
3) Private prayers (Hetherington).
Under this, in the absence of enforcers, the courts, via Pettingall Order (coming
from Pettingall v Pettingall), appoint the person as enforcer who otherwise would
have benefitted from the trust asset had the trust failed.
2) NON-CHARITABLE/PRIVATE UNINCORPORATED ASSOCIATION: (rephrase)
In case if the organization is unincorporated association (non-charitable), the gift
or money held on trust for the same shall be valid gift to such organization subject
to their mandate (Re-Lipinski).
