A Private trust is essentially a trust in favour of ascertainable individuals. A charitable trust is a trust for purposes, which are treated in law as charitable. In order to answer this question it is necessary to know about primary rule that a private express trust should be void if there are no identifiable beneficiaries, original test, current test, recent changes, exception to current beneficiary principles and above all it will gradually discuss whether the law should allow trusts for non-charitable purposes to exist.
The requirement for the existence of identified beneficiaries is called the ‘beneficiary Principle’. The ‘beneficiary Principle’ states that a valid trust must be for the benefit of ascertainable individuals- the trust must have beneficiaries. In consequence, equity will not countenance a trust to carry out a purpose since the benefits of carrying out a purpose are not owed to any specific individuals. Hence, the principle is also framed as the ‘no purpose trust’ rule. The first objection may be seen in a celebrated dictum of Sir William Grant M.
R. in Morice v Bishop of Durham 1. Every trust has an obligation. The objection is that there cannot be an obligation upon the trustees unless there is a correlative right in someone else to enforce it. Sir William Grant M. R. states: ‘There can be no trust, over the exercise of which this Court will not assume a control; for an uncontrollable power of disposition would be ownership, and not trust… Every trust (other than a charitable one) must have a definite object. There must be somebody, in whose favour the court can decree performance.
’This rule similar to ‘privity’ rule of contract law; only parties of the contract may enforce it; even though some third party may benefit from the performance of a contract, that factual benefit alone gives him no interest under the contract, and thus no right to enforce it. In Re Astor’s Settlement Trust 2, Lord Astor purported to create a trust for ‘the maintenance of good understanding between nations and preservation of the independence and integrity of newspapers.
’The court held that the trust was void for uncertainty on the ground that the means by which the trustees were to attain the stated aims were un specified and the person who was entitled, as of right, to enforce the trust was unnamed. In the other words, a trust creates rights in favour of the beneficiaries and imposes correlative duties on the trustees. If there were no persons with the power to enforce such rights, then equally there can be no duties imposed on trustees. In Re Endacott 3, a testator transferred his residuary estate to the Devon Parish Council ‘for the purposes of providing some useful memorial to myself’.
Lord Evershed MR held that no out and out gift to the Council was created, but the testator intended to impose an obligation in the nature of a trust on Council, which failed for uncertainty of objects. However, this principle closely linked with the question of enforceability: if the trustee refuses to perform or administer the trust then equity needs someone who will be able to enforce it and if necessary bring an action in a court of law. Hayton suggests that the term ‘beneficiary Principle’ should in fact be read as ‘enforcer principle’. 2 (1952) Ch 534, 3 (1960)
Ch 232, In Re Baden’s Deed Trusts (No. 2), Brightman J., and the court of appeal, had to apply the test laid down by the House of Lords, and consider in particular whether the words “dependants” and “relatives” were too uncertain. In applying the test is concerned with the former; “the court never defeated by evidential uncertainty. ” The Attorney General enforces charitable purposes trust, so this problem does not arise. However, trusts for non-charitable purposes clearly do present a problem in this respect. If the objects of the private trust fail, the (in the absence of any express provision) will usually go on a resulting trust for the settler or settler’s estate.
By contrast, if the objects of a charitable trust fail, the property can sometimes be saved for charity by application of cy-pres scheme; if the failure occurs before the property has been vested in the trust for charity, a general charitable intention must be shown by the settler. In Re Wilson 4, cy-pres is also applicable to charitable trusts in the instances in the Charities Act 1993, s. 13; and there is provision for the alternation of the objects of small charities in s. 74. Funds raised for charitable purposes which fail may be applicable cy-pres under the Charities Act 1993.