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.
1 (1804) 9 Ves 399, 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, s. 14.
The strict application of beneficiary principles has recently subjected to attack and there were various attempts to relax the principles. Some of the attempts were successful but others have been subsequently rejected. Originally, the test for certainty of objects in discretionary and fixed trusts was the same. In IRC v Broadway Cottages Trust 5, it was held that for a trust to be valid the trustees must be able to draw up complete list of the beneficiaries. 4 (1913) 1 Ch 314,
They had to overcome any conceptual or evidential uncertainties that might arise and locate all the beneficiaries, since otherwise the trust fund could not be properly distributed.
It has been recognised, however in Re Gulbenkian 6 and McPhail v Doulton 7 that this test is very appropriate for fixed trusts, but creates unfair and unjust results for discretionary trusts. The nature of a discretionary trust is that allows the trustees to make a reasonable choice between the beneficiaries, and the strict application of the test would be defeat the trust and settlers intention where the majority of the beneficiaries were clearly identified and located but some of them were not. Although the trustee would be able to make a reasonable selection, the ‘complete list’ test would invalid the trust. Lord Wilberforce recognised this as unsatisfactory while giving judgment in McPhail v Doulton:
‘The basis for the Broadway Cottages principle is stated that to be that a trust cannot be valid unless, if need be, it can be executed by the court and ... the court can only execute it by ordering an equal distribution in which every beneficiary shares.’
If the trustee is able to make a reasonable selection among of the class of beneficiaries then the court should be exactly able to do the same. In addition, Lord Wilberforce regarded as unsustainable the view that in order for the trustees to comply with the trust they must have a complete list in front of them in order to make a reasonable choice.
6 (1970) AC 508,
7 (1971) AC 424,
A new test has been adopted for power and discretionary trusts. This test means that ‘the power will be valid if it can be said with certainty whether any given individual is or is not a member of the class and the power does not simply fail because it is impossible to ascertain every member of the class according to Lord Wilberforce in McPhail v Doulton. It until the trustees select the beneficiaries.
There are a number of private purpose trusts, which are exceptionally considered valid. Despite the objections to the validity of the purpose trust as stated above, a number of anomalous exceptions exist. These trusts are created as concessions to human weakness. Therefore, it must be emphasised that the only concession granted by the court is that it is necessary for the beneficiaries (purpose) to enforce the trust. The other rules applicable to express trusts are equally applied to these anomalous trusts according to Re Endacott 8. Accordingly, such gifts are required to satisfy the test for certainty of objects and the perpetuity rule.
These exceptionally valid are not mandatory in effect but merely ‘directory’ in the sense that the trustees are entitled to refuse to carry out the wishes of the settlers and the courts will not force them to do otherwise. At the same time, the courts will not forbid the trustees from carrying out the terms of the trusts, if they express an intention to do so. In the latter event, the traditional fiduciary duties attach to trustees. These anomalous trusts are called ‘hybrid trusts’ or ‘trusts for imperfect obligations’.
In Re Denley’s Settlement Trusts 9, Goff J upheld a trust under which a piece of land was to be used as a recreation ground for the employees of a particular company. Goff J regarded the 8 (1960), 8 (1969) 1 Ch 373, employees as persons so directly benefited by the purpose that (1) the purpose was not such an abstract kind so to fall foul of the beneficiary principle, and (2) that the employees had to standing enforce the purpose against the trustees.
Subsequent commentary on the case has tended to treat the case as merely one of a particular kind of discretionary trust according to Re Grant’s Will Trusts 10, or as a trust for persons with the purpose being treated merely as a “superadded” direction or motive for the gift Re Lipinski’s Will Trusts 11. Thus, the case appears to have been read to deny that it represents a true departure from the beneficiary principle.
In Re Lipinski’s Will Trusts 12 however; Oliver j followed the principle of Re Denley’s Trust Deed by finding that although a trust for the erection of buildings of the hull Judeans (Maccabi) Association was expressed as a purpose trust. It was in fact for the benefit of ascertainable individuals, namely, the members of the club, and he therefore held the trust to be valid. It was argued that because the testator had made the gift in memory of his late wife, this tented to perpetuity and precluded the association members for the time being from enjoying the gift beneficially.
Oliver J rejected this argument. Applying the principle of Re Lipinski’s Will Trusts to this disposition therefore, it might well not fail for certainty of objects. In addition to the there are some recognised categories of private purpose trusts that are valid. In Re Endacott the court, discuss regarding this subjects. Gifts for the animals generally are 10  ALL ER 359,
11  Ch 253,
12  Ch 235,
Charitable, but trusts for the maintenance of specific animals, such as pets, are valid private purpose trusts. In Pettingall v pettingall 13, the testator’s executor was given a fund in order to spend ₤ 50 per annum for the benefit of the testator’s black mare. On her death, any surplus funds were to be taken by the executor. The court held that in the view of the willingness of the executor to carry out the testator’s wishes, a valid trust in favour of the animal was created. The residuary legatees were interested not in the validly of the gift in its failure. In Re Dean 14, the testators directed his trustees to use ₤ 750 per annum for the maintenance of his horses and hounds should they live so long. It was held that the trust was valid.
In Re Kelly 15, the court took the view that lives in being were required to be human lives. In any event, the court is entitled to take judicial notice of the lifetime of animals. In Re Haines, The Times, 7th November 1952, the court took notice that a cat could not live for no longer than 21 years. In Re Thompson 16, the Pettingall principle was unjustifiably extend to uphold a trust form the promotion and furtherance of fox hunting. A trust for the building of a memorial or monument in memory of an individual is not charitable, but may exist as a valid purpose trust if the trustees express a desire to perform the task.
In Mussett v Bingle, 17 a testator bequeathed ₤ 300 to his executors to be used to erect a monument to the testator’s wife’s first husband. The court held that the gift was valid. Similarly, a gift for the maintenance of a specific grave or particular graves may be valid as private purpose 13 (1842),
14 (1889) 41 Ch D 552,
16  Ch 342,
trusts but additionally the donor is required to restrict the gift within the perpetuity period, otherwise the gift may be invalidated. In Re Hooper 18, a bequest to trustees on trust to provide ‘so far as they can legally do so’ for the care and upkeep of specified graves in churchyard was upheld as a private trust. The perpetuity period was satisfied by the phase ‘so far as they can legally do so’.
From the above discussion it can be said that recognition afforded only to trusts with objects able to enforce them is open criticism on the grounds of harshness and inflexibility and creates difficulties with endowments for unincorporated association. Whilst any general abrogation of the rule would be undesirable and the modifications made by the courts where there are discernible indirect objects are to be welcomed. 18  Ch 38,
1) Hanbury & Martin, Modern Equity, 17th Edition, (2005), London: Sweet & Maxwell,
2) Penner, J. E. The Law of Trusts, 4th Edition, (2004), London: Butterworths,
3) Ramjohn M. Unlocking Trusts, 1st Edition, (2005), Hodder & Stoughton,
4) Margaret wilkie & Rosalind, Equity & Trusts, (2004 -2005), Oxford University Press.