Prepare Anti-Trust Laws Seminar

Requirement

Purpose Trusts with particular emphasis on gifts to unincorporated associations and a re-examination of charities in this context.

Solution:

1) The requirements for charitable trusts are provided in Section 1 of Charities Act 2006. It should be established only for the purposes that are charitable, and it is controlled by the High Court in the matter of charities and for exercising jurisdiction. Section 2 (2) of Charity Act 2006 provides that the charitable purpose is fulfilled, if two requirements are met, (1), it must comply with the list of purposes, and (2) it should be to the satisfaction of public benefits test. It must fall into one of the thirteen categories.
Independent schools and private hospitals would fall in the definition of charity, only if the above requirements of section (1) and (2) are fulfilled.
The organizations or trusts that are running for making profits as it was in the case of Re Girls' Public Day School Trust (1951) Ch 400, that school is a charitable body, though they charge fees, but if they run for profit,  they are not under charitable trust and those that promote political changes ("Charitable Purposes", 2000).

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(2) Legal nature of unincorporated  association 
These associations are governed by the common law and not by any statutes. They do not have a separate legal personality, thus, they cannot enter into contracts or buy property or employ persons and cannot initiate or defend any action in the court. The liability of the members may be joint or several (("LEGAL STATUS PROPOSED FOR UNINCORPORATED ASSOCIATIONS", 2016))
3) Legal problems associated with gifts and bequests to unincorporated associations 
If an unincorporated association is for non-charitable purposes than in that case, gifts and bequests may fail, but the Courts have considered the gifts to the members of such associations. It would be an individual gift to individual members and not be the gift for the unincorporated  association. In the case of Re Recher v Will Trust (1972) Ch 526, the Court took a purposive approach and gift to be distributed to members.Unincorporated associations in English law.
4) The relative advantages and disadvantages of the trust and contract approach 
The main advantages are, it can be set up easily, it is simple and easy to close down, it may be for charitable purpose, and no registration is required except for charity (Aguilar-Alfu, 2011). 
The disadvantages of the unincorporated  association are unlimited personal liability of members, as it does not have its legal identity, it cannot enter into any contracts, and cannot hold property in its right. It can be held as holding or custodian or nominee trustees.
Contract holding approach was illustrated in the case of Hanchett Stamford v HM Attorney General (2008) EWHC 330 (Ch), 2008 WL 196885. As per contract holding theory, the assets of the association, cash, money kept in the bank, the land is held by the officers nominally on behalf of the trust and has an equitable title under a joint tenancy form. The association has rules or constitution, according to which the members may contract internally between them, wherein it is implied that a member cannot claim any share in the property or assets of the association and that in case of his death or resignation, the property will pass on to the member ("Hanchett-Stamford v Attorney General & Ors, Court of Appeal - Chancery Division, February 27, 2008, [2008] 4 All ER 323,[2008] EWHC 330 (Ch),[2008] 2 P & CR 5 - Case Law - VLEX 52635618", 2016).
5) The purposes of the society are for a charitable purpose as defined in the Charities Act 2011. Donna may be advised in the matter of the first legacy of one million pounds was given to the society for the purposes of society as the managing committee thought proper, that it is up to the managing committee to decide to deal with it. however, she may decide to distribute among members or use it for good cause as suggested by few members.
Regarding second legacy it was for the benefit of members, thus it is advisable to be distributed to the members.
Thus, Donna may use some money for good cause from the first legacy and distribute the money to members, as is held in the given case of Re Richer herein.
7) The purpose trusts, where the beneficiary or class of beneficiary is defined or if it requires that a certain purpose has to be achieved and requested for it than, it  recognized by the Courts. Other types of purpose trusts recognised are for the erection of tombs or maintenance of tombs or memorials, the maintenance of animals will be recognised by the Court, provided they comply with the rule of the perpetuity of not continuing for more than 21 years (Pawlowski, 2002). 

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References

  • Aguilar-Alfu, A. (2011). Panama: charities as a cornerstone to society. Trusts & Trustees, 17(6), 594-599. http://dx.doi.org/10.1093/tandt/ttr043

  • Charitable Purposes. (2000). Trusts & Trustees, 6(9), 32-32. http://dx.doi.org/10.1093/tandt/6.9.32a

  • Hanchett-Stamford v Attorney General & Ors, Court of Appeal - Chancery Division, February 27, 2008, [2008] 4 All ER 323,[2008] EWHC 330 (Ch),[2008] 2 P & CR 5 - Case Law - VLEX 52635618. (2016). vLex. Retrieved 8 March 2016, from http://high-court-justice.vlex.co.uk/vid/7bs30827-52635618

  • LEGAL STATUS PROPOSED FOR UNINCORPORATED ASSOCIATIONS. (2016). Google.co.in. Retrieved 8 March 2016, from https://www.google.co.in/url?sa=t&source=web&rct=j&url=https://www.britainfirst.org/legal-notice/&ved=0ahUKEwiykITjo7HLAhXBS44KHQVnA0kQFggdMAA&usg=AFQjCNGRXi-585knoE0ukRKjtsQE7_oUAA

  • Pawlowski, M. (2002). Purpose trusts: obligations without beneficiaries?. Trusts & Trustees, 9(1), 10-14. http://dx.doi.org/10.1093/tandt/9.1.10

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