Denley Trusts

The Denley interpretation of a gift to an unincorporated association overcomes the problem with private purpose trusts, if the problem should be overcome. The courts have to accept as a matter of fact that property, particularly money, is left to organisations in a person’s will. So the struggle is how to interpret these bequests. Goff J identified that the objection to purpose trusts was that there was no beneficiary. If the beneficiary’s function is to own property (the ownership principle) then it is true that the unincorporated association has no legal identity (unlike a company which is a legal person in its own right) but if the focus is on their other function and it is to enforce the trust obligations (thereby having locus standi) then this was not a problem in a purpose trust for an unincorporated association trust. The people who would directly benefit from the clear purpose had sufficient locus standi and therefore the objection was solved. If so, this makes sense but it perhaps raises the question as to whether this also means that they are capable of using principles such as Saunders v Vautier. To be able to use this principle it is clear that the role of the beneficiary principle is to have ownership of property and to have people who will enforce the trust (the locus standi) so the dual function is essential for Saunders v Vautier, and indeed in most trusts. It can be argued that Re Denley saw the move away from the beneficiary principle being connected to ownership and more towards enforceability (having the relevant locus standi). This principle was then, arguably, extended in McPhail v Doulton. It is worth considering the validity of these trusts and if the courts are trying to fit the ownership of the property into far too restrictive principles. Should we just accept the issue as unique (sui generis) and stop trying to manipulate existing property concepts? These two decisions were in an era when trusts were increasingly used as a vehicle for efficient tax planning and, whilst the courts try to give effect to the intention of settlors/testators, perhaps they should not have encouraged this increased flexibility.