Trusts of Imperfect Obligation
| DOI | http://doi.org/10.1111/j.1468-2230.1955.tb00287.x |
| Published date | 01 March 1955 |
| Date | 01 March 1955 |
| Author | L. H. Leigh |
TRUSTS OF IMPERFECT OBLIGATION
THE
PROBLEMATIC DECISION
IN
Re Astor’s Settlement Trusts
the shares of the company owning
The Observer
newspaper were settled upon trust to apply the
income, which should arise from the shares during
a
period within
the perpetuity rule, towards such scheduled purposes as the settlors
should direct, and,
on
the determination of such period, to hold
capital and income upon certain residuary trusts in favour of
objects
at
present unascertainable. Any interests which the settlors
might have thereafter retained by resulting trusts through un-
certainty were settled, by a second settlement, upon charitable
trusts.
It
was common ground that the scheduled objects in the first
settlement were not charitable, and
on
originating summons
it
was
claimed by the trustees of the second settlement, and by the
Attorney-General for the charities, that the trusts of the first settle-
ment failed for uncertainty and through the non-existence of
a
cestui que trust
to enforce them. Roxburgh
J.
held that the trusts,
not being charitable, failed for uncertainty,
so
that there was
u
resulting trust under the second settlement.
On
this point the case
is
unexceptionable, but the learned judge also decided the case upon
the prior ground that trusts of imperfect obligation are invalid. The
upshot of the case is therefore that an arrangement
is
not a trust
if
it
cannot be the subject of litigation to enforce
it.
This is
on
the
ground that, as the system of r’ghts known as a
‘‘
trust
”
is
not
a
creature of statute
or
of the common law, but is the product only
of
the extraordinary jurisdiction of the Chancellor,
no
arrangement can
be called a
“
trust
”
unless it can be brought before the purview of
the Chancellor
or
of his judicial heirs and successors. A trust
is
11
confidence protected by equity.
An
arrangement of confidence,
without
a
cestui que trust
who can ensure that protection, is an
arrangement
of
confidence not protected by equity, and thus,
so
it
is said, outside the very definition of a trust. Whilst, however, there
have been dicta bearing somewhat obliquely
on
this point before,
the first principle
of
whether
or
not there must always
be
an
available
cestui que trust
had never before received such direct
pronouncement.
It
is the purpose of this article to inquire into
whether this pronouncement can be supported from the learning
on
this question which existed before it.
CASES
IN
SUPPORT
Superficial authority
in
plenty can be found to support the proposi-
tion that
if
a
trust cannot
be
enforced
it
cannot be recognised.
A
1
[1962]
1
Ch.
634.
120
MARCH
1966
TRUSTS
OF
IMPERFECT
OBLIUATION
121
century and a half ago,
in
Morrice
v.
Bishop
of
Durham,a
Lord
Chancellor Eldon said, at
589:
‘(As
it
is
a maxim, that the execution of a trust shall be
under the control of the court,
it
must be
of
such a nature, that
it
can be under their control
.
.
.
a trust therefore, which, in
case of maladministration could
be
reformed; and a due
administration directed
;
and then, unless the subject and the
objects can be ascertained upon principles familiar in other
cases,
it
must be decided that the court can neither reform
maladministration,
nor
direct a due administration.”
To Lord Eldon, therefore,
it
could be said, it was axiomatic that
“the execution
of
a trust be under the control
of
the court.”
Similarly
in
Bowman
v.
Secular Society, Ltd.,s
Lord Parker said:
“
A trust to be valid must be for the benefit of individuals
. . .
or
it
must be in that class of gifts for the benefit of the
public which the courts
in
this country recognise as charitable.”
To Lord Parker, then,
it
could be said that
it
was a rule that
if
there was
no
one to commence litigation, whether a specific
cestu.i
que trust
or,
if
none, the Attorney-General, there could not be a
valid trust. Thus
it
would follow that where a beneficiary was both
unspecified and outside the scope of that class of unspecified
objects
on
whose behalf the Attorney-General would intervene,
i.e.,
an unspecified uncharitable object, then the trust fails for want of a
cestui que trust.
In
recent years, also, Harman
J.
had said,
in
Re
Wood
‘
:
“
There is an earlier obstacle which is fatal to the validity of
this bequest, namely, that a
gift
on
trust must have a
cestui
que trust,
and there being here
no
cestui que trust
the gift must
fail.”
This formidable authority repays a deeper inspection. The issue
in
Monice
v.
Bishop
of
Durham
was the effect of a
gift
to “such
objects
of
benevolence and liberality as the trustee in his own dis-
cretion shall most approve.” There is
no
difficulty today in stating
quite categorically that such a gift is not a charitable bequest and
accordingly fails for uncertainty of objects.
In
that light Lord
Eldon’s remarks take
on
a different character. The decision is
simply that, as
no
one can say exactly what “benevolence”
c)r
“
liberality
”
constitute,
no
one can say either whether any payment
out of the trust funds is
or
is not a payment to an object of the
trust.
In
these circumstances the court is unable to control its
administration. The existence of a trustee’s discretion is not
generally regarded as removing the difficulty. The discretion must
be exercised in a fiduciary manner and the propriety of any exercise
of
it
must therefore be measurable. This is impossible
if
the scope
*
10
Ves.
621.
4
[1949]
Ch.
498,
at
p.
601.
[1917]
A.C.
406,
at
p.
441.
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