Session 4_DN

Jacob, a philanthropist, establishes a trust leaving his full investment portfolio to his trustee Brian with instructions to hold ‘on trust and distribute dividends/profits to his three children and the Fiona Stanley Hospital, WA, in such portions as he shall deem fit’. How would common law likely have interpreted this trust?

• This is a fully charitable purpose trust

• This is a trusts made up of several distinct objects some charitable and others non-charitable

• This would be a mixed charitable and non-charitable trust where non-charitable purpose is incidental to the dominant charitable purpose

Arthur, a philanthropist, establishes a trust of $2,000,000 ‘to establish and maintain the Grant Regional History Archive in Kardinya for the promotion of public learning and local historical research, and to hold an annual fully catered appreciation dinner at a local venue for living descendants of the Grant family’. How would equity under the common law likely have interpreted and treated this trust?

• This is a fully charitable purpose trust

• This is a trusts made up of several distinct objects some charitable and others non-charitable

• This would be a mixed charitable and non-charitable trust where non-charitable purpose is incidental to the dominant charitable purpose

Answer explanation

• Grant Regional History Archive → likely falls under advancement of education, because an archive intended to promote public learning and historical research can serve an educational purpose.

• Annual catered dinner for living descendants of the Grant family → this is a private, non-qualifying purpose, benefiting a defined family group rather than the public.e

  The Incidental Purpose Doctrine

• Primary vs. Auxiliary Intention: If the dominant purpose is the advancement of a recognized public good, minor private benefits that flow from or accompany that purpose do not invalidate the trust.

• Scale and Subordination: The private dinner is subordinate, ancillary, and minor in financial scale relative to the overarching mandate to establish and maintain a public regional archive.

The court would likely interpret the trust as a valid public trust for the advancement of education, treating the annual family dinner as a merely incidental non-qualifying private purpose. Because the private directive is auxiliary to the primary educational mandate, it will not invalidate the trust instrument as a whole.

A testator from Harrington County left a $20 million estate to be held in trust “to provide housing to such persons residing in or otherwise carrying on business in Harrington County or surrounding area as defined by postcode 6160 as the trustees shall determine”. However, Harrington County was dissolved and became Barrington Ward under the same postcode before the testator's death. Barrington Ward claims the trust, but the residuary beneficiaries argue the trust is invalid due to the county's dissolution. Can the cy-près doctrine apply to uphold the trust?

• Doctrine of cy-près would apply because Barrington Ward under the same postcode 6160 is a reasonable approximation of Harrington County

• Doctrine of cy-près would apply because any geographical or administrative changes are irrelevant to the trust's charitable goal

• Doctrine of cy-près would not apply as the trust was non-charitable

Answer explanation

Wright v Stevens [2018] NSWSC 548

A long-time benefactor of St Francis Hospital Inc. bequeathed a $7 million estate to be held on trust “for the St Francis Hospital Inc”. At the date of the testator’s death, the St Francis Hospital Inc. was still in operation but unexpectedly closed eight months later. The residuary beneficiaries seek the trust's invalidation to claim the funds. Can the cy-près doctrine be invoked to uphold the trust?

• The cy-près doctrine can apply as the trust's purpose can still be fulfilled by supporting another healthcare institution

• The cy-près doctrine cannot be applied because the trust’s purpose was specifically tied to St Francis Hospital Inc., which no longer exists

Answer explanation

Re Slevin, Slevin v Hepburn [1891] 2 Ch 236; Re Wright [1954] Ch 347

A trust for a hospital traditionally fits under "relief of the impotent, aged, and infirm"

A gift: "to Hospital X" or "to trustees upon trust for Hospital X" is therefore ordinarily construed as a charitable gift

Three years ago, Gerald won $100,000 from the Lucky Lotteries jackpot and secretly deposited it in a Westpac term deposit account. While drafting his will, he decided to bequeath the full amount to his mistress, Norma, and their child, but to conceal this from his wife, he stated in the will that "the full amount in the Westpac term account should go to my friend Henry". Before executing the will, Gerald met with Henry in the presence of their mutual friend, Tom. During that meeting, Gerald told Henry that he was not to keep the money for himself but was to hold it for Norma and their child and transfer it to them after Gerald's death. Tom witnessed Henry explicitly promise to do so. Relying on this, Gerald left the will unchanged. Upon Gerald’s death, his Westpac account, now worth $120,000, was left to Henry. What type of trust arises regarding the $120,000?

• Fully secret trust

• Half-secret trust

Before executing his will, Henry met with his friends Thelma and Vivian. Henry informed Thelma that while the will named her as the recipient of his holiday cabin, she was to hold it on trust for his mistress, Kate. Vivian witnessed Henry give these instructions and heard Thelma expressly agree to them. Relying on her promise, Henry executed his will, which stated: "I give my holiday cabin to Thelma, to deal with it in accordance with my wishes, which she knows all about." What type of trust is presented by these facts regarding the holiday cabin?

• Fully secret trust

• Half-secret trust

John has elected to set up a trust for his property at 2 Marker Ave, WA, for his daughter Amanda, appointing his friend Sarah as the trustee. The deed provides that Sarah will hold the house until Amanda turns 20yrs. What type of trust is John seeking to establish and what type of interest will Amanda receive from the trust?

• An express trust by transfer, Amanda receives legal interest over the house

• An express trust by declaration, Amanda receives legal interest over the house

• An express trust by transfer, Amanda receives equitable interest over the house

• An express trust by declaration, Amanda receives equitable interest over the house

Maryam has opted to create a trust using her property at 8 Zander St, WA, with the intent of benefiting her son, Thomas. To formalise this arrangement, Maryam drafts a letter, explicitly articulating her commitment to hold and manage the property in trust for Thomas until he reaches the age of 21yrs. What type of trust is Maryam seeking to establish and what type of interest will Thomas receive from the trust?

• An express trust by transfer, Thomas receives legal interest over the house

• An express trust by declaration, Thomas receives legal interest over the house

• An express trust by transfer, Thomas receives equitable interest over the house

• An express trust by declaration, Thomas receives equitable interest over the house