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

Sarah, a philanthropist, establishes a trust 'To promote education of underprivileged children in Kardinya through provision of scholarships and educational resources for underprivileged children attending primary and secondary schools in Kardinya and provision of shoes to all children attending primary and secondary schools in Kardinya’. How would the 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

Answer explanation

Re Gwyon [1930] 1 Ch 255

Trust purpose

This a purpose trust. The purpose 1 targets ‘underprivileged children’ and therefore is linked to poverty relief or advancement of education.  The purpose 2 ”to provide shoes to all children” does not target underprivileged children. The trust is simply giving shoes to all children regardless of need, it may be seen as benevolent but not charitable.

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

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". Gerald informed his friends Henry and Tom of the true intention, and Henry agreed to covertly pass the funds to Norma. Upon Gerald’s death, his Westpac account, now worth $120,000, was left to Henry. What type of trust is presented from the facts regarding the $120,000?

• Fully secret trust

• Half-secret trust

One year ago, Henry drafted the final details of his will in the presence of his long-time friends, Thelma and Vivian. During this significant moment, Henry explicitly articulated his desire for Thelma to hold possession of his cherished holiday cabin on behalf of his mistress, Kate. Thelma consented to his request, leading Henry to proceed and finalize the will with confidence. The will is precisely worded to state that Henry bequeaths his holiday cabin to Thelma, instructing her to manage it "in accordance with my wishes, which she knows all about". What type of trust is presented from the facts regarding 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