Re Buckinghamshire Constabulary Fund (No 2) [1978] 1 WLR 641

Facts

  • The case concerned a welfare fund established for members of the Buckinghamshire Constabulary and their dependents.
  • Contributions to the fund were made voluntarily by police officers and other sources.
  • Following the merger of Buckinghamshire Constabulary with other police forces, the original purpose of the fund became obsolete.
  • The main question arose regarding the distribution of leftover (surplus) funds after the trust's purpose had ceased.
  • The trustees sought court guidance on whether surplus funds should return to contributors under a resulting trust or be used for other related purposes.

Issues

  1. Whether surplus funds remaining after the fulfillment or cessation of a non-charitable trust's purpose should revert to the contributors under a resulting trust.
  2. Whether the cy-près doctrine, applicable to charitable trusts, should apply to distribute surplus funds in a non-charitable trust.
  3. Whether there was an alternative intention demonstrated by the contributors regarding the destination of leftover funds.

Decision

  • The Court of Appeal held that the surplus funds should be held on resulting trust for the original contributors.
  • It was determined that the cy-près doctrine does not apply to non-charitable trusts.
  • The court emphasized the absence of a clear alternative intention by the contributors to relinquish their interest in the surplus funds.
  • Arguments to use the surplus for the merged police force’s benefit were rejected, as this was inconsistent with the contributors’ original intentions.

Legal Principles

  • In non-charitable trusts, surplus funds typically revert to the settlor or contributors by way of resulting trust unless there is a clear, contrary intention.
  • The distinction between charitable and non-charitable trusts is significant: the cy-près doctrine allows charitable trusts greater flexibility in repurposing surplus funds, which does not apply to non-charitable trusts.
  • Respect for the intentions of those establishing or contributing to the trust is fundamental to the distribution of surplus assets.

Conclusion

Re Buckinghamshire Constabulary Fund (No 2) [1978] 1 WLR 641 clarified that surplus funds in non-charitable trusts revert to contributors under a resulting trust unless a contrary intention appears, and confirmed that the cy-près doctrine does not apply to non-charitable trusts, reinforcing the distinction between charitable and non-charitable asset distribution.

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