Introduction
The case of Re Buckinghamshire Constabulary Fund (No 2) [1978] 1 WLR 641 is a significant decision in English trust law, addressing the treatment of leftover money in charitable trusts. The main question for the Court of Appeal was determining how leftover money should be dealt with when a trust ends. The case established key rules about how leftover assets should be shared in charitable and non-charitable trusts, particularly when the trust's purpose has been fulfilled or can no longer be achieved.
The judgment outlined the legal rules for managing leftover money, focusing on the difference between resulting trusts and the cy-près doctrine in charitable trusts. The court considered the intentions of the person who set up the trust, the type of trust, and the legal rules for sharing leftover assets. This case remains an important reference in trust law, providing clear guidance on managing leftover money and the rules of resulting trusts.
Legal Principles and Context
Resulting Trusts and Leftover Money
A resulting trust occurs when property is given to a trustee, but the benefit returns to the person who set up the trust or their estate because the trust's purpose has failed or been fulfilled. In Re Buckinghamshire Constabulary Fund (No 2), the court examined whether leftover money from a police welfare fund should return to the contributors under a resulting trust or be used for other purposes.
The court decided that the leftover money was held on a resulting trust for the contributors, as the trust's purpose had been fulfilled. This decision supported the rule that, unless there is a clear alternative intention, leftover money in a non-charitable trust returns to the person who set up the trust or the contributors under a resulting trust.
Charitable Trusts and the Cy-Près Doctrine
Unlike non-charitable trusts, charitable trusts follow the cy-près doctrine, which allows leftover money to be used for purposes similar to the original charitable goal when the initial goal becomes impossible or impractical. The court in Re Buckinghamshire Constabulary Fund (No 2) made a clear distinction between how leftover money is handled in charitable and non-charitable trusts, stating that the cy-près doctrine does not apply to non-charitable trusts.
This distinction is important in trust law, as it determines the legal rules for sharing leftover money. Charitable trusts benefit from the flexibility of the cy-près doctrine, while non-charitable trusts follow the stricter rules of resulting trusts.
Analysis of the Judgment
Factual Background
The case involved a fund set up for the welfare of members of the Buckinghamshire Constabulary and their dependents. The fund was funded by voluntary contributions from police officers and other sources. When the Buckinghamshire Constabulary merged with other police forces, the fund's purpose became outdated, and the question arose about how to share the leftover money.
The trustees asked the court for guidance on how to distribute the leftover money. The main issue was whether the leftover money should return to the contributors under a resulting trust or be used for other purposes, such as the welfare of the merged police force.
Court's Reasoning
The Court of Appeal decided that the leftover money was held on a resulting trust for the contributors. The court emphasized that the fund was a non-charitable trust, and the contributors had not intended to give up their benefit in the funds. The lack of a clear alternative intention meant that the leftover money returned to the contributors under a resulting trust.
The court rejected the argument that the leftover money should be used for the benefit of the merged police force, as this would go against the contributors' intentions. The decision highlighted the importance of respecting the intentions of the person who set up the trust or the contributors when deciding how to share leftover money.
Implications for Trust Law
The judgment in Re Buckinghamshire Constabulary Fund (No 2) has significant effects on trust law, particularly in how leftover money is handled. The case made it clear that, in non-charitable trusts, leftover money usually returns to the person who set up the trust or the contributors under a resulting trust unless there is a clear alternative intention.
This rule ensures that the benefit in trust property is not unfairly taken away from the person who set up the trust or the contributors. The case also highlighted the distinction between charitable and non-charitable trusts, supporting the use of the cy-près doctrine for charitable trusts and the resulting trust rule for non-charitable trusts.
Practical Applications and Case Studies
Non-Charitable Trusts
The rules set out in Re Buckinghamshire Constabulary Fund (No 2) have been applied in many cases involving non-charitable trusts. For example, in Re Gillingham Bus Disaster Fund [1958] Ch 300, the court decided that leftover money from a public appeal for the victims of a bus disaster was held on a resulting trust for the contributors. The court emphasized that the contributors had not intended to give up their benefit in the funds, and the leftover money returned to them under a resulting trust.
Similarly, in Re West Sussex Constabulary's Widows, Children and Benevolent (1930) Fund Trusts [1971] Ch 1, the court used the resulting trust rule to distribute leftover money from a police welfare fund to the contributors. These cases show the consistent application of the rules set out in Re Buckinghamshire Constabulary Fund (No 2) in non-charitable trusts.
Charitable Trusts
In contrast, charitable trusts benefit from the flexibility of the cy-près doctrine, which allows leftover money to be used for purposes similar to the original charitable goal. For example, in Re Lepton's Charity [1972] Ch 276, the court used the cy-près doctrine to redirect leftover money from a charitable trust to a similar charitable purpose. The court emphasized that the cy-près doctrine is meant to ensure that charitable funds are used for charitable purposes, even if the original goal becomes impossible or impractical.
These cases highlight the different treatment of leftover money in charitable and non-charitable trusts, as set out in Re Buckinghamshire Constabulary Fund (No 2).
Conclusion
The judgment in Re Buckinghamshire Constabulary Fund (No 2) [1978] 1 WLR 641 provides clear guidance on how to handle leftover money in trusts. The case established that, in non-charitable trusts, leftover money usually returns to the person who set up the trust or the contributors under a resulting trust unless there is a clear alternative intention. This rule ensures that the benefit in trust property is respected and not unfairly taken away.
The case also supported the distinction between charitable and non-charitable trusts, with charitable trusts benefiting from the flexibility of the cy-près doctrine. The rules set out in Re Buckinghamshire Constabulary Fund (No 2) have been consistently applied in later cases, providing a clear legal framework for distributing leftover money in trusts. This judgment remains an important reference in trust law, offering useful information on handling leftover money and the rules of resulting trusts.
