Re Denley [1969]

• Facts:

◦ A company (the settlor) transferred land to trustees, with the stipulation that it be maintained as a recreation or sports ground for the benefit of its employees.

◦ While the trust was framed in terms of a purpose ("purpose of a recreation or sports ground"), the beneficiaries were employees of the company, which raised questions about whether the trust was a valid purpose trust or a trust for persons.

• Outcome:

◦ Goff J ruled that the trust was valid, despite its appearance as a purpose trust.

◦ The judge reasoned that a trust aimed at a purpose can still be valid if it is directly or indirectly for the benefit of individuals (in this case, the employees).

◦ The trust was upheld under the enforcer principle—the employees themselves could enforce the trust, as they were the beneficiaries.

• Impact and Analysis:

◦ Purpose Trusts vs. Person-Defined Trusts:

▪ This case blurred the lines between purpose trusts and beneficiary-focused trusts.

▪ Although the trust seemed to be for a purpose (maintaining the recreation grounds), Goff J focused on how it ultimately benefited identifiable individuals (the employees).

▪ The case is notable for validating a trust that seemed to be for a non-charitable purpose, by framing it as a trust benefiting individuals.

◦ Enforcer Principle Applied:

▪ The enforcer principle (which states that trusts must have identifiable beneficiaries who can enforce the trust) was applied indirectly.

▪ In this case, employees were seen as the beneficiaries who could enforce the trust, thereby sidestepping the typical issue of enforceability in purpose trusts.

◦ Certainty of Beneficiaries:

▪ Goff J acknowledged concerns about the certainty of beneficiaries—whether employees were sufficiently identifiable or whether other persons could benefit from the trust.

▪ He ruled that the trust could still be valid if the beneficiaries were not too remote or indirect.

▪ The court considered what might be remote in this context, such as employees being unable to access the grounds due to restricted hours or others living outside the immediate area (Cheltenham/Gloucestershire).

▪ However, these concerns were addressed by emphasising that the trust must benefit individuals directly, without being too distant or speculative.

• Key Takeaway:

◦ Re Denley expanded the scope for non-charitable purpose trusts by confirming that, if a purpose directly or indirectly benefits identifiable individuals, the trust can still be valid and enforceable.

◦ This case helped clarify the judicial willingness to uphold purpose-like trusts, as long as they were oriented toward tangible benefits for individuals, and not just abstract goals.

◦ It also reinforced the importance of enforceability in trust law and demonstrated how courts might approach trusts that blend both purpose and person-based characteristics.

This case highlights the flexibility in trust law, where a purpose-oriented trust can be valid if it benefits specific individuals, offering an important precedent for future cases involving mixed-purpose trusts.