“Purpose trusts valid when beneficiaries have direct enforceable interest”
A company established a trust to maintain sports grounds for the benefit of its employees and their families. The trust deed provided that the land should be used as recreational facilities, with the company having power to add other companies' employees as beneficiaries. The question arose whether this constituted a valid trust.
Whether a trust for purposes (maintaining recreational facilities) rather than for persons directly could be valid, and whether such a trust violated the rule against perpetuities or the rule against non-charitable purpose trusts.
The trust was valid. It was not a purpose trust but a trust for the benefit of ascertainable individuals (the employees) who had sufficient interest to enforce the trust.
This case created the 'Denley principle' allowing purpose trusts where identifiable beneficiaries have direct benefits and can enforce the trust, significantly expanding the categories of valid trusts beyond the traditional beneficiary principle.
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OSCOLA Citation
Re Denley's Trust Deed [1969] 1 Ch 373
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