Failure for illegality A trust which is created for an illegal purpose may fail or be set aside. Illegal purposes include those that are contrary to statute, general law or public policy. Trusts Contrary to Statute Statute-based illegality arises in two ways. The may be directly affected by statute; i.e. by s121(1) of the Bankruptch Act 1966 (Cth) makes void transfer to a trustee made to defeat credits Some step required to constitute the trust might be affected by statute. (1995) 184 CLR 583 Primary Authority - Nelson v Nelson question of the effect of illegality had to be considered in the light ‘the of the underlying policy of the legislation in question. The Courts should not refuse to enforce legal or equitable rights simple because they arose out of or were associated with some unlawful purpose unless the statute concerned show an intention that such rights should be unenforceable, or where the imposition of the sanction was either not disproportionate or otherwise necessary in the circumstances’ Thus, it appears unless the illegal purpose is achieved in whole or in party, illegality will not be relevant per (1932) 32 SR NSW 109 Clegg v Wilson – upheld in Nelson v Nelson. Trusts Failure by Contract If the trusts creation is dependent upon a contract that is expressly prohibited by statute, then the trust is void unless there is also some provision allowing otherwise per Yango Pastoral (1978) 139 CLR 410. Co Pty Ltd v First Chicago Australia Ltd Trusts contrary to public policy Trusts may be contrary to public policy if they promote an immoral or illegal purpose, although the range of purposes that are contrary to public policy are not restricted to immoral or illegal purposes. [1939] 1 All ER 635 Testator wanted his sons to work on his business and Re Edgar – left the trust stating that their interests were void if became politicians or a ‘they person of public office.’ Court ruled that this was in violation of public policy as it was contrary to the interests of the state and was a void clause. (1960) 104 CLR Trustees of Church Property of the Dicese of Newcastle v Ebbeck 394 A testator stated that his wife and sons would inherent his trust as long as they – declared christain faith. They were already married to Catholic women.
Failure for illegality A trust which is created for an illegal purpose may fail or be set aside. Illegal purposes include those that are contrary to statute, general law or public policy. Trusts Contrary to Statute Statute-based illegality arises in two ways. The may be directly affected by statute; i.e. by s121(1) of the Bankruptch Act 1966 (Cth) makes void transfer to a trustee made to defeat credits Some step required to constitute the trust might be affected by statute. Primary Authority - Nelson v Nelson (1995) 184 CLR 583 ‘the question of the effect of illegality had to be considered in the light of the underlying policy of the legislation in question. The Courts should not refuse to enforce legal or equitable rights simple because they arose out of or were associated with some unlawful purpose unless the statute concerned show an intention that such rights should be unenforceable, or where the imposition of the sanction was either not disproportionate or otherwise necessary in the circumstances’ Thus, it appears unless the illegal purpose is achieved in whole or in party, illegality will not be relevant per Clegg v Wilson (1932) 32 SR NSW 109 – upheld in Nelson v Nelson. Trusts Failure by Contract If the trusts creation is dependent upon a contract that is expressly prohibited by statute, then the trust is void unless there is also some provision allowing otherwise per Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410. Trusts contrary to public policy Trusts may be contrary to public policy if they promote an immoral or illegal purpose, although the range of purposes that are contrary to public policy are not restricted to immoral or illegal purposes. Re Edgar [1939] 1 All ER 635 – Testator wanted his sons to work on his business and left the trust stating that their interests were void if ‘they became politicians or a person of public office.’ Court ruled that this was in violation of public policy as it was contrary to the interests of the state and was a void clause. Trustees of Church Property of the Dicese of Newcastle v Ebbeck (1960) 104 CLR 394 – A testator stated that his wife and sons would inherent his trust as long as they declared christain faith. They were already married to Catholic women.
Trusts_Summary.docx