• In the case of Leahy v AG for NSW [1959] AC 457, it was established that there were only two ways gifts/transfers could be made to unincorporated associations. This is either by a purpose trust or a joint tenancy. This was subsequently changed in Neville Estates v Madden [1962] Ch 832, which set out 3 ways (contract holding, joint tenancy, and trusts).

Facts of Leahy v AG for NSW [1959] AC 457

  • Testator died, in his will he left his property to nuns
    • ‘upon trust for such order of nuns of the Catholic Church or the Christian Brothers as my executors and trustees shall select …’ [clause 3]
  • He gave his residuary estate to be put on trust, and the money resulting from the sale to build a new convent or add to existing ones [clause 5]
  • Section 37D of the Conveyancing Act 1919-1954 of New South Wales (NSW): “No trust shall be held invalid by reason that some non-charitable and invalid purpose as well as some charitable purpose is or could be deemed to be included in any of the purposes to or for which an application of the trust funds or any part thereof is by such trust directed or allowed.”
  • Trustees sought declaration as to whether the gifts from clauses 3 and 5 were valid

Issues in Leahy v AG for NSW [1959] AC 457

  • Would the trust survive or fail, i.e. were gifts saved from invalidity?

Held by the Privy Council

The gifts was saved from invalidity by section 37D of the Conveyancing Act.

Viscount Simonds

2 ways to transfer property to unincorporated associations:

  1. As a prima facie gift, or
  2. Through a purpose trust

Even if there appears to be a prima facie gift, this can be displaced by the considerations of:

  • “terms of the will, or the nature of the society, its organisation and rules, or the subject-matter of the gift which should lead the court to conclude that, though prima facie the gift is an absolute one (absolute both in quality of estate and in freedom from restriction) to individual nuns, yet it is invalid because it is in the nature of an endowment and tends to a perpetuity or for any other reason.” [478]

In the present case:

The prima facie assumptions were displaced [485 – 6]:

  • Gifts were made to a selected order
  • Not believable that an ‘immediate beneficial legacy’ was intended
  • The subject matter, a farm, is not possible to have all individuals as beneficial owners

Therefore, the testator’s intention was held to be “not merely for the benefit of the existing members of the selected Order, but for its benefit as a continuing society and for the furtherance of its work.” [486]

The gift was made valid by way of s37D of the Conveyancing Act, otherwise it would have failed by perpetuity rules [487]