Boris Ignachkov Legal Principles and Key Points
- In the case of Re Abbott Fund [1900] 2 Ch. 326, it was held that money vested in a trust for two now deceased individuals was held on a resulting trust for the subscribers who had raised the money initially.
Facts of the Case
- Dr Abbott’s will created a trust fund for his two deaf and dumb daughters. By 1889 the last trustee to this will had died, and it was discovered that the funds from this trust had disappeared and could not be traced.
- Dr Fawcett raised a fund amongst his friends to continue the maintenance for Abbott’s daughters. He also created a subscribership by which community members could pay into this fund to allow the daughters to maintain lodgings in Cambridge. No proposition was made as to how the surplus of this fund would be disposed of.
- By 1899 both daughters had died. There was no account breaking down how much had been supplied by each donor and spent accordingly. C (the subscribers) applied for the surplus to be returned to them as the money was held in trust for the two daughters alone; it was not for other relatives, nor should it pass to the trustee.
Issues
- Did the fund represent a legally valid trust, to which the daughters were the only beneficiaries, and thus there was no living beneficiary?
- How was the surplus to be distributed, either to the trustees, surviving relatives or the subscribers despite there being no account as to how the money received was distributed?
Held by the Chancery Division
- The trust was legally valid-The fund was a purpose trust for the maintenance and support of the two daughters. It was not to pass onto them for their absolute benefit. With both having died, the purpose had been achieved. As such, the money was now held on a resulting trust for C.
Stirling J.
- There was no declaration of trust in this case. Dr Fawcett raised funds for the relief of Dr Abbott’s daughters, and was taken by another gentleman after his death. There is thus no trust deed stating what should happen to the surplus funds.
- “I do not think the ladies ever became absolute owners of this fund. I think that the trustee or trustees were intended to have a wide discretion as to whether any, and if any, what part of the fund should be applied for the benefit of the ladies and how the application should be made. That view would not deprive them of all right in the fund, because if the trustees had not done their duty—if they either failed to exercise their discretion or exercised it improperly—the ladies might successfully have applied to the Court to have the fund administered. In the result, therefore, there must be a declaration that there is a resulting trust of the monies remaining unapplied for the benefit of the subscribers to the Abbott Fund” [330].
