McPhail v Doulton (Re Baden's Deed Trusts No 1)

Ratio Decidendi

ਤੱਥ

Bertram Baden executed a deed establishing a trust fund whose income the trustees were to apply, in their absolute discretion, for the benefit of the staff of Matthew Hall & Co Ltd and their relatives and dependants. After his death the validity of the trust was challenged on the ground that the class of potential beneficiaries — employees, ex-employees, and their relatives and dependants — was too wide and uncertain for the trust to be valid, since a complete list of every possible beneficiary could not be drawn up.

ਫੈਸਲੇ ਦਾ ਸਾਰ

The House of Lords held (Lord Wilberforce giving the leading speech) that the disposition created a discretionary trust rather than a mere power, but that its validity should be tested by the same test of certainty of objects as applies to powers of appointment — the 'is or is not' (given-postulant) test laid down in Re Gulbenkian: a discretionary trust is valid if it can be said with certainty whether any given individual is or is not a member of the class of beneficiaries. The older, stricter rule requiring the trustees to be able to draw up a 'complete list' of every beneficiary was rejected as inappropriate for wide-ranging discretionary trusts, since it would defeat many perfectly workable trusts. Their Lordships remitted the case to determine whether the trust satisfied the new test (it was later held valid in Re Baden's Deed Trusts (No 2)). The decision is the leading authority on certainty of objects for discretionary trusts and assimilated the tests for trusts and powers.

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