Re Baden’s Deed Trusts (No 2) [1972]
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Re Baden’s Deed Trusts (No 2) [1972] EWCA Civ 10 is a consequential English trusts law case that followed the House of Lords decision in McPhail v Doulton [1970]. The central issue revolved around the circumstances determining the validity of a trust and the level of certainty required for its enforcement.
Mr Bertram Baden had established a trust for the benefit of employees, relatives, and dependents of his company, Matthew Hall & Co Ltd. The trust granted trustees absolute discretion in making grants to the specified beneficiaries. The case was remanded to the Court of Appeal following the principles set out in McPhail v Doulton, with the question of whether the trust was enforceable still to be determined.
Brightman J, in the Court of Appeal, held that the House of Lords decision in McPhail v Doulton effectively overruled the previous IRC v Broadway Cottages [1955], applying the Re Gulbenkian test to trusts. The Re Gulbenkian principle stated that a trust is valid if it can be determined with certainty whether any given individual is or is not a member of the class of beneficiaries. Accordingly, the trust clause was considered valid as a trust.
The Court of Appeal, in dismissing the appeal, clarified that conceptual and evidential uncertainties were distinct. While a claimant needed to provide evidence to establish their status as a beneficiary, conceptual uncertainty was not inherent in terms like dependants or relatives. The key focus was on whether the class of persons to be benefited was conceptually certain.
The three judges gave different views on why the trust was valid. Stamp LJ explained that the trust was valid because the court could always determine who was a dependant, and a workable definition of the next of kin for relatives could be established. Sachs LJ reasoned that the test required clarity in the concept, and the court was never defeated by evidential uncertainty. Once the class was conceptually certain, it became a factual question determined by evidence. Megaw LJ pointed out that the test was satisfied if, for a substantial number of objects, it could be said with certainty that they fell within the trust. Requiring complete conceptual certainty would amount to a return to the list certainty test.
Re Baden’s Deed Trusts (No 2) clarified the application of the Re Gulbenkian test to discretionary trusts, emphasising conceptual certainty over evidential certainty. The case provided insights into the nuanced considerations in determining the validity of trusts, offering flexibility without necessitating exhaustive conceptual precision.
Mr Bertram Baden had established a trust for the benefit of employees, relatives, and dependents of his company, Matthew Hall & Co Ltd. The trust granted trustees absolute discretion in making grants to the specified beneficiaries. The case was remanded to the Court of Appeal following the principles set out in McPhail v Doulton, with the question of whether the trust was enforceable still to be determined.
Brightman J, in the Court of Appeal, held that the House of Lords decision in McPhail v Doulton effectively overruled the previous IRC v Broadway Cottages [1955], applying the Re Gulbenkian test to trusts. The Re Gulbenkian principle stated that a trust is valid if it can be determined with certainty whether any given individual is or is not a member of the class of beneficiaries. Accordingly, the trust clause was considered valid as a trust.
The Court of Appeal, in dismissing the appeal, clarified that conceptual and evidential uncertainties were distinct. While a claimant needed to provide evidence to establish their status as a beneficiary, conceptual uncertainty was not inherent in terms like dependants or relatives. The key focus was on whether the class of persons to be benefited was conceptually certain.
The three judges gave different views on why the trust was valid. Stamp LJ explained that the trust was valid because the court could always determine who was a dependant, and a workable definition of the next of kin for relatives could be established. Sachs LJ reasoned that the test required clarity in the concept, and the court was never defeated by evidential uncertainty. Once the class was conceptually certain, it became a factual question determined by evidence. Megaw LJ pointed out that the test was satisfied if, for a substantial number of objects, it could be said with certainty that they fell within the trust. Requiring complete conceptual certainty would amount to a return to the list certainty test.
Re Baden’s Deed Trusts (No 2) clarified the application of the Re Gulbenkian test to discretionary trusts, emphasising conceptual certainty over evidential certainty. The case provided insights into the nuanced considerations in determining the validity of trusts, offering flexibility without necessitating exhaustive conceptual precision.
