| Re Baden’s Deed Trusts (No 2) | |
| Court: | Court of Appeal |
| Citations: | [1972] EWCA Civ 10, [1973] Ch 9 |
| Judges: | Stamp LJ Sachs LJ Megaw LJ |
| Opinions: | Stamp LJ, Sachs LJ and Megaw LJ |
| Keywords: | Certainty, express trusts |
Re Baden’s Deed Trusts (No 2). 1972. EWCA. Civ. 10. is an English trusts law case, concerning the circumstances under which a trust will be held to be uncertain. It followed on from McPhail v Doulton,[1] where the House of Lords affirmed that upholding the settlor's intentions was of paramount importance. It dealt with the same facts as McPhail v Doulton, since the Lords had remanded the case to the Court of Appeal to be decided using the legal principles set out in McPhail.
Mr Bertram Baden settled a trust for the employees, relatives and dependants of his company, Matthew Hall & Co Ltd. It said the net income of the trust fund should be applied by the trustees ‘in their absolute discretion’ and as they thought fit for the employees, relatives and dependants in grants. The House of Lords in McPhail v Doulton[2] held that the trust would in principle be valid if it could be said with certainty that a hypothetical claimant "is or is not" within the class of beneficiaries. The case returned to the lower courts to determine if the trust was in fact enforceable.
Brightman J held the House of Lords decision had overruled previous IRC v Broadway Cottages so that the rule in Re Gulbenkian applied equally to trusts as to powers: a trust was valid if it could be said with certainty that any given individual was or was not a member of a class of beneficiaries, and accordingly the clause was valid as a trust. The executors appealed.
The Court of Appeal held, dismissing the appeal, that to apply the Re Gulbenkian[3] test for a discretionary trust, "conceptual" and "evidential" were distinct. If a claimant could not bring evidence he was a beneficiary, he would not be. But there was no inherent conceptual uncertainty in the words "dependants" or "relatives", and the clause was valid.
The three judges gave different views on why the trust was valid. Stamp LJ held that the trust was valid because the court could always determine who was a dependant and a relative could be restricted to a workable definition of the next of kin.
Sachs LJ held the test required only clarity in the concept. He put it as follows.
Megaw LJ viewed the position to be as follows.
He said that requiring complete conceptual certainty would amount to a return to the list certainty test.