McPhail v Doulton (on appeal from In re Baden’s Deed Trusts): HL 6 May 1970

The settlor asked whether the test for validity, in point of certainty of objects, is the same for trusts and powers, or whether the test for trusts is more demanding.
Held: The test is the same. The context was a provision, held to be a trust, for trustees to distribute income ‘to or for the benefit of any of the officers and employees or ex-officers or ex-employees of [a named company] or to any relatives or dependants of any such persons’ (with a power for the trustees to hold up income which did not, prevent the trustees distributing the retentions as income). The distinction between trusts, trust powers, and powers is narrow and artificial. What is to one a power of distribution coupled with a trust to dispose of the undistributed surplus, by accumulation or otherwise, may to another appear as a trust for distribution coupled with a power to withhold a portion and accumulate or otherwise dispose of it. It is not satisfactory that the validity of a disposition should depend on such delicate shading. To say that there is no obligation to exercise a mere power whereas a trust is mandatory and its execution may be compelled does not contain an exhaustive comparison of the trustees’ duties. Any trustee would surely make it his duty to know what is the permissible area of selection and then consider responsibly, in individual cases, whether a contemplated beneficiary was within the power and whether, in relation to other possible claimants, a particular grant was appropriate. A trustee with a duty to distribute, even among a potentially very large class, would not require the preparation of a complete list of names, but consider by class and category; and then select individuals according to their needs or qualifications. Can it be said that he is not carrying out the trust? There are differences between trust (trust powers) and powers, but as regards validity, they are not so great that complete, ascertainment is needed, for one but not in the other? Any distinction may lie in the extent of the survey which the trustee is to carry out. The difference may be one of degree rather than of principle. Trusts and powers are often blended, and the mixture may vary in its ingredients.’ A private trust for a large class of individuals can be so large as to make a private trust unworkable, and hence void.
Lord Wilberforce said that in the context of private trusts: ‘the court, if called upon to execute the trust power, will do so in the manner best calculated to give effect to the settlor’s or testator’s intentions. It may do so by appointing new trustees, or by authorising or directing representative persons of the classes of beneficiaries to prepare a scheme of distribution, or even, should the proper basis for distribution appear by itself directing the trustees so to distribute. The books give many instances where this has been done …’
Lord Reid, Lord Hodson, Lord Guest, Viscount Dilhorne, Lord Wilberforce
[1971] AC 424, [1970] UKHL 1, [1970] 2 All ER 228
Bailii
England and Wales
Cited by:
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Lists of cited by and citing cases may be incomplete.
Updated: 29 August 2021; Ref: scu.180358