Facts[edit]

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.