Anyone heard about the case Re Baden's Deed Trust (no. 2)????

I am going through the case of Re Baden's DT (no. 2)...its a case relating to trust law. but I am not understanding the difference between the decisions of the three judges and which one is more preferable and why.

Does this case some how connected to Mcphil v Daulton? If so how?

If anyone have any idea about it and can break it down for me....it would be a great help for me bcos the more I am proceeding with this case the more I am getting confused. so, plzzzzzz......HELP!!!!!!! :o:

Reply 1

jacketpotato

20

The starting point is that you need certainty of objects to have a valid trust.

The leading authority is the House of Lords in McPhail v Doulton. McPhail says that this means that you must be able to tell whether a given person is or is not an object of the trust or power. An "is or is not" test.

That is the starting point. There is a little difficulty surrounding how that test is to be applied - hence the different approaches in Re Baden 2.

Stamp LJ says that the McPhail "is or is not" test means you must be able to tell with certainty whether a given person is or is not an object of the trust. If there is anybody about whom it is unclear whether he is or is not an object, the trust fails for uncertainty of objects. In other words, you MUST be able to put EVERYBODY into a "yes" or "no" box. If there is anybody who goes into the "don't know" box, the trust fails. This appears quite harsh. However, Stamp LJ wasn't so harsh on the facts - he interpreted "relative" to mean "next-of-kin" - which is a little bit fishy.

Sachs LJ takes a more lenient approach. Sachs LJ thinks that the McPhail test only applies to conceptual uncertainty, not evidential uncertainty. In other words, if the court knew all the facts in the universe like a God, it must always be able to say whether a given person is an object of the trust. If the problem is simply that the person has difficulty proving that there are an object, there is no problem. If a purported trust uses a word like "friends", that would be conceptually uncertain because the word "friend" is inherently ambiguous. If a trust used the words "anybody who gave me money on the 1st October 1951", that would be evidentially uncertain but not conceptually uncertain. It will be extremely hard, if not utterly impossible, for anyone to prove that they gave money to the settlor 50 years ago - but the trust is at least theoretically certain.
This boils down to using burdens of proof to get around the problem. As long as it is theroetically possible for people to prove that they are objects, that is fine. The burden of proof is on people who think they are objects to show this: if somebody's name goes into the "don't know box", they are assumed not to be objects.

Megaw LJ thinks that the McPhail test is satisfied if a substantial number of people are definitely objects of the trust. This is very difficult to reconcile with House of Lords in McPhail.

Out of the three, I back Sachs LJ. His approach is pragmatic and sensible. Megaw LJ's interpretation is clearly not what the House of Lords said in McPhail. Stamp LJ's interpretation is very harsh and relies on playing semantic games (i.e. treating "relatives", an ambiguous term, as meaning "next-of-kin") to get around its harshness.

Alastair Hudson has excellent podcasts on this and other trusts issues. Google Alastair Hudson and listen to them.

Reply 2

SBT KH

OP

2

THanX a lot!!!!!!!!! now it starts making sense. Thanks a lot man!!!
:smile:

Reply 3

K8evs

Brilliant answer thanks... also Alastair Hudson is a legend!

Reply 4

thestonerovers

A slightly related question........

I have a problem question involving a purported discretionary trust. However the the wording of question makes it unclear as to whether there is conceptual uncertainty regarding the class of objects stipulated by the settlor. He has given a discretion to the trustees to choose "any of the committed and loyal emplyees of Apple Tree plc".
No other information is given, so it seems the validity of the trust will turn on whether the two descriptive words of 'loyal' and 'committed' are interpreted as merely descriptive words of the employees in general, or whether they are further criteria as to the class? Are there any cases I could relate to?

Reply 5

MarylinIsaacs

Maybe you could relate it back to conceptual uncertainty... use cases like McPhail where the judges talk about vague concepts like 'friends'. There is an article by C.T. Emery where he says that (if i remember correctly, this is the example) eg. if John and Ken are friends. John is dead. Ken comes back to claim on the trust where John has left beneficially to his friends. There is no one to say that John and Ken are not friends. We cannot say, even if John had made it to "close friends" that the trust interest cannot be given to Ken. We cannot be the judge of a term as vague as this. If you can get your hands on this article, it would be very useful as it provides you with a lot of examples of this kind. Hope this helps. God bless

Reply 6

MOORE_LAWSTUDENT

12

I just came aross this thread and wanted to congratulate jacketpotato on a fantastic answer. That truly is first class stuff. I love how you have used original examples. Fantastic.

Reply 7

JOJO X

4

jacketpotato you are the man!!!!! ( i assume you are male for some reason!)

you have clarified a rather confusing point for me, I am most impressed

Thank you :-)

Reply 8

pgmor0

Re Baden's case No. 1 is McPhail v Doulton (or Re Baden’s Deed Trusts ) [1971] A.C. 424

Reply 9

Daffodilsdudu

1

I appreciate the explanation provided by @jacketpotato. Although it was written almost 6 years ago, it absolutely legit! Thank you.

I still have a question regarding this case. What criticism did the outcome of this decision face? (considering that all three judges had differing viewpoints?) I know one is that it provides for lack of uncertainty within this area of law, but are there any more?

Reply 10

Niamhmorrison

2

I have a query!
Thanks very much for the great explanation of Baden!

But for Macphail - i get there has to be conceptual certainty. But for Evidential - is that necessary? I assume yes in that if someone is a 'don't know' then the trust would fail. is that correct? (in which case, Sach LJ would be a wide interpretation?)

thanks

Reply 11

argie77

1

Hey, I'm trying work out how I would tackle this question

In Re Baden’s Deed Trusts (no 2) [1973] Ch. 9 the three Law Lords set out different tests in relation to certainty of objects for a discretionary trust. Critically analysing the law and academic commentary, what do you consider to be the best way forward for trustees when deciding the proper approach to take in a discretionary trust?

Any help in relation to this question would be great, as I am reading and reading and I don't feel I am getting anywhere.

Thanks!!!

(edited 7 years ago)

Reply 12

Notoriety

22

Original post by argie77

Hey, I'm trying work out how I would tackle this question

In Re Baden’s Deed Trusts (no 2) [1973] Ch. 9 the three Law Lords set out different tests in relation to certainty of objects for a discretionary trust. Critically analysing the law and academic commentary, what do you consider to be the best way forward for trustees when deciding the proper approach to take in a discretionary trust?

Any help in relation to this question would be great, as I am reading and reading and I don't feel I am getting anywhere.

Thanks!!!

Wait, that is the question verbatim? The "Ch. 9" is clue enough that it is not Law Lords' opinions you're discussing.

I suggest asking your uni for a refund.

Reply 13

argie77

1

Original post by Notorious_B.I.G.

Wait, that is the question verbatim? The "Ch. 9" is clue enough that it is not Law Lords' opinions you're discussing.

I suggest asking your uni for a refund.

Fair enough,

Thanks.

Reply 14

argie77

1

Original post by Notorious_B.I.G.

Wait, that is the question verbatim? The "Ch. 9" is clue enough that it is not Law Lords' opinions you're discussing.

I suggest asking your uni for a refund.

Even so, is there any pointers you can give me for tis question?