McPhail v Doulton

OP

Pfft, if it isn't a thread about 'Oxford vs. Cambridge' then nobody looks or posts. :wink:

Reply 2

Tory_boy

2

As opposed to: 'Everybody look I have a question on Trusts! What joy, rejoice with me...'. Sorry mate, I'm not feeling it.

Reply 3

OP

Trusts are stupid. Whoever invented them is a moron. :frown:

Reply 4

Given all Gordon Brown's recent intervention in the recent Finance Act, it is looking that way. Clearly less latitude to play about with them to avoid tax. Gradually there is becoming more incentive to just take property with you to the grave and be subjected to inheritance tax instead. Then again, trusts have other uses.... Pensions etc.

Reply 5

OP

This is just the basic trust stuff. I dread to think what the more complex stuff is.

I think I've finally worked out in my head what McPhail says.

Reply 6

Well done... Share all!! I cannot count how many times I've seen people get Mcphail v. Doulton wrong. At Hull someone actually pinched my powers and certainities essay and photocopied it and circulated it around. I am sure the Oxford students are too nice, brainy and diligent for that. Despite cracking the essay, I've pretty much forgotton now what the whole wreched case was about. I think I need to read it again because it is relevant to tax :frown:

Reply 7

OP

I think that extends the conceputal-certainty test for establishing beneficiaries from Mere Powers to Discretionary Trusts. So where a list-certainty approach was used before (whereby it had to be possible to compile a list of all the possible beneficiaries, something which could take a long time and be expensive) it was now only necessary to say whether a particular person is or is not part of the class. If that is the case then the trust is valid.

Stamp LJ in Re Baden (No. 2) (the case where it got sent back down to the High Court to be decided, then got appealed back to the Court of Appeal - sounds a lot like that wretched Vandervell case which fortunately we don't have to know about). then stated that there can only be two answers to the question "is this person a member of the class or not?". Those answers are 'yes' and 'no'. If the answer is 'don't know' or 'it is impossible to say' then the discretionary trust is void for uncertainty.

This is all for discretionary trusts, mind. For fixed trusts the list-certainty test still applies in that at the time of the distribution of the trust funds (or whatever the subject of the trust is) it must be possible to clearly identify every single beneficiary and be able to compile a list (hence 'list-certainty').

Is that about right? I did all that without notes, so hopefully it's gone in.

Reply 8

OP

As for the facts (I had to look them up to get the exact details):

Mr Baden executed a non-charitable trust for the benefit of the staff of the company of which he was Chairman and MD, their relatives and their dependents. The clause itself stated:

"The trustees shall apply the net income of the fund in making at their absolute discretion grants to or for the benefit of any of the officers and employees or ex-officers or ex-employees of the company or to any relatives or dependants of any such persons in such amounts at such times and on such conditions (if any) as they think fit."

So essentially, the class of objects of the trust (potential beneficiaries) was very, very wide. And so it was challenged that the trust was void for uncertainty due to this wideness.

I think.

Reply 9

Bless you. I cannot believe I actually did that last year, my memory sucks!

Reply 10

OP

Does that seem right? I hope so. As if I look at it like that, it's finally making sense in my head.

Reply 11

It does not look wrong and your only going to have an hour to write and probably many other areas in a problem question to look at so I'd guess that seems like a good pointish to stop and remember.

Reply 12

OP

Yorkshire_Laura

At Hull someone actually pinched my powers and certainities essay and photocopied it and circulated it around.

That's funny. I just went to print out my Property notes and what should I find but a ready printed out set of Property notes. Not just any Property notes. My Property notes.

I sent them to two people so that they could see what I'd done. Not print them out and learn from them. I just nabbed them rather than waiting for everything to print out. They don't have the extra page or two that I wrote on trusts so I'll have to hand write that up, use my flatmate's printer or just remember them from the computer screen.

Cheeky b*stards.

Reply 13

At undergrad level its a major operation. My tutor in the end posted every trusts essay to me in a brown envelope. It was beyond a joke because they grapped (lol Grabbed even) it before I'd even seen the dam thing. That said, would not mind stealing the notes off some random undergrad who did Tax at Oxford. :wink:

Reply 14

OP

I mean, I don't mind people using my notes to help them understand something (I sent them to two of my friends for this purpose) but I think it takes the piss from them to just print them out or send them on to other people.

I mean, I asked some of my friends for International and EU law notes, but then I read from them and added to my own notes, I didn't just copy them, word-for-word.

Reply 15

emmings

12

TommehR

I think that extends the conceputal-certainty test for establishing beneficiaries from Mere Powers to Discretionary Trusts. So where a list-certainty approach was used before (whereby it had to be possible to compile a list of all the possible beneficiaries, something which could take a long time and be expensive) it was now only necessary to say whether a particular person is or is not part of the class. If that is the case then the trust is valid.

Stamp LJ in Re Baden (No. 2) (the case where it got sent back down to the High Court to be decided, then got appealed back to the Court of Appeal - sounds a lot like that wretched Vandervell case which fortunately we don't have to know about). then stated that there can only be two answers to the question "is this person a member of the class or not?". Those answers are 'yes' and 'no'. If the answer is 'don't know' or 'it is impossible to say' then the discretionary trust is void for uncertainty.

This is all for discretionary trusts, mind. For fixed trusts the list-certainty test still applies in that at the time of the distribution of the trust funds (or whatever the subject of the trust is) it must be possible to clearly identify every single beneficiary and be able to compile a list (hence 'list-certainty').

Is that about right? I did all that without notes, so hopefully it's gone in.

This sounds about but it's important to consider what the other two judges said as well. Sachs thought that it didn't matter if the answer was 'don't know' as long as there was at least one beneficiary of whom it could definitely be said 'yes'. This is actually what Denning said at CA level in Gulbenkian, where the test is borrowed from for powers was set out, but it was overruled by the HL on appeal so is potentially a point to criticise it on.

Megaw thought the same - it doesn't matter if there are some 'don't knows', but thought that there should be a substantial number of beneficiaries in the 'yes' category.

However, all three managed to agree on the facts that the trust was ok, because Stamp said he was prepared to interpret the offending word 'relatives' as 'next of kin'. Megaw and Sachs saw no need to do this because 'relatives' passed the tests they proposed.

Reply 16

OP