Analysis of McPhail v Doulton and Boardman v Phipps Cases

ASSIGNMENT
JUNE 7, 2018

1
Case-1
Parties to the court-
McPhail v Doulton (1971) AC 424
Facts of the case-
In the case McPhail v Doulton (1971) AC 424, the dispute was related to the construction
deed. The deed was about transfer of the trustee shares in the organisation. McPhail
transferred the trustee shares in Matthew Hall & Co Ltd. The intention of this transfer was to
establish the fund for staff benefit, benefits of relatives and benefits of dependants. When
McPhail died, the executers of the trust claimed that deed was not valid. As per the clause
9(a) of the trust deed, trustees are required to relate the net income of the fund to the
making in their complete discretion or for employee’s benefit, officer’s benefit or benefit of
ex-employee or benefit of ex-officers or the benefit of relatives or dependents. The case was
sent to the Chancery Division for the reconsideration on the question of the powers as per
the clause1.
Speech of Lord Wilberforce-
The judgement given by the Lord Wilberforce is the formative of the matter. The Wilberforce
said that the purpose of the deed is clear. The language of the clause 9(a) is compulsory.
The Clause 9(a) makes a trust for the purpose of the income distribution together with the
selection power. The strictness of the clause 9(a) is the practised by clause 9(b). The clause
9(b) permits to detain the income of any one year with the bank or the financial institutions
for the particular period of time or permit to invest if it seems appropriate. It was said by the
Lord Wilberforce that the clause 9(a) created a trust. It does not create the powers.The case
would be referred to the Chancery Division for the reconsideration. The case was remitted to
know the validity of the clause 9(a). But the problem is that in respect of validity, the question
1 Trustee Act, 2000

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arises that all possible beneficiaries are covered by the complete test list. This follows from
the decision made in case Inland Revenue Commissioners v Broadway Cottage Trust [1955]
Ch. 20. The court of Chancery will be bound if it is not decided by the house2.
The second issue arises that the clause 9(a) creates the trust not the powers. Whether this
validity test is correct as per the law. If existing validity test is not correct then what the test
should be applied. Lord Wilberforce said that trust would be valid if the question arises
whether he was or was not within the class of matters specified outlined by the words of
settler. Before the decision given, the test of is or is not was considered as right test for the
validity of the powers to make an appointment but not for the discretionary trusts for which
complete test was test for the certain matters. In the related case of Gulbenkian’s settlement
[1970] A. C. 508 the judges were of the view that when the valid gift over the defaulted
appointment, the power to make an appointment among the classes is valid if the individual
is not a member of a class and power did not flop to determine the member of class. As per
the opinion of Lord Wilberforce ordinary power is different from a trust3.
Lord Wilberforce said that it has been concluded that the major difference between the tests
to validate the powers and the trust power is unsuccessful and not correct. The rule fastened
upon the court by Inland Revenue Commissioners v Broadway Cottage Trust should be
discarded. The test to validate the powers should be same to acknowledge by this house in
In re Gulbenkian’s settlements [1970] A.C. 508 for the powers such as the trust is not void if
the individual is a member of the class4.
Review of the judgement of Lord Wilberforce-
It has been reviewed that the judgement was eventually not helpful. The differences between
compulsory trust and the powers is a distinction which is of little useful assistance. It has
2 Trustee Act, 1925
3 George Moffat, ‘McPhail v Doulton (1971) AC 424’ (2017) <https://www.lawteacher.net/free-law-essays/equity-
law/mcphail-v-doulton-1971.php> accessed on 8 June 2018
4 Jessica Glover, ‘Property rights, restitution and fraud: Disciplining in wrongdoing in capitalist system’ [2016]
Facta universitaties, series: law and politics 22