It followed on from McPhail v Doulton,[1] where the House of Lords affirmed that upholding the settlor's intentions was of paramount importance.
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.
Stamp LJ held that the trust was valid because the court could always determine who was a dependant and a relative could be restricted to a workable definition of the next of kin.