• In the case of IRC v Broadway Cottages 1955 ch 20, which has been overruled (McPhail v Doulton (Re Baden (No.1)) [1971] AC 424, a trust for such members of a given class of objects as the trustees shall select is void for uncertainty unless the whole range of objects eligible for selection is ascertained or capable of ascertainment.

Facts of the Case

  • Cl.1 of a settlement defined the objects of its powers and trusts by reference to a schedule in which the class defined comprised members who, it was common ground, were unascertainable at any given moment.
  • It was therefore agreed that cl.4 declaring the trusts relating to the capital of the trust fund, the interests in which by cl.5 were absolute interests, was void for uncertainty. Cl.8 contained an imperative direction to the trustees to distribute the whole of the income from the trust funds among such members of the unascertainable class as they might in their absolute and uncontrolled discretion think fit.
  • The taxpayers, who were some of the beneficiaries under the settlement, were trusts established for charitable purposes only. They applied to have their claims for exemption from income tax under the Income Tax Act 1918 s.37(1)(b) in respect of certain sums of money which they alleged to be their income in the years 1950-51 and 1951-52 determined by the Commissioners.

Issues in IRC v Broadway Cottages 1955 ch 20

  • Has a valid trust been created?

Held by Court of Appeal

  • Court could not control or execute the trust.

Hodson LJ

  • Here, this objection could not be met by urging the improbability of assistance by the court ever becoming necessary; the court would not be executing the trust merely by ordering a change in the trusteeship; the “relations” cases were in a class by themselves and provided no assistance in the present case; it would not be possible here for the court to create an arbitrarily restricted trust to take effect in default of distribution by the trustees; the trusts were void for uncertainty.
  • “We do not think that a valid power is to be spelt out of an invalid trust. If the trust declared by clause 8 of the settlement is void for uncertainty, then the trustees do not hold the income in question upon that trust but (by way of resulting trust) in trust for the settlor, with no power to dispose of it in any manner otherwise than by paying it to, or as directed by, the settlor. The settlor must be taken to have authorized any payments heretofore made by the trustees (of whom he himself is one) in purported execution of the invalid trust, but there the matter ends. Wynn-Parry J., in our view rightly, held himself bound by In re H. J. Ogdcn 15 and In re Gestetner Settlement 16 to decide the case in favour of the Crown. Mr. Pennycuick, for the appellants, criticized his judgment for referring to the ” relations ” cases as instances of powers of distribution as distinct from trusts for distribution, and therefore irrelevant to the present case. This description of the ” relations ” cases was perhaps not quite accurate, but for the reasons we have endeavoured to state we agree with Wynn-Parry J. that they have no application here. We are accordingly of opinion that these appeals fail and should be dismissed.” Pg 36