Justification of the Courts Use of Secret and Half Secret Trust

In accordance with s.1 of the Act the term ‘will’ was described as “a testament and to a codicil and to an appointment by will or by writing in the nature of a will in exercise of power...”. Section 3 of the Act further goes on to explain the purpose of the will saying thus “It shall be lawful for every person to devise bequeath or dispose of, by his will executed in manner here in after required, all real estate and all personal estate which he shall be entitled to, either at law or in equity, at the time of his death..”. Bothe sections help bring to light the basic fundamental ideas of what the Wills Act aims to achieve the law simply states the will acts as proof of the testators intentions in regards to how they would like their properties to be shared and this must be done before the testator is dead. However, there are certain requirements that any will has to meet before the courts can declare it valid.

Requirements for The Validation Of A Will

There are four requirements that this essay will be taking into consideration as stipulated in the Wills Act. In other words the requirements are that for the courts to consider a will valid the it has to be writing first and signed by the testator and after he has signed it the it could be said the, this must be done in the presence of two or more witnesses and the signature will be put into effect as the intention of the testator towards his property and how it should be shared. These requirements can be found in s.9 of the Act and it states:

“No will shall be valid unless:-

• It is in writing and signed by the testator or by some other person in his presence and by his direction;
• It appears that the testator intended by his signature to give effect to the will;
• The signature is made or acknowledged by the testator in the presence of two or more witnesses present at the same time;

Each witness either:

• Attests and sings the will
• Acknowledges his signature”

Secret and Half Secret Trusts

The term ‘Secret’ trust can be put as a trust that arises when the testator leaves a gift to a person who is aware of the testator’s intention to make them a trustee to other beneficiaries. This form of trust maybe considered secret because it cannot be found of the face of the will. Therefore, a half-secret trust maybe said to occur when the subject matter has been expressly giving to the trustee on the face of the will but the detail as to what the subject matter and how it should be used are not mentioned in the will. It is therefore partly a secret trust yet it is also part clear.

Although there are no said formalities under these trusts for reasons we shall discuss later there are still certain requirements to be for a trust to me allowed or considered by the courts. Which can be found in the case of Ottoway v Norman [1972] ch 698; in this case the testator had a bungalow where the testator lived with his housekeeper and man and wife and on occasions his son from his previous wife would visit them. In the presence of the wife and the son he made it known that his intention was to give the bungalow to the wife until she dies then it should be passed on to the son. He then made the will and gave the house to the wife as planned and the he died the wife created the first will giving the house to the son as had been requested by the testator. After a minor disagreement between both parties the wife decided in her last will to give over the bungalow to the defendant and his wife and shared the rest of her property between the defendant and the claimant. The courts decided that in order to establish if there was really a trust that some essential elements must be proven and this said elements are thus: “(a) the intention of the testator to subject the primary donee to an obligation in favour of the secondary done, (b) the communication of that intention to the primary donee, and (c) the acceptance of that obligation by the primary donee either expressly of acquiescence”. Although these formalities have been established through precedence there still begs a question as to whether or not the courts have a justifiable reason for allowing the use of secret and half secret trust. But before that we will be looking into circumstances in which courts have allowed the claim of secret and half secret trust to stand.

Circumstances in Which Courts Allowed Secret and Half Secret Trust

A good example could be found in the case of Blackwell v Blackwell [1929] UKHL 1; In this case a testator had given twelve thousand pounds (12,000) in a codicil to five people on trust, asking them to invest the money at their discretion and to use the income for things that he will instruct them on. Out of the five given four were told general objects, however, the fifth got a more detailed instruction. All five of them had agreed, the fifth person went on to make a written reminder of the testators instructions, however, a after some hours had gone by from when the codicil was executed. The residuary legatees claimed that any trust was invalid because parole evidence was considered to be inadmissible to establish any intentions of the testator’s purposes. The house of lord considered the secret trust to be valid. Lord Buckmaster, in his judgment said thus: “This principle is easily understood and may be also stated by sayin that he cannot defraud beneficiaries for whom he has consented to act by keeping the money for himself. Apart, however, from the personal benefit accruing to the trustee, the real beneficiaries are equally defrauded in both cases, and the faith on which the testator relied is equally betrayed”.

Lord Buckmaster’s statement is in line with the elements required for a secret trust as seen in the facts of the case the testator had met the element of informing the trustee of his in the intention when he call on the trustee and gave the instructions, he also hand the element of acceptance as the trustee had clearly accepted to carry out the instruction of the testator, the testator also intended for a secret trust to be create and the creation of this trust was valid and therefore the trustee was obligated to carry out the instruction because it would be fraud on the part of the trustee if he does not fulfill the obligation. Lord Buckmaster; in his judgment also stated thus: “Why should equity forbid an honest trustee to give effect to his promise, made to a deceased testator and compel him to pay another legatee, about whom it is quite certain that the testator did not mean to make him the object of his bounty? Why should equity, over a mere matter of words, give effect to them in one case and frustrate them in another?.”

The court goes further to explain that it is only equitable for the trustee to fully carry how the intention of the testator and not deny the beneficiary what is rightfully theirs by giving it to some who the trustee had no intention of handing the subject matter to it is both unfair to the testator who established the trust and to the beneficiaries who were the rightful recipient of the subject matter.

This then raises the next question does the court have a justifiable reason for allowing individuals to claim properties and inheritance under the secret and half secret trust. Secret and half secret trust have a lot of practical advantages but the strongest argument to the use of these trusts was raised by Lord Sumner in the case of Blackwell v Blackwell [1929] UKHL 1; who made a point by saying that the use of both trusts would be good for the ‘prevention of fraud’ this analysis has evolved from the root of all trust which is equity as trust were established on the maxims of equity. Equity resonates with the notion of a trustee’s conscience. This in the sense that the earliest thought of equity was derived from the term ‘conscience’. This is the essential principle at the very heart of equity which was that it would not permit the strict interpretations of common law to take advantage of the people through the application of unfair or unjust means. This is in accordance with the reasoning of lord viscount Sumner the courts word no permit such oversight or possible fraud and the courts must establish a means to of protection in half secret and secret trusts.

However, contradicting arguments may be brought to light in regards as to the fact that there is still an absence of formalities which leaves both trusts exposed. However, this may not be so. Secret and Half secret trust are intervivos trust meaning that although they do not comply with the formalities of the Wills Act 1837 they still have to follow the three elements under which a claim can be made.

Although there are multiple advantages with the analysis provided by Viscount Sumner there are also multiple disadvantages. The first problem would be that the law doesn’t cover fraud alone it also deals with other problems or scenarios like uncertainty and ambivalence. Another possible disadvantage would be that difficulties surrounding evidence also affect the opinion of Viscount Sumner. This can be seen in the case of McCormick V Grogan [1972] CH 698; where there was circumstantial evidence of an agreement; because the words were vague the court ruled that there had been no equitable fraud on the part of Grogan and that his conscience was not affected. The issue maybe that the judiciary have been following an integral case-by-case analysis instead of creating clear and concise rules for courts to follow should circumstances like this arise. Further evidential concern arises from the case of Re. Keen [1937] CH 236; where the factual dispute arose over the issue of time in which the instructions were given to the trustee. The court gave an example of a “captain whose ship was under sealed orders; the sealed nature did not affect the governance of those orders”. The question would then be how a trustee can be considered to have acted fraudulently if they had no knowledge of the burden that was being placed on them.

Alternative Analysis

The analysis given by Viscount Sumner which has its advantages and disadvantages as discussed above maybe deemed irrelevant unless an alternative theory could be formed. Therefore, through the stare decisis of the courts an alternative analysis has been used it many cases such as the case of Cullen v Attorney General of Northern Ireland [1866] L.R. 1 H.L. 190. The curt had agreed that the secret and half secret trust were enforceable because they were established outside the will and the will merely acts an extra means of proof to show what the testators had intended. Thus putting to rest the tussle over the formalities of the Wills Act and those formalities are only essential for trust found in the will.

This analysis could actually be traced back to the same case in which Viscount Sumner had established his ‘fraud’ analysis. However, it was suggest by Lord Warrington in the case of Blackwell v Blackwell [1929] UKHL 1; who was of a different opinion stating that the relationship the most important relationship was between that of the testator and the trustee. This was said to be because the trustee had agreed to carry out the testators intentions.

Conclusion

In conclusion after weighing the facts stated above and an analysis of ‘fraud prevention’ justification that the creation of the secret and have secret trust is justified on the grounds that it can serve as a means to prevent fraud but it can also serve as a means for the court to ensure that the trustee carries out their duties in a way that is fair and equitable In accordance with s.1 of the Act the term ‘will’ was described as “a testament and to a codicil and to an appointment by will or by writing in the nature of a will in exercise of power...”. Section 3 of the Act further goes on to explain the purpose of the will saying thus “It shall be lawful for every person to devise bequeath or dispose of, by his will executed in manner here in after required, all real estate and all personal estate which he shall be entitled to, either at law or in equity, at the time of his death..”. Bothe sections help bring to light the basic fundamental ideas of what the Wills Act aims to achieve the law simply states the will acts as proof of the testators intentions in regards to how they would like their properties to be shared and this must be done before the testator is dead. However, there are certain requirements that any will has to meet before the courts can declare it valid.