An Express Trust And The Law Relating To Secret Trusts: Case Study Of A Will

The question requires an analysis of as whether Judges have inclined to go in a roundabout way to avoid set statutory standards which require proof and evidence by writing. The question will dealt under the headings of formalities of an express trust and the law relating to secret trusts. The question will also consider why the law required such confines in the first place.

For any express trust to be valid the law requires that 3 requirements need to be satisfied by the settlor. The trust must be certain as to the subject matter, the trust obligation must be properly constituted to the hands of the trustee and the necessary formality requirements must be satisfied. However with regard to the formality requirements it can be said that the courts have affornded themselves with some degree of leeway to depart from the set standards as we shall see.

The general rule in creating an express trust is that the law does not require any formalities to be satisfied thereby allowing oral evidence to be admissible in court. however the law has identified two instances where the general rule is not followed – when testamentary trusts are created and when trust relating to lands are created. The former is governed by the provision in the wills act 1837 and the latter is governed by LPA 1925.

But why does the law require formalities to be complied with in such a manner? firstly when land related trusts are created, land in the early days was considered to be a scared properly. Feudal lords were gifted for their contribution to the state by the monarch by way of land. Thus land was considered to be the pinnacle of property thus arose the need to protect land through legislation. S53.1.b LPA states that declarations of land related trusts must be manifested and PROVED in writing also signed by the settlor. Thisis an evidential requirement( Vandervell V IRC) and shoes that land taked the utmost stand when property is considered. However the courts have circumvented this statutory rule and allowed oral evidence to be admissible in court to claim land. This was evident in Rochefoucauld where the courts stated that in the event a fraud is to be committed by a trustee of land instead of conforming with the trust obligation, by way of the trustee unjustly enriching himself, the courts will avoid the statutory requirement of the LPA ad equity will not allow a statute enacted to prevent fraud to be used as an instrument of fraud. In the case parole evidence was admissible and the courts disregarded the formality in the LPA. It is submitted that the provisions of the LPA were enacted for “good reason” but it is also for a different good reason that the courts have circumvented this provison and allowed oral evidence thus avoiding the writing requirement. However have the courts gone overboard with this roundabout method? In Blackwell v Blackwell the courts gave a wider interpretation to the word fraud which initially was confined to the trustee unjustly enriching himself and it was extended to not giving effect to the settlors intention. It is submitted that this interpretation covers a lot of circumstances but the approach of the courts must not be undermined since it has been taken for the wider benefit of the community.

A second method that the courts have opted to circumvent provisions requiring transactions to be effected and evidence by writing can be seen in the law of testamentary trusts. Such trusts are governed by S9 Wills Act which states that a will must be in writing signed and attested by two witnesses for it to be valid, suggesting that any element that is not in the will in writing will not be valid. However, as seen in case law the courts have refused to abide by this black letter law when it comes to situations of secret trusts. The inception of secret trust can be traced to situation where gifts were made by men to their mistresses and illegitimate children. According to Mitchell, by admission to probate wills, the wishes become public knowledge. So a testator can make provisions for such beneficiaries with the help of Secret trust as they don’t appear on the face of the will. As such instances could not be expressly stated in the wills they would set it as a secret trust and the courts have recognized these as valid instruments. Courts have recognize two types of Secret trusts. Firstly Fully secret trust (FST) where the will provides that an individual is to obtain property as the sole beneficiary but the will doesnot state that the particular individual is in fact a secret trustee. Secondly, Half secret trusts (HST) where there is a trust in existence in the will but the objects haven’t been clearly identified The existence of secret trusts have been justified by two theories that have been developed by the courts. The fraud theory attempts to validate secret trusts pointing out to a situation where if the FST is not allowed the trustee will be able to unjustly enrich themself because on the face of the will he is the sole beneficiary, the fraud execption only applies to the FST and there can be no fraud in a HST which says the existence of a trsut on the face of the will. But how are HST validated? HST have been validated by the concept in Blackwell v Blackwell where lord Buckmaster found fraud to be not gibing effect to the intentions of the secret beneficiary. Here we have found a place to justify the good reason of the Blackwell principle although such wasn’t possible in the LPA regime.

The courts have also allowed HST their own justification – the dehors the wills theory where viscount Sumner said that the communication of the purpose and the corresponding promise of the trustee removes Secret trust from the realm of the wills act and brings it within the confines of trust law. Prof Penner states that the de hors the wills theory must be called the de hors the WILLS ACT theory because secret trust are viewed as intervivos declarations and not within the ambit of testamentary law. So FST would be wholly outside and HST would be partially outside the wills act.

It is therefore submitted that the courts have indeed in exceptional situations departed from the writing requirement in black letter law that was enacted for good reasons as mentioned above but it can be said that such a departure by the courts is not without merit and the courts have given due reasoning to the departures as discussed above.

Harry must be advised as to the validity of the bequests under Grace’s will.

a) Cottage for Juliet.

Juliet has been made a beneficiary under the will but she will later reveal to Harry that she was later sent an email with instructions that Grace wanted give the cottage to Kevin. This is not mentioned in her will.

S9 of the Wills Act states that a will must be in writing, suggesting that anything unwritten will be not valid. Prima facie Kevin will not be able to get the cottage for himself. But harry must be advised that this transaction may be validated by the law of secret trusts if it proved that Juliet is a Secret trustee.

Secret trust are trust that do not appear completely or partially on the face of the will. The law permits two of these to be valid Fully Secret trust- there’s no evidence of a trust on the face of the will (FST) and Half Secret trust- existence of the trust is evident but the beneficiaries haven’t ben identified (HST). In this situation sicne Juliet under the will looks like she’s taking the cottage absolutely, Grace intends to make a FST. FST and HST are validated by two theories fraud theory Rauchefoucould v Boustead and De hors the will theory Blackwell V Blackwell.

The law requires certain requirements to be satisfied for it to be a Valid FST. Communication by the testator to trustee of the trust obligation and the corresponding acceptance must happen before the death of the testator. In Moss v Cooper communication happened after the will was created before the death of the testator and it was held that the trustee was a secret trustee. In this situation too the will was created in Jan and communication happened in March through an email. Juliet however did was not feeling “comfortable” with the plan and sent Grace a response to which grace never replied to (re colin cooper – FST binds only to the extent communicated) . This could mean that Juliet doesn’t want to hold it as a secret trustee and the communication and acceptance requirement is not satisfied meaning that the secret trust will fail. According to Walgrave V tebbs in such a situation where the secret trust fails the trustee will be allowed to keep the property absolutely.

Juliet will be able to keep the cottage for herself without needing to hold for Kevin.

b) Grace intends to create an express trust of £100000 for the benefit of BEST FORMER students at the college.

Three certainties must be satisfied. The subject matter is certain since it specifically says £100000. Clear and unambiguous words must be spoken to express the trust intention. in re Diggles – my desire and Re adams – in full confidence was held to be uncertain. The intention is certain since grace has left it to the executors under her WILL. The certainty of objects is however problematic. The objects are “best former students” thus it’s a generic group that has been identified and the trust may fail for that reason. Trust may be saved by delegation since the principle has been given the authority to judge Can conceptual uncertainty be cured by delegation? According to Mc Phail v Doultan two issues may be faced with when generic terms are identified – conceptual uncertainty and evidential uncertainty. In re Coxen the courts said that its not possible to so cure but in Re Tucks lord denning said that it can be cured. Re wright and re teppers point towards the negative. The facts state that there have been 50 students a year who have been taught to by Grace and Grace has taught for 20 years at that school. So it is impractical in two ways to distribute among the students. Firstly how is “best former students” be assed ?” should a student who obtained 89 marks be excluded and a student who obtained 90 marks be included? and the second reason is that the students cant be traced in such a manner due to administrative unworkability ( R v District Auditors exparte west York MCC ). The trust will fail for the uncertainty of objects.

c) half of the rare book collection to Sarah and the other half to colleagues

the intention is certain. Subject matter may be uncertain –Rare book collection. Harry wouldn’t know which books should be included in the half given to Sarah. Further, the objects have been identified by a generic term when it comes to the other half of the beneficiaries as “any former colleague who has remained a friend”. In re Badens trust the question, should the trust having generic terms be allowed appeared and the response of the judiciary was as follows. Stamp J stated that if the trust was conceptually and evidentially certain then it sould be allowed. Sach J said that if the term was evidentially uncertain but conceptually certain then it should be allowed. Megaw j stated that even if the trust is not either, if a substantial number of individuals can be identified then the trust must be valid WHO is a friend is an issue because according to Brown v Gould Meggary J stated that friendship is a concept with infinite shades of meaning. It is not possible to ascertain who is to be considered as a friend. So the trust may fail.

d) everything that’s left to nephews and nieces.

Generally, the remainder is considered to be certain.(Sprange V Barnard) And there’s the intention to create a trust for the nephews and nieces. However, the term nieces and nephews is conceptually certain but evidentially uncertain as “three of those nieces and nephews cannot be located as they have been estranged from the family for over a decade”. So the trust may fail for the uncertainty of objects because the three cant be located.