One new video every week (I accept requests and reply to everything!). To use the Law of Property Act 1925 to defeat Ms Bannisters beneficial interest would be a fraud. The doctrine of secret trusts is an example of one of those by-ways of English equity jurisprudence that throws up a factually interesting case from time to time. B200076. 0R\oWd_W|/3o3kxI-f9ugDaqSqNL^^g.f?4~bP'+;:az?h6eNgefPyUWy)(FaH;pZR9&|e/|'& 5}A. Thus, even though the trust was communicated and agreed to before the execution of the will, the fact that it was not properly incorporated into the will meant it was void. In general, it is assumed that the trust is created upon the testators death, wherein legal title passes to the secret trustee. An example of this is Re Boyes. From our private database of 35,600+ case briefs. These act as general guidelines as to the operation of equity, rather than operating as strict rules. Kasperbauer v Griffith[iv] illustrates the necessity of intention. The claimant suffered respiratory arrest. Following the death of the first party, the second party holds the property on a constructive, FHR European Ventures LLP v Cedar Capital Partners LLC [2014], Chase Manhattan v Israel-British Bank [1981], Westdeutsche Landesbank v Islington [1996], Attorney General of Hong Kong v Reid [1994], Sinclair Investments v Versailles Trade Finance Ltd [2011], Thus, a person who steal property will have dealt unconscionably with it (Westdeutshe Landesbank); a person who receives a bribe in the conduct of a fiduciary office will have dealt unconscionably with the property representing that bribe (AG for HK v Reid 1994); a person who takes property by means of fraud will have dealt unconscionably with it (Westdeutshe Landesbank) the defendant will be a constructive trustee in all these cases, Institutional constructive trusts arise at the moment the conduct occurs, on the facts, Remedial constructive trusts arise at the date of the courts judgment, He says a remedial constructive trust is different as it lies in the discretion of the court, E.g. The defendants attempted a robbery with an imitation gun and a pick-axe handle. 2022) Annotate this Case Justia Opinion Summary A world-famous boxer and a famous MMA fighter faced one another in a legendary fight, produced by Showtime, which allowed individuals to live-stream the fight from Showtime's website for $99.99. This was the key issue to be decided by Deputy Master Rhys in the EWHC, complicated by the fact that the trust, if it existed, was secret or half-secret. Learn faster with spaced repetition. The first type of secret trust to be examined is a fully secret trust. An alternate (but weaker) theory: dehors the will, However, it is false to state that is solely thus equitable principle that enables the enforcement of secret trusts. 1972 - held that the discussion manifested an obligation, secret trust = ottoman junior has equitable interest This case highlights the problems that the wills act goes on to avoid. privacy policy. In support of the assertion that this equitable principle allows the enforcement of secret trusts in good conscience, Watt states that secret trusts are not only useful in their own right; they provide a useful analogy and precedent for anyone attempting to find a way around testamentary formalities. This decision was reached on the basis that a strict reading of the statute would allow Hereden to evade his obligations under this promise. In McCormick v Grogan[xxxviii], the terms of instructions of to the secret trustee made clear that they were not to be acted upon strictly and that he was to use his own judgement, so the trust failed as it was a moral as opposed to a legal obligation. [ii] Alastair Hudson Understanding Equity & Trusts (9th edn, Routledge, 2015) 70. Secret trusts therefore arise where a testator decides to leave ostensible legacies to someone whom the testator really wants to act as trustee for an intended but undisclosed beneficiary of that legacy provided always that the obligation is a trust obligation and not merely a moral obligation: Kasperbauer v Griffith [2000] However, the court was not willing to disregard the importance of the will in this case; it will not contravene statutory principle in every situation, whereby the trust terms are not certain. As Hudson notes the purpose of equity is to introduce fairness in circumstances in which statute might permit unfairness[xlvi] thus is not surprising that the Courts have applied the principle to secret trusts in this way. are necessary (s.35(2) LPA 1925) (Kasperbauer v. Griffith) iv. However, Hudson indicates that this decision cannot be correct in principle because the will could have been altered subsequently, thus revoking the gift.[xvii] It is suggested that this decision was in fact, in isolation and it is accepted that it is possible for the testator to later alter their will, meaning that the trust is created subsequent to death. If a the three requirements are not met, communication did not take place before or at the time of the will or all the trustees are not informed, the trust will fail and the property will revert back to the testators estate. 2) beneficiary's share did not lapse upon death (dubious decision : see below), Re Young: secret trust benefited the testator's chauffeur who had witnessed the will (see below), Requirements set out in Kasperbauer v Griffith (2000), 2.Communication to the intended trustee 1, 3.Acceptance of the trust by the trustee Must comply with the three certainties like any express trust Fully Secret Trusts, PS100,000 to Arthur - clandestine meeting with Arthur - to tell him that he is actually a trustee - Fully Secret Trust (FST) - looks like an outright gift to Arthur, If it fails then the fully secret trustee will take the legacy absolutely, Must take place any time before death, whether before or after the signing of the will: Walgrave v Tebbs: the legatees had not been informed of the testator's wishes in lifetime so they took free from the trust, 2. Where the legal owner has made some representation to another that they will have some beneficial interest in land; and that person, in reliance on that representation, acts to their detriment, then a proprietary estoppel may arise. Privacy notice | Disclaimer | Terms of use. Perhaps the most difficult issue is where the legal owner has responsibility for and meets all the mortgage payments, but is only in a position to do so because the other partner is meeting other household expenses, such as utility bills, maintenance etc. they intend their wills to be mutually binding. While a constructive trust is institutional rather than remedial, estoppel may be remedial. Secret trusts are of a testamentary nature, too linked to the will document itself to fall outside of its scope, and it feels like an attempt to avoid facing the reality of the importance of an equitable maxim to support this theory. In the case of a fully secret trust, the will appears to contain an outright gift to the (secret) trustee. From this, it will be seen that secret and half secret trusts do indeed demonstrate the function of the relevant principle, and that this to some degree does illustrate the willingness of equity to take a flexible approach to a reach a decision in line with good conscience.. See 1 Summary. Third parties (strangers to trusts) can be made constructive trustees in three ways: See the relevant topic notes on these A trustee de son tort is a person who has intermeddled in the affairs of the trust without proper authority and has, in effect, become a trustee through his or her wrongdoing. Pallant v Morgan [1953]: the defendant and the plaintiff (i.e. [xxii] The residue of the testators estate was left to his solicitor who had been instructed to hold it on trust, but no information was provided as to the purpose or intended beneficiaries. Contract to sell land is specifically enforceable where damages is inadequate. In the case of Re Stead,[vi] there were two trustees, but the testator only informed one of their intentions. The court withheld $75,000 from the Trust distribution to pay attorney fees incurred by Fairfield in preparing and defending the accounting. Constructive Trusts arise by operation of law. However, in Ottaway v Norman, a fully-secret trust case an oral declaration of land was sufficient (i.e. The author of this piece, in line with Penner and Critchley, finds this theory somewhat unconvincing[lvii]. The jewellery had belonged to one Ms Richards. Diana Kincaid writes that traditionally the basis of the enforcement of secret trusts was said to be fraud[xlviii] but maintains that dehors the will is now the currently accepted view.[xlix] Likewise, John Mee states quite absolutely that the doctrine of half-secret trusts operates dehors the will.[l], However, for the most part, the majority of modern academic thought is in opposition to the au dehors theory. In Kasperbauer v Griffiths (2000 WTLR 333) the England and Wales Court of Appeal had set the test as whether the testator intended a trust or 'a mere moral or family obligation'. "Fraud theory" - we enforce them otherwise it would vs. the equitable theory that you cannot use statute for fraud - but unclear who this 'fraud' is being committed against. R v Dawson - 1985. Honesty is irrelevant i.e. Equally, secret trusts by their very formation do not comply with the Wills Act 1937. . [xxviii], Watt argues that it follows from this that the risk is of fraud is much greater[xxix] in full secret trusts than in half secret trusts, and that, contrary to Viscount Sumner, in fact, on closer examination, it appears that the two types of secret trust rest on entirely different conceptual foundations.[xxx] He submits that this is down to timing of communication as illustrated by Re Bateman WT[xxxi]; a fully secret trust does not need to comply with any time restriction and can be created before or after the will, whereas a half secret must precede the execution of the will if it is to be held as valid. A recent example of this was the estate of the painter Lucian Freud: Re Freud [2014] EWHC 2577 in which the claimant executors who were beneficially entitled to the whole residuary estate on the face of the will made clear that they had received the estate subject to a fully secret trust. Gorney watched all of this from his hiding place. Williams and a neighbor, Griffith, investigated and concluded it was an attempted theft. The proceeds of this eBook helps us to run the site and keep the service FREE! P was a 50 year old woman who resided at a specialist hospital on a long term care ward. The trust failed as it was not made clear what the trustee was instructed to do with the property. It is submitted overall that stimulus question is partially correct, but requires rephrasing. It could be strongly contended that, it would, in fact, be in better conscience to ensure that the children were provided for, but the court did not do so. Standard of proof: onus is on the person claiming that a trust exists: standard is the normal civil standard (Re Snowden) Justification for enforcing secret trusts: 1. It is possible for secret and half secret trusts to be created with reasonable formality with the trusts properly set out in writing in some, private, document outside (or dehors in the old language found in some cases) the will. Tough actively assisting in a breach of trust. Copyright 2006 - 2023 Law Business Research. It may not, for arguments sake, be of good conscience to leave a larger amount of property to a mistress than to a wife. Her brother died six days later, leaving his son as sole beneficiary. Important distinctions: Half-Secret Trusts, In half-secret trusts the terms of the will make it clear that the legatee is to hold property on trust, but the terms of the trusts upon which he is to hold the property are not disclosed.[xxiii] They are perhaps best explained in their differences to fully secret trusts. The second circumstance exists where the intended trustee was aware that the property was going to be left to them to hold on trust, but had no knowledge of the purpose of the trust. It only intervenes if there is a risk of an unconscionable result, like the denial of a testators wishes. [42] It is no coincidence then, that communication and acceptance are two of the requirements for the recognition of ST's. [43] 833, application was filed on October 16, 1934, asking an extension of period of redemption pursuant to the provisions of chapter 179 of the Acts of the 45th General Assembly. Deputy Master Rhys was assisted in deciding this point by the comments in two cases. Requirements (Kasperbauer v Griffith) = o 1. In this case, Boyes made a gift in his will to his executor, his solicitor having already requested that the executor accepted that instruction to hold the gift on trust, but had not actually communicated the names of those beneficiaries. These can either be fully secret or half secret, and two types will later be discussed separately. [i] Gary Watt Trusts and Equity (4th edn, OUP, 2010) 180. endstream endobj above 21, doubt was cast on the relevance of fraud. 2010-2023 Oxbridge Notes. A clear distinction between the two is made in this case, and equity was not used to insist on a trust here. She claimed that as a result Mr Ison now held the jewellery on a bare (secret) trust for her. A Mutual Will is where two or more people agree to make wills and not to revoke those wills without mutual consent i.e. Kasperbauer, 05-1273, the case now before the Court. Moreover, it has been shown that the equitable principle is not always used to justify the enforcement of fully and half secret trusts. Under this section, a spouse who makes a substantial financial contribution to improve a property is treated as then acquiring a share in its beneficial interest, whether or not they have a legal interest. It was stated in Ottoway v Norman[xii] that the acceptance could be express or by acquiescence. Just fewer than twenty relatives challenged his sister, the testatrixs will, alleging that her brother had received the legacy on secret trust for them. There is a school of thought who argues that these trusts operate entirely outside of the will, thus there is no need to consider fraud. Intention by testator, or person prepared to die intestate, to create trust binding inheritor of their property. By applying this principle, the court can address each secret trust on its own unique facts and circumstances, and, certainly, as Watt states, in the exercise of discretion, a principle or maxim is a more flexible and useful tool than a rule.[lviii], Bannister v Bannister [1948] 2 All ER 133, Katherine, Duchess of Sufflock v Hereden [1560], Matrimonial Proceedings and Property Act 1970 s37, Hudson, A, Great Debates in Equity and Trusts (Palgrave 2014), Hudson, A, Understanding Equity & Trusts, (5th edn, Routledge 2015), Penner, J.E, The Law of Trusts (9th edn, Oxford University Press 2014), Warner-Reed, E, Equity and Trusts, (Pearson 2011), Watt, G, Todd & Watts Cases & Materials on Equity and Trusts, (9th edn, Oxford University Press 2013), Watt, G, Trusts and Equity, (4th edn, Oxford University Press 2010), Council B, Clean Hands Need Not Be Spotless (1993) 143 New Law Journal, Critchley P, Instruments of fraud, testamentary dispositions, and the doctrine of secret trusts (1993) 115 Law Quarterly Law 631, Gardner S, Two Maxims of Equity (1995) 54 (1) Cambridge Law Journal 60, Kincaid D, The tangled web: the relationship between a secret trust and the will [2000] Conveyancer and Property Lawyer 420, King L In Practice: Legal Update: Probate: Secret and half-secret trusts (2014) Law Society Gazette 27, Mee J, Half Secret trusts in England and Ireland [1992] Conveyancer and Property Lawyer 202, Thomas M, The longer you look at a [will], the more abstract it becomes construction and secret trusts: Rawstron and Pearce v Freud (2014) 1 Trust Law International 157. The vendor, on conclusion of a sale, holds it on constructive trust for the purchaser. The purpose of the succession project, begun by the New Zealand Law Commission in 1993, is to develop a Succession Act to provide for all succession matters in one statute. If the matter was left simply to the conscience of the donee, then there is no trust but a moral obligation.. Why should equity, over a mere matter of words, give effect to them in one case and frustrate them in the other?[xxv], Blackwell v Blackwell[xxvi], described by Watt as a classic instance of a valid half secret trusts[xxvii] is the basis for another noteworthy requirement regarding half secret trusts. When Miss Hodge failed to do so, the claimant brought an action against the executors of Miss Hodges estate alleging entitlement to the property left by Ottoway. Buy the full version of these notes or essay plans and more in our GDL Equity and Trusts Notes. It may be unconscionable to keep the money after the mistake has been bought to the attention of the recipient. Accordingly no trust was created. GDL Law Notes These requirements are intended to ensure that wills constitute a clear record of how the estate should be distributed after the testators death. The fraud theory allows the distribution of the estate to reflect the testators wishes in so far as it is possible. While the origins of secret trusts are old, they are, are Meryl Thomas notes far from obsolete.[lvi] An exploration of the law has revealed that the two types, fully and half secret trusts, must fulfil three requirements before they can be held as valid, and if they do not they shall fail. Re Snowden 1979 See also Kasperbauer v Griffith [2000] WTLR 333. And concluded it was stated in Ottoway v Norman, a fully-secret trust case an oral declaration of land sufficient! Penner and Critchley, finds this theory somewhat unconvincing [ lvii ] that! 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