The Secret Life of Secret Trusts

https://nationalpost.com/life

“upon the whole matter, it appearing to be, as well a fraud, as also a trust…” Thynn v Thynn (1684)

“every will shall be in writing, and signed by the testator in the presence of two witnesses at one time” IX Will Act 1837

If we consider secret trusts to be “testamentary trusts that arise without complying with the formalities required by the Wills Act 1837” (in particular see sections 1, 9 and 20 (as regards codicils)) and though taxonomically not complicated, with a simple ‘fully’ secret (no mention of trust at all on the ‘face’ of the will) ‘half-secret’ (will mentions trust but does not establish objects) distinction, and consequently different curial solutions in the face of ‘failure’ (in the case of a FST the legatee takes outright; whilst for an HST the trust will fail for want of objects, generating a ‘resulting trust’ (ART) in favour of the testator’s estate) they nonetheless share two, to a degree overlapping conundrums:

i. what kind of trust/s do they represent?
ii. how might we justify the recognition and/or indeed the enforcement of such trusts in the light of their utter failure to comply with, it has to be said, pretty non-ambiguous and long established statutory guidelines.

I here propose to try and address firstly:

Is a secret trust an express trust or a constructive trust? Why?

before moving on to attempt to unravel the related conundrum:

In Blackwell v Blackwell [1929] UKHL 1, [1929] AC 318, Viscount Sumner said that secret trusts are enforceable even if the secret trustees “are acting with perfect honesty, seek no advantage to themselves, and only desire, if the Court will permit them, to do what in other circumstances the Court would have fastened it on their conscience to perform.”

In that situation, how does a court justify enforcing a trust that fails to comply with the Wills Act 1837?

A. Is a secret trust an express trust or a constructive trust?

Capable of several incarnations (inter vivos/testamentary revocable/irrevocable fixed/ discretionary etc.) the ‘express’ triangulated (settlor/trustee/beneficiary) trust might perhaps be considered the ‘classic’ trust, a “trust imposed by the will” as Lord Warrington described it in Blackwell v Blackwell [1929] whilst the ‘constructive’ trust is imposed by the court when a “wrongdoer acquires legal title to property that rightfully belongs to another [importing a] duty to return the property to the true owner”.

Much as in Rochefoucauld v Boustead [1894]7 the tension is between on the one hand an ‘express’ trust, and on the other a ‘constructive’ trust (arising by the ‘operation of law’). This has both theoretic ‘taxonomic’ implications if you will, but perhaps more importantly practical consequences particularly when we come to consider vesting interests in land.

Certainly at first blush both kinds of secret trust have certain significant differences from the classic ‘express’ trust, most notably that ‘timely communication to’ and ‘acceptance by’ the secret trustee are enforceable curial requirements, this not being the case with the ‘express’ trust which can be created even though the intended trustee is wholly unaware of its existence; but is there enough similarity (and the shared remit of fraud prevention) that we can consider them to fall under the Rochefoucauld/‘express’ rubric?

Alternatively can their nature be best captured by a ‘constructive’/‘detrimental reliance’ model; certainly it would ease away the ‘timely communication’/‘acceptance’ issue/s. It would also ease the vesting of land by secret trust, that otherwise may well encounter (aside from s. 9 Wills Act 1837) issue with s.53 (1) (b) of the Law of Property Act 1925 which requires:

“a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by his will”

If deemed constructive they would be saved by s. 53 (2) which provides exemption for constructive, implied and resulting trusts; it might however be argued that constructive/ express differences aside the reasons for ignoring the Wills Act 1837 should also apply to s. 53(1)(b).

A quick glance at the the table below will confirm that there is little juristic agreement as to how this circle should be squared:

Rochefoucauld [1894] secret trusts
Robert Chambers express (E) constructive (C)
Lord Millett C C
William Swadling E E

Chambers favours the ‘constructive’ trust solution, seeing s. 9 Wills Act as essentially ‘substantive’ (concerned with ‘validity’) suggesting that the testator’s ‘intention’ (to create a trust) PLUS the emphasis on the trustee’s ‘undertaking’ (itself generating ‘detrimental reliance’ as regards the testator) work together in Elias’s terms, to ‘perfect’ the trust. BUT say Swadling, if they are constructive trusts, why as and when they are declared formally ‘void’ is an ART (the usual outcome) not generated; instead the court appears to be looking to ways to give direct effect to what appears to be an ‘express’ trust. He suggests that despite its language, which indeed is (at least in large part) substantive (as was that of its predecessor Section 7 Statute of Frauds 1677) the courts are interpreting s. 9 as if it were procedural, that is to say ‘evidential’ (see: Blackwell v Blackwell [1929]) using the trustee’s ‘undertaking’ to leverage the Rochefoucauld/‘fraud theory’ paradigm, and so bypass the formality requirements of both s. 9 ( and if it is relevant) s. 53 (1) (b).

In a word the will is ‘proved’ (Court of Probate).

So to conclude this section if the trust is constructive, arising by operation of law rather than directly by intention, the formalities problem is obviated, but we then need a ‘reason’ for perfecting the unperfected intentions of the testator which takes us to:

B. How does a court justify enforcing a trust that fails to comply with the Wills Act 1837?

Well, in this contentious area of law, it is perhaps not that surprising, that a variety of explanatory/justificatory paradigms co-exist, all attempting to overcome the flouting of s.9 formalities, and accommodate the fundamental unreliability of parol evidence; the principal theories (in order of importance) are:

• incorporation by reference
• outside the will (‘dehors’) theory • fraud theory

i. ‘incorporation by reference’:

can be easily disposed of as a stand-alone theory, for the simple reason that the doctrine only applies to documents, whereas secret trusts frequently concerns oral testimony; nonetheless it may to an extent (by a process of analogy) explain some of the rules concerning ‘timely communication’.

ii. outside the will (‘dehors’) theory:
In Cullen v AG for Ireland Lord Westbury established the ‘dehors’ theory, when he stated:

“where there is a secret trust, or where there is a right created by a personal confidence reposed by a testator in any individual, the breach of which confidence would amount to a fraud, the title of the party claiming under the secret trust, or claiming by virtue of that personal confidence, is a title dehors the will, and which cannot be correctly termed testamentary.”

Viscount Sumner in Blackwell v Blackwell [1929] affirming that:

“It is communication of the purpose to the legatee, coupled with acquiescence or promise on his part, that removes the matter from the provision of the Wills Act and brings it within the law of trusts…”

This idea, of treating the secret trust/s as essentially ‘non-testamentary’, can be critiqued on a variety of grounds:

  1. it fails to explain why secret trusts place such a great emphasis on trustee ‘acceptance’/‘acquiescence’ (normally not a requirement in English law for the creation of a valid trust).
  2. it appears to affirm, even to establish a false dichotomy between the law of wills, and the law of trusts, that cannot be easily upheld.
  3. it suggests a very narrow, and indeed historically inaccurate view of what constitutes a ‘will’, in harsh contrast with the open texture of s. 1 Wills Act 1837 which states that: ‘the word “will” shall extend to a testament, and to a codicil… and to any other testamentary disposition’; which would seem to comfortably cover both fully and half- secret trusts.
  4. but perhaps most importantly: “it still fails to address the fundamental objection that the evidence the court admits is inherently unreliable.”

iii. fraud theory:


Lords’ Bill 1673 which provided the wording of s. 7 1677 Act

Drawing on s. 7 Statute of Frauds 1677, Thynn v Thynn (1684) clearly establishes the close (potential) connection between fraud and secret trusts, though it must be recalled that the vast majority are simply enacted, not contested. And indeed, for some 200 years it appears “equity would enforce the promise as a trust obligation over the property only in the case of actual fraud.” McCormick v Grogan (1869) was a game changer, when there was a shift away from the requirement of fraudulent ‘induction’, to the courts (assuming there was adequate communication) allowing the testator and legatee/trustee to jointly defy the Wills Act, equity enforcing any such agreement against the legatee.

In cases such as Blackwell [1929] (see Viscount Sumner’s quote above) and re: Snowden [1979] we see the modern day court’s willingness to enforce FST’s with Mitchell even suggesting it may be a way for an aged testator to continually update how their property will be vested up and until their ultimate demise; the only ‘fraud’ necessary being the legatee’s refusal to follow through on what is essentially an informal agreement.

As regards HSTs, the trust is already on the face of the will, and so the only remaining option is what we might think of as ‘fraud on the beneficiaries’ which as Sheridan has pointed out, is in itself a tautology.

While Matthews (2010) has argued that s. 9 of the Wills Act may not apply to testamentary trusts at all, the judges (and many jurists) seem to think otherwise, and so we are finally left with a Gordian knot of possibilities; Chambers favouring a ‘constructive’ interpretation, Swadling an ‘express’ (with ‘fraud’ tipping the balance towards a Rochefoucauld paradigm) whilst Penner suggesting they should not be enforceable at all.

Personally of the three I find Swadling takes the day by a neck, though Penner’s objections are also entirely valid, but it does also strike me, that as in many areas of law these might be best considered as simply one of a kind (sui generis) trusts if you will, with equity drawing on a variety of justifications as it attempts to balance the books of conscionability/ unconscionability. Unfortunately, at least to a degree, we are left in the dark (just as are the other legatees in a FST) as to the exactitudes of the theoretical engine that is driving these decisions.

The pen is mightier…

The pen is mightier than the sword” is a metonymic adage, coined by English author Edward Bulwer-Lytton in 1839, indicating that communication (particularly written language), or in some interpretations, administrative power or advocacy of an independent press, is a more effective tool than direct violence.

In response to a series of posts on the law related Facebook pages I originally established (some years ago now) I thought it might be timely to write a post on the the specifics of writing high scoring essays and problem answers with a focus on the LLB Hons.

If you’re not in the mood for reading a few hundred words, then I’m going to spoil my own article and give you the answer in three simple words: write a lot.

For those more particular amongst you I’ll lay it out in more detail, but I promise you the conclusion will be no different. So with Margaret Thatcher’s words ringing in my mind (“say what you’re going to say, say it, then say it again”) I shall proceed.

  1. general remarks: 

First and foremost I want to stress one fundamental point. Writing is a specific skill. It is neither reading, nor listening, nor speaking, and as such it needs to be learned in and of itself. Don’t imagine reading another chapter of Wilson’s Criminal Law will directly help you write a better essay on say the vagaries of intention. It will hone your reading skills, and you may well need some of the information (case law/theoretical stances etc.) that he refers to BUT it is no substitute whatsoever for you putting pen to paper

Indeed it may undermine that very process by: 

  1. providing you with more information than you can process.
  2. allowing you to applaud yourself for what a good student you are/have been when in fact your writing skills have not advanced one iota.
  3. use up valuable time that would have been better dedicated in actually writing an answer or two.

At the end of your studies one thing is for sure. You will (the dissertation module aside) face a series of very unpleasant unseen examinations. And (forgive me for stating the obvious) they are WRITTEN exams. They are not listening assessments, oral presentations or viva voces. They are unseen WRITTEN examinations. (The smarter students can stop here, stop reading and get their pens out). So you need to spend time writing. Not a bit of time, not occasionally, but a LOT of dedicated time: crafting your skill/s, honing your tools, and learning to express yourself well and succinctly. Until such time as it becomes second nature.

A very simple illustrative example flows from the world of football. Some years ago it was realised that in the land of taking penalties all is not equal. Some nations were excellent at it (Germany for example) whilst others (England for example) were at best inconsistent. Just luck some would say, astrology, the make of football boots, the weather. Utter nonsense I would retort, and indeed it proved to be so. It was really simple. Germany spent on average of 10 times the amount of time practising taking penalties compared to the English players. Is it any wonder they were better at it.

I’ll say it again: write a lot.

Moving on to the specifics of tackling essays v problem questions I would once again offer only one piece of advice. Get good at writing both of them. The alternative is not a pleasant thought. You will simply back yourself into a corner and be/feel obliged to write a style of question that you prefer on a topic that you know very little about, simply because you consider yourself a ‘problem question’ kind of person or vice versa.

ii. problem questions:

There is no doubt here that:

  1. practice makes perfect
  2. a formula helps
  3. practice makes perfect

Use whichever formula that works for you, but I have never seen any need to stray beyond IRAC. If you don’t know what I’m talking about then you should. It stands for:

Issues

Rules

Application

Conclusion

I won’t labour these sub-divisions as plenty has been written elsewhere on the subject (see below) but I will simply make a few points.

The Issues section is vital, much a like a good introduction to an essay question, it not only provides the first impression (don’t forget that the examiner is obliged to read a LOT of scripts) but also, if written well guides the rest of the answer. It here that fatal mistakes are made. You’ll be forgiven an occasional case law error or a misquoted academic article but you won’t recover from completely misidentifying the subject matter of the question. If the focus of the question is on liability for murder you won’t score well if your answer predominantly concerns gross negligence manslaughter. If the question asks you to consider the defences (to said liability) then do so. If it’s a question on the Law of Torts don’t spend half your time considering whether the original contract is binding or not. 

You get the idea I am sure.

The Rules represent the relevant law. So here is your chance to demonstrate your knowledge of statute, construct a narrative with relevant case law and introduce (once again if and only if it is relevant) any human rights concerns. BUT don’t spend TOO long on this section not leaving yourself enough time to APPLY the relevant law to your particular factual matrix for it is this section that the examiner will be really interested in, and able to assess if you do really understand what your talking about and/or are just bluffing. 

So to reiterate, the Application is the meat of the pudding. Do this section well and you will pass. Do it really well and you will pass really well. Nobody cares if you misspell the odd case (Tse Kwing Lam [1983] might test many of us) and/or fail recall the author of an obscure article. But they will care if your analysis makes no sense and/or woefully misapplies the relevant case-law/legislation. Construct a meaningful and accurate narrative, just as a barrister in court would do, using relevant and illustrative cases to bring the story to light.

Once again the Conclusion should be accurate and make some kind of sense. It matters little in many instances if you suggest D is liable or not BUT it matters a great deal that you establish why you are arguing your case in that particular direction. If you have time and energy to spare, here might be a good place to drop in a word or two about potential law reform. It will show the examiner that you are not just a performing seal and are really thinking about the questions that the Law raises.

iii. essay writing:

At pains of restating the obvious:

  1. practice makes perfect
  2. a formula helps
  3. practice makes perfect

Once again, given that you only have 45 minutes per essay (60 in Equity and Trusts) there is no need for rocket science.

Introduction

Body Paragraphs 

Conclusion

And I have to say many of the provisos from above, apply here.

Lay out a good, clear Introduction (say what you’re going to say) and be sure to identify the subject matter of the question clearly. If the question concerns the ‘separation of powers’ an extensive consideration of Wednesbury unreasonableness is unlikely to score highly. Do be aware that LLB questions will almost invariably ask you to critically discuss a subject. That is to say it will be a matter that attracts debate. If you find yourself just recounting any particular subject you have almost certainly missed something. Discuss the claim that codifying the unwritten elements of the UK constitution would have minimal impact on day-to-day politics clearly invites you to discuss BOTH sides of the coin. That is to say to initiate a discussion/debate within your essay. So one would expect to see pros and cons carefully discussed. On the one hand A on the other B. Don’t be scared to have an opinion (as long as it is not TOO extreme) and do be sure to support your argument as well as you are able, with relevant academic opinions, case law etc.

The Body Paragraphs will hopefully flow from your wonderful Introduction. Try not be excessively curt and/or unreasonably ambitious. I usually try to target 3-5 MAIN ideas (with a handful of sub-ideas) per essay. That will be enough. But once again be sure to have practised before your exam is due so that you know your own style, how much you can write in the allotted time etc. Nearer to the time I suggest you write, by hand a series of closed book essays, within the given time frame (45 or 60 minutes) to give yourself an idea of the reality you will be inevitably facing. It is usually quite a humbling but nonetheless very useful experience.

Just as above the Conclusion should be the icing on the cake. Recapitulating your main ideas (if you have time) and drawing any loose threads to some kind of meaningful closure. State your opinion one last time and try and leave a good last impression. Once again you may have time to consider how and where the law is unsatisfactory and so (in certain areas) ripe for reform.

Conclusion:

So there we have it. By no means an exhaustive consideration of the subject matter but enough I believe to get me through three (no less) University of London degrees including one First and one 2:1. And at the risk of irritating you I will leave my final piece of advice. 

You guessed it: write a lot.

Happy Studies.

Additional Material:

  1. Camilla Barker-DeStefano – Mastering the IRAC Method for Law School Success: A down-to-earth step-by-step guide to writing first class answers to legal problem questions ASIN: B07RB752QD
  1. SI STrong – How to Write Law – Essays & Exams OUP Oxford; 5 edition (15 Mar. 2018)
  1. Lisa Webley – Legal Writing – Routledge; 4 edition (8 Feb. 2016)