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secret trust

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As the title indicates, secret trusts are trusts where a testamentary disposition is
said to occur, but because of their secrecy, the judiciary treats them as exceptions
to the Wills Act of 1837. Several S.53.1justifications have been put out by the
judiciary as to why they exist. When it comes to secret trusts, a common question
is whether they are express or constructive trusts and what implications either
classification may have. The purpose of this essay is to look at the scope of secret
trusts. S.9 of the Wills Act, which mandates that all such transfers be in writing,
be witnessed, and be completed with signatures, deals with transfers of a
testamentary nature. If we look at these prerequisites, it seems that secret trusts
are in conflict with them, and fully secret trusts go even further against them than
half-secret trusts because a full secret trust has no mention in the will and
appears to be an outright gift, but the testator and trustee are the only ones who
know the true nature of the transfer. Because the testator might very well utilise
this statute to commit fraud, this is a matter for concern. Due to this, courts
accept these trysts as an exception to S.9 and uphold them in spite of the obvious
inconsistency.
The fraud theory and the De Hors the will idea are the two arguments courts have
made to support the creation of such trusts. The discussion in the current essay is
considerably more naturally suited to the fraud theory. It is similar to the
argument put forth in Rouchefould v. Boustead and R v. B, where the courts
made it clear that they wouldn't permit the exploitation of a statute as a means of
committing fraud. This approach was developed to stop legatees from engaging in
deception to acquire unjust enrichment since they could readily use this act for
such nefarious purposes. This demonstrates the significance of the idea and the
necessity of taking it seriously. Lords Hailsham and Buckmaster emphasised how
the prospect of fraud can destroy the purpose of the testator's intentions in
Blackwell v. Blackwell, which presented a more detailed consideration of the
fraud argument. However, there are problems with the craud idea. One major
weakness is that it offers no explanation for why half-secret trusts exist; these
trusts are those that are listed as "trusts" on the will document but are not, and
the theory falls short of offering a compelling argument for their existence.
However, it is cited as justification for the practise of maintaining full secret
trusts. The S.53 (1)(b) LPA 1925 formality requirements, which stipulate that all
express trusts must be written, are the fundamental driver behind the
significance of the question of whether secret trusts are constructive or express.
S.5(2), however, stipulates that resultant and constructive trusts are excluded
from formality requirements, therefore if hidden trusts fall under this category,
no such restrictions apply. Despite being an express trust in R v. B, it was
recognised as an exemption to 53(1)(b) to avoid fraud. Contrast must be drawn
between hidden trusts and other intervivos trusts that are formed for obvious
beneficiaries.
It can be argued that the Moss v. Cooper case established some prerequisites for
determining whether a trust is valid, including the testator's clear intention and
the secret trustee's accurate communication in accordance with the time
constraints that must accompany the testator's acceptance of this duty of
executing the trust. The fact that these particular requirements apply exclusively
to secret trusts and not express trusts means that they are regarded as
constructive trusts. Oakley continues the argument by stating that both the halfsecret trust and the complete secret trust should be seen as express trusts
because the trstator had to intend for them to exist in the first place. Additionally,
he claimed that the legislation creates a constructive trust when a trustee
commits fraud by abusing S.9's provisions, citing the Bannister v. Bannister case
law to support his claim. However, this reasoning raises the question of why other
requirements are disregarded in favour of the purpose requirement. David
Hodges asserts that secret trusts are actually express trusts due to the proper
priority given to communication and acceptance between testator and legatee
rather than because of the testator's intention. His line of reasoning is based on
the fact that the trust arrangement is an express trust because the parties agree
to it in writing. However, academics aim to disagree on this issue. For instance,
Paul Mathews and Lionel Sheradon took a stand against both partially and
completely secret trusts. They claim that only fully secret trusts are constructive
trusts because they are not mentioned in the will document. As a result, they are
only created to prevent fraud or the trustee from obtaining unjust enrichment.
Conversely, because the trust is stated in the will form, half-secret trusts are
express trusts. Given cases like Blackwell v. Blackwell, where nothing was
fraudulently done but it was nonetheless done as per the court's order, it may be
justified to treat half-secret trusts as express trusts; however, this justification
does not seem strong enough to support the use of fully secret trusts as a means
of preventing unjust enrichment. Each secret trust cannot be assumed to have the
same justification. The idea that secret trusts are constructive trusts since they
were created as a defence against unjust enrichment agrees with Hayton's. It can
be argued that this is true for fully secret trusts, but it does not provide a
convincing argument for why half secret trusts exist. Because these trusts are
clearly stated in a will document, there are fewer opportunities for unjust
enrichment on the part of the trustee than there are under a fully secret trust.
The case law has made an effort to provide a compelling defence for the
existence of hidden trusts. Half-secret trusts are express trusts, and the Re Baille
decision demonstrates this by holding that it was unenforceable since it did not
adhere to the S. 53(1)(b) requirements.
Furthermore, it was established in Ottaway v. Norman that constructive trusts,
which are free from such criteria under S.53(1)(b), include secret trusts. In the
case, the trust was upheld despite not complying with the formalities set forth in
the rule (2). In a different case's obiter, the court declared in Re Cleaver that a
wholly secret trust was constructive because it wasn't mentioned in the will.
As a result, the study shows that half-secret trusts are express trusts while fully
secret trusts are most likely constructive trusts. Sen. Headley's example,
however, illustrates a different scenario: if these trusts are treated as an
exception to the S. 9 Wills Act, then requiring them to follow the formalities is
illogical; if one legal requirement may be waived, why not the other?
In conclusion, it is acceptable to say that half-secret trusts and fully-secret trusts
differ from one another; one isn't included in the will, while the other is,
according to academic research and the cases reviewed. Sen. Headly, however,
paints a different image, rendering the entire discussion pointless. Why, he asks,
should an evidentiary requirement be given much weight when there is a
deviation from a significant legal requirement?
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