Q3 Answer - Lecture notes 3 PDF

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PRE-SEEN RECORDERD CLASS – Q3. A fully secret trust is an obligation which is fully concealed on the face of a will. According to Viscount Sumner ‘it is communication of the purpose to the legatee, coupled with acquiescence or promise on his part, that removes the matter from the provisions of the Wills Act and brings it within the law of trusts, as applied in this instance to trustees, who happen to be legatees’. Whereas a half secret trust is created when the will acknowledges the existence of a trust but the terms are concealed on the face of the will. In the case of a half secret trust the communication of the terms must take place before or at the time of the execution of the will.

In Ottaway v Norman, Brightman J set out elements necessary to prove the existence of a fully secret trust in the following terms: “It will be convenient to call the person on whom such a trust is imposed the ‘primary donee’ and the beneficiary under that trust the ‘secondary donee’. The essential elements which must be proved to exist are (I) the intention of the testator to subject the primary donee to an obligation in favour of the secondary done; (ii ) communication of that intention to other primary donee; and (iii) the acceptance of the obligation by the primary donee either expressly or by acquiescence. It is immaterial whether these elements precede or succeed will of the donor.”

The first problem which arose in this Scenario is the conversation between Theresa and Gerry where Theresa asked to keep £750,000 on trust for her son. During this basis he stayed silent on his part of the conversation. The question which arose form this is ‘was there acceptance?’ However, you do not have to express your acceptance if you stay silent you will be deemed to have agreed to the trusteeship

and will be bound by it. A case which emphasises this is Moss v Cooper (1861) where three asked to be trustees of secret trust however two of them accepted and third one stayed silent. The question in for the court was whether or not there was two or three trustees and the court held that because the third stayed silent that silence had meant that they had accepted the trusteeship. It was stated in the judgement, that the trustee can accept the obligation either expressly or impliedly. The trustee must make some positive attempt to reject the trust obligation, mere silence will be treated as acceptance. Therefore as all requirements were satisfied a valid trust was formed between Theresa and Gerry.

Furthermore Theresa’s communication with jerry in relation to the

bequest “(a)I

leave my home ‘Tory House, Ballymena’ to my friend Jeremy Cable on trusts for purposes as I shall communicate to him.” provided the trustee are made aware of the fact by the testator that they are being appointed as secret trustees to the secret trust that’s acceptable proved it is during the lifetime of the testator. Which Theresa has clear intention to create a trust and communicated with jerry in September 2018 and Jeremy accepted the trust. House in Ballymena is a half secret trust and Jeremy has accepted the request and it was during the testator’s lifetime therefore all conditions for a half secret trust are satisfied and Jeremy will have to carry it out. This would be deemed acceptable as all the requirements in Ottaway v Norman are satisfied

There is one slight qualification to this which is after her death it was found that here will had been changed in the last week of her life it was altered to include here holiday home in Portstewart as well has the Ballymena house. The question which

arises is does Michelle get both houses? The fact that the will has been changed Jeremy has not been told about the extra house during the lifetime of the testator and there has to be communication during the lifetime this has not happened in relation to the Portstewart house due to him finding out after her death. Jeremy has not been asked to be a half secret trustee. According to professor Ramjohn, If you have made a half secret trust and you want to change the bequest you have to go through the procedure again of contacting the secret trustee and getting the agreement form them and it’s got be during the testators lifetime.

In Re Boyes v Carritt (1884) A testator made a will leaving all his estate to his solicitor and appointing the solicitor as his executor. The testator intended to communicate the terms of a fully secret trust to the solicitor but failed to do so. The trust failed as even though the solicitor was aware of the presence of a secret trust, the testator failed to communicate any of the terms of the trust to the solicitor. Therefore, as Theresa has died and after her lifetime this bequest is made therefore, Michelle will not be entitled to get the house and it will unfortunately form part of Theresa residuary state and as resulting trust go back to her estate.

This was also seen in the case of Walgrave v Tebbs (1855) as a testator left £12K and certain lands to two persons apparently absolutely and as joint tenants. Shortly before his death he asked his executor to write to the two persons informing them of the objects towards which he wished them to apply the money and property. The executor wrote the letter but never sent it. The question arose whether the persons were bound by the secret trusts being informed of the testator’s wishes after his

death. It was held that there was no secret trust, and that the two persons were entitled to the property for their absolute benefit.

Another problem which arises from this scenario is Her house-maid Arlene stayed at her bedside and Theresa said to her that she felt she was not going to make it. On this basis, she said that Arlene should have her Aston Martin and handed her the keys. In this situation a Donatio Mortis Causa is relevant, according the Professor Ramjohn this involves an itner vivios transfer of control over property by the donor whilst contemplating his impending death but on condition that the gift will become prefect on death. Buckley J in Re Beaumont (1902) described a Donatio Mortis Causa as a “singular form of gift”.

According to Lord Russell CJ in Cain v Moon [1896] what we need in order to establish for a valid donatio mortis causa is that: a) the gift must have been made in contemplation of death; b) the gift must have been conditional on death; and c) the donor must have parted with dominion over the subject matter of the gift. In Re Cravens Estate (1937) Farwell J also set out these conditions to be met to establish a claim of donatio mortis causa: ‘The conditions which are essential to a donatio mortis causa are, firstly, a clear intention to give, but to give only if the donor dies, whereas if the donor does not die then the gift is not to take effect and the donor is to have back the subject-matter of the gift. Secondly, the gift must be made in contemplation of death, by which is meant not the possibility of death at some time or other, but death within the near future, what may be called death for some reason

believed to be impending. Thirdly, the donor must part with dominion over the subject-matter of the donatio”

According to Baker P in the article ‘Land as a donation mortis causa’ (1993) the requirement here is that the donor contemplates impending death or death in the near future from a specific health condition such as incurable cancer. In the recent case of King v Dubery (2016) the Court of Appeal reviewed the law relating to the DMC concept and decided that such a claim is required to be construed with considerable caution to avoid unscrupulous treasure hunters adjusting their recollection in order to gain huge rewards. Also, Baker states that if the person who is giving the mortis causa gets better the causa does not take effect. There is case of Wilkes v Allington (1931)

the donor who was dying of cancer with no hope of

recovery . he did not know how long he had to live when he transferred property to the done. One month later he caught a cold and died due to pneumonia. And the question was whether the donation mortis causa was valid because it was made when the person thought they were dying of cancer didn’t know anything about the other illness. The court held that it was valid because as long as the person died it didn’t have to be of a specific disease.

A gift made must be conditional on death would mean that there is a clear intention to part with the whatever is given only if the donor dies, subsequent recovery of the donor will be held as if the gift has not taken effect, as in the case of Staniland v Willott. Nevertheless, the condition of death does not need to be stated explicitly, for if the gift is parted with at the time of the donor’s last illness and in contemplation of death the court will be inclined, following the case of Gardner v. Parker , to infer that

the donor intended that the gift should be held only if death occurs. Furthermore, even if it seems that that the gift was unconditional, the presumption can be rebutted by the court [27] .

Theresa is required to part with dominion or control over the property during the lifetime. It is required to be established that the donor has lost control over the asset and during her lifetime and, at the same time, the donee (Arlene) has acquired control over the subject matter of the gift. In Sen v Headly (1991) H, a few days before death in hospital purported to make a gift of real property to Sen. He said to her "the house is yours, Margaret. The keys are in your bag. The deeds are in the steel box." It was held by the CoA that there is no reason in principle why land should not be the subject of a DMC provided that the general conditions are met.

Therefore, the Aston Martin to Arlene can pass through the DMC as in Cain v Moon [1896] what we need in order to establish for a valid donatio mortis causa is that: a) the gift must have been made in contemplation of death; b) the gift must have been conditional on death; and c) the donor must have parted with dominion over the subject matter of the gift. These requirements are all satisfied as Theresa made the decision in contemplation of death as she said she felt she was not going to make it and therefore told Arlene she could have the Aston Marten and hand over the keys which indicated that she parted with dominion of the car.

To conclude, in light of Moss v Cooper it is clear that Gerry accepted to trust and therefore a valid trust between Theresa and Gerry was formed. Also, as Theresa has

died and after her lifetime this bequest is made therefore, Michelle will not be entitled to get the house in Portstewart, and it will unfortunately form part of Theresa residuary state and as resulting trust go back to her estate. Therefore, the Aston Martin to Arlene can pass through the DMC as stated Theresa has satisfied all the requirements....