Blackwell v Blackwell [1929] AC 318

KEY POINTS

• A legacy of secret trust can be established through the testator's detailed verbal instructions to one of several trustees.

• A written memorandum created on the same date as the execution of a codicil is generally admissible as evidence regarding the testator's intentions.

• The knowledge and acceptance of trust by all trustees can be a significant factor in determining the validity of a trust legacy.

• In cases of secret trusts, parole evidence is often admissible to ascertain the testator's intentions and the validity of the trust legacy.

FACTS

• Through a codicil to his will, the testator left 12,000 pounds to five trustees, instructing them to invest it and use the income "as indicated by me." They were also empowered to distribute 8,000 pounds "to such person or persons indicated by me," with the remaining 4,000 pounds going to his will's trustees.

• Before executing the codicil, the testator gave detailed oral instructions to one trustee, C., which all trustees understood and accepted. Soon after, C. created a written memorandum outlining the instructions, specifying that the interest from the 12,000 pounds should benefit a lady and her son, providing their full names and addresses.

• In response, the testator's widow and son sued both the trustees and beneficiaries to challenge the 12,000-pound trust legacy's validity.

JUDGEMENT

• That parole evidence was admissible to establish the trust. Furthermore, the codicil established a comprehensive, valid, and consistent trust, and the memorandum was executed on the same day.

• This judgment was made in response to an appeal from an order issued by the Court of Appeal, which had previously upheld a judgment.

COMMENTARY

• Through a codicil to his will, the testator designated 12,000 pounds for five trustees, granting them discretion over their investment and income utilization "as indicated by me." Additionally, they were authorized to distribute 8,000 pounds "to such person or persons indicated by me," with the remaining 4,000 pounds allocated to the trustees of his original will.

• Before enacting the codicil, the testator provided comprehensive oral instructions to one trustee, C., which were understood and accepted by all trustees. Shortly thereafter, trustee C. composed a written memorandum capturing these instructions, specifying that the interest generated from the 12,000 pounds should benefit a lady and her son, complete with their full names and addresses.

ORIGINAL ANALYSIS

• The testator gave a large sum of money in his will to certain of his friends, stating that they should hold it on trust for purposes that he would communicate to them (half-secret trust: it was written thus in his will). 

• The question that arose was whether the trust obligation was binding on the `trustees'. 

• HL held that in principle half-secret trusts ARE enforceable, even though they bypass the Wills Act 1837 (though different rationales were supplied).

  • However in this particular case the trusts couldn’t be enforced because the terms of the trusts hadn’t been communicated to the trustees before the testator’s death.

Lord Sumner

• Half secret trusts are simply normal inter-vivos trusts established by a normal declaration of express trust. He adopted this instead of the problematic “instrument of fraud” theory (see above).

• Even half secret trusts cannot always be explained as express trusts since there isn’t always a declaration of trust. Again, CT is the only explanation for their existence. See Oakley