Blackwell v Blackwell is a landmark case in English trusts law that addresses the doctrine of secret trusts. The case establishes key principles regarding the admissibility of oral evidence in establishing secret trusts and highlights the balance between statutory formalities under the Wills Act 1837 and the equitable principles designed to prevent fraud.
Facts of Blackwell v Blackwell
The testator, through a codicil to his will, left £12,000 to five trustees with the instruction to invest it and apply the income “for the purposes indicated by me to them.” Among the five trustees, four were informed of the general objectives of the trust, while the fifth trustee received detailed verbal instructions from the testator. These detailed instructions were later recorded in a written memorandum prepared by the fifth trustee, albeit a few hours after the codicil was executed.
The residuary legatees of the estate challenged the validity of the trust, arguing that it failed to comply with the formal requirements of the Wills Act 1837. They contended that parol (oral) evidence should not be admissible to establish the testator’s intentions and the terms of the trust.
The case was initially heard by Justice Eve, who ruled in favour of the trustees, allowing the introduction of oral evidence to establish the trust. The Court of Appeal upheld this decision, affirming the existence of a valid secret trust. The residuary legatees then appealed to the House of Lords.
Issues Presented to the Court
The key issues in Blackwell v Blackwell were:
- Whether a secret trust can be validly established through oral instructions communicated to one trustee and later recorded in writing.
- Whether parol evidence is admissible to prove the testator’s intentions.
- Whether secret trusts undermine the formal requirements prescribed by the Wills Act 1837.
Blackwell v Blackwell Judgement
The House of Lords unanimously upheld the validity of the secret trust. The key findings were as follows:
- Parol Evidence Admissibility: The court affirmed that parol evidence was admissible to establish the trust, provided that the essential elements of a secret trust—intention, communication, and acceptance—were met.
- Timing of Communication: The Lords held that the instructions given to the trustee and subsequently documented in writing, albeit after the execution of the codicil, were still valid as they were communicated during the testator’s lifetime and accepted by the trustees.
- Preventing Fraud: The judgement reinforced the principle that equity intervenes to prevent fraud by ensuring that trustees cannot retain property for their benefit when they have undertaken an obligation to hold it on trust.
- Compliance with the Wills Act: The Lords rejected the argument that secret trusts circumvent the statutory requirements of the Wills Act. They held that a properly communicated and accepted secret trust does not conflict with the Act but rather exists independently within the realm of equity.
Lord Buckmaster emphasised the equitable duty of trustees, stating:
“This principle is easily understood and may be also stated by saying that he cannot defraud beneficiaries for whom he has consented to act by keeping the money for himself.”
Viscount Sumner further elaborated on the doctrine of secret trusts, noting that the recognition of such trusts does not conflict with the Wills Act but rather aligns with equitable principles. He outlined the rationale for enforcing secret trusts:
“A court of conscience finds a man in the position of an absolute legal owner of a sum of money, which has been bequeathed to him under a valid will, and it declares that, on proof of certain facts relating to the motives and actions of the testator, it will not allow the legal owner to exercise his legal right to do what he will with his own.”
He further clarified that secret trusts are enforced because the testator relies on the trustee’s promise to carry out their wishes.
Conclusion
Blackwell v Blackwell [1929] UKHL 1 remains a pivotal case in English trusts law, affirming the validity of secret trusts and establishing crucial principles regarding intention, communication, and acceptance. The case underscores the importance of equity in preventing fraud and ensuring that the testator’s true intentions are respected, even when they are not formally included in the will.
While the case upholds the doctrine of secret trusts, it also serves as a reminder of the delicate balance between statutory formalities and equitable intervention in trust law. Practitioners must carefully consider these elements when advising clients on estate planning and trust creation.
