Ottaway v Norman is an important decision of the High Court that explains the law relating to fully secret trusts and clarifies the conditions under which such trusts are enforceable. The case is frequently cited for confirming that fraud by the recipient of property is not a necessary requirement for enforcing a secret trust.
Instead, the court focused on the intention of the testator, communication of that intention, and acceptance by the person receiving the property under the will. This case brief explains the facts, issues, decision, legal principles, and significance of the judgement in a clear and structured manner.
Background and Facts of Ottaway v Norman Case
In Ottaway v Norman, the testator had lived for many years with a woman without marrying her. During his lifetime, he decided to make arrangements for the distribution of his property after his death. He made a formally valid will in which he left his bungalow, along with its furniture, fixtures, and fittings, to the woman absolutely. The residue of his estate was left equally between the woman and his son.
Although the will appeared clear on its face, the testator had communicated additional wishes privately. He told the woman that after her death, she should leave the bungalow to his son and the son’s wife. The woman agreed to this arrangement. However, this understanding was not recorded in the will and was known only to the testator and the woman.
After the testator’s death, the woman initially acted in a manner consistent with what she had agreed. She made a will leaving the bungalow to the son and his wife equally. Later, however, she changed her will on two occasions. In her final will, she left the bungalow to another man and his wife and left only half of her residual estate to the son and his wife.
Following the woman’s death, the son and his wife, who were the claimants, argued that the original gift of the bungalow to the woman was subject to a secret trust in their favour. They claimed that the bungalow, along with its furniture, fixtures, fittings, and certain money, should be held on trust for them. The defendant, who was the executor of the woman’s estate, denied that any trust existed.
Legal Issues Before the Court
The High Court in Ottaway v Norman was required to consider several key issues arising from these facts. First, the court had to decide whether the testator intended to impose a binding obligation on the woman to leave the bungalow and other property to the claimants. This involved examining whether the testator’s words and conduct showed an intention to create a trust rather than a mere moral request.
Secondly, the court had to determine whether this obligation, if it existed, amounted to a valid fully secret trust under the law. This required an assessment of whether the essential elements of a secret trust were present.
Thirdly, the court needed to decide the scope of any such trust. In particular, it had to consider whether the trust extended beyond the bungalow to include its contents and any money or other property allegedly covered by the arrangement.
Finally, the court had to consider whether the trust was enforceable against the woman’s executor, despite the terms of her final will.
Ottaway v Norman Judgement
In Ottaway v Norman, the High Court held that a fully secret trust had been created, but only in relation to specific property. The court found that the bungalow, together with the furniture, fixtures, and fittings that passed under the testator’s will, was subject to a secret trust in favour of the claimants. The woman, having accepted the obligation during the testator’s lifetime, was bound by it.
However, the court rejected the claim that the trust extended to other property, including money or the remainder of the woman’s estate. The evidence was not sufficient to establish that the testator had imposed a clear and certain obligation in respect of this additional property.
Even if the testator had intended to create a trust over money, the lack of any requirement to keep that money separate meant that the alleged trust was too uncertain to be enforceable.
As a result, the executor was required to transfer the bungalow and its contents to the claimants in accordance with the secret trust, but no further obligation was imposed in respect of other assets.
Legal Reasoning and Key Principles in Ottaway v Norman
A central contribution of Ottaway v Norman lies in the court’s clear explanation of the essential elements of a fully secret trust. The court confirmed that three requirements must be satisfied:
- Intention – The testator must intend to impose a binding obligation on the person who receives the property under the will.
- Communication – That intention must be communicated to the intended trustee during the testator’s lifetime.
- Acceptance – The intended trustee must accept the obligation, either expressly or by acquiescence.
In this case, the court found clear evidence that the testator intended the woman to be under an obligation to leave the bungalow to the claimants. This intention was communicated to her during his lifetime, and she agreed to carry out his wishes. Her acceptance was therefore established.
Importantly, the court rejected the argument that proof of fraud or deliberate wrongdoing by the woman was required. The judgement made it clear that a secret trust does not depend on showing that the recipient of the property acted dishonestly. The trust arises because of the testator’s intention and the conscience of the person who accepted the obligation.
The court also addressed the certainty required for secret trusts. While the obligation relating to the bungalow and its contents was sufficiently clear, the alleged trust over money failed due to uncertainty. Without clear evidence of the terms of the trust and without any requirement to keep the money separate, the court could not enforce such an obligation.
Nature of a Fully Secret Trust
The decision in Ottaway v Norman is particularly significant in explaining the operation of a fully secret trust. A fully secret trust arises where the will makes an absolute gift to a person, with no indication on the face of the will that the gift is subject to any trust. The trust obligations exist entirely outside the will and are enforced in equity.
The case confirms that acceptance of the trust terms may be express or inferred from conduct. Silence or failure to object, where the circumstances require a response, may amount to acquiescence. Once the obligation is accepted, it binds the conscience of the trustee and can be enforced against their estate after death.
The court also adopted the idea that such a trust may be regarded as “suspended” until the death of the secret trustee, at which point it becomes enforceable against their estate. This explains why the obligation could be enforced against the woman’s executor, despite the terms of her will.
Conclusion
Ottaway v Norman remains a leading authority on fully secret trusts and is widely relied upon for its clear statement of the law. The case confirms that the enforceability of a secret trust depends on intention, communication, and acceptance, rather than on any requirement to prove fraud. It also demonstrates the importance of certainty, particularly where money or additional property is said to be subject to a trust.
By carefully limiting the scope of the trust to the bungalow and its contents, the court showed a cautious and principled approach to enforcing informal arrangements. The decision balances respect for the testator’s wishes with the need for clear and certain evidence before imposing trust obligations.
Overall, the case provides valuable guidance for understanding how equity enforces secret trusts and continues to play an important role in the modern law of trusts.