Factual and Procedural Background
The deceased, referred to as the Testator, died on 13 February 2021, leaving a will dated 12 November 2020 (the "Last Will") which bequeathed his entire residuary estate to his civil partner, the Defendant. The Claimant commenced proceedings on 17 July 2023 seeking a declaration that the Defendant holds one half of the residuary estate on trust for the Claimant and his siblings, based on an alleged "secret trust". The Claimant's primary case was that the Testator instructed the Defendant to apply one half of the residuary estate for the benefit of the Claimant and his siblings equally. The Defendant applied to strike out the claim or for reverse summary judgment, which was dismissed by the Master. On appeal, the Judge allowed the appeal and dismissed the claim. The Claimant obtained permission to appeal this decision.
Legal Issues Presented
- Whether the Claimant has established the existence of a secret trust over one half of the Testator's residuary estate.
- Whether the three certainties required for a secret trust—certainty of intention, subject matter, and objects—are satisfied.
- Whether the Judge erred in overturning the Master's decision dismissing the Defendant's strike out and summary judgment application.
- Whether there is a realistic prospect of further evidence at trial supporting the Claimant's case.
- The correct standard of appellate review applicable to the Judge's decision.
Arguments of the Parties
Claimant's Arguments
- The Testator had a long-standing intention to divide his residuary estate, leaving half to the Defendant and half to the Claimant and his siblings.
- The Testator gave instructions to the Defendant, accepted by her, to hold one half of the residuary estate on trust for the Claimant and his siblings.
- The Claimant relies on contemporaneous documents and statements indicating the Testator's intention and the Defendant's agreement to the plan.
- There is a real prospect of further evidence at trial, including witness evidence and cross-examination, which could establish the secret trust.
- The Judge erred by treating the appeal as an exercise of discretion rather than an evaluative judgment on the realistic prospect of success.
- The Judge was wrong to find insufficient certainty of subject matter and objects, and to dismiss the possibility of further evidence.
Defendant's Arguments
- The Testator intended to leave the entire estate outright to the Defendant to take advantage of inheritance tax exemptions.
- The contemporaneous documents show the Testator's intention to avoid any binding obligations on the Defendant regarding the estate.
- The Defendant denies receiving any instructions or obligations to hold the estate on trust for others.
- The Claimant's case lacks sufficient certainty in language, subject matter, and objects to establish a secret trust.
- The Judge correctly found no reasonable grounds for the claim and correctly dismissed it on appeal.
- The Claimant's hope for further evidence is speculative and insufficient to survive summary judgment or strike out.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Ottoway v Norman [1972] Ch 698 |
Establishment of secret trusts based on the legatee's obligation to carry out testator's instructions. |
Confirmed the requirement of intention to create a binding trust with imperative language. |
| Re Gardner [1920] 2 Ch 523 |
Support for the principle that a legatee is bound in equity to carry out the testator's instructions. |
Referenced as authority for the equitable obligation underlying secret trusts. |
| Kasperbauer v Griffith [2000] W.T.L.R. 333 |
Requirements for secret trusts: intention, communication, and acceptance. |
Discussed regarding the necessity of intention and the effect of tax avoidance motives on secret trusts. |
| Easyair v Opal Telecom [2009] EWHC 339 (Ch) |
Test for summary judgment and strike out: realistic prospect of success versus fanciful claim. |
Applied to assess whether the claim disclosed reasonable grounds to proceed. |
| Swain v Hillman [2001] 2 All ER 91 |
Definition of "realistic" prospect of success for summary judgment purposes. |
Used as part of the test for whether the claim should be struck out or summarily dismissed. |
| ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 |
Clarification on the assessment of evidence and claims at summary judgment stage. |
Guided the court on evaluating the strength of factual assertions without conducting a mini-trial. |
| Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550 |
Evidence consideration at summary judgment, including evidence reasonably expected at trial. |
Supported the approach of considering both present and anticipated evidence in the evaluation. |
| Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63 |
Approach to summary judgment where further factual investigation might alter outcome. |
Supported hesitation to grant summary judgment where further evidence might be forthcoming. |
| ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725 |
Limits on arguments for trial based on speculative evidence. |
Referenced to reject claims relying solely on the hope of future evidence without present substance. |
| Azam v University Hospital Birmingham [2020] EWHC 3384 (QB) |
Standards for appellate review of discretionary decisions. |
Applied to assess whether the Judge erred in overturning the Master's discretion on appeal. |
| Re Sprintroom Ltd [2019] EWCA Civ 932 |
Appellate interference with evaluative judgments requires identifiable flaws undermining the conclusion. |
Guided the appellate court's standard for interfering with the Judge's evaluation of prospects of success. |
| In re Snowden (deceased) [1979] Ch 528 |
Distinguishing between moral obligation and binding trust in secret trust cases. |
Referenced regarding the necessity of an immediate binding trust rather than mere moral obligation. |
Court's Reasoning and Analysis
The court began by outlining the established requirements for a secret trust: intention to create a trust evidenced by imperative language, certainty of subject matter, and certainty of objects, as well as communication and acceptance by the legatee. The Claimant bore the burden of proof to establish these elements.
The court analysed the evidential record, including contemporaneous solicitor attendance notes and a recorded telephone conversation. These documents contained references to the Testator giving "instructions" to the Defendant and a "plan" for gifts to be made to family members, consistent with the Claimant's case. However, the Defendant's witness statement denied receiving any such instructions or obligations.
The court noted the Testator's clear intention to avoid inheritance tax by transferring the estate outright to the Defendant, supported by multiple references in the documentation. The court acknowledged that such tax avoidance intentions do not preclude the existence of a secret trust but complicate the analysis.
Regarding certainty of language, the court found there was sufficient material to meet the low threshold at this stage that the evidence at trial could support the Claimant's case, given the inconsistencies between the Defendant's limited evidence and the contemporaneous documents.
On certainty of subject matter, the court found uncertainty as to what constituted the "residuary estate" due to variations in prior wills and possible exclusion of specific properties. This raised a factual issue for trial rather than a legal bar at this stage.
Regarding certainty of objects, the evidence was inconclusive but there was a real prospect that trial evidence and inferences could establish the intended beneficiaries.
The court emphasised that the only direct evidence of the Testator's oral instructions would come from the Defendant, whose limited evidence contrasted with contemporaneous documents. The possibility of further evidence, disclosure, or adverse inferences from the Defendant's failure to provide evidence meant the case could not be struck out or summarily dismissed at this stage.
The court found that the Judge erred in treating the appeal as a discretionary review rather than an evaluative judgment on the realistic prospect of success. The Judge's conclusion that the Claimant had no reasonable prospects was flawed due to failure to properly consider the potential for further evidence and the inconsistencies in the evidence.
Accordingly, the court restored the Master's decision that the claim has a real prospect of success and should proceed to trial.
Holding and Implications
The court ALLOWED THE APPEAL and restored the decision of the Master, thereby reversing the Judge's dismissal of the claim. The claim for a secret trust over one half of the Testator's residuary estate will proceed to trial.
The direct effect of this decision is to permit the Claimant's claim to continue, allowing further evidence and cross-examination to determine the existence and terms of the alleged secret trust. No new legal precedent was established; rather, the court clarified the proper application of the realistic prospect of success test at the summary judgment and appellate stages in the context of secret trust claims.