TRUST- DEFINITION

A trust is can generally be defined as an agreement which subsists between a person called the
trustee and a settlorm where the the settlor transfers his property to the trustee to hold the property
for the benefit of another person called the beneficiary ( cestui que trust ) of whom the trustee may
himself be, or for some object permitted by law in such a way that the real benefit of the property
accrues not to the trustee.

The Trustee Act Chapter 167 of the Laws of Kenya does not explicitly define the term Trust but
instead, Section 2 of the Act prescribes a negative and inclusive definition which seeks to show
the type of transactions to which the Act applies and does not apply. Section 2 of Trustee Act Cap
167 – states that: Trust does not include the duties incidents to an estate conveyed by way of
mortgage but with this exception the expressions trust and trustee extend to implied or constructive
trusts and to cases where the trustee has a beneficial interest in the trust property and to the duties
incident to the office of a personal representative and Trustee where the context admits includes a
personal representative. Therefore to effectively define the term Trust one has to rely on
alternative authorities’ definition of the term.
Lord Coke’s Definition
Lord Coke defined a trust as “a confidence reposed in some other, not issuing out of the land but
as a thing collateral thereto, annexed in privity to the estate of the land, and to the person
touching the land, for which cestui que trust has no remedy but by subpoena in the Chancery.”

SIR ARTHUR UNDERHILL’S DEFINITION in Underhill and Hayton, Law of Trusts and
Trustees, described a trust as “an equitable obligation binding a person (who is called a trustee)
to deal with property over which he has control (which is called trust property), for the benefit of
persons (who are called beneficiaries or cestuis que trust) of whom he may himself be one and any
one of whom may enforce the obligation.

This is not satisfactory, for it is not wide enough to cover trusts for purposes rather than
persons. Trust for charitable purposes (e.g. for the repair of a church or the prevention of cruelty
to animals) may lack human beneficiaries and yet be valid as trusts and there may also be other
trusts which lack beneficiaries who can enforce them. Underhill’s definition does not cover

1
charitable trusts and trusts of imperfect obligation- such as a trust “for the maintenance and
support of my dog Tigger” – which is a valid trust but is a trust of imperfect obligation because
Tigger cannot enforce it.
Lewin’s Definition
Lewin on Trusts adopts a rather more comprehensive definition, which is based on a definition
given by Mayo J. in Re Scott. “the word ‘trust’ refers to the duty or aggregate accumulation
of obligations that rest upon a person described as trustee. The responsibilities are in relation
to property held by him, or under his control. That property he will be compelled by a court in its
equitable jurisdiction to administer in the manner lawfully prescribed by the trust instrument, or
where there be no specific provision written or oral, or to the extent that such provision is invalid
or lacking, in accordance with equitable principles. As a consequence the administration will be
in such a manner that the consequential benefits and advantages accrue, not to the trustee, but to
the persons called cestui que trust, or beneficiaries, if there be any; if not, for some purpose which
the law will recognise and enforce.”
This definition is an improvement on Underhill’s definition.
➢ Duties and obligations are clearly expressed;
➢ Trust Instrument;
➢ Beneficiaries do not have to be persons –purpose which takes care of charities etc. A trustee
may be a beneficiary, in which case advantages will accrue in his favour to the extent of his
beneficial interest.
Keeton in his book Keeton Law of Trust defines trust as “the relationship which arises whenever
a person called the trustee is compelled in equity to hold property for the benefit of some persons
or for some object in such a way that the real benefit of the property accrues not to the Trustee but
to the beneficiaries or other objects of the trust.
Definition in Hague Convention on Law of Trusts:
This has been incorporated into English Law by the UK Recognition of Trusts Act 1987 and
under Article 2 of that convention, a trust is defined as follows:-
For the purpose of this convention, the word ‘trust’ refers to the legal relationships created – inter
vivos or on death – by a person, the settlor, when assets have been placed under the control of a
trustee for the benefit of a beneficiary or for a specified purpose.

2
Characteristics of a trust
a) the assets constitute a separate fund and are not part of the trustee’s own estate;
b) title to the trust assets stands in the name of the trustee or in the name of another person on
behalf of the trustee;
c) The trustee has the power and duty, in respect of which he is accountable, to manage,
employ or dispose of the assets in accordance with the terms of the trust and the special
duties imposed upon him by law.
d) the trust can be created during the lifetime of the settlor or after his death.
The reservation by the settlor of certain rights and powers, and the fact that the trustee may himself
have rights as a beneficiary, are not necessarily inconsistent with the existence of a trust.
The characteristics of a trust;
Main elements of a trust
➢ Equity/equitable jurisdiction. It is a creature of equity rather than common law.
➢ There is an equitable obligation – an imperative duty.
➢ There is a trustee-beneficiary relationship.
➢ There is property constituting the subject matter.
➢ There is duality of ownership – the trust separates legal ownership of trust property from
its equitable or beneficial ownership.
THE CONCEPT OF “USE”
Historically the concept of Trust arose from the concept known as the use which originated around
1230 AD in Europe. Under this concept land could be held by one person or several persons on
behalf of another or others for a particular purpose or use in respect to persons who were under
common law allowed to own land. Uses with time became more common as conveyancing devices
often specifically to avoid common law restrictions. The difficulty was however that A had the
legal title while common law only recognised legal title and not the use. So although clearly B
was intended to enjoy the benefits of the property common law would not enforce his rights.

The Chancellor from about the year 1400 ensured that B did get this benefit by acting on the
conscience of A. A who retained the legal title became known as the feoffee to uses and B became
known as the cestui que use and was regarded as the equitable owner.

3
USES OF THE TRUST
Throughout its history, the trust has been used especially by lawyers as a device to circumvent
inconvenient rules of law. in medieval times a use which was the forerunner of the trust was
brought into existence as a result of a transfer of property by its owner to 3 rd parties to the use of
either of himself or some other beneficiaries especially where such other beneficiary was not
capable of owning property in law e.g. infants, religious associations etc.

Similarly from the 13th Century statutes referred to as Statutes of Mortmain imposed prohibitions
on gifts of land to corporations in an attempt to prevent land from being taken out of circulation
more or less permanently thereby depriving the feudal lords of their revenue. This statute was
trying to prevent land being given by way of gifts to corporations.

These statutes could often be avoided by taking advantage of a use. All that the owner needed to
do was to transfer his property to B for the use of C where C was corporation for the use of the
land. Before 1540 when the statute of Wales was enacted, it was not possible to leave freehold
land by will. However if a land owner wished to achieve the same result he could convey the land
during his lifetime to 3rd parties to the use of himself during the remainder of his life and thereafter
to the use of the intended beneficiaries. The result was that the land owner would continue to
derive the benefit from his land for as long as he lived and upon his death the intended beneficiaries
would automatically become entitled to the benefits.

The use was employed most frequently as a device to avoid feudal taxes. It was a medieval
equivalent of a tax avoidance scheme for example on the death of a person who held land, as a
tenant in Knight service an adult heir would have to pay the feudal lord a fixed sum before he
could claim his inheritance and a year’s profit of the land in question. Although after the year
1267 profits were only payable to the feudal lords in question or the king.

All these disadvantages could be avoided if before his death the tenant in Knight service conveyed
his land to 3rd parties to the use of himself during the remainder of his life and thereafter to the use
of his heir because the effect of uses was to deprive feudal lords in general and the King in
particular of a substantial proportion of the feudal revenues uses became very unpopular with the

4
 crown and the crown consequently attempted to abolish the advantages of the use by the enactment
of the Statute of Uses 1535.

The effect of the statutes was to execute the use by transferring the legal title from the 3 rd parties
who were known as Feoffee to uses to the beneficiary or the cestui que use or beneficiary thereby
making the beneficiary liable to pay the feudal taxes.

However the effect of this statute was short-lived and by the 18th century the use had returned
under the name of Trust. The device that the lawyers invented to circumvent the taxes was for A
to confer land to B for the use of C in trust for D so that the statute only had effect on the first use
but could not touch the second use which then became known as the trust.

In subsequent centuries the trust was used to tie up land or wealth for succeeding generations of a
family and to make provisions for dependants. It also had other purposes for example the common
law rule which was of general application that a married woman could not hold property in her
own right during her marriage could be circumvented by the device of the use of a trust. One could
vest property in trustees to hold upon trust for the married woman thereby circumventing the
rule. Likewise un-incorporated organisation such as clubs, societies, trade unions etcetera which
are not of themselves legal entities and therefore cannot hold real property would not have
developed as they have if it had not been possible for property to be held by trustees on their
behalf. The trust has also once again come to be used as a means of creating tax avoidance
schemes. The law does not proscribe avoidance it proscribes evasion.
The principal uses of a trust may be summarised as
(a) To enable property particularly real property to be held for persons who cannot themselves hold
it e.g. even though the legal title to land cannot be vested in an infant or a minor, there is no
objection to land being held in trust for the infant or minor;
(b) To enable a person to make provision for dependants privately, the most obvious examples are
provisions made a man for his mistress or illegitimate child; during the lifetime of the man there
is no problem but if the man were to provide for the mistress or illegitimate child through his will,
these circumstances are likely to leak out because once probate of the will has been obtained the

5
 will is a public document and is open to public inspection. On the other hand a trust deed in favour
of the mistress or illegitimate child escapes this publicity;
(c) To tie up property so that it can benefit persons in succession; an outright gift may be made to a
spouse in the hope that on their death that property will go to the children but there is no guarantee
that it will do so. The spouse could get married again and the property could get alienated. On
the other hand a gift to trustees to hold on trust for the spouse for life with the remainder to the
children will ensure that the children get the benefit;
(d) To protect family property from Wastrels, a person may feel that an outright gift or money or other
property to a surviving spouse or child will lead to its being squandered or wasted, a gift of that
money or transfer of that property to trustees to hold upon trust and to pay either the income
therefrom or only a limited proportion of the capital to the surviving spouse or child at given
intervals will probably prevent this;
(e) To make a gift to take effect in the future in the light of circumstances which have not yet arisen
and therefore are not yet known. A person may for instance have 3 young daughters and may by
will set up a trust whereby a sum of money is given to trustees for them to distribute among the
daughters either as they deem fit or having regard to stated factors and with that discretion the
trustees would be able for example in due course to give say one quarter of the fund each to two
of the daughters who have married well and the remaining one half to the other daughter who was
not so lucky.
Property that may be held in trust
The subject matter of a trust may be real or personal property. A trust may be not only a legal
interest but also an equitable interest in the property. In case of Lord Strathcona S.S. v Dominion
Coal Ltd . It was stated that “the scope of the trust recognized in equity is unlimited. There can be
a trust of a chattel or of a chose in action or of a right or obligation and an ordinary legal contract
just much as the trust for land. A ship owner might declare himself a trustee of his obligations
under a charter party.”
Classifications of trust
There are no hard and fast categories but the following classes may be convenient:
1. Express trust.
An express trust is one created by an express declaration of the person in whom the property is
vested. This could be under a will or by way of a trust deed or even under a document not under

6
 seal or orally. What matters is that there is intention and conduct creating the trust. An express
trust is also referred to as a declared trust.

2. Implied trust.
An implied trust arises from the presumed as opposed to the expressed intention of the owner of
the property. So for example if property is transferred to A to be held on certain trust which fail
there is a presumption that A hold the property in trust for the owner’s estate. Sometimes these are
also called presumptive trusts or resulting trusts.
3. Constructive trust.
This is a trust imposed by equity although it is neither the expressed nor the presumed intention of
the settlor or the testator or the owner of the property. Equity will impose such a trust when it
would an abuse of confidence to allow the holder of the property to use it for his own benefit.
See Keech v Standford (1726) where the trustee of leasehold property had used his position to
induce the landlord to renew the lease in his favour upon the determination of the initial term of
the lease. The court held that this was an attempt to obtain a personal advantage for himself which
was antagonistic to the beneficiary’s interest and in bad faith. He was directed to hold the new
lease on the trust under which he held the old lease. And this situation has also arisen in Kenya in
customary view of land trust: you cannot defeat the first title under LRA. But judges have gone
around this especially where the land involved was family land.
Trust may also be classified between private and public or charitable trusts.
A trust is said to be private if it is for the benefit of an individual or a class of individuals which
the law refers to as a defined but limited group of beneficiaries. By its nature it can be enforced by
the individual or individuals. It is private even though there may be some benefit conferred thereby
to the public at large.
On the other hand a public trust promotes the public welfare as an object and is public even if it
incidentally confers a benefit on an individual or class of individuals. The public trust is only
enforceable by the Attorney-General or an officer appoint by him for that purpose or by two or
more persons who can show that they have interest in the trust with the express consent of the
Attorney-General.
Trust of imperfect obligation

7
A trust not enforceable by a beneficiary or on the beneficiary’s behalf is called a trust of imperfect
obligation. The courts are rather reluctant to uphold such trusts, e.g. a trust to take care of my dog
Simba. But some have been enforced such as a trust to take care of a tomb. There have been
borderline cases that the courts have upheld but refused to follow as precedent, e.g. a trust to
enhance grounds for hunting
Trust of perfect obligation
In the case of perfect obligation the objects are specific and capable of enforcing the trust
Express Private Trust
Who has the capacity to create an express private trust? If a person a power of dispossession over
a particular type of property he can create a trust of that property. He must be of age and of sound
mind and a trust will be set aside if it can be show that the settlor did not understand the nature of
his act. The burden of proof will normally lie with the person seeking to set aside the trust but
where there is a long history of mental illness the burden is easily discharged and it is then for the
other side to prove that the trust was made during a lucid interval. See the case of Cleare v
Cleare (1869) 1 P & D 655.

There are the so-called the three certainties of a private trust. In the case of Knight v
Knight (1840) Vol 49 ER 58. In that case Lord Langdale set 3 certainties that are required for
creation of a trust:

a) the words used must be so phrased that taken as a whole they may be deemed to be imperative.
b) the subject matter of the trust must be certain
c) the persons or objects intended to be benefited must also be certain.
Certainty of words or intention
Equity applies the maxim that equity looks to the intent rather than to the form and therefore no
particular form is necessary for the creation of a trust but the intent must be manifest from the
document or the circumstances. Therefore even precatory words can rise to a trust if it can be
shown from the construction of the document that a trust was intended. It is all a matter of
construction for the court looking at the entire document to ascertain whether a trust was intended
or not. In the case of

8
Re Hamilton (1895) 2 Ch 370, 373. It was said of a will: “You must take the will which you have
to construe and see what it means and if you come to the conclusion that no trust was intended you
say so although previous judges have said the contrary on some wills more or less similar to the
one you have to construe.”
The trend would seem to be to negative such an intention where such words occur but each case
depends on its particular set of circumstances. In Re Adams & Kensington Vestry (1884) 27 Ch.
D 394 where a testator had given all his real and personal estate to his wife “in full confidence that
she would do what was right as to the disposal thereof between my children”. It was held that
under these words the widow took an absolute interest in the property unfettered by any trust in
favour of the children. The judge also observed that some case had gone very far and unjustifiably
imposed upon words a meaning beyond that which they would bear if looked at alone.

What is meant by certainty of words is certainty of intention to create a trust appearing from the
words in the document. In the case of Re Diggles (Gregory v. Edmonson (1888) 39 Ch.D 253 a
testatrix Maryanne Diggles had made a will dated 4th August 1868 in the following terms “I give
device and bequeath all my real and personal property and effects unto my daughter Frances
Edmonson her heirs and assigns and it is my desire that she allows to my relatives and companion
Anne Gregory now residing with me an annuity of 25 sterling pounds during her life and that the
said Anne Gregory shall if she desire it have the use of such portions of my household furniture
linen etcetera as may not be required by my daughter Frances Edmonson…” Under this will the
daughter and her husband Alfred had been appointed as executrix and executor of the will. They
continued paying annuity to Anne for a number of years and then stopped. She filed a suit for
payment of arrears and a decision that they held the Estate subject to a trust in her favour. The
question was whether under these words there was any trust created in favour of Anne Gregory
and the Court of Appeal held that no trust or obligation to pay the annuity was imposed upon the
daughter but that there was only a request to the daughter not binding on her in law to make that
provision for Anne Gregory.

No trust was created either in Lambe V. Eames (1871) E.R. Ch. App 57 using the words “have
confidence” and in Re Williams (1897) 2 Ch. 12 by the use of the words “fullest, trust and

9
confidence” and neither was such trust created in Re Connoly (1910) 1 Ch. D 219 by the words
“specially desire”

On the other hand in the case of Comiskey V. Bowring –Hanbury (1905) A.C. 84 The testator gave
all his property to his wife “absolutely in full confidence that she will make such use of it as I
would have made myself and that at her death she will device it to such one or more of my nieces
as she may think fit.” The House of Lords held that on a true construction of the whole will the
words in full confidence created a trust.
CERTAINTY OF SUBJECT MATTER:
There are two limbs to this rule that the subject matter be certain:
i) The trust property or trust fund must be certain, it is uncertain to say for example “the
bulk of my residuary estate”
ii) The actual interest that the beneficiaries are to have must also be certain.
The maxims of equity will in certain cases come in to remedy the defects. Equity is equality,
equality is equity. Equity tries to save a trust by finding a way to cure the uncertainty so where
the maxim is applicable equity will apply equality is equity to divide in equal proportions. Note
that there is no uncertainty if the testator does not specify the exact interest but confers upon the
trustees a discretionary power to apply the trust fund or to pay it among a class of persons as they
think fit. The discretionary power provides the absolute certainty.

Even if part of the trust is uncertain a certain part is still good and in certain circumstances if the
uncertain part fails the entire interest will go to the persons entitled to the certain part of Curtis V.
Rippon (1820) 5 Madd. 434 where the testator had left all his property to his wife “trusting that
she would in fear of God and in love of the children committed to her care make such use of it as
should be for her own and their spiritual and temporal good remembering always according to
the circumstances the church of God and the poor”. The court held that the beneficial interest was
to be taken by unascertained beneficiary subject to the rights of others to unascertained portions
of it and the rights of these others therefore failed due to uncertainty and the ascertained beneficiary
took the entire interest.
In Re Kolb’s Wills Trusts (1962) Ch. 531 what was in issue in this case was the construction of an
investment clause in a will where the testator had referred to among other things investments in

10
Blue-Chip Securities. The term blue-chip securities is often used to denote shares in large public
companies thought to be entirely safe but is not a term of art and it lacks precision. The judge held
that the term depended essentially on the standard applied by the testator and should not be
regarded as an objective quality of the investment. If the testator had made his trustees the judges
of the standard to be applied, all would have been well but as he had not that part of the clause in
which the term was contained was void for uncertainty. Contrast this decision with the decision
in Re Golay’s Wills trust (1965) 1 WLR 969 and Claire v Claire

Certainty of objects
The question: who has locus standi or who stands to benefit. The test of certainty here is that the
objects be certain or be capable of being rendered certain. This test was restrictively interpreted in
the case of I.R.C v Broadway Cottages Trust, to require that the trustees should at any time be able
to make a full list of the beneficiaries an (1955) Ch 678 if the class was uncertainable at any time
the trust will fail for uncertainty.

with regard to trust powers in favour of a discretionary class of objects. This test was later
discarded by the House of Lords. In the case of McPhail v Doulton (1971) AC 424 and a new test
identical to that used in Powers was formulated which is whether it can be said of any given person
that he or she is or is not a member of the class. There has been arguments that this new test should
also apply to fixed trusts and not only to discretionary trusts but the issue has not finally be
determined.
There is an important exception to the rule that the objects be certain and this is the charitable trust
where provided that a paramount general intention of charity is manifested certainty is charitable
trusts is not essential to the validity of the trust.
The effect of uncertainty is as follows:
a) with respect to certainty of word or intention if an intention to create a trust cannot be
derived the words used in the instrument the alleged trustee will take the property
beneficiary.
b) if it is the subject matter that is uncertain the transaction will fail “in limine” or from the
threshold. In such circumstances there is nothing certain on which the trust can fasten. If it
is the beneficial interest which is to be taken by the beneficiaries which is uncertain there

11
 is may a trustee in favour of the settlor or rep if he dead. Ort in certain cases in favour
of the residual legatee is there is one. There may also be cases where p-art of the trust is
certain in which case the uncertain parts may go to the person entitled to the certain parts.
Sometimes the maxim of equity will be applied to divide equally.
c) if it is the objects that are uncertain with the exception of the charitable trust there will be
a resulting trust either in favour of the settlor, his estate if he is dead, or in favour of the
residuary legatee.
Secret trust
These usually arise where a person wishes to make provision for another but does not want the
whole world to known about it. When a person dies his will become open to public inspection and
secret trusts are used to avoid this public scrutiny and sometimes this is because the testator
mistress or illegitimate children. The doctrine of secret trust was originally based on equity’s
maxim that equity will not allow a statute to be used as a cloak or engine of fraud. The statute
referred to in this maxim was the Wills Act 1837, which was a statute of general application. Under
section 9 of that act (equivalent to section 160) no will shall be valid unless
a) it is in writing and signed by testator or by some other person in his presence or by his direction
b) it appears that the testator intended by his signature to give effect to the will
c) the signature is made or acknowledged by the testator in the presence of two or more witnesses
each witness either (1) attests and signs the will or (2) acknowledges his signature in the
presence of the testator.
A will executed without these formalities is void and this applies to both inequitable interest as
well as a legal estate disposed of by the will.

The doctrine of secret trust applies in that the details of the trust or the very existence of the trust
is not disclosed in the will. And the doctrine applies as follows:
If a testator makes a provision of a gift in his will to a trustee therein named on the strength of a
promise that the recipient will hold that property on trust for a third party, equity will prevent any
attempt by the recipient to rely on the absence of any mention of the trust in the will and to claim
the property for himself, despite the testator’s failure to comply with section 9. an equitable
obligation communicated to the trustee during the testator’s lifetime, which obligation the trustee

12
has expressly or by implication accepted. The doctrine of secret trust therefore operates outside
the provisions of the The Wills Act or the Law of Succession Act.
In Blackwell v Blackwell (1929) AC 318, 335, it was stated by Viscount Summer “ For the
prevention of fraud equity fastens on the conscience of the legatee a trust which otherwise would
be inoperative. In other words it makes him do what the will has nothing to do with. It lets him
take what the will gives him and then makes him apply it as the court of conscience directs and it
does so in order to give effect to the wishes of the testator which would not otherwise be effectual.”

The basis of the secret trust is therefore the existence of a validly executed will which passes the
title of property to the intended trustee and the acceptance by the trustee of an equitable obligation
during the testator’s lifetime This is illustrated in the case of Re Young (1951). Ch 344. Here one
of the intended beneficiaries under a secret trust had witnessed the will and the question was
whether he forfeited his legacy under section 15 of the Wills Act which provides that a witness to
a will cannot take a benefit under it (S 13 (2) of the Law of Succession Act. The judge held that
there was no forfeiture because the whole theory of the formation of a secret trust was that the act
had nothing to with the matter. He went on to say that the forms required by the Wills Act were to
be entirely disregarded because the beneficiary did not take by virtue of a gift in the will but by
virtue of a secret trust imposed on an apparent beneficiary who did not take under the will and who
was bounded by the trust.
Secret Trust- will classified into full and half secret trust.
A full secret
A full secret trust, which are completely concealed by the testator in his will. On the face of the
will, the alleged trustee takes absolutely. If property is given by will to x absolutely and a
communication is made to x by the testator during his lifetime that x is to hold the property on
specified trusts and provided also that x accepts the trust, a fully secret TRUST which is
enforceable at equity will come into being. In the case of Ottaway v Norman (1972) Ch 698 the
judge stated the essential requirements of a secret trust as follow
a) The intention of the testator to subject the primary donee to an obligation in favour of a
secondary donee
b) the communication of that intention to the primary donee

13
 c) The acceptance of that obligation by the primary donee either expressly or by acquiesce.
Evidence oral or written is admissible to show the terms of a trust. And in the case of
Ottaway it was stated that clear evidence is needed before court will assume that the testator
did not means what he said but intended that the gift should be held by the beneficiary
subject to a secret trust.

The doctrine of fully secret trust has a rather long history and its basis was established as long ago
as 18th century. Thus in the case of Drakeford v Wilks (1737) the t. had bequeathed a bond to the
plaintiff. She was thereafter induced to make a new will by which she bequeathed the same bond
to a third party on the strength of a promise by the third party that upon his death the bond would
go to the plaintiff and it was held on those facts that the plaintiff could compel the performance of
the trust
It is essential to show that the testator did in fact communicate the trust during his lifetime to the
legatee and that the latter explicitly or impliedly accepted it. If the legatee only hears about the
trust after the testator’s death the secret trust will fail and the legatee will take absolutely. [Legatee-
one who is named in a will to take personal property; one who has received a legacy or bequest;
loosely, one to whom a devise of real property is given]

The communication of the trust and its acceptance may take place either before or after the date of
the Will provided that it takes place during the lifetime of the testator.

If the fully secret trust is accepted by the trustee but the objects of the trust are not communicated
during the lifetime of the testator the trust will not take effect but in such a situation the legatee
will not take absolutely and there will be a resulting trust in favour of the testator’s estate or in
favour of the residuary legatee if there is one.

In the case of Re Boyes (1884) 26 Ch D 531, the testator had made an absolute gift of property to
his executor. The testator had previously told the executor that he wished him to hold the property
according to directions which he would communicate by letter and the executor had agreed to this
arrangement. However, these directions were not communicated by the testator but after his death
two unwitnessed documents were found in which the testator stated that he wished a particular

14
person to have the property and on those facts it was held that the secret trust failed and the executor
held the property for the testator’s next of kin as there was no gift of residual.

Communication and acceptance of the trust may be effected constructively and in that case in Re
Boyes the judged expressed the view that a trust put in writing and placed in the trustee’s hands in
a sealed envelope would constitute communication and acceptance at the date of delivery for that
purpose. This view was accepted by the court of appeal in the case of Re Keen (1937) Ch
236 which was a case of half secret trust.

It is required that the property that forms the subject matter of the intended trust be certain which
is a rule that applies generally in the law of trust.

Half secret trust

These arise where the trustee on the face of the will takes as trustee but the terms of the trust are
not specified. For example, if property is given to a person for purposes which I have
communicated to him or for purposes which he is aware of a half secret trust will arise. It is clearly
established that evidence cannot be adduced to contradict the express terms of the will, therefore
if the will points to a future communication, for example, to my trustees for purposes which I will
communicate to them evidence cannot be admitted of communication made before the will was
made. Similarly if the will points to a contemporaneous or past communication evidence cannot
be admitted of communication made after the execution of the will. You should note that as the
present state of the law stands future communications with respect to half secret trusts, whether or
not the will points to them, are not in any even admissible.

However where the communication of the trust is made before or at the same time as the execution
of the will evidence is admissible to show the terms of the trust and the trustee is bound by it. You
may refer to the case of Backwell v Blackwell (1929) A 318 for that proposition.

It has been argued that the principle governing communication made after the execution of will
yet prior to the testator’s death with respect to half secret trust cannot be justified and it would
appear that the courts have confused the doctrine of secret trust with the probate doctrine of

15
incorporation by reference. Section 12 sets out the probate doctrine of incorporation. It means that
it is possible to incorporate in a will a document which is not executed in accordance with —- in
our case-- the Law of the Succession Act but for the doctrine to apply the document must be in
existence at the date of the will and must be specifically referred to in the will. It is argued that this
rule of probate is concerned purely with the validity of the will itself and the documents to be
incorporated within it. The rule should not and does not relate to secret acts, which according to
the doctrine of secret trusts operates outside the will.
If a testator wishes to carry out his purpose by making a number of secret trusts piecemeal he must
inform the trustees in respect of every edition to the secret objects. Example in the case of Re Colin
Cooper (1939) Ch 811 in which a testator by will bequeathed 5,000 pounds sterling to two trustees
“upon trusts already communicated to them”. He had in fact communicated the nature of the trusts
to the trustees by a farther will he purported to increase the sum to be devoted to the secret trust to
10,000 pounds but did not inform the trustees. The result was that though the first install of 5,000
pounds could be devoted to the secret trust the second installment could not.
Charitable Trusts
Charitable trusts or public trusts are distinguished from private trusts in that they are aimed to
benefit society at large or an appreciable portion of society. On the other hand a private trust is
aimed to benefit defined persons or defined classes of persons. In general charitable trust are
subject to the same rules as private trusts. However, because of their public nature they enjoy a
number of advantages which are not shared by private trusts:
a) They are restricted to the rule against perpetuity.
b) They enjoy income tax exemptions over their investment incomes
c) They will not fail for uncertainty of objects if they are exclusively charitable and there is a
paramount general intention of charity.
Through case law three requirements have emerged for the creation of charitable trusts:
➢ They must be of charitable nature
➢ They must be for the public benefit
➢ They must be exclusively charitable
Charitable nature
The definition of charity adopted by the courts has been drawn from the preamble of the Statutes
of Elizabeth 1601, 43 Eliz 1 .4. In this preamble a list of charitable objects was set out as follows:

16
“The relief of aged, impotent and poor people, the maintenance of sick and maimed soldiers and
marines, schools of learning, free schools and schools in universities, the repair of bridges, ports,
havens causeways, churches, sea banks and highways, the education and preferment of orphans,
the relief of stock or maintenance for houses of correction, the marriage of poor maids, the support,
aid and help of young tradesmen, handicraftsmen, and persons decayed, the relief or redemption
of prisoners or captives and the aid or care of any poor inhabitants concerning payment of fifteens,
setting out of soldiers and other taxes.”
The statute was repealed in 1888 by the Mortmain and Charitable Uses Act 188 but the preamble
was repeated under section 13(2) of the 1888 Act. The 1888 Act was also repealed in its entirely
by the Charities Act of 1960 but the preamble remains a guide to the courts as to the legal meaning
of charity.
The spirit of the preamble has been used extensively to extend charitable objects by analogy into
new situations. The continued relevance of the preamble was affirmed in the case of Scottish
Burial Reform and Cremation Society v Glasgow City Corporation (1968) AC 138 in which
cremation was held to be a charitable purpose. Lord Wilberforce in that case stated: “What must
be regarded is not the wording of the preamble but the effect of decisions given by the courts as to
its scope, decisions which have endeavoured to keep the law as to charities moving according as
new social needs arise or old ones become obsolete or satisfied.”
Likewise in the case of the Incorporated Council for Law Reporting for England and Wales v
Attorney General (1972) Ch 73. The Court of Appeal in affirming the charitable status of the
council specifically held that the publication or dissemination of law reports was a purpose
beneficial to the community being within the spirit and intendments of the preamble to the Statutes
of Elizabeth. And in the case of Re Pemsel (1891) AC 531 Lord MacNaghten stated at page 583
as follows:
“Charity in its legal sense comprises four principal divisions:
➢ Trusts for the relief of poverty
➢ Trusts for the advancement of education
➢ Trusts for the advancement of religion
➢ Trusts for other purposes beneficial to the community not following under any of the preceding
heads.

17
The trusts last referred to are not less charitable in the eyes of the law because incidentally they benefit
the rich as well as the poor and indeed every charity that deserves the name must do so either directly
or indirectly.”
For a trust to be termed charitable it must benefit or be intended to benefit the public at large. In Re
Horbourn Air Raid Distress Fund [1946] Ch. 194 an emergency fund which had been built up during
the war had been used partly for comforts for ex-employees serving in the forces and later for
employees who had suffered distress from the air raids. An application was made to court with respect
to surplus funds arising from this fund and it was held that because of the absence of a public element
no charitable trust had been created and the surplus funds should be returned to the contributors.
In the case of Oppenheim V. Tobacco Securities Trust Co Ltd [1951] A.C. 297 Trustees had been
directed under a settlement to apply monies in providing for the education of children of employees or
ex-employees of BAT or any of its subsidiaries or allied companies. The employees numbered over
110,000. the question was whether or not the settlement was a charitable trust. The House of Lords
held that although the group of persons indicated was numerous, the nexus between them was
employment by a particular employer and it therefore followed that the Trust did not satisfy the test of
public benefit which was required to establish it as charitable.

In Re Compton [1945] Ch. 123 a trust for the education of the descendants of 3 named persons was
held not to be a charitable trust because the beneficiaries were identified by reference to a personal
relationship and it therefore lacked the quality of a public trust. It was a family trust and not one for
the benefit of a section of the public. Therefore an aggregate of individuals ascertained by reference
to some personal tie such as blood or contract for example the relations of a particular individual, the
members of a particular family or the members of a particular association does not amount to the public
or a section thereof for the purpose of the general rule and will not accordingly rank as legally
charitable.

18