Legal principles and points:
- In McCormick v Grogan  LR 4 HL 82it was held that Secret trusts are only enabled to circumvent the legitimacy of a will under the Wills Act, when there is evidence that a fraud had occurred, or was likely to occur, on the basis that equity will not allow a statute as an instrument of fraud.
Facts of the case:
- S left his estate to T in his will, whom he later gave a letter containing instructions relating to the distribution of the property.
- The letter disclosed the names of S’s relatives and friends, however, instructed T to exercise ‘good judgement’ in distributing the estate in a way that S would have done.
- One of the beneficiaries of the will did not get anything, submitted that there was a secret trust, and that T was in breach of that trust.
Issues in McCormick v Grogan :
- The issue in this case was whether there was indeed a secret trust, or whether the parties are bound by the division of the properties in the way that T did.
The House of Lords held:
- The HL held that there was no secret trust on the facts. The presence of a secret trust, so as to circumvent the legitimacy of a will under the Wills Act, is only able to be determined where evidence has been adduced suggesting that fraud had occurred, or was likely to occur with respect to the will.
- S had not therefore intended to create a trust on T, but rather, merely intended to act ‘as a guide to T’
- “An Act of Parliament shall not be used as an instrument of fraud, but this doctrine must be restricted to clear cases of fraud since it deviates from the policy of Parliament in enacting the statute of frauds”
- “In the current case, the intention of the testator was that his instructions were simply to act as a guide to T and not to impose a trust”
- “When you look at this instrument, and see the mode in which it is framed in its several parts, beginning with something which certainly looks like express gifts, and then qualifying those gifts in the very extraordinary manner in which he does quality them afterwards, I think the letter itself, and all the circumstances attending it, lead to the conclusion that it was the full intention of the testator, uninduced by anything except that it was his own wish so to deal with his property, to give Mr. Grogan full and complete control over the property, and to leave the instructions simply as a guide which might assist him in the discretion which he would himself exercise.”
- “but it is absolutely necessary that it should be so, because it is a case where a right of property is claimed, and is sought to be enforced through the medium of fastening an imputation of fraud, for which there is no justification.”