The law on secret trust – Secret trusts enable a testator to direct the disposition of his or her property upon his or her death without specifying the actual beneficiary in the will whereby the property is bequeathed to a ‘legatee’ who holds it as a trustee for the secret beneficiary – Establishing the existence of secret trust – Recognition of the doctrine of secret trust in Malaysia

Chin Jhin Thien & Anor v Chin Huat Yean @ Chin Chun Yean & Anor
[2020] 1 LNS 662, Federal Court

see the grounds of judgment here

Facts The deceased had three wives, but only the marriage between the deceased and the first wife was registered. The appellants are the deceased’s children from his first wife marriage and the first respondent is the elder brother of the deceased and the second respondent is the son of the former, and nephew of the deceased (the ‘respondents’). The deceased had four children with the second wife, of whom two were still studying when the deceased died, and the youngest was still a minor at the time. The deceased was diagnosed with fourth stage renal cancer/ terminal cancer and the family conflicts arise from the will made by the deceased six days before his death, which the deceased gave all his assets and properties to the defendants. The defendants later obtained the grant of probate and consequently, the plaintiffs filed a civil suit at the Pulau Pinang High Court seeking to revoke the grant of probate, and declare the will to be void. The learned High Court Judge allowed the appellants’ claim, revoked the grant of probate issued to the defendants and declared the will to be invalid and that the deceased had died intestate. Being dissatisfied with the decision of the High Court, the respondents appealed to the Court of Appeal. The Court of Appeal allowed the appeal by the defendants and set aside the order of the High Court. Hence, this appeal.

Issue The main issue in this case was whether the concept of secret trust is applicable to Malaysia as there is no decision regarding the applicability of secret trust?

Held In dismissing the appeal, the Federal Court held that secret trust, as a creature of common law, operates outside the formalities of the Wills Act 1959. Nevertheless, a secret trust is a form of an inter vivos express trust in which the testator and trustee mutually agree to form a trust relationship for the lifetime of the testator. Once this is understood, one can also understand that secret trusts are enforced to promote the main policy principle behind the Wills Act 1959, to protect the testamentary freedom of testators.

ZUL RAFIQUE & partners
{30 July 2020}