JCW

[Secret Trust] This is the very first Federal Court decision on secret trust, a novel point of law argued by Justin and Chooi Peng who acted for the Defendants / Respondents. This case confirms that the law and principles of secret trust are part of the jurisprudence of Malaysian law and it applies where appropriate to ensure that the true intentions of the testator where there is a Will are carried out.   This case is an appeal by the Plaintiffs against the Court of Appeal decision, in their attempt to revoke the Grant of Probate issued to the Defendants. The Plaintiffs sought to argue that the deceased did not have the testamentary capacity to make the Will or there was undue influence exerted on the deceased by the Defendants. The deceased's Will named the Defendants as the executors and beneficiaries. The Defendants resisted the Plaintiffs' claim and in their Defence, pleaded that they are not the true beneficiaries of the deceased's estate because of a secret trust created by the deceased.     The Federal Court dismissed the Plaintiffs' appeal, maintained the Court of Appeal decision and answered the Leave Questions as follows :  (i)Whether the concept of secret trust is applicable to Malaysia as there is no decision regarding the applicability of secret trust? Affirmative (ii)Whether secret trust is applicable in a case involving the issue of testamentary capacity of a testator? Need not be answered but if must be answered, it would be in the Affirmative (iii)     Whether secret trust is contradictory to the Malaysian Wills Act 1959 and/or is against public policy as it can be abused? Negative   The Federal Court also amongst others held that : (a) 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.  (b) The concept of secret trust, which is part of the law of trust and is governed by the rules of equity and the common law of England, is statutorily applicable in Malaysia by virtue of Section 3 (1) of the Civil Law Act 1956. (c)Secret trust operates outside the will, ie. dehors the will. Therefore, the Court's endorsement of the secret trust does not breach the Wills Act or any other statutory law.   (d) If the testator is ill, it does not deprive his ability or capacity to execute a will.