Re Cook's Settlement Trusts [1965] Ch 902

Facts

• The case concerned a covenant by a settlor promising to settle after-acquired property into a trust.
• The issue arose when determining whether the covenant was enforceable against the settlor’s estate after the settlor’s death.
• The court examined the nature of the covenant, whether consideration had been provided, and the remedies potentially available to the trust beneficiaries.
• Trustees’ actions and the rights of beneficiaries with respect to trust administration and the enforcement of covenants were considered.

Issues

1. Whether a covenant to settle after-acquired property could be enforced against the settlor’s estate upon death.
2. Whether the covenant, being voluntary and possibly unsupported by consideration, was legally valid and enforceable.
3. What equitable remedies, if any, were available to beneficiaries in respect of such a covenant.
4. How the specificity and clarity of the covenant affected its enforceability.
5. What obligations and powers trustees have in enforcing covenants dependent on their legal validity.

Decision

• The court held that a voluntary covenant unsupported by consideration could not be enforced at common law.
• Equity may enforce such a covenant only if there is clear evidence of the settlor’s intent to create a binding obligation and if the beneficiaries have a legitimate expectation to the property.
• The court found that the covenant in question was voluntary and lacked consideration; therefore, specific performance was unavailable.
• The doctrine of proprietary estoppel was considered but not applied, as the beneficiaries did not show sufficient reliance on the covenant.
• The court stressed the necessity for specificity in covenants concerning after-acquired property to avoid unenforceability due to uncertainty.
• Trustees could not enforce the covenant unless it was legally valid.

Legal Principles

• Voluntary covenants, in the absence of consideration, are generally not enforceable at common law.
• Equity may enforce voluntary covenants if there is compelling evidence of intent and reliance by beneficiaries.
• Specific performance requires that covenants be supported by consideration and that damages are inadequate.
• Proprietary estoppel may apply when there is detrimental reliance, but this standard was not met in the present case.
• Trustees’ fiduciary duties do not extend to enforcing covenants lacking legal validity.
• The importance of clear drafting and documented intent is emphasized for enforceability.

Conclusion

Re Cook's Settlement Trusts [1965] Ch 902 clarified that voluntary covenants to settle after-acquired property are not enforceable without consideration or clear reliance, and equitable remedies are limited; the case highlights the importance of specificity, intent, and consideration in trust covenants.