The trustees of a discretionary settlement requested its rectification on the basis that the now deceased settlor’s solicitor had mistakenly not appreciated the need to confer interests in possession on the beneficiaries, with the consequence that the settlement had not given effect to the settlor’s underlying intention of making a potentially exempt transfer of funds in order to avoid paying Inheritance Tax. They now appealed against a refusal of rectification.
Held: The appeal failed. The lower court correctly rejected the rectification. The object of that remedy was to enable parties to correct mistakes in the way their transaction had been recorded, and not to enable them to change the substance of the transaction they had entered into. The settlor had executed the settlement he had intended to execute, and there was no operative mistake in the way that his intentions had been recorded; Rectification is about setting the record straight.
Mummery LJ discussed rectfication of a voluntary settlement, and described the availability of rectification: ‘This can be done by the court when, owing to a mistake in the drafting of the document, it fails to record the settlor’s true intentions. The mistake may, for example, consist of leaving out words that were intended to be put into the document, or putting in words that were not intended to be in the document or, through a misunderstanding by those involved about the meaning of the words or expressions that were used in the document. Mistakes of this kind have the effect that the document, as executed, is not a true record of the settlor’s intentions.’
Judges:
Mummery LJ
Citations:
[2007] EWCA Civ 412, [2007] WTLR 941, 9 ITELR 806
Links:
Jurisdiction:
England and Wales
Citing:
Cited – Gibbon v Mitchell ChD 1990
G executed a deed surrendering his life interest in a trust fund in order to vest the property in his two children: the deed did not have that effect because of two errors (one of which was ignoring the fact that his life interest was subject to . .
Cited by:
Cited – Oun v Ahmad ChD 19-Mar-2008
The parties agreed in writing for the sale of leasehold property to the claimant. One document had been signed, but later one said that it had not included an aportionment. Another document then set out the apportionment. When the defendant refused . .
Cited – Fender (Administrator of FG Collier and Sons Ltd) v National Westminster Bank Plc ChD 26-Sep-2008
The administrator sought declarations as to whether to treat the bank as a secured or unsecured creditor.
Held: The court directed the Administrator to recognise the Bank as a secured creditor, as if the Deed of Release had never been . .
Cited – Ashcroft v Barnsdale and Others ChD 30-Jul-2010
The parties sought to rectify a deed of family arrangement varying a will. The variation deed had had several mistakes which in fact increased the sum of Inheritance Tax owed. HMRC refused to accept the rectification deed unless approved by the . .
Lists of cited by and citing cases may be incomplete.
Equity
Updated: 27 January 2022; Ref: scu.251766