The claimants were interested under a pension scheme. Alterations had been made, which the said had been in error, and they sought rectification to remove a link between early leaver benefits and incapacity benefits. The defendant trustees agreed that there had been a mistake, but chose not to correct it. The potential cost to the Scheme of such an increase in early leaver benefits would be enormous.
Held: When one is considering the intentions of a collective body such as a group of trustees it is their collective intention which is relevant. It would be a very odd case if that collective intention were not objectively manifested. The claimant had failed to show convincingly a continuing common intention by the Trustees to affect only incapacity benefits. Nevertheless, the employees were affected by the mistake, that the rectification sought would be effective. Rectification was therefore granted. There is a wide equitable jurisdiction to relieve from the consequences of mistake, and the court would have decided that this would have been an appropriate case for setting aside NPI’s consent for mistake.
Lawrence Collins J described the rule that rectification is not available if the mistake relates only to the consequences of the transaction or the advantages to be gained by entering into it as: ‘simply a formula designed to ensure that the policy involved in equitable relief is effectuated to keep it within reasonable bounds and to ensure that it is not used simply when parties are mistaken about the commercial effects of their transactions or have second thoughts about them. The cases certainly establish that relief may be available if there is a mistake as to law or the legal consequences of an agreement or settlement . . ‘
Judges:
Mr Justice Lawrence Collins
Citations:
HC 001897, [2000] EWHC Ch 42, [2001] OPLR 197, [2001] Pens LR 77
Links:
Jurisdiction:
England and Wales
Citing:
Cited – Walker v Armstrong 1856
The court considered a request for rectification of a document. . .
Cited – Lackersteen v Lackersteen 1860
The court has power to rectify a settlement notwithstanding that it is a voluntary settlement and not the result of a bargain, such as an ante-nuptial marriage settlement. . .
Cited – Bonhote v Henderson 1895
The court refused to allow rectification of a voluntary settlement, since the mistake was demonstrated by a prior agreement. . .
Cited – Frederick E Rose (London) Limited v William H Pim Junior and Co Limited 1953
The plaintiffs, who were London merchants, had been asked by Egyptian buyers to supply ‘feveroles’. Not knowing what this term meant, they asked the defendants’ representative, who responded that ‘feveroles’ meant horsebeans. Relying on this . .
Cited – Behrens v Heilbut 1956
A voluntary settlement was rectified despite it not being a representation of a previously negotiated bargain. . .
Cited – Joscelyne v Nissen CA 1970
A father entered into a written contract with his daughter by which he transferred to her his car hire business in return for her agreement to pay him a pension and discharge certain expenses. In their discussions it had been agreed between them . .
Cited – Re Butlin’s Settlement Trusts 1976
Sir Billy Butlin had executed a voluntary settlement to allow a majority of trustees to exercise a power under the settlement. By a drafting error the settlement did not give effect to this intention.
Held: The court could rectify the . .
Cited – The Olympic Pride (Etablissements Georges et Paul Levy v Adderley Navigation Co Panama SA 1980
In the case of a bilateral transaction, there must be convincing proof that the concluded instrument does not represent the common intention of the parties to allow rectification. The policy reason for the need for convincing proof is that certainty . .
Cited – Thomas Bates and Sons Ltd v Wyndham’s Lingerie Ltd CA 21-Nov-1980
An application was made for rectification of a rent review clause in a lease. When executing the lease, the tenants’ officer, Mr Avon, noticed that the rent review clause in the lease drafted by the landlords was defective in not including a . .
Cited – Grand Metropolitan plc v Wm Hill Group Ltd 1997
The court considered the standard of evidence required to allow rectification of a document. . .
Cited – Lansing Linder Ltd v Alber ChD 2000
Pension scheme rules were amended varying the ages etc for retirement. The rules gave the company power to amend the rules with the consent of the Trustees. The original rules permitted early retirement on an immediate, but actuarially reduced, . .
Cited – Hanley v Pearson 1879
Rectification was ordered of a voluntary settlement on the uncontradicted affidavit evidence of the settlor without any need for objective manifestation of intention. . .
Cited – McDonald and Others v Horn and Others CA 8-Aug-1994
A court may make a pre-emptive award of costs to pension fund members who wished to sue the trustees. Hoffmann LJ said: ‘if one looks at the economic relationships involved, there does seem to me to be a compelling analogy between a minority . .
Cited – Lady Hood of Avalon v Mackinnon 1909
Lady Hood made an appointment in favour of her elder daughter, in order to place her in the same position as her younger daughter to whom she had already made large appointments. But in doing so she (and her solicitor) had forgotten that she had, . .
Cited – Whiteside v Whiteside CA 1950
The husband had executed a deed in favour of his former wife after dissolution of their marriage covenanting to pay a specified sum per annum free of income tax up to but not exceeding a stated amount. This provision was in substitution for one . .
Cited – In Re Pilkington’s Will Trusts; Pilkington v Inland Revenue Commissioners HL 8-Oct-1962
The trustees proposed establishing a new trust in respect of the share of an estate to which an infant beneficiary had a contingent entitlement. A portion of the trust fund would be allocated to the new trust.
Held: This was a lawful exercise . .
Cited – Re Earl of Coventry’s Indenture 1974
. .
Cited – Re Hastings-Bass; Hastings v Inland Revenue CA 14-Mar-1974
Trustees of a settlement had exercised their power of advancement under the section, in order to save estate duty by transferring investments to be held on the trusts of a later settlement. However the actual effect of the advancement was that the . .
Cited – Kerr v British Leyland (Staff Trustees) Ltd 26-Mar-1986
In confirming that trustees did not have an uncontrolled discretion to determine whether the incapacity of a beneficiary of the trust was permanent, the Court held ‘Now this is not a case of trust where the beneficiaries are simply volunteers. The . .
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 – Mettoy Pension Trustees v Evans ChD 1990
Where a trustee acts under a discretion given to him by the terms of the trust the court will interfere with his action if it is clear that he would not have so acted as he did had he not failed to take into account considerations which he ought to . .
Cited – Imperial Group Pension Trust Ltd v Imperial Tobacco Ltd 1991
A company pension scheme had been operating for many years, with increases being provided for under one rule. A new rule was introduced to provide regular increases. The company was taken over, and the trustees sought clarification of the company’s . .
Cited – Stannard v Fisons Pension Trust Limited CA 1991
Fisons had sold their fertiliser division to Norsk Hydro. Acting on advice of actuaries and thinking that the fund was in deficit, the trustees made a transfer to a new fund to provide for pensions of transferring employees in accordance with a . .
Cited – Breadner v Granville-Grossman ChD 2000
‘it cannot be right, whenever trustees do something which they later regret and think they ought not to have done, they can say they never did it in the first place’
It was not correct to suggest that whenever trustees do something which they . .
Cited – Green v Cobham ChD 19-Jan-2000
cw The Trustees had overlooked the fact that a Will Trust and two sub-settlements together constituted a single composite settlement for the purposes of CGT with a single body of trustees. As a result of his . .
Cited by:
Cited – Futter and Another v Futter and Others ChD 11-Mar-2010
Various family settlements had been created. The trustees wished to use the rule in Hastings-Bass to re-open decisions they had made after receiving incorrect advice.
Held: The deeds were set aside as void. The Rule in Hastings-Bass derives . .
Cited – FSHC Group Holdings Ltd v Glas Trust Corporation Ltd CA 31-Jul-2019
Rectification – Chartbrook not followed
Opportunity for an appellate court to clarify the correct test to apply in deciding whether the written terms of a contract may be rectified because of a common mistake.
Held: The appeal failed. The judge was right to conclude that an . .
Lists of cited by and citing cases may be incomplete.
Equity, Financial Services
Updated: 15 July 2022; Ref: scu.135647
