Strover & Anor v Strover & Anor

Rectification is unavailable where a trust instrument accurately records the parties’ intention at the time of execution, but the parties failed to consider a later contingency. Proprietary estoppel may nevertheless arise where a shared assumption causes detriment and makes it unconscionable for a party to insist on strict legal rights. The remedy is flexible and should reflect the equity arising from the combination of expectation, reliance and detriment. It may fulfil the expected benefit, subject to proportionality and the probabilities of corrective action. Partnership assets remain subject to accounting on dissolution and do not automatically become assets of a new partnership.

The claimants, personal representatives of David Strover, sought the proceeds of a life policy held on express trusts for the deceased’s former partners. The policy had been maintained after his retirement, with premiums debited to his partnership account. The claimants argued for rectification, resulting or constructive trusts, and estoppel-based relief. The defendants counterclaimed for proceeds of a second policy, asserting that it was a partnership asset or was held on express trusts for them. The central issues were the effect of the policy trusts, the consequences of the parties’ post-retirement common assumption, and the ownership and accounting treatment of the second policy.

1. FP Policy. The express trusts reflected the parties’ intention when made. The failure to consider what would happen on retirement was an omission, not a mistake in recording an agreed term. Rectification was therefore unavailable.
2. The alternative resulting and constructive trust arguments failed because there was no proven shared intention from the outset that retirement would give the deceased the beneficial interest.
3. After retirement, however, the parties shared the assumption that the deceased would benefit from the policy if he continued to bear its cost. His consent to the continued debiting of premiums caused detriment. It was therefore unconscionable for the defendants to assert their strict rights under the trusts. The appropriate analysis was proprietary estoppel rather than estoppel by convention.
4. The court could grant relief despite the absence of an amended pleading. The relevant factual allegations had been central to the existing case, the evidence had been fully explored, and the defendants had suffered no substantial forensic prejudice.
5. The equity was assessed by reference to the likelihood that the defendants would have reorganised the policies had the mistake been exposed. That likelihood was very high, but a 20 per cent discount was applied to reflect uncertainty.
6. GA Policy. The alleged express trusts were probably never created, or had been removed. Nevertheless, the partners had agreed to maintain the policies at partnership expense for the partnership’s benefit. The policy proceeds were therefore partnership assets to be brought into account in winding up the partnership between the deceased and the defendants; they did not automatically belong to the new partnership of the surviving partners.