Giles v The Royal National Institute for the Blind & Ors

Rectification of a unilateral instrument is a discretionary remedy exercised with caution. The claimant must provide convincing evidence of the specific intention which the document failed to express. The error must concern the instrument’s effect, rather than a mistaken belief about the fiscal consequences of an instrument that correctly records the intended transaction. The intended effect need not be proved in exact verbal form if it is established with sufficient precision. Although an actual dispute is unnecessary, the court must identify an issue capable of affecting the parties’ rights; rectification will not be granted solely to obtain a fiscal benefit where rights are otherwise unaffected.

The claimant, acting for the estates of two sisters, sought rectification under Part 8 of the CPR of a deed of variation executed after the death of Hilda Elsie Bolton. The deed redirected the residue of Hilda’s estate to four charities but failed to redirect a specific devise of property to her sister Ellen. The intended tax-saving arrangement therefore failed to produce the anticipated inheritance tax refund.

The charities and HMRC did not oppose the claim. The issues were whether the deed failed to record the claimant’s specific intention, whether the mistake concerned the deed’s effect rather than merely its tax consequences, and whether there was an issue capable of being contested despite the consent of the interested parties.

1. Relief granted. The deed of variation was rectified so that the specific devise of the property to Ellen was deleted, the residue was redirected to the four charities, and clerical errors were corrected. The claimant was ordered to pay the charities’ costs.
2. Rectification of a unilateral document is discretionary and must be approached cautiously. The claimant must establish, on the balance of probabilities and by convincing evidence, the true intention which the document failed to implement. It is insufficient merely to show that the document did not achieve the desired fiscal result.
3. The relevant distinction is between an error as to the effect or terms of the instrument and a mistaken belief about its fiscal consequences. Allnutt v Wilding [2007] EWCA Civ 412 illustrated the latter category, in which rectification was unavailable because the settlement had the intended legal effect even though its tax treatment was misunderstood. Here, the deed did not implement the intention to redirect the whole of Ellen’s entitlement under Hilda’s will.
4. The specific intended effect was proved with the required precision by the contemporaneous correspondence, the memoranda of appropriation and the claimant’s evidence. It was unnecessary to identify a single exclusive drafting route where the intended substantive effect was clear. The court accepted that deleting the specific devise was the appropriate means of giving effect to that intention.
5. An actual dispute between the parties is unnecessary. Nevertheless, there must be an issue capable of affecting their rights. The potential issues concerning the charities’ entitlement, the estates’ rights and possible negligence claims satisfied that requirement. The claim was not confined to securing a fiscal benefit because rectification affected substantive rights as well as inheritance tax.
6. The delay in seeking relief caused no significant prejudice and did not justify refusing the discretionary remedy.

First-instance decision. No prior appellate decision is stated in the judgment.