Millar & Anor v Millar & Ors

The construction of a family trust deed follows the ordinary contextual approach used for contracts and wills. Where provisions are irreconcilable, the deed must be read as a whole and effect given to the provision that best reflects its coherent substantive scheme. A gift over to charity which is dependent on the failure of prior family interests does not take effect merely because an inconsistent exclusion clause purports to prevent those interests arising. A drafting error may alternatively justify rectification where the settlors’ specific intention, the flaw in the instrument and an issue capable of litigation are established by convincing evidence.

The claimants, who were settlors and trustees of a family settlement, sought construction or rectification of clause 13. That clause purported to prevent any trust property benefiting the settlors or their spouses, but appeared inconsistent with clauses 4.2 and 5, which reserved interests to the settlors and included them among the objects of a power of appointment.

The defendants, including the Attorney-General representing the charitable default beneficiaries, did not contest the claim. The claim was determined on the papers. The issues were whether clause 13 should be disregarded on construction and, alternatively, whether the deed should be rectified.

1. Construction. The principles applicable to commercial documents, including the contextual approach described in Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896, apply to family trust deeds. Subjective intention is excluded from construction, although the document must be interpreted in its factual and documentary context (paras [16]–[23]).
2. Clauses 4.2 and 13 could not sensibly stand together. Clause 4.2 reserved interests to the settlors, whereas clause 13 purported to remove them. The deed, read as a whole, showed that the settlors intended to retain those interests. Clause 13 therefore yielded to clause 4.2 and was to be disregarded (paras [23]–[29]).
3. The charitable gift over in clause 6 was dependent and expectant on the prior family trusts. It did not take effect merely because clause 13 purported to prevent clause 4.2 operating. Otherwise the settlors would obtain substantially the same property through a resulting trust, making it perverse to give clause 13 effect (paras [25]–[29]).
4. The same reasoning applied to clause 5. Clause 13 therefore did not prevent the power of appointment being exercised in favour of the settlors. The court declared that clause 13 was of no effect and that clauses 4.2 and 5 had full effect in their favour (para [36]).
5. Rectification. Alternatively, the evidence established the settlors’ specific intention to retain the property, a drafting flaw caused by the inclusion of clause 13, and an issue capable of litigation despite the parties’ consent. The conditions for rectification identified in Giles v Royal National Institute for the Blind [2014] EWHC 1373 were satisfied. Rectification would have been ordered if construction had not resolved the matter (paras [30]–[35]).
6. The court noted that possible future spouses and children were not bound because no representation orders had been sought. The Perpetuities and Accumulations Act 1964, section 2, did not assist because no question under the rule against perpetuities arose in the claim (paras [9]–[13]).

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