Price v Saundry & Ors (Rev 1)

Rectification of a formally executed trust deed requires convincing evidence that the document wrongly recorded the relevant intention. The applicable intention depends on the character of the instrument. For a voluntary instrument, the settlor’s intention is relevant; for an instrument made for consideration, the continuing common intention of those providing consideration, objectively expressed, is relevant. The court must assess the unrectified document when determining which category applies and cannot assume the proposed rectification. Later conduct may illuminate earlier intention, but a later change of mind does not establish an earlier mistake. Where the evidence does not prove that the trust terms were wrongly recorded, rectification fails.

The claimant and the first defendant disputed whether 7 Linwell Close was subject to two trust deeds dated 19 October 2006 and 6 July 2009. The defendant, as executrix and trustee, amended her acknowledgement of service during a Part 8 claim to seek rectification by removing references to that property. She relied on alleged mistake, including a later deed in 2013 in which the property was crossed out, later correspondence, and other conduct. The claimant opposed rectification and relied on the terms of the executed deeds and the surrounding evidence. The central issues were whether the deeds were voluntary instruments or instruments for consideration, what intention was legally relevant, and whether mistake had been proved.

1. Rectification standard. The defendant bore the burden of showing that the formal trust deeds wrongly recorded the parties’ intention. Although the standard remained the balance of probabilities, strong and convincing evidence was required to overcome the presumption that parties intend to be bound by a professionally drafted document which they have signed. The court relied on (1784) 1 Bro CC 338, [1970] 2 QB 86 and [1981] 1 WLR 505.
2. Relevant intention. A voluntary instrument is assessed by reference to the intention of the person whose bounty created it. An instrument for consideration requires the continuing common intention of those who provided consideration, contained in an outward expression of accord. The recitals in the deeds were operative, at least by estoppel, in showing that the trusts were settlements for value. In any event, the underlying business arrangement showed that consideration had been given.
3. The court had to examine the unrectified documents when determining the applicable rectification test. It could not assume that the proposed removal of the property was effective in order to establish that the instruments were voluntary.
4. On the evidence, the inclusion of 7 Linwell Close was not shown to be a mistake in either deed. The close proximity of the property reference to the settlor’s signature in the 2006 deed, his professional familiarity with legal documents, and his execution of a differently formatted deed in 2009 strongly indicated that he intended the property to be included. The 2013 crossing-out showed a later intention only and could not itself alter the earlier trusts.
5. The claimant’s alleged affirmation defence did not need to be decided. Mortgage payments from trust funds were not unequivocal affirmation because they had other possible explanations. However, if a prima facie case had been established, the delay and loss of evidence would have made rectification too late as a matter of laches.
6. The application for rectification of both deeds was dismissed.