MacKay v Wesley

A person’s acceptance of appointment as trustee is a unilateral act capable of being set aside for undue influence. The appointment process does not take effect without the intended trustee’s knowledge and consent, since trusteeship carries immediate duties. Rescission may be granted for a self-contained and severable part of a non-contractual voluntary transaction. The court must also consider whether rescission would operate unjustly or unfairly on affected parties. The possibility that HMRC may lose a tax claim does not, without more, make rescission unfair.

The claimant appealed against the decision of Deputy Master Henderson dated 18 May 2020. She sought to set aside her acceptance of appointment as a trustee under a deed of appointment and retirement relating to a family settlement. The appointment had exposed her to a substantial potential tax liability.

The Master rejected claims based on non est factum, incapacity, mistake and undue influence, and held that rescission would not be just and fair. On appeal, the claimant pursued mistake, undue influence and fairness. She amended her case to clarify that she sought rescission of her own acceptance, rather than an act of the outgoing trustees.

1. Appeal allowed. The claimant’s acceptance of appointment as trustee was rescinded for undue influence.
2. The court rejected the unilateral-act objection. Section 36 of the Trustee Act 1925 was neutral as to the effect of appointment before acceptance. Appointment as trustee was distinct from transfer of trust property, and acceptance was effective immediately. A person could not have the duties of trusteeship imposed without knowledge and consent. The claimant’s acceptance was therefore a unilateral act capable of being set aside.
3. The authorities concerning disclaimer, gifts and acceptance did not establish that rescission was unavailable. Mallott v Wilson [1903] 2 Ch 494 did not decide the precise status of an intended trustee before disclaimer. Ong v Ping [2015] EWHC 1742 (Ch) supported the distinction between acceptance of trusteeship and transfer of trust property. Scott v Bridge [2020] EWHC 3116 (Ch) supported the requirement for consent in relation to gifts. Evans v John (1841) 4 Beav. 35 illustrated the significance of acceptance to trustee liability.
4. Partial rescission was available. The restriction against partial rescission of a contract prevents the court imposing a new contractual bargain. It does not prevent rescission of a self-contained and severable part of a non-contractual voluntary transaction. The claimant’s acceptance was separately identified in the deed, and removing it left the remaining provisions operative and intelligible.
5. Rescission would operate fairly. The defendant had exerted the undue influence and would not be unfairly prejudiced. The dissolved status of Browne Jacobson Trustees Ltd and the absence of any asserted contribution claim meant that the potential impact on it and its creditors did not justify refusing relief. HMRC’s possible loss of a tax claim did not make rescission unfair.

• High Court (Chancery Division): Appeal from Deputy Master Henderson’s decision of 18 May 2020. Permission to appeal was granted by Trower J on 20 July 2020. The appeal was allowed and rescission ordered.