Ware v Ware

Rectification of a trust instrument is available where the document fails to record the maker’s true intention, provided the intention is proved by convincing evidence, the document contains a drafting flaw, the intended result is identified with sufficient precision, and there is an issue capable of being contested.

A mistake about the legal effect of the instrument is sufficient. The claimant need not prove a separate positive intention not to produce every unintended consequence. Rectification is distinct from relief for a mistake merely as to fiscal consequences.

The claimant and defendant were trustees and beneficiaries of two will trusts. Deeds executed in 2005 gave the claimant life interests. In 2013, the trustees intended to add five cousins to the potential beneficiary classes, but the replacement deeds also terminated and re-appointed the claimant’s life interests.

The claimant sought rectification, alternatively rescission, under a Part 8 claim. The defendant supported the claim but advanced opposing arguments on behalf of represented beneficiaries. HMRC was notified but did not seek to be joined. The central issues were whether the 2013 Deeds failed to record the trustees’ true intention and whether the requirements for rectification were satisfied.

1. Rectification granted. The 2013 Deeds were rectified. It was unnecessary to consider rescission.
2. The relevant intention was that of the trustees as makers of the deeds. The witness evidence and contemporaneous correspondence established that they intended only to add beneficiaries and alter the default trusts taking effect after the claimant’s death. They did not intend to terminate or replace his existing life interests.
3. The deeds contained a flaw because they produced an unintended legal effect. This was not merely a mistake about the fiscal consequences of an intended transaction. The deeds altered the scope of the trust arrangements by terminating and re-appointing the claimant’s interests.
4. The requirements for rectification were satisfied: the true intention was established by convincing evidence; the written instruments failed to give effect to that intention; the specific intended change was sufficiently identified; and there was an issue capable of being contested.
5. The last requirement was met because it was necessary to determine whether the claimant’s and his future children’s interests arose under the 2005 Deeds or the 2013 Deeds. A change in the date of the governing trust document constituted a material contestable issue, even though all interested parties consented and the dispute had fiscal consequences.
6. The decision was distinguishable from Racal Group Services Ltd v Ashmore and Allnutt v Wilding. Those cases involved mistakes as to fiscal consequences without a mistake as to the legal effect intended. Here, the legal effect itself was unintended.

First-instance decision. No appeal history is stated in the judgment.