The Chancery Division recently ruled on this case, allowing the Claimant’s application as executrix of the late Deceased’s estate. The Court found that the Deceased had mistakenly executed a declaration of trust over his property in 2009, believing it to be a non-binding expression of his testamentary wishes rather than a legally binding trust disposition. This led to unintended consequences, including significant financial and property-related implications. Consequently, the Court rescinded the Trust on the grounds of mistake.
Facts
The Deceased executed a declaration of trust over a property in 2009, mistakenly believing it to be a simple expression of his wishes, rather than a formal legal document. While he intended for his children to eventually inherit the property, he did not intend to strip himself of ownership at that moment.
Several key issues arose:
- The Trust was drafted by a legal executive at the firm where the Deceased’s wife, the Claimant, worked. However, the Deceased was not provided with proper legal advice on its implications.
- The Deceased continued to treat the property as his own until his passing in 2021.
- A dispute over the Deceased’s Will led to the discovery of the 2009 Trust.
- The Claimant, both as executrix and in her personal capacity, sought rescission of the Trust on the ground of an equitable mistake. If the Trust remained valid, she would receive no provision from the Deceased’s estate for her living costs, aside from accommodation.
Legal principles
The case hinged on the doctrine of equitable mistake, with the Court referencing:
The claimant contended that the Deceased’s misunderstanding of the Trust’s effect was a serious mistake warranting rescission. Importantly, the Defendants—the Deceased’s children—did not oppose the application.
Court rationale
The Court concluded that the Deceased had made a fundamental mistake regarding the legal character and nature of the Trust. Believing it to be an informal declaration rather than a binding disposition, he unwittingly relinquished control over his property.
Given the serious and unintended consequences of this mistake, the Court ruled that it would be unconscionable to uphold the trust. The principles of equity dictated that the Trust should be rescinded.
Comment
In a significant ruling for trust law, the Court granted an order rescinding the Trust on the grounds of mistake. The case underscores the importance of receiving proper legal advice when executing trusts and the Courts’ willingness to intervene where fundamental errors have occurred.
This case highlights how equitable mistake remains a powerful doctrine, ensuring fairness when a party’s genuine misunderstanding of a legal document results in unintended and unjust consequences.
How can we help?
Amrik Basra is an Associate in our Private Litigation team.
At Nelsons, our team specialises in these types of disputes and includes members of The Association of Contentious Trust and Probate Specialists (ACTAPS). The team is also recommended by the independently researched publication, The Legal 500, as one of the top teams of specialists in the country.
If you have concerns about the above subject, don’t hesitate to get in touch with Amrik or a member of our expert Dispute Resolution team in Derby, Leicester, or Nottingham on 0800 024 1976 or via our online enquiry form.
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