This was an application by Fenchurch Trust Limited
('Fenchurch') for the rectification of a
deed of retirement and appointment of trustee of the Hawtry
Discretionary Trust (the
Lindmar Trust Company ('Lindmar') were
the original trustee of the Settlement whose proper law was
English. Lindmar was a Guernsey company. The Settlor wished to
utilise the power under the settlement to change the trustee to
Fenchurch but by mistake the deed of retirement and appointment was
expressed as if the Settlor and Lindmar were co-trustees and would
remain as such when Fenchurch was appointed. The error was not
realised until the Settlor indicated that she wished Fenchurch to
retire in favour of VTL Trust Limited. The reason why rectification
was sought was because having the Settlor as a trustee may have had
adverse tax consequences in the UK.
The Court had jurisdiction pursuant to Articles 5(b) and (d) of
the Trusts (Jersey) Law 1984 because Fenchurch was a Jersey company
and carried on the administration of the Settlement in Jersey.
Test For Rectification
The test for rectification is well established as follows:
the Court has to be satisfied by sufficient evidence that a
genuine mistake has been made to the extend that the document does
not carry out the true intention of the parties;
there has to be full and frank disclosure; and
there has to be no other practical remedy.
The remedy of rectification remains a discretionary remedy. In
this case the Court was satisfied by the evidence that the deed as
executed did not carry out the true intention of the parties; that
there had been full and frank disclosure; and that there was no
other practical remedy.
The Court was satisfied that, in its discretion, it should grant
the remedy of rectification, with effect from the date of the deed.
The Court noted that "very properly" Fenchurch and the
original trustee had agreed not to seek payment of their costs out
of the trust fund.
Even though in this case the order sought was granted, the
success of an application for rectification depends on the quality
of the evidence that is able to be provided to the court. Trustees
need to be able to show through substantive evidence that the 3
requirements for rectification are satisfied for an application to
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about your specific circumstances.
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