Kennedy – English Chancery Division finds that there can be a partial rescission of a trust appointment on the grounds of equitable mistake

An English family trust would not have included a distribution of shares to the trust settlor (Mr Kennedy) in an "appointment" of trust property in favour of various beneficiaries, if the trust’s advisor had been aware that losses of the trust already had been used up. Following Pitt (also applied in Pallen), Sir Terence Etherton found that the clause of the appointment dealing with the distributions to Mr Kennedy could be rescinded on grounds of equitable mistake. In particular, he found that there could be partial rescission, so that the clauses of the appointment in favour of the other beneficiaries were not rescinded.

On the other hand, given the narrowness of the English doctrine of rectification, the particular clause for the distributions to Mr Kennedy (whose wording referred to the remainder of the trust fund) could not be rectified so as to exclude the shares and refer only to cash, rather than being rescinded in its entirety.

Neal Armstrong.  Summary of Kennedy & Ors v. Kennedy & Ors, [2015] BTC 2, [2014] EWHC 4129 under Rectification and Rescission.