The recent case of David Smithson & 7 Ors v David Hamilton (2007) could make it more difficult for a scheme’s trust deed and rules to be amended where mistakes have been identified in their drafting. The traditional method of amendment is the process of ‘rectification’, where a deed is changed to reflect the original intention of the trustees. In this case however the trustees sought to solve the problem by using a legal rule known as the Hastings-Bass principle, whereby the incorrectly drafted provision would be set aside entirely. The trustees undertook that if the provision was set aside, they would insert a new provision that reflected their original intention.
The judge in the case disagreed that the Hastings-Bass principle was applicable in such circumstances, saying that this would amount to ‘rectification by the back door’, but without the usual evidential safeguards that formed part of the rectification process.