Rectification of mistakes

Wills v Gibbs [2007] All ER (D) 509 (Jul) confirms that the equitable remedy of rectification enables parties to a transaction to correct mistakes made in the way an intended transaction is recorded, but not to enable them to correct an unintended consequence of a transaction which was recorded correctly.

In Wills v Gibbs, a deed of variation omitted the statements required, under section 62(7) TCGA 1992 and section 142(2) IHTA 1984, which give effect to the transactions as if, for tax purposes, they had been made in the deceased's will. The transactions had not, therefore, been recorded in accordance with the parties' intentions and the court permitted the deed to be rectified.

Wills v Gibbbs can be contrasted with Allnutt v Wilding. Whilst both cases involved an unexpected exposure to tax, rectification was granted in Wills v Gibbs because the exposure arose as a result of a mistake in the manner in which the transaction had been recorded, whereas rectification was refused in Allnutt v Wilding because there had been no error in the documentation (the error, instead, being in a misunderstanding over the tax treatment of the transaction itself).