Declarations of Trusts and Mistakes – the recent case of Sullivan v Sullivan EWHC 1072 (CH)

On 9 May 2025, the High Court of Justice (Chancery Division) handed down an important judgment concerning a claim for the setting aside of a declaration of trust on the grounds of mistake.

The Parties

The claim was brought by Susan Sullivan, the widow of Patrick Sullivan, who died on 1 June 2021. Susan brought the claim as both the executrix and beneficiary of Patrick’s Will. The first and second defendants (Stephen and David) are Patrick’s children from his former marriage to Priscilla Sullivan. The third and fourth defendants (Kerrie and Holly) are Susan and Patrick’s own children.

The Background

Patrick and Priscilla jointly owned 24 Stanley Road, Bromley, BR2 8JE (“the property”). Upon Priscilla’s death in 2008, Patrick inherited the property by way of survivorship. Stephen and David were most unhappy about this, and a rift occurred within the family.

Patrick was keen to smooth things over and spoke with Susan about his intentions to create a non-binding document, providing reassurance to Stephen and David that they would likely receive an inheritance down the line.

Susan discussed Partrick’s intentions with a colleague, Ms Grant, who suggested the production of a “Declaration of Intent” to encapsulate Patrick’s wishes. No formal legal advice was given, and no client agreement or fee was recorded. Ms Grant informally drafted a declaration of trust (“the trust”), which was executed by Patrick on 31 July 2009. The trust transferred the beneficial ownership of the property to the four children and triggered significant tax liabilities. It soon unfolded that no one involved, including Ms Grant, truly understood the implications of the trust – which also directly contradicted Patrick’s wishes.

The Law relating to Equitable Mistake

Master Marsh applied the four-part test established in Pitt v Holt [2013] AC 108, which emphasises the need for:

• A distinct and causative mistake
• Mistake as to the legal character or nature of the transaction
• Centrality of the mistake to the transaction
• Serious consequences render it unconscionable to allow the disposition to stand.

It was decided that all four elements of the test had been satisfied; Patrick had made a clear mistake, and as a result, there was a justifiable reason to rescind the trust.

This case highlights not only the importance of obtaining proper and appropriate legal advice but also the need to fully understand its implications. Equity will often prevail in circumstances where there is a fundamental mistake, which results in unfavourable and unjust consequences.

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