Zec Family Investments Pty Ltd v Zecchini

In Zec Family Investments Pty Ltd v Zecchini, the court was asked to consider whether a trust deed should be rectified to allow the beneficiaries to receive trust distributions. The parties involved were Zec Family Investments Pty Ltd, the applicant, and the Zecchini Family Trust Discretionary Trust, with the first and second respondents being the persons behind the trust and class A beneficiaries. The trust deed, dated 17 April 2013, contained a clause that prohibited the beneficiaries from receiving distributions. The applicant sought to rectify this clause, arguing that it was the result of a mutual mistake. The applicant claimed that one of the main purposes of establishing the trust was to allow the beneficiaries to receive distributions as beneficiaries, and there were no instructions to exclude them.

The court considered whether the mutual mistake was sufficient to warrant rectification of the trust deed. It was necessary to determine whether the error was fundamental and whether rectification was a fair and just course of action. The court also examined whether there was any prejudice to third parties if the deed was rectified. Given that the purpose of the trust was to benefit the beneficiaries and there were no instructions to exclude them, the court found that the mistake was fundamental and that rectifying the deed would not prejudice any third parties.

In conclusion, the court ordered that the Zecchini Family Trust Discretionary Trust Deed dated 17 April 2013 be rectified by deleting the words “or the Trustee or, any person who at any time has been a Trustee” from clause 11.2. This would allow the beneficiaries to receive distributions as intended. The court determined that this rectification was necessary to achieve the trust's intended purpose and that it would not cause any prejudice to third parties.