Commentary on Sections Section 8: Principles
38.As mentioned above, in considering what orders to make under section 7(2) the court must have regard as far as practicable to the two principles in section 8 (sections 7(4) and 8(1)).
39.The first principle set out in subsection (3) has two limbs and is relevant where property acquired as a result of the declaration to be varied or revoked is or has been held in trust (subsection (2)). The first limb is that where, but for the fact that a variation order does not affect interests in property acquired as a result of a declaration of presumed death (section 6(1)), a person (E) would have an interest in the property in question as a result of the variation order, E should be entitled to receive the property or value specified in subsection (4) in full satisfaction of the interest from the trustee (subsection (3)(a)). The second limb is to the same effect save that the person entitled to satisfaction is not E but a person (F) who would, but for the limitation on the effect of the variation order in section 6(1), have acquired an interest in property acquired as a result of the declaration to be varied or revoked, from E (subsection (3)(b)).
40.The property or value to be made over by the trustee under the first principle to E or F depends on whether the trustee still holds the interest in property acquired as a result of the declaration to be varied or revoked or an equivalent interest in property representing that property. If he does, E or F, as the case may be, is entitled to that interest. If he does not, E or F, as the case may be, is entitled to the value of the interest in the property in question (subsection (4)).
41.The second principle is relevant where an insurer has paid a capital sum (other than one distributed by way of an annuity or other periodical payment) as a result of a declaration varied or revoked by a variation order (subsections (5) and (7)). The principle is that the whole or part of the capital sum should be repaid to the insurers if repayment is justified by the facts in respect of which the variation order was made (subsection (6)). See also section 14 which allows insurers to require recipients of capital sums to insure against the consequences of a variation order.