Bhaur & Ors v Equity First Trustees (Nevis) Ltd & Ors [2023] EWCA Civ 534 (18 May 2023)

Bhaur & Ors v Equity First Trustees (Nevis) Ltd & Ors [2023] EWCA Civ 534 (18 May 2023)

The appellants did not make a relevant mistake of fact or law when entering into the scheme. Their beliefs regarding the tax consequences, honesty of advisers, and retention of control were either mispredictions about future events or conscious assumptions of risk, not operative mistakes. The appellants knowingly participated in a sham scheme designed to evade tax, with tacit assent to the misrepresentation of the trust's purpose. Therefore, the equitable jurisdiction to set aside the disposition for mistake does not apply.

Citation
[2023] EWCA Civ 534
Parties
Claimant/appellant: Amarjit Bhaur; Claimant/appellant: Joginder Bhaur; Claimant/appellant: Mandeep Bhaur; Claimant/appellant: Baldeep Bhaur; Claimant/appellant: Safe Investments Management UK; Defendant/respondent: Equity First Trustees (Nevis) Limited; Defendant/respondent: Stratton Investment Management (Seventeen) Limited; Defendant/respondent: James O'Toole; Defendant/respondent: National Society for the Prevention of Cruelty to Children (NSPCC); Defendant/respondent: IVM PCC
Jurisdiction
England and Wales
Judgment Date
18 May 2023
Procedural Posture
Civil Appeal / Court of Appeal Judgment
Outcome
Appeal dismissed
Legal Topics
Mistake in Equity, Setting Aside Voluntary Dispositions, Employee Benefit Trusts, Inheritance Tax Avoidance, Sham Transactions, Tax Evasion, Professional Negligence
Equity and Trusts Tax Law Civil Procedure Mistake in Equity Setting Aside Voluntary Dispositions Employee Benefit Trusts Inheritance Tax Avoidance Sham Transactions +2 more

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Parties

Amarjit Bhaur

Claimant/appellant

Joginder Bhaur

Claimant/appellant

Mandeep Bhaur

Claimant/appellant

Baldeep Bhaur

Claimant/appellant

Safe Investments Management UK

Claimant/appellant

Equity First Trustees (Nevis) Limited

Defendant/respondent

Stratton Investment Management (Seventeen) Limited

Defendant/respondent

James O'Toole

Defendant/respondent

National Society for the Prevention of Cruelty to Children (NSPCC)

Defendant/respondent

IVM PCC

Defendant/respondent

Procedural Posture

Civil Appeal / Court of Appeal Judgment

Legal Issues

  1. 1 Whether the court's equitable jurisdiction to set aside a voluntary disposition for mistake applies to the appellants' participation in a failed inheritance tax avoidance scheme involving an employee benefit trust.
  2. 2 Whether the appellants made a relevant mistake of fact or law sufficient to invoke the equitable jurisdiction to set aside the disposition.
  3. 3 Whether the appellants' belief regarding the tax consequences, honesty of advisers, and retention of control constituted mistakes or mere mispredictions.

Ratio Decidendi

The appellants did not make a relevant mistake of fact or law when entering into the scheme. Their beliefs regarding the tax consequences, honesty of advisers, and retention of control were either mispredictions about future events or conscious assumptions of risk, not operative mistakes. The appellants knowingly participated in a sham scheme designed to evade tax, with tacit assent to the misrepresentation of the trust's purpose. Therefore, the equitable jurisdiction to set aside the disposition for mistake does not apply.

Court Disposition

Appeal dismissed

Orders

  • The appeal is dismissed.