In the matter of B and C [2009] JRC 245 (16 December 2009)

In the matter of B and C [2009] JRC 245 (16 December 2009)

The court held that under Jersey law, following the broader Ogilvie v Littleboy test, a voluntary disposition may be set aside for mistake if the donor was under a mistake of so serious a character as to render it unjust for the donee to retain the property. Mrs B made the disposition under a fundamental mistake of law as to her domicile for inheritance tax purposes, resulting in a substantial and immediate tax liability. The court found that but for this mistake, Mrs B would not have made the disposition. The mistake was sufficiently serious, and it would be unjust for the trustee to retain the property. The court further held that the transaction is voidable, not void ab initio, and...

Citation
[2009] JRC 245
Parties
Representor/applicant: Mrs B; First Respondent/trustee: C; Second Respondent/beneficiary: D; Third Respondent/beneficiary: E
Jurisdiction
Jersey
Judgment Date
16 December 2009
Procedural Posture
Application Under Article 11(2) of the Trusts (jersey) Law 1984 / Judgment on Application to Set Aside Trust/dispositions for Mistake
Outcome
Application granted. Dispositions set aside. Trust declared invalid to the extent of Mrs B's property.
Legal Topics
Mistake in Voluntary Dispositions, Setting Aside Trusts, Inheritance Tax Liability, Jurisdiction Under Jersey Law, Void Vs Voidable Transactions
Trust Law Equity Private International Law Mistake in Voluntary Dispositions Setting Aside Trusts Inheritance Tax Liability Jurisdiction Under Jersey Law Void Vs Voidable Transactions

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Parties

Mrs B

Representor/applicant

C

First Respondent/trustee

D

Second Respondent/beneficiary

E

Third Respondent/beneficiary

Procedural Posture

Application Under Article 11(2) of the Trusts (jersey) Law 1984 / Judgment on Application to Set Aside Trust/dispositions for Mistake

Legal Issues

  1. 1 Whether the trust and dispositions into it should be set aside on grounds of mistake under Jersey law
  2. 2 Whether the mistake was sufficiently serious to render it unjust for the trustee/donee to retain the property
  3. 3 Whether the relevant mistake was one of law or fact and whether this distinction matters

Ratio Decidendi

The court held that under Jersey law, following the broader Ogilvie v Littleboy test, a voluntary disposition may be set aside for mistake if the donor was under a mistake of so serious a character as to render it unjust for the donee to retain the property. Mrs B made the disposition under a fundamental mistake of law as to her domicile for inheritance tax purposes, resulting in a substantial and immediate tax liability. The court found that but for this mistake, Mrs B would not have made the disposition. The mistake was sufficiently serious, and it would be unjust for the trustee to retain the property. The court further held that the transaction is voidable, not void ab initio, and...

Court Disposition

Application granted. Dispositions set aside. Trust declared invalid to the extent of Mrs B's property.

Orders

  • The dispositions by Mrs B to the trust in the sum of £5,390,097.78 are set aside as voidable for mistake.
  • The trust is declared invalid to the extent of the property settled by Mrs B.