B and C v D, E, F and Others [2020] JRC 169 (20 August 2020)

B and C v D, E, F and Others [2020] JRC 169 (20 August 2020)

The Royal Court of Jersey does not have the power to set aside a foundation ab initio for mistake under the Foundations (Jersey) Law 2009, but does have jurisdiction to set aside endowments made to a foundation for mistake where the established three-stage test is met. In this case, the Representors acted under a serious mistake as to the tax consequences of the endowments, satisfying the test, and the endowments were set aside as void.

Citation
[2020] JRC 169
Parties
Applicant: Representors; Respondent: H Foundation; Respondent: Mr Anton Lane (Edge Tax Consultancy Limited); Council Member: Nedgroup Trust (Jersey) Limited; Interested Party: HMRC
Jurisdiction
Jersey
Judgment Date
20 August 2020
Procedural Posture
Civil Trusts/foundations / Judgment on Application to Set Aside Foundation and Endowments for Mistake
Outcome
Endowments set aside as void for mistake; application to set aside foundation ab initio refused.
Legal Topics
Setting Aside Voluntary Dispositions for Mistake, Jurisdiction to Set Aside Foundations, Inheritance Tax Liability, Powers of Jersey Royal Court, Distinction Between Trusts and Foundations
Trusts and Estates Tax Law Company/foundation Law Setting Aside Voluntary Dispositions for Mistake Jurisdiction to Set Aside Foundations Inheritance Tax Liability Powers of Jersey Royal Court Distinction Between Trusts and Foundations

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Parties

Representors

Applicant

H Foundation

Respondent

Mr Anton Lane (Edge Tax Consultancy Limited)

Respondent

Nedgroup Trust (Jersey) Limited

Council Member

HMRC

Interested Party

Procedural Posture

Civil Trusts/foundations / Judgment on Application to Set Aside Foundation and Endowments for Mistake

Legal Issues

  1. 1 Whether the Royal Court of Jersey has power to set aside a foundation ab initio on grounds of mistake
  2. 2 Whether endowments to a foundation can be set aside for mistake under Jersey law
  3. 3 Applicable legal test for mistake in voluntary dispositions

Ratio Decidendi

The Royal Court of Jersey does not have the power to set aside a foundation ab initio for mistake under the Foundations (Jersey) Law 2009, but does have jurisdiction to set aside endowments made to a foundation for mistake where the established three-stage test is met. In this case, the Representors acted under a serious mistake as to the tax consequences of the endowments, satisfying the test, and the endowments were set aside as void.

Court Disposition

Endowments set aside as void for mistake; application to set aside foundation ab initio refused.

Orders

  • All endowments made by the Representors to the Foundation are set aside as void for mistake.
  • The Foundation remains in existence as a legal entity; assets to be returned to the Representors.