The Representation of Q re The R, S, T and U Trusts - [2021] JRC 166 (10 June 2021)

The Representation of Q re The R, S, T and U Trusts - [2021] JRC 166 (10 June 2021)

The Settlor established the trusts under a mistaken belief, reasonably relying on professional advice, that there was negligible risk of UK domicile and associated tax liability. In fact, there was a material risk, and had he known, he would not have settled the trusts. The mistake was sufficiently serious to justify setting aside the trusts under Article 11 of the Trusts (Jersey) Law 1984. The Court has jurisdiction to make declarations even in respect of trusts already terminated, as liabilities and equitable liens persist.

Citation
[2021] JRC 166
Parties
Applicant: The Settlor (Representor); Trustees: Lutea Trustees Limited and Lutea Hong Kong Limited; Representative of Unborn Beneficiaries and Guardian Ad Litem of Minor Beneficiary: Advocate Staal; Notified Party: HMRC
Jurisdiction
Jersey
Judgment Date
10 June 2021
Procedural Posture
Trust Law Application / Judgment on Application to Set Aside Trusts for Mistake
Outcome
Application granted. Trusts declared invalid and void ab initio on grounds of mistake.
Legal Topics
Mistake in Trust Law, Domicile for Tax Purposes, Inheritance Tax Liability, Jurisdiction Under Trusts (jersey) Law 1984
Trusts Private International Law Taxation Mistake in Trust Law Domicile for Tax Purposes Inheritance Tax Liability Jurisdiction Under Trusts (jersey) Law 1984

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Parties

The Settlor (Representor)

Applicant

Lutea Trustees Limited and Lutea Hong Kong Limited

Trustees

Advocate Staal

Representative of Unborn Beneficiaries and Guardian Ad Litem of Minor Beneficiary

HMRC

Notified Party

Procedural Posture

Trust Law Application / Judgment on Application to Set Aside Trusts for Mistake

Legal Issues

  1. 1 Whether the trusts settled by the Settlor in 2009 should be set aside as void ab initio on grounds of mistake under Article 11 of the Trusts (Jersey) Law 1984
  2. 2 Whether the Settlor made a mistake of so serious a character as to render it just for the Court to make the declaration sought
  3. 3 Whether the Court has jurisdiction to make declarations in respect of trusts already terminated

Ratio Decidendi

The Settlor established the trusts under a mistaken belief, reasonably relying on professional advice, that there was negligible risk of UK domicile and associated tax liability. In fact, there was a material risk, and had he known, he would not have settled the trusts. The mistake was sufficiently serious to justify setting aside the trusts under Article 11 of the Trusts (Jersey) Law 1984. The Court has jurisdiction to make declarations even in respect of trusts already terminated, as liabilities and equitable liens persist.

Court Disposition

Application granted. Trusts declared invalid and void ab initio on grounds of mistake.

Orders

  • The Trusts are declared invalid and voided from the date they were purportedly made under Article 11(2)(b)(i) of the Trusts Law.
  • Trust assets have, from the dates received, been held on bare trust for the Settlor by the Trustees.