Anthony Gold

Get in touch

020 7940 4060

  • People
  • Insights
  • What to Expect
  • Contact Us
Anthony Gold
  • Services
    • Housing And Property Disputes
      • Property Disputes
      • Leasehold Services
      • Services For Commercial Landlords, Tenants And Agents
      • Services For Residential Landlords And Agents
      • Housing And Tenancy Issues
      • Judicial Review
    • Injury And Medical Claims
      • Life Changing Injuries
      • Medical Claims
      • Personal Injury
      • Compensation And Life Planning
      • Child Abuse
    • Family And Relationships
      • Starting Relationships
      • Ending Relationships
      • After Relationships End
      • Capacity And Court Of Protection
      • Wills, Trusts And Estates
      • Family Mediation
      • Religious & Cultural Issues
      • Family Law FAQs
    • Business Services
      • Business Agreements
      • Business Disagreements
      • Commercial Property Agreements
      • Commercial Property Disputes
    • Property Services And Estates
      • Commercial Property
      • Leasehold Services
      • Residential Property
      • Wills, Trusts And Estates
      • Claims Against Trusts And Estates
    • Dispute Resolution For Individuals
      • Personal Claims
      • Professional Negligence
      • Home
      • Claims Against Trusts And Estates
      • Employment
    • People
    • Insights
    • What to Expect
    • Contact Us
  • Get in touch

    020 7940 4060

  • Housing and Property Disputes
  • Injury and Medical Claims
  • Family and Relationships
  • Business Services
  • Property Services and Estates
  • Dispute Resolution For Individuals
  • Property disputes
  • Ownership disputes and shares in property
  • Challenging the decisions of councils and public bodies
  • Rights of way, boundaries, covenants and easements
  • Party wall disputes
  • Building disputes
  • Civil and commercial mediation
  • Leasehold services
  • Lease extension
  • Collective enfranchisement
  • Service charge disputes
  • Repairs to leaseholds
  • Right to manage
  • Services for commercial landlords, tenants and agents
  • Breach of covenant
  • Forfeiture and recovery of possession
  • Dilapidations and failing to repair
  • Lease renewals
  • Services for residential landlords and agents
  • Regulatory issues
  • Repossession
  • Agents (including letting agreements)
  • Housing and tenancy issues
  • Repairs
  • Repossession and eviction
  • Rehousing and homelessness
  • Judicial review
  • Life changing injuries
  • Brain injury
  • Spinal cord injury
  • Amputation
  • Psychiatric injury
  • Fatal injuries and inquests
  • Medical claims
  • Surgical claims
  • Non-Surgical Claims
  • Birth injury
  • Child health and paediatrics
  • GP and primary care treatment
  • Private healthcare
  • Personal injury
  • Road traffic accidents
  • Accidents abroad
  • Accidents at work
  • Faulty products
  • Public liability and other accidents
  • Compensation and life planning
  • Capacity and court of protection
  • Starting and ending relationships
  • Buying and selling your home
  • Child abuse
  • Child abuse
  • Starting relationships
  • Pre nuptial agreements
  • Pre civil partnership and same sex relationship agreements
  • Cohabitation and living together agreements
  • Property ownership agreements
  • Ending relationships
  • Divorce and separation
  • Ending a civil partnership
  • Ending cohabitation
  • Agreeing parenting
  • Agreeing finance and assets
  • International arrangements
  • Abduction and leave to remove children
  • Family mediation
  • After relationships end
  • Abduction and leave to remove children
  • Changing and challenging parenting agreements
  • Changing and challenging financial agreements
  • Grandparents' rights
  • Capacity and court of protection
  • Appointing a deputy
  • Removing a deputy
  • Arranging lasting power of attorney
  • Gifts and legacies
  • Managing assets under a deputyship
  • Care issues
  • Removing lasting and enduring power of attorney
  • Special educational needs
  • Wills, trusts and estates
  • Making a will
  • Contesting a will
  • Applying for probate
  • Distributing the estate
  • Trust advice
  • Tax planning and advice
  • Capacity and court of protection
  • Family mediation
  • Family Mediation
  • Religious & cultural issues
  • Jewish family law
  • Islamic family law
  • Family Law FAQs
  • Children FAQs
  • Cohabitation Agreement FAQs
  • Divorce and Separation FAQs
  • Financial Issues FAQs
  • Pre-Marital Contracts FAQs
  • Business agreements
  • Business advice
  • Employment
  • Mergers and acquisitions
  • Supplier contracts
  • Business disagreements
  • Building disputes
  • Civil and commercial mediation
  • Claims against directors
  • Contract disputes
  • Debt recovery
  • Directors personal liabilities
  • Employment
  • Professional negligence
  • Commercial property agreements
  • Commercial advice for landlords and tenants
  • Commercial Sale and Purchases
  • Planning advice
  • Mortgage debentures and securities
  • Commercial property disputes
  • Breach of covenant
  • Dilapidations and failing to repair
  • Forfeiture and recovery of possession
  • Lease renewals
  • Commercial property
  • Commercial Sale and Purchases
  • Commercial lease advice for Landlords and Tenants
  • Commercial loans and mortgages
  • Property Investment: plot developers & plot buyers
  • Auction: sales and purchases
  • Leasehold services
  • Lease extension
  • Collective enfranchisement
  • Service charge disputes
  • Repairs to leaseholds
  • Right to manage
  • Residential property
  • Residential Sale and Purchases
  • Property Investment: plot developers & plot buyers
  • Remortgages
  • Auction: sales and purchases
  • Ownership matters and transfers
  • Wills, trusts and estates
  • Contesting a will
  • Making a will
  • Applying for probate
  • Distributing the estate
  • Trust advice
  • Tax planning and advice
  • Polish Clients
  • Claims against trusts and estates
  • Contesting a will
  • Losses caused by trustees
  • Capacity and court of protection
  • Personal claims
  • Contesting a will
  • Debt recovery
  • Ownership disputes and shares in property
  • Losses caused by trustees
  • Civil and commercial mediation
  • Professional negligence
  • Professional Negligence
  • Property Fraud
  • Investment Fraud
  • Medical claims
  • Home
  • Building disputes
  • Personal injury
  • Ownership disputes and shares in property
  • Claims against trusts and estates
  • Contesting a will
  • Losses caused by trustees
  • Polish Clients
  • Employment
  • Employment
  • Unfair or Wrongful Dismissal
  • Settlement Agreements
Anthony Gold > Blog > Putting Right Mistakes by Deputies
David Wedgwood - Partner

David Wedgwood

Partner| Head of Commercial| Head of Court of Protection

david_wedgwood@anthonygold.co.uk

Share
  • January 18, 2019
  • Blog
  • By  David Wedgwood 
  • 0 comments

Putting Right Mistakes by Deputies


Professional Deputies often deal with transactions or investments involving millions of pounds. There can be unintended tax consequences of when dealing with investments. The most common error is incurring a large tax liability on liquidating assets or creating a trust. In some circumstances it is possible to apply to the court for rectification or even rescission of the transaction. In layman’s terms – undoing the transaction so that the protected party avoids any loss.

This get out of jail free card stems from a line of cases involving trustees. As Deputies are trustees of the Protected Party’s money, it comes as no surprise that similar rules apply to them.

The Court of Appeal decision in re. Hastings-Bass deceased [1975] Ch25 is the leading case that sets out the conditions wherein the court can put right transactions by trustees that resulted in unintended tax consequences. This is essentially where: –

  1. The trustees had no power to dispose of the assets; or
  2. The trustees acted fraudulently in disposing of the assets; or
  3. Where the trustees acted within their powers did not act fraudulently, but acted without sufficient deliberations.

As you can see this leaves scope for a multitude of sins to be reversed, to such extent that there has been criticism of this line of cases by academics, such as Professor Charles Mitchell. In his article “Reigning in the ruling re. Hastings-Bass (2006) 122 LQR35,” where he asks “Should a beneficiary be placed in a stronger position than an outright owner if he wishes to unwind the transaction to which he has given his consent, for which it turns out to have unforeseen disadvantages?” Essentially, he does not see why very wealthy people, often seeking to avoid tax, should be given a second bite of the cherry if their attempts fail.

Perhaps the answer lies in the judge’s justification of the rule in Hastings-Bass. This is sometimes held to be analogous to a court jurisdiction to set aside a voluntary disposition on the grounds of mistake.  However, although there are similarities with the law of mistake, Lord Walker in the case of Pitt v Holt [2013] 2AC108 asserts any analogy to be misleading.  In a very inciteful judgement he points out that the Hasting-Bass line of cases are more cases in which the court exercises its duty to supervise trustees as fiduciaries.

In the Pitt case, a Deputy transferred personal injury monies from a Deputyship into a discretionary trust. In doing so, there arose an immediate charge for Inheritance Tax, as it was a discretionary trust that did not qualify under the relevant person’s trust rules for exemption.  The Deputy applied to the court in order to have the trust rescinded, so as the immediate tax charge never took effect.

That particular transaction could not qualify under the Hasting-Bass rule, as the payment into a new trust was within the Deputy’s power to this and there was no fraud in doing so.   The third ground for setting aside that equally did not apply, in that the Deputy had acted with sufficient deliberation. However, he had received inappropriate legal advice. As such the Supreme Court did not rule that the transaction could be rescinded.

In paragraph 122 of his judgment in the Court of Appeal, Lord Walker considered the law of equitable mistake. He stated that under equity a mistake can be set aside if it arises from a “causative mistake with sufficient gravity.  A mistake will be causative if disposition would not have been made but for the mistake.”  A mistake “must be distinguished from mere ignorance or inadvertence” (at paragraph 104) and “the gravity of the mistake must be assessed by close examination of the facts …. including the circumstances of the mistake and consequences” (at paragraph 126).

He further went on to say that “the test will normally be satisfied only where there is a mistake either as to the legal character of the transaction or as to some matter of fact or law which is basic to the transaction”.

The Judge did grant the mistaken Deputy the equitable remedy, however he warned that such decisions are very unusual and should not be relied upon in the future.

This decision is perhaps against the recent line of cases limiting the extent of Hasting-Bass type rectification decisions. This is particularly so were the catastrophic error was entered into with some comprehension by the beneficiaries that the arrangement was solely to avoid tax and that the tax might not be achieved. An example of such a case is the Ratio Group Services v Ashmore [1995] STC1151, where the company could not show what it would otherwise have done with the money, had it not moved the money so as to seek a tax advantage.

The other common ground for seeking rectification or rescission of a transaction is where there has been undue influence such that it would be inequitable not to set aside the transaction.  The leading case in this area is perhaps Royal Bank of Scotland v Everidge [2002] 2AC773.

However, here again the courts are moving away from a jail-free card, as evidenced in the case of Santander v Fletcher [2018] EWHC 2778. In this case a mother transferred half her property to a son, so as to enable him to achieve a loan. She was told the loan was to be £32,000.  In fact, he borrowed £120,000 and charged the now jointly owned property. The Santander mortgage was then defaulted and they sought possession of the property. The court in that case did not allow a rescission on the basis of undue influence, although there clearly was undue influence. This was because although the loan itself may well have been entered into under undue influence, the transfer of the property before that was with the mother’s consent. The transfer of half the property to a son was not proven to have been undertaken through undue influence.

Perhaps if the matter had been pleaded as a fraud or the circumstances around the earlier transfer into joint names had been sufficiently explored at trial, then on appeal the decision might have been different.

In conclusion, when there has been a mistake, it is best first to look carefully whether the mistake can be rectified and the original transaction rescinded or corrected. The courts are, however, reluctant to do that and the circumstances in which it can be achieved are becoming limited.  As such, it is an onerous task to satisfy the criteria. The Santander case illustrates that it is essential to present the case correctly, a specialist task.

If you have a transaction that has resulted in an outcome you did not predict, and feel is unfair, please contact us and we will be able to give you an opinion as to whether it might be corrected

David Wedgwood - Partner

David Wedgwood

Partner| Head of Commercial| Head of Court of Protection

david_wedgwood@anthonygold.co.uk

  • A tenacious litigator who is approachable and supportive of clients, achieving settlements in commercials cases valued in excess of £12m in the past twelve months.
  • David brings understanding of the emotional, financial and practical needs of people with disabilities and their families in deputyship situations together with approachability.
  • Has the capacity to deal with complex cases involving many inter-related claims and put forward creative solutions.
  • David applies analytical skills to forensically analyse complex matters. He is flexible and creative when it comes to dealing with the varied problems that do sometimes arise.
  • “Stupendously knowledgeable on private client work.” – Chambers and Partners 2019
  • “Very knowledgeable and technically brilliant” – Legal 500 2019
  •  “David has vast experience of all aspects of trusts and probate matters and also regularly acts in matters involving breach of trust and freezing orders”- Legal 500 2019
  • “Approachable, considerate and empathetic whilst maintaining a fully professional stance’ – Legal 500 2019
  • “Your help has truly been a Godsend and you will always be in my prayers”

Get in touch

Call, email or use a contact form – whichever suits you. We’ll let you know the best person to help you get started.

Call or Email

020 7940 4060

mail@anthonygold.co.uk

No comments

Add your comment

We need your name and email address to make sure you’re a real person. We won’t share your email address with anyone else or send you spam. Please complete fields marked with *.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

*

code

Sign up to our email newsletter

For news, help and advice.

Sign up now

Related Services

  • Applying for probate

  • Applying for probate

  • Appointing a deputy

  • Appointing a deputy

  • Arranging lasting power of attorney

  • Arranging lasting power of attorney

  • Civil and commercial mediation

  • Civil and commercial mediation

  • Civil and commercial mediation

  • Claims against directors

  • Directors personal liabilities

  • Employment

  • Employment

  • Employment

  • International arrangements

  • International arrangements

  • Losses caused by trustees

  • Losses caused by trustees

  • Losses caused by trustees

  • Mergers and acquisitions

  • Probate sales and gifts

  • Removing a deputy

  • Removing a deputy

  • Trust advice

  • Trust advice

  • Professional Negligence

About the author

  • David Wedgwood

Meet the team

  • Dispute Resolution For Individuals

  • Business Services

  • Property Services and Estates

  • Family and Relationships

  • Capacity and court of protection

You might also like...

  • Should I become the executor of my relative's estate?

  • Death of a legatee before testator - do their children take the inheritance?

  • Court of Protection Deputyship Annual Returns

About Us

  • Accessibility
  • Compliance
  • Corporate Social Responsibility
  • Equality & Diversity
  • History
  • Our Beliefs
  • List of Partners

Accredited by

Lexel Parctice
76000Award

Careers

  • Trainee Solicitors
  • Vacancies

Solicitors in London Bridge

Solicitors in Elephant and Castle

Solicitors in Streatham

Follow us on Twitter Follow us on LinkedIn View our YouTube channel

Get in touch

020 7940 4060



Anthony Gold

Contact Us

Anthony Gold

Request a callback

Copyright © Anthony Gold Solicitors. All rights reserved. Authorised and Regulated by the Solicitors Regulation Authority Number 48050

Site managed by Prism Production. Brand by David Carroll & Co.