Mistaken about mistake? Pitt v Holt in the Isle of Man
The English Court of Appeal judgment in Pitt v Holt; Futter v Futter [2011] EWCA Civ 197, in which the “Hastings-Bass rule” was reviewed and restated, was handed down on 9 March 2011, Lord Justice Lloyd giving the leading judgment. There is an interesting Isle of Man aspect to the judgment in relation to equitable relief for mistake.
In Pitt v Holt, Derek Pitt was very badly injured in a road accident and his wife was his receiver appointed by the Court of Protection. His personal injury claim was settled by the payment of a lump sum and an annuity. As his receiver, Mrs. Pitt settled a discretionary trust to hold lump sum and the annuity (which Mrs Pitt, as receiver, assigned to the trustees).
The trustees were Mrs Pitt and two others. Mrs. Pitt was advised by solicitors and by a firm described in the judgment of Lloyd LJ as financial advisors with specialist experience of structured settlements. The question of inheritance tax was not, however, addressed by any of the advisers to Mrs Pitt and therefore not by Mrs Pitt herself. Since the trust was not (as it could have been) established as a discretionary trust for a disabled person, unintended IhT was payable.
The claim by Mrs Pitt and the trustees was for a declaration that the trust, and the assignment of the annuity, were void or alternatively voidable on the basis of the Hastings-Bass rule or on the ground of mistake.