The facts were that the applicant, Mr Boyd, for whom Advocate
Rob Gardner of Bedell Cristin acted, was resident and domiciled
in England until March 1997 and thereafter became resident and
domiciled in the Isle of Man. Shortly afterwards, he sold his
commercial business and sought appropriate advice as to how to deal
with the shares in a Jersey company that held the proceeds of sale
so as to satisfy his wishes and to ensure the arrangement was tax
efficient. He consulted UK and Jersey accountants and a Jersey
In October 1997, and relying upon advice, Mr Boyd, as settlor,
settled the shares of the Jersey company into a discretionary
trust. It had Jersey trustees and was subject to Jersey law. The
settlor and his wife were beneficiaries with long stop trusts in
favour of charities generally. The trust continued for more than 10
years until it became apparent to the UK accountants that the
effect of the deemed domicile rule had been overlooked. The result
was that under UK tax law:
the initial or subsequent transfer to the trust gave rise to a
tax charge of 20% of the capital value;
10 year charges, amounting to about 6% of the capital value,
were levied on each 10th anniversary;
There would be an exit charge when the trust was wound up;
the settled property would be treated as part of the
settlor's estate on his death and subject to inheritance
there would be interest and penalties to pay.
The result would be that approximately one quarter of the
£4 million value of the trust would be subject to tax which
otherwise would not have arisen had the trust never been created,
or had it been created, after over 3 years had elapsed from the
date Mr Boyd had acquired the new domicile, by which time the
deemed domicile provision would not have applied to him.
The application was made under Article 11 of the Trusts (Jersey)
Law 1984 dealing with invalidity of a trust for equitable mistake.
Alternatively, and for the first time, the application was based on
mistake pursuant to the provisions of the recent Trusts (Amendment
No. 6) (Jersey) Law 2013 which set out a statutory test for
Hastings Bass and equitable mistake applications.
The Court held that Article 11 of the Trusts (Jersey) Law 1984,
together with the earlier common law position on mistake, could be
applied to the facts of the case. This resulted in a finding that
the three requirements had been met, namely:
there had been a mistake on the part of the settlor;
the settlor would not have entered into the transaction
"but for" the mistake;
the mistake was of so serious a character as to render it
unjust on the part of the donee to retain the property.
This then resulted in the Court declaring that the trust should
be set aside on the grounds of mistake and to have been invalid
under Article 11. The trust having been avoided, it is as if it
There was therefore no need to consider the later statutory
The trustees, which had supported the application, were
permitted to retain all remuneration and expenses and to charge its
reasonable and proper costs incurred in the application.
HMRC had been given notice of the application but did not take
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