UKSC 26
On appeal from:  EWCA Civ 197
Futter and another (Appellants) v The Commissioners for Her Majesty's Revenue and Customs (Respondent)
Pitt and another (Appellants) v The Commissioners for Her Majesty's Revenue and Customs (Respondent)
Lord Neuberger, President
JUDGMENT GIVEN ON
9 May 2013
Heard on 12, 13 and 14 March 2013
Robert Ham QC
(Instructed by Withers LLP)
Philip Jones QC
(Instructed by HMRC Solicitors Office)
Christopher Nugee QC
(Instructed by Bolitho Way and Belcher Frost)
Philip Jones QC
(Instructed by HMRC Solicitors Office)
LORD WALKER (with whom Lord Neuberger, Lady Hale, Lord Mance, Lord Clarke, Lord Sumption and Lord Carnwath agree)
"This is another application by trustees who wish to assert that they have acted in an un-trustee-like fashion and so have failed properly to exercise a power vested in them. The trustees wish to take advantage of this failure to perform their duties in order to enable the beneficiaries to avoid paying the tax liability consequent upon the trustees' decision. Put like that (and I am conscious that that is not the only way in which the situation may be described) the possibility is raised that the development of the rule may have been diverted from its true course."
These appeals are the first cases on the Hastings-Bass rule in which the Commissioners of HM Revenue and Customs ("the Revenue", so as to include their predecessors, the Commissioners of Inland Revenue) have been joined as parties in the proceedings. It is the Revenue that has taken on the task of challenging, if not the existence, at least the limits of the Hastings-Bass rule. It is no coincidence that the judgment of the Court of Appeal in these two appeals (which were heard together in that court also) is the first fully considered judgment above first-instance level, and the first to come on further appeal to the Supreme Court (Mettoy was not cited to the Court of Appeal in Stannard v Fisons Pension Trust Ltd  Pen LR 225, discussed in para 34 below).
"Why should a beneficiary be placed in a stronger position than the outright legal owner of property if he wishes to unwind a transaction to which he has given his consent, but which turns out to have unforeseen tax disadvantages?"
Professor Mitchell went on to comment, presciently:
"The courts will have to look elsewhere for the means of reining in the rule in Re Hastings-Bass, most probably to the equitable bars to unwinding a transaction that would come into play if it were decisively recognised that the rule renders transactions voidable rather than void."
This court now has the opportunity of confirming the Court of Appeal's recognition of that essential point.
THE HASTINGS-BASS RULE
The three strands of the problem
". . . examples of that comparatively rare instance of the law taking a seriously wrong turn, of that wrong turn being not infrequently acted on over a 20-year period but this court being able to reverse that error and put the law back on the right course."
If the law did take a seriously wrong turning it was because a number of first-instance judges were persuaded that three separate strands of legal doctrine, all largely associated with practice in the Chancery Division, should be spun or plaited together so as to produce a new rule.
"Certain points are clear beyond argument. Trustees must act in good faith, responsibly and reasonably. They must inform themselves, before making a decision, of matters which are relevant to the decision. These matters may not be limited to simple matters of fact but will, on occasion (indeed, quite often) include taking advice from appropriate experts, whether the experts are lawyers, accountants, actuaries, surveyors, scientists or whomsoever. It is, however for advisers to advise and for trustees to decide: trustees may not (except in so far as they are authorised to do so) delegate the exercise of their discretions, even to experts. This sometimes creates real difficulties, especially when lay trustees have to digest and assess expert advice on a highly technical matter (to take merely one instance, the disposal of actuarial surplus in a superannuation fund)."
The same principles apply, at least in a modified manner, to other persons acting in a fiduciary capacity.
Vestey, Abrahams and Hastings-Bass
"I do not think it can or ought to be said that if, as I hold, the trustees wrongly thought that section 31 would operate, then a result is produced substantially or essentially different from that which was intended."
The result was that for the period covered by the trustees' resolutions, the minor beneficiaries got their income, but the Revenue got their surtax on that income.
"The interests given to separate objects of an ordinary special power are separate interests, but all the interests created in Carole's fund were intended as part and parcel of a single benefit to her."
Cross J held, therefore, that there was no valid exercise of the power of advancement.
"To sum up the preceding observations, in our judgment, where by the terms of a trust (as under section 32) a trustee is given a discretion as to some matter under which he acts in good faith, the court should not interfere with his action notwithstanding that it does not have the full effect which he intended, unless (1) what he has achieved is unauthorised by the power conferred upon him, or (2) it is clear that he would not have acted as he did (a) had he not taken into account considerations which he should not have taken into account, or (b) had he not failed to take into account considerations which he ought to have taken into account."
Lloyd LJ did not accept that as the true ratio. He thought that the Court of Appeal had already decided the case on the ground that the advancement, so far as not struck down by the rule against perpetuities, must stand unless it could not, in that attenuated form, reasonably be regarded as beneficial to the advancee. That is an objective test which does not call for an inquiry into the actual states of mind of the trustees.
"If the problem to be resolved is what is the effect on an operation such as an advancement of the failure of some of the intended provisions, because of external factors such as perpetuity, it is not useful to ask what the trustees would have thought and done if they had known about the problem. The answer to that question is almost certainly that they would have done something different, which would not have run into the perpetuity or other difficulty. It is for that reason that the test has to be objective, by reference to whether that which was done, with all its defects and consequent limitations, is capable of being regarded as beneficial to the intended object, or not. If it is so capable, then it satisfies the requirement of the power that it should be for that person's benefit. Otherwise it does not satisfy that requirement. In the latter case it would follow that it is outside the scope of the power, it is not an exercise of the power at all, and it cannot take effect under that power."
On this analysis, limb (1) of Buckley LJ's statement of principle covers the whole ground, and limb (2) adds nothing. I respectfully agree with Lloyd LJ's criticism of the statement of principle. I think it is also open to criticism for the generality of its reference to unintended consequences ("notwithstanding that it does not have the full effect which he intended"). That is a far-reaching extrapolation from one case about section 31 of the Trustee Act 1925 and two cases about the rule against perpetuities. It set ajar a door that was pushed wide open in Mettoy Pension Trustees Ltd v Evans  1 WLR 1587 and other later cases.
"where a trustee acts under a discretion given to him by the terms of the trust, the court will interfere with his action if it is clear that he would not have acted as he did had he not failed to take into account considerations which he ought to have taken into account."
". . .were about the consequences of what [Mr Nugee] referred to as an 'excessive execution' of a power, ie the purported exercise of a power in a way that the law rendered partially ineffective."
Warner J dismissed this argument at p1624B-C:
"If, as I believe, the reason for the application of the principle is the failure by the trustees to take into account considerations that they ought to have taken into account, it cannot matter whether that failure is due to their having overlooked (or to their legal advisers having overlooked) some relevant rule of law or limit on their discretion, or is due to some other cause."
From Mettoy to Sieff
"There must surely be some limits. It cannot be right that whenever trustees do something which they later regret and think that they ought not to have done, they can say that they never did it in the first place."
"But in considering the ambit of the rule it is necessary to bear in mind that it is only one of the protections afforded to beneficiaries in respect of the due administration of the trust by the trustees. It is also important to have in mind that equity does not afford a trustee or a beneficiary a free pass to rescind a decision which subsequently proves unpalatable or unfortunate and substitute another. Relief is only available if the necessary conditions for its grant are satisfied."
He referred to the authorities already discussed and observed that he did not need to resolve the issue posed by Stannard, since (para 20) "clearly the trustee would not have appointed 60% of the trust fund if it had known of the settlor's true wishes." He then addressed four issues: (1) whether there had to be a fundamental mistake; (2) whether the rule applied if there was any relevant mistake or ignorance on the part of the trustee, regardless of how it arose (and in particular, regardless of any breach of duty on the part of the trustee); (3) following from the last point, whether the rule applied on the facts of the case before him; and (4) whether, if the rule applied, the appointment was void or voidable.
"the rule does not require that the relevant consideration unconsidered by the trustee should make a fundamental difference between the facts as perceived by the trustee and the facts as they should have been perceived. All that is required in this regard is that the unconsidered relevant considerations would or might have affected the trustees' decision, and in a case such as the present that the trustee would or might have made a different appointment or no appointment at all."
But as his decision on the second point shows, it must be sufficiently serious as to amount to a breach of duty.
"What has to be established is that the trustee in making his decision has, in the language of Warner J in Mettoy Pension Trustees Ltd v Evans  1 WLR 1587, 1625, failed to consider what he was under a duty to consider. If the trustee has in accordance with his duty identified the relevant considerations and used all proper care and diligence in obtaining the relevant information and advice relating to those considerations, the trustee can be in no breach of duty and its decision cannot be impugned merely because in fact that information turns out to be partial or incorrect."
Futter v Futter: The facts and the first-instance decision
Pitt v Holt: The facts and the first-instance decision
Lloyd LJ's judgment on the Hastings-Bass rule
"If an appointment is void at law, no title at law can be founded on it; but this is not so in equity: the mere fact that the appointment is void does not prevent a Court of Equity from having regard to it: eg, an appointment under a limited power to a stranger is void, but equity may cause effect to be given to it by means of the doctrine of election."
The decision in Cloutte v Storey may have to be revisited one day. For present purposes it is sufficient to note that a fraudulent appointment (that is, one shown to have been made for a positively improper purpose) may need a separate pigeon-hole somewhere between the categories of excessive execution and inadequate deliberation.
"I would venture to amplify this by saying that the court, if called upon to execute the trust power, will do so in the manner best calculated to give effect to the settlor's or testator's intentions. It may do so by appointing new trustees, or by authorising or directing representative persons of the classes of beneficiaries to prepare a scheme of distribution, or even, should the proper basis of distribution appear by itself directing the trustees so to distribute".
Lloyd LJ did not refer to that particular passage, but Warner J had done so in Mettoy  1 WLR 1587, 1617-1618, since in that case a decision as to the exercise of the power to augment benefits would have to be taken by someone. The passage serves as a reminder that where trustees have been in breach of duty by exercising a discretion with inadequate deliberation, setting aside their decision may not be the only course open to the court.
"It seems to me that the principled and correct approach to these cases is, first, that the trustees' act is not void, but that it may be voidable. It will be voidable if, and only if, it can be shown to have been done in breach of fiduciary duty on the part of the trustees. If it is voidable, then it may be capable of being set aside at the suit of a beneficiary, but this would be subject to equitable defences and to the court's discretion. The trustees' duty to take relevant matters into account is a fiduciary duty, so an act done as a result of a breach of that duty is voidable. Fiscal considerations will often be among the relevant matters which ought to be taken into account. However, if the trustees seek advice (in general or in specific terms) from apparently competent advisers as to the implications of the course they are taking, and follow the advice so obtained, then, in the absence of any other basis for a challenge, I would hold that the trustees are not in breach of their fiduciary duty for failure to have regard to relevant matters if the failure occurs because it turns out that the advice given to them was materially wrong. Accordingly, in such a case I would not regard the trustees' act, done in reliance on that advice, as being vitiated by the error and therefore voidable."
The requirement for breach of duty
"In a case such as this, where it is claimed that the rule in Hastings-Bass applies, three questions arise: (1) What were the trustees under a duty to consider? (2) Did they fail to consider it? (3) If so, what would they have done if they had considered it?"
"I do not think he was entitled to do that. The decision whether to accept the claim is one for the trustee and not for the court. It seems to me that, in the present case, the decision of the trustee was simply ineffective since the board did not carry out their duty to give a properly informed consideration to the claim. That however does not entitle the Court to substitute its own view of the claim for that of the trustee.
I would, therefore, discharge the order of the judge and substitute an order that the decision of the trustees on 28 June 1978 to reject Mr Kerr's claim was of no effect and that the trustee should reconsider the claim."
"is altogether different, as it seems to me, from the question whether, if trustees take advice properly, and act on that advice in a matter which is within their powers, the fact that the advice has misled them as to the true position in a relevant respect means that they acted in breach of fiduciary duty."
"It is however for advisers to advise and for trustees to decide: trustees may not (except insofar as they are authorised to do so) delegate the exercise of their discretions, even to experts."
"But the question is not in my view to what extent trustees may in practice have to rely on professional advice. The duty to take into account all material considerations is that of the trustees. The extent of that duty is not affected by the amount or quality of the professional advice they may seek or obtain. In In Re Hastings-Bass  Ch 25 it was not relevant to what extent the trustees themselves were able to form an opinion on the effect of the rule against perpetuities."
This passage was noted by Lloyd LJ in his discussion of the cases (para 71) but receives only a passing mention in para 124, the part of his judgment which discusses the significance of professional advice. I have difficulty with these observations of Warner J. They occur in the part of his judgment dealing with the first of the three questions that he had posed (para 72 above) and probably they must be read in that context. Moreover the last sentence at p1626 A-B suggests that Warner J was not clearly distinguishing the category of excessive execution in Hastings-Bass itself from the category of inadequate deliberation relevant to the issue before him. If his remarks cannot be limited to their context then I would say that Warner J was wrong in disregarding the "amount or quality" of professional advice obtained by trustees, when the question relates to a decision within the scope of the trustees' powers.
"He was the one point of contact between on the one side the settlor and on the other side C & L, C & L Isle of Man, the trustee and the protector. For all practical purposes he was the emanation and only representative of C & L, C & L Isle of Man, the trustee and the protector in all their dealings with the settlor. C & L was through itself and its associated firm, C & L Isle of Man and its vehicles, the trustee and the protector, providing the settlor with a total corporate and trust holding service. As is common ground the solicitors who drafted the appointment were acting on behalf of the trustee: Mr Ward-Thompson in giving instructions for its preparation in the circumstances can only have done so acting as agent for the trustee."
These findings (based, it appears, on witness statements not tested by cross-examination) show that it was an unusual situation in which Mr Ward-Thompson had an exceptionally important role. The judge's conclusion was reinforced by another passage in para 27:
"I should add that my view is reinforced by the consideration that any ambiguity in the structure and arrangements ought to be resolved in favour of the settlor: (1) the 'C & L' side were responsible for the structure and arrangements; (2) Mr Ward-Thompson has declined to assist the court; and (3) the trustee perhaps surprisingly failed to seek from the settlor an expression of his wishes in documentary form or provide him with a copy of the proposed appointment before it was executed. In short, on the material before me, on the third issue I am satisfied that the trustee failed in its fiduciary duty to ascertain the true wishes of the settlor to which the appointment was intended to give effect and accordingly the rule is brought into play."
". . . that in such cases as I have mentioned it is to the discretion of the trustees that the execution of the trust is confided, that discretion being exercised with an entire absence of indirect motive, with honesty of intention, and with a fair consideration of the subject. The duty of supervision on the part of this court will thus be confined to the question of the honesty, integrity, and fairness with which the deliberation has been conducted, and will not be extended to the accuracy of the conclusion arrived at, except in particular cases."
The trustees' duty does not extend to being right ("the accuracy of the conclusion arrived at") on every occasion. The "particular cases" that the Lord Chancellor had in mind may have included cases concerned with the maintenance of minor beneficiaries. They may also have included cases (such as Kerr v British Leyland (Staff) Trustees Ltd) in which the trustees have to make a particular factual judgment, rather than exercise a wide discretion.
Would or Might?
Void or Voidable?
"if an exercise by trustees of a discretionary power is within the terms of the power, but the trustees have in some way breached their duties in respect of that exercise, then (unless it is a case of a fraud on the power) the trustees' act is not void but it may be voidable at the instance of a beneficiary who is adversely affected."
In my judgment that is plainly right, and in the absence of further argument on the point it is unnecessary to add much to it. The issue has been clouded, in the past, by the difficult case of Cloutte v Storey, a case on appointments that are fraudulent in the equitable sense, that is made for a positively improper purpose. Here we are concerned not with equitable fraud, nor with dispositions which exceed the scope of the power, or infringe the general law (such as the rule against perpetuity). We are in an area in which the court has an equitable jurisdiction of a discretionary nature, although the discretion is not at large, but must be exercised in accordance with well-settled principles.
Disposal of the Hastings-Bass issues
"They did not overlook the need to think about CGT. They were given advice on the right point. The problem was that the advice was wrong."
RESCISSION ON THE GROUND OF MISTAKE
Mrs Ogilvie's litigation
"undoubtedly a good woman of business, shrewd, clever and intelligent, having been accustomed to assist her husband in business matters. She had a proper sense of the responsibilities of great wealth, she was charitable and munificent. She had strong views on certain subjects, was impatient of any attempt to thwart or control her, and though perhaps at times inclined to be somewhat changeable, she was firm and decided as to her course of action when she had made up her mind and laid down what she terms her law in respect to any matter."
Seven years later she brought an action to have the deeds set aside. She relied on grounds summarized by Byrne J (p 862) as follows:
"(1) That she had not preserved to her the absolute power of disposing of the capital, including the land, as she thought fit during her life, and that notwithstanding express instructions to the contrary. (2) That she had not a similar absolute power in respect to income. (3) That she is liable to interference by the Charity Commissioners and by her own Trustees, and to be called upon by them to account for her administration of the income and that notwithstanding express instructions to the contrary. (4) That she has not the power to apply moneys originally dedicated to London institutions to Suffolk institutions. (5) That she was not fully and properly advised and that she did not fairly understand the nature and effect of the documents she executed."
"The case is entirely wanting in any of those elements of fraud, undue influence, concealments of facts from the donor, want of separate and independent advice, surprise or pressure, which, or some of which, are commonly to be met with in cases of attempts to set aside or rectify voluntary instruments."
The judge rejected almost entirely the criticisms that Mrs Ogilvie directed towards her legal advisers:
"The utmost that could be suggested against Mr Smith is that he misunderstood his instructions, or that he was guilty of error of judgment in not having with more insistence determined to see his client personally, and against Mr Smith, Mr Harding, Mr Sutherland, and their counsel, that possibly they allowed their natural and perfectly unselfish wish to see the charitable scheme carried through to permit them to neglect informing the plaintiff of every trouble and difficulty of detail which arose in the matter."
(Mr Smith was the London solicitor of Mrs Ogilvie, who lived in Suffolk; Mr Harding was a respected member of the Society of Friends, who gave her advice; and Mr Sutherland was her late husband's confidential clerk.) Her action was dismissed.
"Gifts cannot be revoked, nor can deeds of gift be set aside, simply because the donors wish that they had not made them and would like to have back the property given. Where there is no fraud, no undue influence, no fiduciary relation between donor and donee, no mistake induced by those who derive any benefit by it, a gift, whether by mere delivery or by deed, is binding on the donor . . . In the absence of all circumstances of suspicion a donor can only obtain back property which he has given away by showing that he was under some mistake of so serious a character as to render it unjust on the part of the donee to retain the property given to him."
Mrs Ogilvie's grounds of complaint seem to have been revised a little. The alleged mistakes as to the application of capital or income for non-charitable purposes, and as to the jurisdiction of the Charity Commissioners, could not be sustained on the judge's findings. As to the fourth ground (relating to sales of land) the Court of Appeal held that "the mistake, such as it was, cannot be regarded as so material as to affect the validity of the deeds." The fifth ground had been reformulated as a failure by her advisers to warn her that members of the Society of Friends might be unwilling to become trustees. As to this Lindley LJ observed (p 401):
"But, assuming the danger to be real, assuming that it was an error of judgment not to call the plaintiff's attention to it, is such an omission enough to entitle her to have the deeds set aside? We are not aware of any legal principle which goes this length or anything like it. The complaint is not that her intentions have not been carried out; it is that a possible danger known to her advisers was not pointed out to her."
"The appellant, a lady, was desirous of establishing certain charities, and she now contends that, though she did intend to devote her money to charity, certain specific intentions as to management, control, independence of control, and the like were such essential and important considerations to her mind that in these respects she was misled, and now seeks to get rid of the effect of her deeds upon that allegation. Such questions, doubtless, may arise under circumstances where misunderstanding on both sides may render it unjust to the giver that the gift should be retained. It appears to me that there are no such circumstances here. I entirely concur with the judgment delivered by the present Master of the Rolls . . ."
So did Lord Macnaghten, who said that Lindley LJ's judgment "deals with the case so fully and so satisfactorily that there is nothing more to be added." Lord Morris concurred.
What is a mistake?
"Having regard to the facts which I have stated, I must assume that Lady Hood, intending only to bring about equality between her daughters, was labouring under a mistake when she thought that equality would be brought about by the execution of the deed appointing £8,600 to her elder daughter. It was obviously a mistake, because the effect of the execution of that deed was to bring about that which Lady Hood never intended and never contemplated."
"I should say that mere forgetfulness is not mistake at all in ordinary language. I cannot find any decision in Courts of Equity which has ever stated that mere forgetfulness is mistake against which equity would relieve."
But Kay LJ (with whom Lopes LJ agreed) seems to have taken the view that there was a mistake which equity had power to relieve, although in the circumstances of the case the court declined to grant relief. The power to relieve would, it seems, have been based on the conscious belief or tacit assumption that the underletting was lawful.
". . . denying relief for mere causative ignorance produces a boundary line which may be difficult to draw in practice, and which is susceptible to judicial manipulation, according to whether it is felt that relief should be afforded – with the court's finding or declining to find incorrect conscious beliefs or tacit assumptions according to the court's perception of the merits of the claim."
It may indeed be difficult to draw the line between mere causative ignorance and a mistaken conscious belief or a mistaken tacit assumption. I would hold that mere ignorance, even if causative, is insufficient, but that the court, in carrying out its task of finding the facts, should not shrink from drawing the inference of conscious belief or tacit assumption when there is evidence to support such an inference. I shall return (paras 131 and 132 below) to the suggestion that this may involve "judicial manipulation."
"The relevant mistake on which they rely is that Mr Griffiths mistakenly believed, at the time of the transfers, that there was a real chance that he would survive for seven years, whereas in fact at that time his state of health was such that he had no real chance of surviving that long."
The medical evidence (in the form of letters from his general practitioner, from a consultant oncologist and from a consultant rheumatologist) was inconclusive, but the GP expressed the view that it was "extremely unlikely" that the cancer was present in April 2003. On this evidence the judge found that in April 2003 Mr Griffiths had a life expectancy of between seven and nine years. He went on to observe (para 18):
"It is unfortunate that in a case involving £1m-worth of tax a proper medical report was not placed before the court and that the claimants are compelled to rely on a single sentence in a letter from [the oncologist]. Although I have hesitated about this finding, I am prepared to find, by a narrow margin that he was suffering from lung cancer on 3 February 2004; and that following the onset of lung cancer at that time his life expectancy did not exceed three years in February 2004. Had the facts been contested, I might not have felt able to make this finding."
"By that time Mr Griffiths was suffering from lung cancer about which he was unaware. He did therefore make a mistake about his state of health. Had he known in February 2004 that he was suffering from lung cancer he would also have known that his chance of surviving for three years, let alone for seven years, was remote. In those circumstances I am persuaded that he would not have acted as he did by transferring his reversionary interest in the shares to trustees."
The judge did not say whether this was (in the Goff & Jones formulation) an incorrect conscious belief or an incorrect tacit assumption. The editors of that work (para 9-36) treat it as a tacit assumption but it seems close to the residual category of mere causative ignorance. Had the judge not made his hair's breadth finding about the presence of cancer in February 2004 it would have been a case of misprediction, not essentially different from a failure to predict a fatal road accident. Lloyd LJ observed (para 198) that it was strongly arguable that, having declined to follow the financial consultants' recommendation of term insurance, Mr Griffiths was taking the risk of deterioration of his health and failure to survive the statutory period.
What type of mistake?
"It is apparent from the foregoing survey that vitiated consent permits the rescission of gifts when unaccompanied by the additional factors that must be present in order to render a contract voidable. The reason is that the law's interest in protecting bargains, and in the security of contracts, is not engaged in the case of a gift, even if made by deed."
Conversely, the fact that a purely unilateral mistake may be sufficient to found relief is arguably a good reason for the court to apply a more stringent test as to the seriousness of the mistake before granting relief.
"In my judgment, these cases show that, wherever there is a voluntary transaction by which one party intends to confer a bounty on another, the deed will be set aside if the court is satisfied that the disponor did not intend the transaction to have the effect which it did. It will be set aside for mistake whether the mistake is a mistake of law or a fact, so long as the mistake is as to the effect of the transaction itself and not merely as to its consequences or the advantages to be gained by entering into it."
It will be observed that this formulation does not include the Ogilvie v Littleboy requirement of seriousness, except so far as it might be argued that any mistake as to the effect of a disposition is likely to be relatively serious.
"If anything, it is simply a formula designed to ensure that the policy involved in equitable relief is effectuated to keep it within reasonable bounds and to ensure that it is not used simply when parties are mistaken about the commercial effects of their transactions or have second thoughts about them."
On that view it comes close to Lindley LJ's more general requirement for the mistake to be serious. In Wolff v Wolff  STC 1633, Mann J considered (para 23) that the test was not a limiting factor, and (para 26) noted that Lawrence Collins J had referred to commercial consequences, not legal consequences.
". . . that, for the equitable jurisdiction to set aside a voluntary disposition for mistake to be invoked, there must be a mistake on the part of the donor either as to the legal effect of the disposition or as to an existing fact which is basic to the transaction."
This extension seems to have been primarily to accommodate cases such as Lady Hood of Avalon, where there was (para 206) "a fundamental error of fact, in relation to a point which lay at the heart of the transaction." He also seems to have had in mind the New Zealand case of University of Canterbury v Attorney-General  1 NZLR 78, which is discussed at para 199 of his judgment. The special feature of that case was that the University had to some extent encouraged, or at least failed to correct, the donor's error; it wished to return the gift but the Attorney-General, representing the public interest in charity, opposed that course. In addition, the mistake must, Lloyd LJ said, meet the Ogilvie v Littleboy test of sufficient gravity.
The conscience test
"Equity acts on the conscience. The parties [in] whose interest it would be to oppose the setting aside of the deed are the unborn future children of Mr Gibbon and the objects of discretionary trusts to arise on forfeiture, that is to say his grandchildren, nephews and nieces. They are all volunteers. In my judgment they could not conscionably insist upon their legal rights under the deed once they had become aware of the circumstances in which they had acquired them."
"The courts quite consciously now are propounding what are acceptable standards of conduct to be exhibited in our relationships and dealings with others . . . A clear consequence of this emphasis on standards (and not on rules) is a far more instance-specific evaluation of conduct."
The injustice (or unfairness or unconscionableness) of leaving a mistaken disposition uncorrected must be evaluated objectively, but with an intense focus (in Lord Steyn's well-known phrase in In re S (A Child)  1 AC 593, para 17) on the facts of the particular case. That is why it is impossible, in my view, to give more than the most tentative answer to the problems posed by Professor Andrew Burrows in his Restatement of the English Law of Unjust Enrichment (2013) p 66: we simply do not know enough about the facts.
". . . the fundamental principle that equity is concerned to prevent unconscionable conduct permeates all the elements of the doctrine. In the end the court must look at the matter in the round."
In my opinion the same is true of the equitable doctrine of mistake. The court cannot decide the issue of what is unconscionable by an elaborate set of rules. It must consider in the round the existence of a distinct mistake (as compared with total ignorance or disappointed expectations), its degree of centrality to the transaction in question and the seriousness of its consequences, and make an evaluative judgment whether it would be unconscionable, or unjust, to leave the mistake uncorrected. The court may and must form a judgment about the justice of the case.
Mistakes about tax
"The legal effect [of the disposition] was the creation of the Special Needs Trust, on its particular terms, and the fact that the lump sum and the annuity were settled upon those terms."
An irony of the situation is that if the SNT had been framed so as to comply with section 89 (requiring at least half of the property applied during Mr Pitt's lifetime to be applied for his benefit) it would most probably have made no difference to the distribution of capital or income during his lifetime (as the deputy judge noted in para 13 of his judgment, in dismissing a Revenue argument that Mrs Pitt might have decided not to take advantage of section 89). It has not been suggested that the primary purpose of the SNT was other than Mr Pitt's welfare and benefit, and the maintenance of his wife as his carer. The SNT could have complied with section 89 without any artificiality or abuse of the statutory relief. It was precisely the sort of trust to which Parliament intended to grant relief by section 89.
Equity does not act in vain
"It is an old maxim that equity does not act in vain. To my mind that is good law and the court should not make orders which would be ineffective to achieve what they set out to do."
In the event the House of Lords took a different view, by a bare majority, as to whether the continuation of the interlocutory injunctions would serve any useful purpose. The maxim exists, but as Mason CJ and McHugh J said in Corin v Patton (1990) 169 CLR 540, 557,
"Like other maxims of equity, it is not a specific rule or principle of law. It is a summary statement of a broad theme which underlies equitable concepts and principles."
"But, in any event, the settlement should not be set aside after this period of time, especially when the Court does not know what proprietary claim would vest in the estate against third parties."
Apparently with a view to avoiding any doubt on this point, Mrs Pitt's solicitors set out the factual position as it was at that time and stated in the last paragraph of their letter:
"Please note that Mrs Pitt and Mr Shores [her co-executor] have irrevocably instructed us to indicate, that if the Supreme Court orders that Mr Pitt's settlement is set aside, no further claim (to monies or other relief), will be made by them in their capacity as Mr Pitt's personal representatives, or by Mrs Pitt in her capacity as sole beneficiary of his estate, whether against the trustees (from time to time) of Mr Pitt's settlement or the recipients of distributions or other payments from the trustees. Our clients will be satisfied with the effect of section 150 IHTA 1984 (consequent on the order setting aside Mr Pitt's settlement)."
"In my judgment the principle established by these cases is that the court will make an order for the rectification of a document if satisfied that it does not give effect to the true agreement or arrangement between the parties, or to the true intention of a grantor or covenantor and if satisfied that there is an issue, capable of being contested, between the parties or between a covenantor or a grantor and the person he intended to benefit, it being irrelevant first that rectification of the document is sought or consented to by them all, and second that rectification is desired because it has beneficial fiscal consequences. On the other hand, the court will not order rectification of a document as between the parties or as between a grantor or covenantor and an intended beneficiary, if their rights will be unaffected and if the only effect of the order will be to secure a fiscal benefit."
But Peter Gibson LJ went on to differ from Vinelott J in applying this principle. He held that there was an issue capable of being contested. The appeal was dismissed on another ground, that is because of the inadequacy of the evidence to satisfy the high standard of proof required for rectification.
The mistake claim in Pitt v Holt