Setting aside a settlement on the grounds of mistake

It is some time since the Appellate Courts decided that the decision in re Hastings-Bass [1974] STC 211, which enabled trustees, effectively, to cancel a transaction on the ground that it resulted in an unexpected tax liability had been applied too widely. The ratio, of the original Hastings-Bass decision was that where trustees had taken action or made a decision as a result of taking into account something which they should not have taken into account, or having failed to take into account something they should have taken into account, their action would be a breach of trust. It would therefore have been void, or at least voidable. However, in Pitt v Holt [2013] 2 AC 108 (also reported as Futter v HMRC [2013] UKSC 26) the Supreme Court did confirm the doctrine of mistake, including mistakes or the fiscal consequences of an action, might save the day. This has now been explored by the High Court in Der Merwe v Goldman and Others (2016) EWHC 790 (Ch).