Ogden & Anor v Trustees of the RHS Griffiths 2003 Settlement & Ors

Equity may set aside a voluntary disposition for a sufficiently serious mistake about an existing or pre-existing fact, including the donor’s state of health. The mistake must exist when the transaction is made; a later failure of expectations is insufficient. An individual seeking relief must show that, if aware of the true facts, he would not have entered into the transaction. The jurisdiction is discretionary and the transaction is voidable, not void ab initio. Relief was granted for a share assignment made while the donor unknowingly had terminal cancer, but refused for earlier transactions because no relevant mistake or counterfactual decision was established.

The claimants were executors seeking to set aside three inheritance-tax planning transactions entered into by the deceased Ronald Griffiths. Two transactions were made in April 2003: a transfer of shares into a short-term discretionary trust and the grant of a deferred lease of the matrimonial home. A further assignment of a reversionary interest in shares was made in February 2004.

The claimants alleged that Mr Griffiths mistakenly believed he had a real prospect of surviving the relevant period, whereas his health made that prospect materially worse. The defendants did not oppose the relief. The court considered whether the alleged mistakes were legally operative, whether Mr Griffiths would have acted differently if aware of the true facts, and whether any relief rendered the relevant transaction void or voidable.

1. The claim was allowed in part. The April 2003 transactions were not set aside. The February 2004 assignment of the reversionary interest in the shares was set aside.
2. The court adopted the equitable principle described in Ogilvie v Littleboy and approved in Ogilvie v Allen: a voluntary disposition may be set aside where the donor made a mistake sufficiently serious to make it unjust for the donee to retain the property.
3. The operative mistake must exist when the transaction is entered into. The subsequent falsification of an expectation, such as an unexpected early death, is insufficient. However, a sufficiently serious mistake about an existing or pre-existing fact, including the donor’s state of health, can engage the jurisdiction. The court declined to treat the formulation in Gibbon v Mitchell as restricting the jurisdiction to mistakes about the effect of the transaction.
4. For an individual disposing of his own property, the claimant must show that, if aware of the true facts, he would not have acted as he did. It is unnecessary to prove precisely what alternative course he would have taken. This was the higher counterfactual test discussed in Sieff v Fox.
5. The April 2003 transactions were made when there was no evidence that Mr Griffiths had lung cancer or made a relevant mistake about his health. The evidence also failed to establish that he would have acted differently. The deferred lease presented the additional difficulty that it was granted jointly with Mrs Griffiths, who had not sought relief and whose own mistake had not been proved.
6. By February 2004 Mr Griffiths was suffering from lung cancer, though unaware of it. Had he known the true position, he would not have assigned the reversionary interest to trustees. It was unjust for the donees to retain the gift in circumstances producing a substantial unintended inheritance-tax liability.
7. The equitable jurisdiction is discretionary. Relief operates by setting aside the transaction, so the transaction is voidable rather than void ab initio. The assignment was therefore set aside.