The claimant had settled the moneys received as damages for injury to her husband on a discretionary trust of which she and others were trustees. The death of her husband gave rise to an immediate inheritance tax, as the terms of the turst had failed to provide that at least half of the settled property was to be applied during his lifetime for his benefit (as in fact occurred).
On finding that the trust should be set aside on the grounds of mistake, Lord Walker noted (at para. 122) that the true requirement for rescinding a voluntary disposition such as a gift or settlement was
for there to be a causative mistake of sufficient gravity; and …[this] test will normally be satisfied only when there is a mistake as to the legal character or nature of a transaction or some matter of law which is basic to the transaction.
He further noted (at para. 132) that "consequences (including tax consequences) are relevant to the gravity of a mistake."
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