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In Re Griffiths Notes

BCL Law Notes > Restitution of Unjust Enrichment BCL Notes

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IN RE GRIFFITHS FACTS Mr. Ronald Griffiths had acquired a number of substantial assets. In January 2003, then aged 73, Mr Griffiths and his wife Barbara took advice about tax planning in order to mitigate what would otherwise be the effect of inheritance tax on his death. Barbara Griffiths was a year younger than her husband. Tax consultants, WJB Chiltern, produced a comprehensive report, running to more than 50 pages, on the options open to him. Most of the options involved the making of potentially exempt transfers, that is to say a transfer made more than seven years before the transferor's death. Some of the options were:

1. So far as the shares in Iota Properties Ltd were concerned they suggested the creation of a short term discretionary trust of the shares with reverter to settlor, and a subsequent assignment of the settlor's reversionary interest to trustees.

2. The report recommended the creation of a deferred lease in favour of trustees. A deferred lease is a lease whose term is limited to begin at a future date. So the idea was that Mr and Mrs Griffiths would retain the right to continue to live in their matrimonial home, but that they would lose that right once the term of the deferred lease began to run. But these would have been effective only if Mr. Griffiths survived for more than seven years. Unfortunately in the autumn of 2004 Mr Griffiths was diagnosed as having lung cancer; and he died on 17 April 2005. Since Mr Griffiths had not survived for more than three years since the transfers were made all of the three transfers by Mr Griffiths are chargeable transfers for inheritance tax. The tax payable therefore exceeds PS1 million. Mr Griffiths also made a will under which he left a life interest in his residuary estate to his widow. Any assets in which she takes an interest under the will do not attract inheritance tax. If, therefore, Mr Griffiths had not made the transfers, there would be no inheritance tax immediately payable. The claimants, as Mr Griffiths' executors, now seek to set aside the transfers on the ground that they were made under a mistake and that equity will set aside a voluntary transfer in such circumstances. The relevant mistake on which they rely is that Mr Griffiths mistakenly believed, at the times 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 for that long. Had he known that his life

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