The Scope of Pitt v Holt

Simon Douglas

The law on rescission for mistake was reformulated by the Supreme Court in the case of Pitt v Holt [2013] UKSC 26. Giving the sole judgment in the case, Lord Walker explained that for a voluntary disposition to be set aside, the party asserting recission needed to show: (1) that there had been a mistake; (2) that the mistake was of "sufficient gravity" to justify the disposition being set aside; and (3) that it would be unconscionable to leave the mistake uncorrected. Lord Walker also confirmed that a disposition could be set aside on the basis that the donor made a mistake about the tax consequences of the transaction, which seems to have led to an increase in the number of parties seeking to invoke the rule.