Bainbridge: tracing the proceeds of a mistake

The recent case of Bainbridge v Bainbridge confirms that, under the doctrine of mistake, voluntary dispositions can be rescinded. The donors received professional advice that no CGT charge would arise on the transfer of three parcels of farmland to a trust. This was incorrect. To complicate matters, by the time of the application, two parcels had been sold and the proceeds used by the trustees to purchase other farmland. The court combined two equitable remedies – rescission and tracing – to restore the transferors to their original positions, notwithstanding the intervening sale of part of the subject matter of the mistaken transaction.