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(Chancery Division; Mr Christopher Nugee QC sitting as a deputy judge of the High Court; 29 October 2009)
Both the wife and the son asked the court to make a declaration that the husband's transfer of the matrimonial home to the son was void, on the basis that the husband had lacked capacity to transfer the property. Although it had been expected that the transfer would save inheritance tax, in fact it had proved to have unwelcome capital gains tax implications.
Setting aside the transfer on the basis that there was enough evidence that the husband had suffered from vascular dementia at the time of the transfer to satisfy the court that the husband had lacked the capacity to transfer the property, the court declined to make a declaration that the transfer was void.
There was real doubt as to whether incapacity made a voluntary transaction void or voidable. The court would have to form a view if it were necessary to resolve the rights of the parties, but in this case it seemed to make no difference to the position of the parties; the tax authorities were not parties to this action, and would not be bound by any declaration made.
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