Hastings-Bass: life after death in the offshore world?

In March 2011 our Jersey office reported on the death of ‘Hastings-Bass’ in the UK as a remedy for trustee ‘mistakes’ following the Court of Appeal’s decisions in Pitt v Holt and Futter v Futter. In a long-awaited post mortem, the Supreme Court has confirmed in its judgment of 9 May 2013, that the ‘rule in re Hastings-Bass’ under English trust law as practitioners had understood it for a number of years is now well and truly dead and buried.  In essence, the Court will only have jurisdiction to intervene in a matter concerning a trustee’s flawed decision, where that decision was within the parameters of a power held by it, if the trustee has acted in breach of fiduciary duty in taking that decision. This rules out bad decisions that result from the trustee having obtained professional advice which advice turned out to be wrong: the principle simply does not apply there since the trustee will not have committed a breach of duty. It also rules out any other decisions that transpire to be disadvantageous but where the trustee did not breach its duties.

The two bits of good news that nevertheless arise from the appeal to the Supreme Court are: first, that Mrs Pitt finally succeeded in setting aside the decision she had taken as receiver for her disabled husband (and thus tantamount to a trustee) based on her alternative argument of mistake (and rightly so); and secondly, that the Supreme Court confirmed that the proper test for mistake in this context is the less restrictive form (and which we note is in the same form as that which is applied by the Jersey Court) based on Ogilvie v Littleboy and not Gibbon v Mitchell. That is, all that has to be shown is a causative mistake of sufficient gravity, not the metaphysical proof that it was a mistake  as to the “effects” of a decision rather than its “consequences”…

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