The application of the Hastings-Bass principle in Jersey following the decision in Pitt v Holt

This judgment relates to an application to the Royal Court under the ‘so-called’ Hastings Bass principle brought by two beneficiaries of a sub-fund of the Onorati Settlement (the trust). In brief, two of the beneficiaries sought to set aside a deed of appointment distributing the trust fund of the trust to them without adequate consideration of the tax consequences of the appointment and without professional tax advice, rather than to their mother who was also a beneficiary of the trust (as was originally envisaged). The application was brought on the grounds that the appointment to the two beneficiaries resulted in a breach of the trustee’s fiduciary duty and an unnecessary tax charge for two beneficiaries. Importantly, the trustee failed to take professional advice as to the tax consequences, despite being aware that the appointment would have adverse tax consequences.

While HM Revenue & Customs (HMRC) was notified of the application, it declined to appear but did draw the attention of the Royal Court to the obiter dicta of the Deputy Bailiff in Re the B Life Interest Settlement.

Given that the principle has been the subject of recent and detailed consideration by the English Court of Appeal and the Supreme Court in Pitt v Holt and Futter v Futter, the Royal Court summarised the current position in England and the position in Jersey…

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