‘The law of tax is not an island entire of itself’: Hastings Bass in Jersey considered again in the case of the Onorati Settlement - .PDF file.
In the case of In the matter of the Onorati Settlement, the Royal Court of Jersey considered the so-called ‘rule in Hastings Bass’ for the first time following the judgment of the Supreme Court of the UK in the cases of Pitt v Holt and Futter v Futter  UKSC 26 and set aside an instrument of appointment and declared it to be invalid on the basis that the trustee was in breach of its fiduciary duty.
The Royal Court’s judgment (given by the bailiff Sir Michael Birt) is of interest to trust practitioners and is summarised below.
The rule in Hastings Bass developed over the years in England to its form as presently applied in Jersey is as follows: where trustees act under a discretion given to them by the terms of the trust and they act within the parameters of that discretionary power, but their exercise of discretion has effects other than those they intended, the court will set it aside if it is clear that they would not have acted as they did had they not failed to take into account considerations that they ought to have taken into account, or taken into account considerations that they ought not to have taken into account; it is not a prerequisite that there has been a breach of duty by the trustees (or by their advisers or agents); and unintended tax consequences are among the matters that may be relevant for the purposes of the principle…
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