In recent times Jersey law has swung in a different direction from English law in relation to the rule in Hasting-Bass, the legal principle by which a trustee's exercise of powers can be set aside in circumstances where inadequate deliberations on its part have adverse implications for beneficiaries.

In the Jersey case of Leumi Overseas Trust Corporation Limited-v-Howe [2007] JLR 660 the Royal Court determined that a breach of fiduciary duty on the part of the trustee was not a necessary factor to invoke the Hastings-Bass principle.

In contrast, the more recent English Supreme Court judgment in Pitt v Holt [2013] STC 1148, confirmed that as a matter of English law the existence of a breach of fiduciary duty was a pre-requisite for a successful Hastings-Bass application.

In the Onorati case, the Court acknowledged obiter observations in Re the B Life Interest Settlement [2012] JRC 229 to the effect that, had it been necessary to decide the point, the Court would have rejected the previous Jersey decisions and applied the English law principle as declared by the Court of Appeal in Pitt-v-Holt.

However, Onorati was not to be the case by which the Royal Court would either align the Jersey position on Hastings-Bass with English law, or follow its decision in the Leumi Overseas case and confirm Jersey's move in a different direction.

The Bailiff simply identified that the Court's decision was "to say nothing further on the topic therefore other than to say that the position remains open although any party wishing to submit that Jersey law should continue to plow its own furrow will have to explain why the closely reasoned judgements [in Pit v Holt] should not be applied".

The Court's decision is perhaps unsurprising given the prospect that, in the not too distant future, Jersey's stance on Hastings- Bass is to be enshrined in statute. Perhaps particularly so given that, as drafted, the Trusts (Amendment No. 6) (Jersey) Law 201 - will uphold the position stated in the Leumi Overseas case, namely that lack of care or other fault on the part of the trustee is not a pre-requisite.

So, for the Jersey position on Hastings-Bass the pendulum keeps swinging, for now at least, though it is hoped Amendment No. 6 will bring a definitive end to its somewhat tortuous route through the Jersey courts.


What the Court did state unequivocally in Onorati was that, where tax treatment affects the trustee's decision, it is wholly insufficient and a breach of fiduciary duty for a trustee to rely on oral confirmation from a beneficiary that he or she has received appropriate tax advice.

The court accepted that, in some circumstances, where written advice has been obtained by a beneficiary it will be sufficient for a trustee to act on the basis of that advice. However, the trustee will always need to see the advice in order to satisfy itself that it is appropriate and is based upon a correct understanding of the facts.

Where, as is so often the case, taxation implications affect trustees' decisions, they should be wary of concluding that, having ensured the affected beneficiary has obtained tax advice, "that box is ticked" with risk passed on to the tax adviser and beneficiary. It is clear from the Onorati decision that the trustees must have cognisance of the tax advice and form a view as to the appropriateness of that advice to the trustees' proposed actions.

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