The latest amendment to Jersey's trust legislation comes
into force today (October 25). The Trusts (Amendment No.6) (Jersey)
Law 2013 provides a clear statutory framework for applications made
on the basis of the rule in Hastings-Bass and the doctrine
Earlier this year, the Supreme Court of England and Wales gave
its judgment in the combined cases of Pitt v Holt and
Futter v Futter, relating to the rule in re
Hastings-Bass and the doctrine of mistake. See our client briefing for more information.
Notably, the Supreme Court shifted the English test for mistake
into near alignment with the Jersey test, as previously determined
by the Royal Court of Jersey.
However, in respect of the rule in Hastings-Bass, the
Supreme Court's decision in Pitt v Holt and Futter
v Futter confirmed that, potentially Jersey and English
law had moved in different directions regarding the criteria
required for a successful Hastings-Bass application, with
a stricter test applying under English law. In Pitt v
Holt, the English Supreme Court ruled that the existence of a
breach of fiduciary duty was a pre-requisite for a successful
Hastings-Bass application. That contrasted with earlier
decisions of the Jersey Courts which concluded that a breach of
fiduciary duty was not a necessary factor to invoke the
Hastings-Bass principle (e.g. Leumi Overseas Trust
Corporation Limited v Howe ). For full details click here.
These principles until now remained established by way of
case law, rather than statute. However, Amendment No. 6 to the Trusts (Jersey) Law
1984 introduces a statutory framework for bringing applications to
the Royal Court to set aside a transfer into a Jersey trust, or the
exercise of a power in relation to a Jersey trust, on the grounds
of mistake or those falling within
Mistake includes a mistake as to fact or law, provided
the mistake is of sufficiently serious character and the action
would not have been taken without the mistake being made. For the
Hastings-Bass rule, it must be shown that the person
taking the action failed to take into account relevant
considerations, or took into account irrelevant considerations, and
would not otherwise have taken such action. The amendments also set
out who may make an application to the court on these grounds.
Jersey's stance on Hastings-Bass is now to be
enshrined in stature, and Amendment No. 6 will uphold the position
stated in the Leumi Overseas Case, namely that lack of care or
other fault on the part of the trustee (e.g. a breach of fiduciary
duty) is not a pre-requisite.
It will still be for the Royal Court to decide whether an action
is voidable on the grounds of mistake or
Hastings-Bass. However, these amendments introduced by
Amendment No.6 provide a clear statutory framework for making
such an application, rather than relying on complicated case law.
This will provide comfort to settlors, beneficiaries and trustees
by reducing the risks associated with mistake and
Hastings-Bass applications, (and a less onerous test for a
successful Hastings-Bass application), thereby making
Jersey an ever more attractive trust jurisdiction.
If you would like more information on this topic, please let us
know and we will arrange a suitable time to come to your office to
do a presentation for you and your colleagues.
Please contact firstname.lastname@example.org to arrange.
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