The renowned physicist, Professor Stephen Hawking, when
considering time travel, has mused that, "...we have not yet
been overrun by tourists from the future.." In the English law
of trusts, the decision of the Supreme Court in Pitt v Holt, Futter
v Futter, has resulted in turning back the 'fiduciary
clock' by judicial order, which is rather problematic and
unattractive. Going forward, trustee tourists from the future seem
certain to be a rarity in English law. In several international
financial centres, however, what the common law has taken away, the
legislature has given back. This case note will examine the first
decision of the Supreme Court of Bermuda on section47A of the
Trustee Act 1975. This statutory provision has sought to replicate
in Bermuda law the so-called rule in Re Hastings-Bass as it was
understood in England and Wales before the English Court of Appeal
decision in Pitt v Holt in 2011.
In the Court of Appeal in Pitt v Holt, Futter v Futter, Longmore
LJ noted that the appeals in those cases: provide examples of that
comparatively rare instance of the law taking a serious wrong turn,
of that wrong turn being not infrequently acted on over a 20-year
period but this court being able to reverse that error and put the
law back on the right course.
The 'wrong turn' that Longmore LJ was talking about was
the principle established in a succession of English cases and
known as the 'rule in Re Hastings-Bass'. Confusingly, the
'rule' had not, in fact, been established in Re
Hastings-Bass at all, but rather in a line of cases starting with
Mettoy Pension Trustees Ltd v Evans. The 'rule' held that
the exercise of a discretionary dispositive power by trustees may
be declared void and set-aside by the court (even many years after
the event) on the basis that the trustees had failed to take into
account relevant matters when exercising the power. This
'rule' has over the years proved to be particularly useful
in a number of cases when, on the application of the trustees, the
court had been persuaded to set-aside prior acts of the trustee on
the basis of their own failure to take into account a relevant tax
consequence of their actions.
Despite the Supreme Court limiting the circumstances in which a court could set aside a trustee's flawed exercise of power in Pitt v Holt, Futter v Futter, a number of offshore jurisdictions have declined to follow.
On 11 April 2016, following the "Panama Papers" disclosures, the UK Government announced that it was bringing forward its plans to introduce legislation designed "to hold companies who fail to stop their employees facilitating tax evasion criminally liable".
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