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. 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.
These principles remain established by way of case law, rather than statute. However, Amendment No. 6 to the Trusts (Jersey) Law 1984 will introduce 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 Hastings-Bass.
The Jersey approach simplifies what has become a complex area of law by codifying it into statute.
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 any 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.
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 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, thereby making Jersey an ever more attractive trust jurisdiction.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
