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Christopher Edwards

Christopher Edwards

Partner | Guernsey

Some mistakes are meant to be fixed: a return to a measure of predictability in Guernsey Hastings-Bass orders

31 July 2018

Not all mistakes by trustees resulting in loss or negative consequences for beneficiaries are necessarily breaches of trust with the ensuing liability.

It is a difficult position for any corporate trustee or administrator to have to make an insurance notification or reconstitute the fund because of an innocent mistake. In the M v St Anne's case the pension scheme trustee relied on the beneficiaries assurances that he had sought the correct tax advice.

The trustee did not take its own tax advice and was without sight of that obtained by the beneficiary (which was wrong) leaving the beneficiary with a £1.8 million tax bill after transferring £2.6 million worth of residential property into the trust. Orders were therefore sought avoiding the transaction under the so called Hastings-Bass principle.

The jurisdiction for Hastings-Bass applications has changed dramatically since 2012, especially with the Royal Court's decision in the St Anne's which imported unpredictable (and somewhat discretionary) 'unconscionability' into the mix. However Guernsey law as to the Hastings-bass jurisdiction should now be considered settled with a level of predicability.

The Court of Appeal has confirmed that unconscionability in letting the transaction stand is no longer a requirement and therefore Hastings-Bass orders, although they are often difficult to formulate, are on a surer footing for beneficiaries - in consultation with their professional trustees and legal advisors - to obtain.

 

Contact

Christopher Edwards

Christopher Edwards

Partner | Guernsey

About Mourant

Mourant is a law firm-led, professional services business with over 60 years' experience in the financial services sector. We advise on the laws of the British Virgin Islands, the Cayman Islands, Guernsey, Jersey and Luxembourg and provide specialist entity management, governance, regulatory and consulting services.

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