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.