NOTE: This article was published in November 2011 and reflects the law as it stands on the date of publication and not at any later date.
In this talk I want to explore the recent English Court of Appeal decision in a conjoined appeal in two cases: Pitt v Holt and Futter v Futter  3 WLR 19 in a context where a mistake has been made as to the tax consequences of a transaction.
Both cases involved a reconsideration of the so-called “rule in Hastings-Bass” (based on dicta in Re Hastings-Bass  Ch 25) that the court will interfere with the exercise of a discretion by trustees where it is clear that the trustees would not have acted as they did:
(a) had they not failed to take into account considerations which they ought to have taken into account or
(b) taken into account considerations which they ought not to have taken into account.
The claim was that the trustees (Futter) or a fiduciary (Pitt) had exercised powers in a way that gave rise to unforeseen tax liabilities, and that they would not have so acted if they had taken the true tax position into account. The claims failed, in the Court of Appeal, because the exercise of a discretion by trustees, which is within the terms of the relevant power, cannot be set aside unless the trustees have committed a breach of trust. There can be no breach of trust if (as was the case) the trustees or fiduciary had taken and acted upon appropriate tax advice, even if that advice proved to be wrong.
The decision, if followed in Jersey, may have an impact on claims against trustees.Read More »