Hastings-Bass Rule Reborn

Bermuda is well known as one of the most stable jurisdictions in the world: a reputation built very much on the islands' established and durable legal system. But stability does not mean stagnation, as Bermuda's legislators have demonstrated this year, with some important and welcome amendments to the Trustee Act 1975. In this article, we consider one of these changes: the Trustee Amendment Act 2014, which gives statutory effect to 'the rule in Re Hastings-Bass'.

THE DEATH OF THE RULE

Following the decision of the UK Supreme Court in Pitt v Holt; Futter v Futter,1 it seemed that what had become known as 'the rule in Re Hastings-Bass' was dead. In giving the sole judgment of the Court, Lord Walker cited the words of Longmore LJ, who said that the appeals in the case were 'examples of that comparatively rare instance of the law taking a seriously 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'.

It is difficult to argue with this analysis. The rule in Re Hastings-Bass in fact emerged in 1990, in the judgment of Warner J in Mettoy Pension Trustees Ltd v Evans.2 What the learned judge did in that case was to extract a principle from certain remarks of Buckley LJ in Re Hastings-Bass (Deceased) to the effect that the court should not interfere with the exercise of a trustee's discretion unless 'it is clear that he would not have acted as he did (a) had he not taken into account considerations which he should not have taken into account, or (b) had he not failed to take into account considerations which he ought to have taken into account'.3

These remarks were strictly obiter – they were made in the context of a case relating to the effect of the perpetuity principle on the validity of a power of advancement – and they were couched in purely negative terms, but from them Warner J drew what he described as 'the principle in Re Hastings-Bass': 'Where a trustee acts under a discretion given to him by the terms of a trust, the court will interfere with his action if it is clear that he would not have acted as he did had he not failed to take into account considerations which he ought to have taken into account.'

It is clear the 'principle' that Warner J identified was in fact a new principle that was not drawn from the Hastings-Bass case at all. However, this new jurisdiction was taken up at first instance, not only in England...