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The Trustee (Amendment) Act 2016 and the Hastings-Bass Rule

Posted by M. Margaret Gonsalves-Sabola | Oct 20, 2017 | 0 Comments

The trustee amendment act 2016 and the hastings bass rule 460x260 c

The Bahamas' Trustee (Amendment) Act 2016 makes several changes to the powers of trustees, including adding the Hastings-Bass Rule to Bahamian statutory law. The Hastings-Bass Rule originated in a 1974 British court decision called In re Hastings-Bass, in which the court found that a trustee could request that the court set aside and declare void an exercise of a fiduciary power that resulted in unforeseen or unintended consequences. If a trustee acted on behalf of the trust in a way that he did not expect would harm the trust or others, he could undo or unwind the act to fix the problem (often a large tax bill).

Subsequent court decisions changed and limited the Hastings-Bass Rule to the point where trustees became very limited in the type of decisions they could seek to unwind. As a result, The Bahamas enacted the Trustee (Amendment) Act 2016, which reinforces in statutory form the original Hastings-Bass Rule. Currently, a trustee in The Bahamas may apply to the court for a declaration that the exercise of a fiduciary power is voidable. Not only can trustees apply, but also a protector or other person exercising the power; a successor in title of the trustee or protector; a beneficiary; any person with leave of the court; and other persons in specific situations defined under the law. Trustee (Amendment) Act 2016, Section 4.

Notably, the Trustee (Amendment) Act does not require that the applicant either allege or prove a breach of duty or a breach of trust. There need not be any “fault” on the part of the trustee in the court's view. The applicant only need assert and the court must find that the person exercising the fiduciary power did not take into account relevant information or took into account irrelevant information, and so the person would not have exercised the power or would have done it differently. Trustee (Amendment) Act 2016, Section 4. Finally, the Trustee (Amendment) Act establishes that the court cannot make an order that would prejudice a bona fide purchaser for value without notice who has no knowledge of the circumstances. Trustee (Amendment) Act 2016, Section 4.

This rule makes it easier for trustees and other persons with connections to a trust to unwind unfortunate decisions or transactions and avoid claims of breach of duty. The Bahamas' recent codification of the Hastings-Bass Rule falls in line with Jersey and Bermuda, which have also enacted the rule in their statutes.

To find out more about trustees' exercise of fiduciary powers, visit Gonsalves-Sabola Chambers online or call the office at +1 242 326 6400.

About the Author

M. Margaret Gonsalves-Sabola

M. Margaret Gonsalves-Sabola is a civil and commercial litigation attorney and an accredited civil and commercial mediator. Margaret has over 21 years' experience in legal practice in the United Kingdom, Jamaica and The Bahamas.

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