In July 2014 the Bermuda legislature enacted the Trustee Amendment Act 2014. The effect of this statutory reform was to insert a new section 47A into the Trustee Act 1975. Section 47A was intended to introduce into Bermuda statutory law the so-called "Rule in Re Hastings-Bass" as it had been understood and applied in England (and in other common law jurisdictions) prior to the decision of the English Court of Appeal in Pitt v. Holt, Futter v. Futter [2011] EWCA Civ 197. The "Rule in Re Hastings-Bass" had, prior to this decision, been a useful technique by which trustees (and others) could apply to set aside flawed exercises of fiduciary powers.
The new section 47A provided the court with the power to set aside the exercise of such powers ab initio (whether exercised before or after the coming into force of section 47A) without the need to attribute blame or to establish any breach of trust. The exercise of this statutory jurisdiction is dependent upon persuading the court that the power holder had taken into consideration an irrelevant consideration or failed to take into consideration a relevant consideration and, but for that failure, the power would not have been exercised (or would have been exercised on a different occasion or in a different manner).
The Supreme Court of Bermuda has now handed down the first written decision on section 47A in In the Matter of the F Trust and In the Matter of the A Settlement ([2015] SC (Bda) 77 Civ (13 November 2015)). This decision related to two Bermuda trusts in each of which a UK resident trustee had been appointed, in one case by the then trustees and in the other, by the Settlor. The appointment of a UK resident trustee had, or was likely to have, adverse UK tax consequences. No UK tax advice had been taken prior to the exercise of the powers. The Chief Justice of Bermuda in granting both applications accepted that in each case the power to appoint trustees was a fiduciary power and thus the threshold jurisdictional requirement was met. It was also accepted in each case that there had been a failure to take into consideration a relevant consideration, namely the UK tax consequences which the Chief Justice described as "financially significant factual and legal considerations". The Chief Justice further held that section 47A provided the court with an unfettered statutory discretion in respect of which it was unnecessary to articulate any particular "test" for its exercise. Rather, the court accepted that this new statutory jurisdiction should be applied on the facts of each particular case.
Appleby represented the successful Plaintiffs in both cases.
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