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Jersey Trust Experts Examine Court Rulings

Tuesday, March 29, 2011

There was a significant turnout at a recent Jersey conference, which focused on the precarious future of the Hastings-Bass principle, which sets out when a court may intervene in cases where a trustee acts under his or her own discretion, particularly in cases involving tax.

The conference, organized by Appleby, was the first to cover the English Court of Appeal's recent decision in Futter v. Futter and Pitt v. Holt, and focused on the future application of the Hastings-Bass principle, and the developments' potential implications for Jersey law.

In Futter v. Futter, the trustees failed to account for Section 2(4) of the Taxation of Capital Gains Act, 1992, which prevented the client, Futter, from being able to offset personal portfolio losses against the trust’s significant stockpiled gains. The trustee in this case successfully sought a declaration that the advancements were void and of no effect, based on the rule in Hastings-Bass. As part of the judgement, the Court agreed that the effect of the trustees’ actions, when exercising a discretion, were contrary to the trustees' intention. The trustees' actions were therefore allowed to be rolled back.

The second case, Pitt v. Holt, ended with a ruling that the receiver, appointed under the Mental Health Act, held the key roles of a trustee, and was exercising his role on a discretionary basis - on the basis that the receiver was not under the instructions of the beneficiary of the trust. The unintentionally incurred additional tax liability was therefore considered in this case also.

These were appealed by HM Revenue and Customs, and in late-March the Court of Appeals agreed that in these cases the application of Hastings-Bass was erroneous. The case set a precedent that trustees acting on professional tax advice, where that advice goes awry, will not have the legal fallback of Hastings-Bass.

At the conference attendees were warned that the judgement represents a fundamental change in approach to dealing with trustee errors. Following the judgment, under English Law, trustees will find it much more difficult to rely on the rule in Hastings-Bass when seeking to set aside decisions made by them on the basis of a misunderstanding as to the tax or legal consequences. For such applications to succeed in future there will need to be a finding of fault or breach of trust against the trustee.

Welcoming the interest in the firm's latest conference, Fraser Robertson, Partner and Practice Group Head, Litigation & Insolvency at Appleby, commented: “The conference was extremely well-received by our audience, and it will be fascinating to see over the coming months the extent to which the dramatic developments in Futter affect the law in Jersey in this important area for trustees.”

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The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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