The Decision in Futter and Pitt –
Hastings Bass and Mistake Explained?
An Offshore Perspective
Mark Renouf, Advocate
Hanson Renouf
www.hansonrenouf.com
Mark Renouf – An Offshore Perspective
Overview of talk:Offshore – to what extent can a “common law”
trust jurisdiction depart from the “mainstream”
trusts law position
• Case Law. Supreme Court vindicates Jersey’s position on
“Mistake”
• Statute Law. Trusts (Jersey) Law Amendment no 6 preserving
old Hastings Bass rule.
• Public Policy
Mark Renouf - An Offshore Perspective
Why is Jersey Interesting?
• A civil law system “at heart” – 1204
• But Trust Law looks to common law trust precedents
• Mistake & Hastings-Bass – Jersey cases initially based upon English precedents:Mistake:Re A Trust [2009] JLR 447 [and other cases, Re R Remuneration Trust [2009]
JRC 164A; re Lochmore Trust [2010] JRC 068; Re S Trust 2011 JLR 375; In Re B
Life Interest Settlement [2012] JRC 229
Hastings-Bass:Re Green GLG Trust [2002] JLR 571; Leumi Overseas Trust Corporation Ltd v
Howe [2007] JLR660 (no breach of duty by Trustees necessary); In Re B Life
Interest Settlement [2012] JRC 229; In re Onorati Settlement [2013] JRC 182.
Mark Renouf - An Offshore Perspective
-Which Way should Jersey Go?
-Follow existing Jersey precedent or follow “mainstream” developments in English
law?
-In Re B Life Interest Settlement [2012] JRC 229
-“Public interest” – varies according to jurisdiction.
- The debates in Jersey must be largely applicable to other offshore jurisdictions.
Mark Renouf - An Offshore Perspective
Statute – Trusts (Amendment no.6) (Jsy) Law
cif 25.10.2013. Deals with:a. Mistake.
b. Hastings-Bass
Mark Renouf - An Offshore Perspective
The Interesting Debate - Public Policy:In re S Trust [2011] JLR 375. Commissioner (Philip) Bailhache (former Bailiff
and now politician):“39.
... The preference accorded to the interests of the tax authority in the United Kingdom is not
one, however, with which we are sympathetic. In our view, Leviathan can look after itself. We
should not be taken as indicating any sympathy for tax evasion, .... But in Jersey it is still open
to citizens so to arrange their affairs, so long as the arrangement is transparent and within the
law, as to involve the lowest possible payment to the tax authority. .... We accordingly see no
reason for adopting a judicial policy in this country which favours the position of the tax
authority to the prejudice of the individual citizen, and excludes from the ambit of discretionary
equitable relief mistakes giving rise to unforeseen fiscal liabilities. We see no fairness in such a
policy. ..... It was a mistake for Mrs. Pitt to enter the arrangement that she did. ...Yet it was
excluded from the possibility of equitable relief because the policy is to treat unforeseen fiscal
liabilities as a consequence rather than an effect of the mistake.
40 Justice and fairness seem to us to have been at the heart of the approach adopted by
Lindley, L.J. in Ogilvie v. Littleboy (12). It is troubling, therefore, that the outcome for Mrs. Pitt
seems to have been so unjust and unfair.”
Mark Renouf - An Offshore Perspective
Lord Tomlin’s proclamation in the Duke of
Westminster’s Case (1936) AC 1 still holds good:
“Every man is entitled, if he can, to order his affairs
so as that the tax attaching under the appropriate
Acts is less than it otherwise would be.”
Mark Renouf - An Offshore Perspective
The Public Policy Debate:a. Is it realistic to say that 3rd Party Professional Advisers can (always) be sued?
b. Is Jersey “diddling” HMRC by making Hastings-Bass applications easier?
(This is about “Windfalls” to HMRC - facts of Pitt v Holt - a perfectly acceptable
“disabled discretionary trust” route created by HMRC which should have been
taken advantage of).
c. Don’t conflate with issue of “artificial”/“aggressive” tax avoidance - within gift of the
UK government and HMRC to alter the law to define (GAAR). Safeguards:
Discretionary, equitable remedy.
d. Allowing mistakes to be fixed avoids (i) uncertainty; (ii) delay; (iii) cost; and (iv)
possible injustice.
e. Citizens are entitled to avoid tax lawfully.
f. Does wider application of Hastings-Bass really encourage “sloppy trust
administration”?
Mark Renouf - An Offshore Perspective
An Offshore Perspective
Mark Renouf, Advocate
Hanson Renouf
www.hansonrenouf.com
Mark Renouf – An Offshore Perspective