KembaraXtra - Legal Terms - Rule in Re Hastings Bass

The rule in Re Hastings Bass concerns situations where trustees exercise their discretionary powers incorrectly. Under the original principle, a court could sometimes set aside a trustee’s decision if relevant considerations had been ignored or irrelevant considerations had been taken into account. The doctrine was intended to protect beneficiaries from defective trustee decision-making. It became an important equitable remedy. Its scope, however, was later significantly restricted.

For many years, courts interpreted the rule broadly. Trustees who made tax mistakes frequently sought to have transactions declared ineffective under the doctrine. Beneficiaries also relied upon the principle where trustee decisions produced unintended consequences. This generous interpretation attracted criticism. Many believed that it undermined legal certainty.

The Supreme Court reconsidered the doctrine in Pitt v Holt and Futter v Futter in 2013. The Court held that the rule could not be used merely because trustees had acted upon incorrect professional advice. If trustees had acted honestly and fulfilled their duty by obtaining competent advice, the transaction would generally remain valid. Professional negligence by advisers would not invalidate the trustee’s decision. The scope of the doctrine was therefore greatly narrowed.

Following the Supreme Court’s decision, trustees may still face liability even where they relied on expert advice. Their remedy may instead lie against negligent professional advisers. The law now distinguishes between defective decision-making and defective advice. This approach promotes commercial certainty. It also preserves the finality of transactions.

The rule in Re Hastings Bass remains an important part of trust law. Although its practical application is now much narrower, it continues to illustrate the limits of judicial intervention in trustee decisions. Trustees must exercise their powers carefully and obtain appropriate advice. Beneficiaries retain protection against genuine breaches of fiduciary duty. The doctrine reflects the balance between fairness and legal certainty.