Leumi Overseas Trust Corporation Ltd v Howe and Others [2007] JRC 248 (24 December 2007)

Leumi Overseas Trust Corporation Ltd v Howe and Others [2007] JRC 248 (24 December 2007)

The trustee failed to consider the true UK tax consequences of the borrowings and investments due to changes in tax law, and would not have acted as it did had it known; under the Hastings-Bass principle as applied in Jersey law, which does not require fault, the trustee's decisions are set aside and declared of no effect.

Citation
[2007] JRC 248
Parties
Applicant/trustee: Leumi Overseas Trust Corporation Limited; Settlor/beneficiary: Daryl Howe; Lender/interested Party: Sandtown Limited; Notified Party: Attorney General; Representative for Minor and Future Beneficiaries: Mr Pearmain
Jurisdiction
Jersey
Judgment Date
24 December 2007
Procedural Posture
Trust Application (hastings Bass Principle) / Judgment on Application to Set Aside Trustee Decisions
Outcome
Application granted; trustee's decisions set aside.
Legal Topics
Hastings Bass Principle, Trustee Discretion, Mistake in Trust Administration, Tax Consequences of Trust Decisions, Setting Aside Trustee Decisions
Trusts Equity Taxation Hastings Bass Principle Trustee Discretion Mistake in Trust Administration Tax Consequences of Trust Decisions Setting Aside Trustee Decisions

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Parties

Leumi Overseas Trust Corporation Limited

Applicant/trustee

Daryl Howe

Settlor/beneficiary

Sandtown Limited

Lender/interested Party

Attorney General

Notified Party

Mr Pearmain

Representative for Minor and Future Beneficiaries

Procedural Posture

Trust Application (hastings Bass Principle) / Judgment on Application to Set Aside Trustee Decisions

Legal Issues

  1. 1 Whether the trustee's decisions to borrow and invest should be set aside under the Hastings-Bass principle due to failure to consider relevant tax consequences
  2. 2 Whether fault or breach of duty is required to invoke the Hastings-Bass principle under Jersey law

Ratio Decidendi

The trustee failed to consider the true UK tax consequences of the borrowings and investments due to changes in tax law, and would not have acted as it did had it known; under the Hastings-Bass principle as applied in Jersey law, which does not require fault, the trustee's decisions are set aside and declared of no effect.

Court Disposition

Application granted; trustee's decisions set aside.

Orders

  • Trust Borrowing 1 and Trust Borrowing 2 and the Settlor Loans are set aside and declared to be of no effect.
  • Investment 1, Investment 2, and other investments made with the proceeds of Trust Borrowing 2 are declared to be held by the Trustee as bare trustee for Sandtown Limited.