The trustees for many years signed every document placed before them by their solicitors (including appointments) without understanding that they had any discretion in the exercise.
Held: What might first appear to have been a decision of trustees may prove on questioning not to have been a decision. Where a power is exercised in form but not in substance then the appointment will be declared void.
Mervyn Davies J said: ‘the trustees exercising a power come under a duty to consider. It is plain on the evidence that here the trustees did not in any way ‘consider’ in the course of signing the three deeds in question. They did not know they had any discretion during the settlor’s lifetime, they did not read or understand the effect of the documents they were signing and what they were doing was not preceded by any decision. They merely signed when requested. The trustees therefore made the appointments in breach of their duty in that it was their duty to ‘consider’ before appointing and this they did not do.’ and ‘The authorities I have mentioned, including In re Hastings-Bass, decd., permit the inference that in a clear case on the facts, the court can put aside the purported exercise of a fiduciary power, if satisfied that the trustees never applied their minds at all to the exercise of the discretion entrusted to them. If appointers fail altogether to exercise the duties of consideration referred to by Sir Robert Megarry then there is no exercise of the power and the purported appointment is a nullity.’
Judges:
Mervyn Davies J
Citations:
[1984] Ch 100, [1983] 2 All ER 745
Jurisdiction:
England and Wales
Cited by:
Cited – Abacus Trust Company (Isle of Man) Colyb Limited v Barr, Barr, and Barr ChD 6-Feb-2003
The court considered the Rule in Hastings-Bass, and specifically (1) whether the trustee’s decision is open to challenge when the failure to take a consideration into account is not attributable to a breach of fiduciary duty on the part of the . .
Cited – Futter and Another v Futter and Others ChD 11-Mar-2010
Various family settlements had been created. The trustees wished to use the rule in Hastings-Bass to re-open decisions they had made after receiving incorrect advice.
Held: The deeds were set aside as void. The Rule in Hastings-Bass derives . .
Lists of cited by and citing cases may be incomplete.
Trusts
Updated: 10 September 2022; Ref: scu.181652
