Trustees' Errors Of Judgment And Setting Aside A Voluntary Disposition On The Grounds Of Mistake

The rule in Re Hastings-Bass, [1975] Ch. 25 (CA), has been understood to permit the court to declare void and set aside the exercise of a discretionary power under a trust, either because the trustees considered factors they ought not to have considered or because they failed to consider factors they ought to have considered. The typical case concerns unforeseen tax consequences. As Lloyd LJ points out in the combined appeals in Pitt v Holt and Futter v Futter, [2011] EWCA Civ 197, Hastings-Bass did not turn on the this sort of fact pattern and the ratio of the case is actually much narrower than the rule that subsequently developed.

Lord Justice Lloyd, in the Court of Appeal, held that cases in which the acts of trustees are found to be void should be kept to a minimum. In his judgment, 'the principled and correct approach to these cases is, first, that the trustees' act is not void, but that it may be voidable. It will be voidable if, and only if, it can be shown