Bermuda: Trustee Amendment Act 2014

Last Updated: 7 August 2014
Article by Ashley Fife

Operative 29 July 2014, the Trustee Amendment Act 2014 (Amendment Act) provides statutory clarification of the Court's discretion to set aside a fiduciary's exercise of a power where the exercise of that power was flawed. The Amendment Act preserves the rule in Hastings Bass as it had been applied prior to the UK Supreme Court's decision last year in Pitt v Holt and Futter v Futter.

Setting Aside Exercise of A Fiduciary Power

Under the Amendment Act, the Court, in relation to exercise of a fiduciary power, may upon satisfying itself that certain conditions have been met, set aside the exercise of a power in whole or part, unconditionally or on such terms as the Court may think fit.

Conditions Required for Court's Jurisdiction

The conditions are that:

a) The person did not take into account one or more considerations that were relevant to the exercise of the power, or took into account one or more considerations (whether of fact, law or a combination of fact and law) that were irrelevant to the exercise of the power; and

b) but for the failure to take into account such relevant considerations, or having taken into account such irrelevant considerations, the person who holds the power:

(i) would not have exercised the power;

(ii) would have exercised the power, but on a different occasion to that on which it was exercised; or

(iii) would have exercised the power, but in a different manner to that in which it was exercised.

The conditions may be satisfied without it being alleged or proved that in exercise of the power, the person who holds the power, or any adviser to such person, acted in breach of trust or duty.

Who Can Apply?

The application to the Court to set aside the exercise of a fiduciary power may be made by:

  • the person who holds the power;
  • the trustee of the trust, where the power is conferred in respect of trust or trust property, or by a person beneficially interested under that trust or, in the case of a purpose trust, a person expressly permitted under the trust instrument to bring applications in respect of the trust or a person with sufficient interest in the trust;
  • where the power is conferred in respect of a charitable trust or otherwise for a charitable purpose, the Attorney-General; and
  • with the leave of the Court, any other person.

Date of Application

The Amendment Act has retrospective application.

The Rule in Re Hastings Bass

The rule in Re Hastings Bass had been construed as providing the Court the power to declare a fiduciary's exercise of discretion void if:

  • the effect of the exercise was different from that which the fiduciary had intended; and
  • it is clear the fiduciary would not have acted as it did had it failed to take into account considerations which it ought to have taken into account, or taken into account considerations which it ought not to have taken into account.

The rule in Re Hastings Bass had been used by fiduciaries to set aside flawed exercise of powers where the exercise had unforeseen adverse tax or other consequences.

Pitt v Holt and Futter v Futter

However, in May 2013, in the cases of Pitt v Holt and Futter v Futter, the United Kingdom Supreme Court determined that a fiduciary's act is not void if it is within the scope of the power that it is purporting to exercise, but that it may be voidable if, on application by a beneficiary, it can be shown to have been in breach of the fiduciary's duty to take into account relevant considerations.

As a consequence, following Pitt v Holt and Futter v Futter, fiduciaries would no longer be able to have their decisions set aside where they have acted within their powers and in accordance with professional advice, notwithstanding that the advice may have been incorrect. In those circumstances, the fiduciaries would be required to consider pursuing the adviser to recover any loss which resulted from the negligent advice. Further, a beneficiary may consider whether a claim is available against the fiduciary for breach of duty.

Consequently, without statutory intervention to preserve or reinstate the rule in Hastings Bass as it existed pre-Pitt v Holt and Futter v Futter, setting aside a fiduciary's exercise of a power would likely be a more time consuming and expensive procedure with far less certain outcomes. Further, fiduciaries may have found themselves increasingly exposed to claims for breach of fiduciary duty (and advisers for negligent advice) from beneficiaries when, previously, a fiduciary itself may have considered making an application to Court to have the exercise of its power set aside.


The new legislation, enacted shortly following statutory clarification and enhancement of Bermuda's settlor reserved powers regime, provides much needed clarity for fiduciaries, their advisers and beneficiaries and ensures that Bermuda remains a jurisdiction of choice for international clients.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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