Directors’ mistakes and the ‘rule in Hastings-Bass’ under Bermuda law

When Bermuda’s Parliament introduced section 47A of the Trustee Act 1975 by way of legislative amendment in 2014, in order to put ‘the rule in Hastings-Bass’ on a clear statutory footing in Bermuda (and by reference to the more generous formulation of the rule prior to changes in English law pursuant to Pitt v Holt and Futter v Futter), one of the questions raised in the Bermuda legal community was whether or not the rule could be invoked by other fiduciaries (such as directors of Bermuda companies), or just by trustees of Bermuda law trusts?

A recent decision of the Chancery Division of the English High Court strongly supports the view that the rule in Hastings-Bass is, and that it logically should be, available to companies and their directors, and other ‘fiduciaries’ when exercising fiduciary powers, just as it is available to trusts and trustees: see, in particular, Power Adhesives Ltd v Sweeney & Ors [2017] EWHC 676 (Ch) (31 March 2017), albeit decided by reference to English law rather than Bermuda law.     

It will be interesting to see how the Bermuda Court reacts to a section 47A application in the corporate context.

It has, of course, already proved receptive to section 47A applications in the trusts context, as in the 2015 case of the F Trust and the A Settlement.

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