Easter Term [2013] UKSC 26 On appeal from: [2011] EWCA Civ 197
JUDGMENT
Futter and another (Appellants) v The Commissioners for Her Majesty's Revenue and Customs (Respondent)
Pitt and another (Appellants) v The Commissioners for Her Majesty's Revenue and Customs (Respondent)
before
Lord Neuberger, President Lord Walker Lady Hale Lord Mance Lord Clarke Lord Sumption Lord Carnwath
JUDGMENT GIVEN ON
9 May 2013
Heard on 12, 13 and 14 March 2013
Appellant (Futter) Robert Ham QC Richard Wilson Jennifer Seaman (Instructed by Withers LLP)
Respondent Philip Jones QC Ruth Jordan (Instructed by HMRC Solicitors Office)
Appellant (Pitt) Christopher Nugee QC William Henderson (Instructed by Bolitho Way and Belcher Frost)
Respondent Philip Jones QC Ruth Jordan (Instructed by HMRC Solicitors Office)
LORD WALKER (with whom Lord Neuberger, Lady Hale, Lord Mance, Lord Clarke, Lord Sumption and Lord Carnwath agree)
Introduction
These appeals raise important and difficult issues in the field of equity and trust law. Both appeals raise issues about the so-called rule in Hastings-Bass. One appeal (Pitt) also raises issues as to the court's jurisdiction to set aside a voluntary disposition on the ground of mistake. It is now generally recognized that the label "the rule in Hastings-Bass" is a misnomer. The decision of the Court of Appeal in In re Hastings-Bass, decd [1975] Ch 25 can be seen, on analysis, to be concerned with a different category of the techniques by which trust law controls the exercise of fiduciary powers. That decision is concerned with the scope of the power itself, rather than with the nature of the decision-making process which led to its being exercised in a particular way (see R C Nolan, Controlling Fiduciary Power [2009] CLJ 293, especially pp 294-295 and 306-309). The rule would be more aptly called "the rule in Mettoy", from the decision of Warner J in Mettoy Pension Trustees Ltd v Evans [1990] 1 WLR 1587. But the misnomer is by now so familiar that it is best to continue to use it, inapposite though it is.
As Mettoy illustrates, the rule is concerned with trustees who make decisions without having given proper consideration to relevant matters which they ought to have taken into consideration. It has also been applied to other fiduciaries (in Pitt Mrs Pitt was acting as a receiver appointed by the Court of Protection). Mettoy was concerned with the rules of an occupational pension scheme, as are some other cases on the rule. But since the turn of the century there have been several cases concerned with family trusts, and in particular with tax–planning arrangements involving trusts, where the arrangements have for one reason or another proved unexpectedly disadvantageous, and the court has been asked to restore the status quo ante under the Hastings-Bass rule.
Futter is such a case, as Norris J pointed out in blunt terms at the beginning of his judgment, [2010] EWHC 449 Ch, [2010] STC 982, para 2:
"This is another application by trustees who wish to assert that…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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