Section 64A of the Cayman Islands Trusts Law (2020) Revision codifies the ‘rule in Hastings-Bass’. It provides that, where a person in the exercise of a fiduciary power did not take into account one or more considerations (whether of fact or of law or both) relevant to the exercise of the power or took into account irrelevant considerations and due to such failure the person would not have exercised such fiduciary power or would have exercised it differently, the Court may set aside the exercise of the power in whole or in part and on such conditions (if any) as the Court thinks fit and may make such order consequent upon the setting aside of the exercise of the power, as the Court thinks fit.

An application to the Court under section 64A, may be made by (i) the person who holds the power; (ii) a beneficiary; (iii) an enforcer of a STAR trust; (iv) a trustee; (v) the Attorney General in the case of a charitable trust; or (vi) any other person with the leave of the Court.

To the extent that the exercise of the power is set aside by the Court under section 64A, it shall be treated as never having occurred.

Section 64A expressly provides that it need not be alleged or proven that, in the exercise of the power, the person or any advisor of the person who exercised the power acted in breach of trust or in breach of duty. Section 64A therefore diverges from the position under English law as decided by the Supreme Court of the United Kingdom in Pitt v HMRC [2013] UKSC 26.

Section 64A should be welcomed by trustees and beneficiaries alike, as the provision allows the Court to ‘turn back the clock’ in cases meeting the requisite criteria. This can mean avoiding the unintended adverse financial consequences of the exercise of a fiduciary power. An application under section 64A may provide a more expeditious and less costly means of remedying a mistake that has occurred in the administration of a trust than a professional negligence claim against a trustee or its advisors.