Advisers can no longer expect trustees to mitigate unexpected losses by unravelling transactions under the Re Hastings Bass principle, leaving those advisers exposed to negligence claims.
In my Legal Alert last week, I wrote about the Court of Appeal’s long awaited decision in the joint appeals of Pitt v Holt and Futter v Futter, restricting the application of the principle in Re Hastings-Bass.
The decision will be of interest to those involved in tax and estate planning, particularly financial advisers, accountants and solicitors. Trust structures are often involved in tax mitigation schemes. Professionals advising the trustees used to rely on Re Hastings-Bass where it was alleged that they had provided negligent advice, as the remedy under Re Hastings-Bass was to put the trustees (and beneficiaries) in the position they would have been in before the transaction, thereby avoiding a negligence claim against the relevant professional. Now, professionals advising trustees will find themselves in the firing line.