On 9 May 2013 a Supreme Court announced their ruling in connection with the rectification of trustees mistakes.
Historically trustees have relied on the ‘Hastings-Bass’ principle, this allowed the Court to set aside a decision made by the trustees who had not properly considered all the relevant matters which should have been taken into account, putting them in breach of their fiduciary duties.
The new ruling confirms that the Court of Appeal is entitled to intervene only when there is a breach of duty by the trustees.
The ruling also gave an interpretation of what the Court would deem to be a ‘mistake’. Forgetfulness, inadvertence or ignorance in themselves are not mistakes but can lead to false beliefs or assumptions which would be recognised as a mistake. The Court will consider the gravity of the mistake and consider matters as a whole to assess whether it is unjust or unconscionable to leave a mistake uncorrected.
The judgment means that where trustees make mistakes based on an incorrect professional advice they can not rely on the Hastings-Bass principle, however relief may be available on the basis of the mistake jurisdiction.