Do We Really Need To Talk About Kevin?

In our first white paper we discussed whether other jurisdictions should follow Bermuda in replicating its section 47 of the Trustee Act; and concluded that the answer is not entirely straightforward. It is not a slam dunk by any means. Prompted separately by influences as disparate as a recent English Court of Appeal case and developments of the probate jurisdiction in Dubai, we have been considering afresh two related legislative questions: first, is it necessarily essential, or even a good idea, for a jurisdiction to legislate when the judges in another influential jurisdiction have spoken in an inconvenient way, with the intention of reversing or modifying its effect? And secondly, if a jurisdiction is codifying should it necessarily enshrine another jurisdiction’s established law without having a fresh think about improving it? Both questions require some creative thinking, taking into account the circumstances of each individual jurisdiction.

It’s all been a terrible mistake

This is illustrative of the first question above and not, you will be relieved to read, yet another article about Hastings-Bass. In the nature of things mistakes will always be made by trustees and their advisers, often at the instigation, or with the cooperation, of beneficiaries and their own advisers. We have never been fans of the purist approach which says that having made your bed you must lie in it forever however bad it is for your back. Far better to find a solution which will allow everyone to sleep comfortably.

The Three Graces

As matters currently stand there are three possibilities for those jurisdictions which are not formally bound by the UK Supreme Court’s ruling in Pitt v Holt: in relation to Hastings-Bass and mistake:

1)      Under existing local law, adopt a more liberal approach to the problem which will assist trustees, beneficiaries and their respective advisers alike. Consider local conditions and whether the supervisory jurisdiction of the court is already sufficiently wide to allow relief for the well-intentioned but mistaken transaction;

2)      Adopt the Pitt v Holt analysis and operate within it. This may still get you a long way to where you want to be (have a look at Kennedy v Kennedy [2014] EWHC 4129 (Ch) to see what we mean) and

3)      Legislate, as Jersey and Bermuda have done, to confer a statutory Hastings-Bass/mistake jurisdiction.

So the question is whether you really need (3) or whether (1) or (2) do the trick in a deserving case as we think they generally do. We think there may be advantages in avoiding the legislative route if at all possible, the main risk being sacrifice of flexibility. We are talking here about equitable principles after all and handing those concepts into the austere hands of the parliamentary draftsman may give rise either to undesirable difficulties of construction of the resultant legislation or to the accidental exclusion of a meritorious case which cannot then be rescued in court by recourse to more generous equitable principles because they will have been ousted by statute. It may be healthy to remind oneself that equity developed to mitigate the rigours of the common law and we are not entirely convinced that conferring a statutory jurisdiction, albeit with some discretion attached, will not give rise to problems for judges and litigants. Call

us old-fashioned, but the English 1925 property and trusts legislation, which remains the high water mark of superb draftsmanship, did not in general try to codify equitable remedies and for good reason.

Can you do better?

If, after careful consideration, a jurisdiction reaches the conclusion that it is beneficial to legislate to codify the law, then the question goes further: can or should we improve on the law as it is currently understood to be in the major trust jurisdictions? We have been interested recently in the consultation process now taking place in Dubai in connection with the introduction of a wills and probate registry administered by the courts of the Dubai International Financial Centre. Although the proposed registry would have jurisdiction only in relation to the Dubai estates of non-Muslim expatriates, the introduction of an English common law-based regime would address a number of issues of fundamental concern for such expatriates who would otherwise be subject to the U.A.E. Shari’a law of succession and estate administration. This is an ambitious and very useful exercise in codifying the whole of the law of wills and probate which we support in that jurisdiction.

But while we are thinking of equitable principles designed to put things right, one particular provision caught our eye. The current proposal suggests the adoption of, in effect, the English statutory jurisdiction in relation to rectification of wills. That jurisdiction, embodied in section 20 of the Administration of Justice Act 1982, restricts the circumstances in which a will may be rectified to those in which there has been a “clerical error” or in which there has been a failure to understand the testator’s instructions. We have never been fans of this limited jurisdiction which does not allow rectification in many cases of purely negligent drafting and which has led to some interesting but ultimately rather frustrating case law. Negligence, we imagine, must be at the root of the majority of cases in which will drafting goes wrong. We have suggested, therefore, that there may be something to be said for avoiding a mere codification of the existing English position and instead allowing a broader curative jurisdiction to be exercised.

So, lots to think about when considering legislation. Not something, in our view, to be adopted without serious thought and simply because it is fashionable. But enough already; next time we will be considering some interesting questions about multi-jurisdictional litigation, the Hague Convention and how new challenges grounded on the laws of emerging centres of family wealth will test the efficacy of anti-forced heirship and anti-foreign law legislation in Bermuda and elsewhere.