Should the ‘rule in Hastings-bass’ Be Followed in Australia? — Trustees’ Duty to Enquire and Trustees’ Mistakes

The principle known as the ‘the rule in Hastings-Bass’ that has developed in first instance courts in England since 2000 is mistaken. Stating, as it does, a short list of conditions for when equity will interfere with a fiduciary's decision is not consistent with equity's conceptual apparatus and method. The ‘rule’ incorrectly conflates two different streams of equitable principle, one concerning the duties of trustees in making decisions, the other concerning transactions entered through mistake or ignorance. On the basis of an examination of the source of the trustees’ duties, and the extent of their obligations to gather facts, it is concluded that the Hastings-Bass cases have set far too high a standard for the ‘relevant considerations’ a trustee must take into account in making a discretionary decision. Those cases have also oversimplified the circumstances in which a decision of a trustee made in breach of trust will result in an order for rescission. The circumstances in which a trustee’s decision can be set aside because of mistake or lack of adequate understanding are examined, together with the rationale for equity intervening in such circumstances, and the types of equitable remedy that are available concerning them