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(1) Gany Holdings (PTC) SA (2) Asif Rangoonwala (Appellants) v Zorin Khan v Others (Respondents)

[2018] UKPC 21

Court: Privy Council
Date of Judgment: 30.07.18
Alan Boyle QC, Richard Wilson QC, Zahler Bryan

Alan Boyle QC, Richard Wilson QC and Zahler Bryan of Serle Court acted for the successful Respondents in this important Privy Council appeal from the BVI concerning the vesting of trust assets and challenges to the exercise of trustees’ discretion under the so-called ‘rule in Re Hastings-Bass’.

In its judgment (delivered by Lord Briggs), the Privy Council clarifies the correct approach to identifying beneficial interests arising from a gratuitous transfer of property and in particular the limited role presumptions should play in modern times.

The claim was brought by discretionary beneficiaries seeking information about the extent of the trust assets after the death of the settlor. The Board has rejected the approach taken by both of the courts below and concluded that the appropriate inference from the limited evidence available is that property vested by the settlor in the corporate trustee had been transferred with the intention that these assets should be held subject to the trust, rather than (as held at first instance) for the settlor beneficially. Time-honoured presumptions such as the presumption of resulting trust should only be resorted to when there is no evidence from which a common intention as to beneficial ownership may be inferred and therefore as a last resort. There is no legal presumption that when a settlor vests assets in a trustee of a previously established trust those assets will be held subject to that trust, but gratuitous transfers of property between the settlor and the trustee of such a trust will frequently form a powerful contextual basis for a common sense inference that that was the intention of the settlor as well as the trustee.

This case also confirms that the rule in Re Hastings-Bass as formulated in Pitt v. Holt [2013] 2 AC 108 forms part of the law of the BVI. More significantly, it resolves the debate left open by the Supreme Court in Pitt v Holt as to whether it is necessary in order to set aside an exercise of discretion to show that the trustee ‘would’ have acted differently had he not committed a breach of duty or merely that he ‘might’ have done so. In Pitt, Lord Walker declined to lay down a rigid rule of either ‘would’ or ‘might’ on the grounds that to do so would inhibit the court applying the rule in Re Hastings-Bass from seeking the best practical solution in a variety of different factual situations. In this case involving a family trust the Privy Council has decided that the question of whether, if properly informed, the trustees (or reasonable trustees) would or might have acted differently will be relevant, but not decisive, to the court’s exercise of its discretion whether to set aside the challenged disposition. There is therefore no specific separate requirement of showing that a trustee ‘would’ or ‘might’ have acted differently but for the breach of trust.

To read the full summary of the case, click 'download document' to the right hand side of the page.  To read the JCPC summary, please click here.


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