Introduction

In a trio of reported judgments the Grand Court of the Cayman Islands has granted relief under section 64A Trusts Act (2021 Revision) by unwinding mistaken exercises of fiduciary powers. Far from a rubber-stamping exercise, these rulings confirm that the Grand Court will take a principled and evidence-based approach to fixing trustee mistakes.

This briefing discusses how, in each of these cases, the Grand Court has refined the scope and operation of the statutory provisions and offers practical tips to those who find themselves considering an application to the court to fix a mistake of the kind anticipated by the legislation.

Section 64A: Cayman’s codified Hastings-Bass jurisdiction

Section 64A of the Act codifies (and in some respects extends) the equitable rule derived from the English Court of Appeal's 1975 decision in Re Hastings-Bass¹ by empowering the Grand Court to set aside the exercise of a fiduciary power provided certain criteria are met.

Importantly, the Cayman Islands enacted section 64A of the Act to override the requirement to demonstrate a breach of the fiduciary's duty that developed in English case law following the UK Supreme Court's 2013 decision in Pitt v Holt². Section 64A restores the initial Hastings-Bass position by focussing on the quality of the decision-making process and its impact, with the Grand Court retaining a supervisory role in determining whether relief should be granted in all the circumstances. This reflects the position adopted in a number of offshore jurisdictions.

Broadly, the Grand Court may grant relief under section 64A where a trustee (or other fiduciary) has exercised a power and in doing so, has either failed to take into account relevant considerations, or has taken into account irrelevant considerations; and but for that failure, the trustee would not have exercised the power, or would have exercised it differently.

The emerging case law

In the Matter of Settlements made by Declaration of Trust dated 9 May 2013 (28 September 2023) ("Re Settlements")³

This case concerned three trusts established in 2013. The original trustees were close personal friends of the settlor. They were not professional trustees, were not paid for their services and, crucially, they did not obtain any professional tax advice regarding subsequent transfers into the trusts of various company shares (the "Transfers").

In 2019, the original trustees retired from office and were replaced by a professional corporate trustee. In 2021, while considering a proposed restructuring, the new trustee obtained tax advice and discovered that the Transfers had triggered substantial unintended tax liabilities (including penalties) in the settlor's home jurisdiction. Available evidence indicated that, had proper tax advice been taken originally, the Transfers would not have been made.

The trustee applied to the Grand Court seeking declarations that the Transfers were void because the original trustees had failed to consider relevant tax consequences when exercising their fiduciary powers. The court granted the application and declared the transfers void ab initio, with the result that the transferred assets reverted to the surviving settlor.

This was the first reported decision under section 64A and provided foundational guidance on the operation of the statutory test. Justice Kawaley emphasised that section 64A of the Act was designed to provide practical and effective relief in cases of genuine trustee error. His ruling confirms that:

1. section 64A represents a deliberate departure from the English position, lowering the threshold for relief;
2. the key question is whether the trustee’s decision was compromised by inadequate deliberation, rather than whether a formal breach of fiduciary duty can be established; and
3. causation remains central. The Grand Court must be satisfied that the defect materially affected the decision.

In the Matter of the S Trust ("Re S Trust") (26 August 2025)⁴

The S Trust was established in 2012 by an individual settlor who was also a beneficiary of the trust. The trust was created as part of the settlor’s personal wealth and tax planning, with shares settled into the trust shortly before the settlor expected to become domiciled in the United Kingdom.

At the time the trust was established, the settlor and his advisers believed that he was not yet UK‑domiciled and that settling the assets into a trust would avoid an immediate exposure to UK inheritance tax. The trustee (a professional Cayman trustee) agreed to establish the trust and receive the assets on that basis.

Several years later, during a review of the settlor’s affairs, it was discovered that an earlier and previously overlooked period of UK residence meant that the settlor was in fact exposed to UK inheritance tax at the time the trust was created. As a result, the establishment of the trust had triggered an immediate and unintended inheritance tax liability, contrary to the purpose for which the trust was set up. Evidence was provided to the effect that, had this correct tax position been understood at the time, the trust would not have been established.

The settlor applied to the Grand Court seeking to set aside the establishment of the trust and related asset transfers on the basis of a mistaken exercise of a fiduciary power. All adult beneficiaries supported the application, and a court‑appointed representative for unborn beneficiaries also confirmed that their interests were aligned and supported the relief sought. It was confirmed that there were no third‑parties whose interests would be adversely affected.

The Grand Court accepted that, in establishing the trust and accepting the assets, the trustee had exercised a fiduciary power without taking into account relevant considerations, namely the true tax consequences under UK law. It was also satisfied that the settlor had acted in good faith and that, but for the mistake, the trust would not have been created.

The court ordered that the S Trust be set aside ab initio, with the result that the trust assets were treated as having been held on bare trust for, and beneficially owned by, the settlor from the outset.

This decision built upon the principles established in the earlier case of Re Settlements and reinforced that the scope of section 64A is not confined to narrow categories of mistake but is instead concerned with the integrity of fiduciary decision-making more broadly. This case is also notable for the fact that it was an application brought by the settlor who had received erroneous advice on the implications of the settlement. Justice Kawaley further clarified the evidential and procedural approach to be taken in these cases:

1. trustees must provide clear evidence as to their decision-making process;
2. the Grand Court is willing to engage in a counterfactual analysis of what would have happened had the error not occurred; and
3. section 64A can apply to a wide range of fiduciary decisions, including those specifically involving tax structuring.

In the Matter of a Settlement known as the D Trust ("Re D Trust") (31 March 2026)⁵

In the latest case to come before the Grand Court, proceedings concerned a discretionary trust known as the 'D Trust', which was settled in 2011 as part of estate and inheritance tax planning for a non‑UK domiciled settlor. A second trust, the 'H Trust' was established on the same day.

Shortly after the D Trust was established, the settlor transferred substantial non‑UK situs assets to the trust. The D Trust then loaned funds to the H Trust to acquire a UK residential property for the settlor and his family to live in. At the time, this structure was believed to be effective in mitigating exposure to UK inheritance tax on the settlor’s death.

In 2017, in response to announced changes to UK inheritance tax legislation, the then trustees of the D Trust sought specialist UK legal advice on how best to preserve the effectiveness of the structure.

Acting on that advice, the trustees executed a Deed of Exclusion, which excluded the settlor from benefiting under the D Trust. This step was taken shortly before the new UK rules came into force and was intended to preserve the anticipated tax benefits of the overall planning.

In 2024, the settlor obtained a fresh review of his estate planning from new advisers. That review concluded that the earlier UK advice relied upon in 2017 had been incomplete and, in certain respects, incorrect. In particular, key UK tax and trust law risks had not been properly analysed, with the result that the Deed of Exclusion may not have achieved its intended effect and may instead have exposed the trust and beneficiaries to significant and unintended UK inheritance tax liabilities.

The current trustee of the D Trust therefore applied to the Grand Court for a declaration that the 2017 Deed of Exclusion was void ab initio. The trustee argued that the previous trustees had exercised their fiduciary power to exclude the settlor on the basis of erroneous and incomplete advice and had failed to take into account all relevant considerations. All beneficiaries supported the application, and there were no third‑party interests affected.

The court accepted that the power of exclusion was a fiduciary power, that relevant tax and legal considerations had not been properly taken into account, and that the previous trustees would not have executed the Deed of Exclusion had they been fully and correctly advised. The court also found that the trustees had acted in good faith and on reliance on professional advice. The court granted the application and declared the Deed of Exclusion void ab initio, restoring the position as if the settlor had never been excluded from the class of beneficiaries of the D Trust.

This ruling further develops the practical application of section 64A. The analysis by Justice Segal suggests a continued alignment with the underlying policy of the legislation, which enables the court to correct genuine trustee errors, while maintaining appropriate safeguards against misuse. This case:

1. reiterates that section 64A is a self-contained statutory regime, not merely a restatement of English law;
2. emphasises the breadth of the Grand Court’s discretion, particularly in balancing the interests of beneficiaries and third parties; and
3. provides further guidance on the limits of the jurisdiction, including the need to ensure that the relief is awarded within its proper bounds and is not subject to abuse by regretful trustees as a 'get of out jail free card.'⁶

Practical tips for trustees

Considered together, these three decisions illustrate growing judicial confidence in applying section 64A as a practical remedial tool, rather than being limited to use in exceptional circumstances. However, trustees and other fiduciaries should be aware that relief under section 64A is not automatic and is not a substitute for a proper decision-making process. The Grand Court will consider the broader context, including the impact on third parties and overall fairness in reaching its judgment.

The judgments offer up a number of important guidelines for trustees and other fiduciaries:

1. Undertake careful due diligence when taking over the trusteeship of a new trust to identify any historical issues which may require remediating and request further information from the current trustees before accepting the role. If necessary, ensure bespoke indemnities are in place in connection with the costs of the application.
2. If a section 64A application is anticipated, the judge will expect detailed evidence of the decision-making process; what was considered and what was not, what the trustee would have done differently had it considered all relevant circumstances and crucially, whether the defect in the process resulted in the decision which is to be unwound. This underscores the importance of keeping contemporaneous trustee minutes which not only record the decision but set out the reasons for the decision (including whether professional legal/tax advice was sought) and the way the decision was made.
3. If the application will have a material effect on the tax position of the settlor, trustee or beneficiary, expert evidence from that jurisdiction should be obtained so that the judge has all relevant information before him.
4. Ensure all relevant parties are joined to the application, and consider whether the relevant tax authority should be put on notice of the proceedings if there is a live tax liability.
5. The emphasis of section 64A is on whether the trustee’s deliberation was flawed, rather than on establishing a breach of duty. This should ensure a more cooperative approach between the parties as there is no requirement to find fault or for adversarial proceedings.

Conclusion

The early jurisprudence of section 64A is demonstrating that the Cayman Islands has established a modern, flexible, and commercially attuned framework for remedying trustee errors. As the case law continues to develop, trustees and advisers can take increasing confidence in the availability of effective remedies provided applications are supported by clear evidence and a coherent narrative of defective decision-making.

With three separate decisions now sealed and publicly available, the direction of travel is clear: the Cayman courts are committed to ensuring that the statutory Hastings-Bass jurisdiction operates as a practical safeguard for trustees navigating complex fiduciary decisions.

Carey Olsen has acted in each of the reported section 64A cases: as counsel for trustees, counsel for impacted family members, and as representative for minors and unborns.

[1] Re Hastings‑Bass [1975] Ch 25 (Court of Appeal)

[2] Pitt v Holt [2013] UKSC 26, [2013] 2 AC 108

[3] In the Matter of Settlements made by Declarations of Trust dated 9 May 2013, Maples Trustee Services (Cayman), Limited v AB and others FSD 228 of 2023 (IKJ), Grand Court of the Cayman Islands, Financial Services Division, Kawaley J, judgment delivered 28 September 2023 (unreported)

[4] In the Matter of the S Trust AA v Cititrust (Cayman) Limited and others [2025] CIGC (FSD) 85, FSD 249 of 2024 (IKJ), Grand Court of the Cayman Islands, Financial Services Division, Kawaley J, decision dated 14 July 2025 (reasons delivered 26 August 2025).

[5] In the Matter of a Settlement known as the D Trust Trustee v AB and others [2026] CIGC (FSD) 23, FSD 297 of 2025 (NSJ), Grand Court of the Cayman Islands, Financial Services Division, Segal J, judgment delivered 31 March 2026.

[6] Lord Neuberger, ‘Aspects of the law of mistake: Re Hastings-Bass’ (2009) 15(4) Trusts & Trustees 189–199