Both sides have set out their cases and are now waiting for a verdict after a group of pilots took a Guernsey finance firm to court claiming it had mismanaged their money.
The group of former pilots, all previously based in Dubai, lodged papers with Guernsey’s Royal Court alleging a breach of duty, gross negligence, wilful neglect, and a failure to manage assets with prudence and care against Sovereign, a provider of corporate, private client, and retirement planning services.
The lawsuit revolves around the pilots’ financial investments in a Loss of Income Protection Scheme which was inherited by Sovereign Trust (Guernsey) Limited.
The pilots’ claim that the scheme was intended to act as “insurance” in case they lost their licence due to medical reasons, and were unable to fly commercially.
The applicants’ case is that Sovereign ignored advice around managing the fund, expanded liabilities, and left contributions unchanged, undermining the Trust’s sustainability.
In one of the court sessions held over the past fortnight, a lawyer from Ogier, representing the pilots in Guernsey’s Royal Court, stated that Sovereign “went to sea with a hole in their boat.”
Sovereign Trust (Guernsey) Limited strongly deny these allegations.
Walkers, representing Sovereign, has claimed that due to the plan’s rules, agreed by those invested in the fund, Sovereign was not liable if the fund were no longer financially viable.
In Court yesterday, a representative for the defendants stated that the bar for “gross negligence” had not been reached, and that there was a lack of evidence stating otherwise that wasn’t in the realm of “speculative”.
They argued that a decline in member numbers, along with increasing benefit claims was slowly stifling the fund, even prior to it being dismantled, and although we know it inevitably failed, that was an agreed risk that all members were made aware of upon signing.
In Guernsey’s Royal Court the Sovereign legal representative stated that the “plaintiffs have the benefit of hindsight”, when it comes to what should, could, or would have happened to the fund, during the process which led to its ultimate demise.
The argument he made was that Sovereign followed the rules of the plan.
It was also stated that the pilots’ fund was doomed from the start, and that Sovereign shouldn’t be held responsible for a fund that they didn’t set up, but that had “flaws in its design”.
The plaintiffs however, feel very different.
Earlier in the court case, Ogier – on behalf of the pilots – had claimed that despite warning signs from official reports, the firm had refused to take any action to steady the ship, and instead continued operating even whilst knowingly losing money each and every month.
In opening claims from the plaintiffs, it was alleged that Sovereign “ignored” expert reports on the fund’s efficacy and warning signs that not enough cash was flowing in to sustain it.
They have also accused Sovereign of intentionally slowing down the court process, drawing out the case to increase the costs on those taking the company to court. Lawyers for the plaintiffs claimed they were using this as a “tactic”.
In total the pilots are seeking more than £18.8 million ($25m) from Sovereign.
More to follow…