The action is by a group of 25 pilots who were all at one time based in Dubai.
They are actioning Sovereign in its role as trustee of the Aircrew Protection International Trust, which provided disability benefits for pilots who had lost their Class I Medical Certificate and were no longer able to fly.
Sovereign is accused of breach of duty, gross negligence, wilful neglect, and failure to act as ‘en bon pere de famille’ – a fiduciary standard under Guernsey trust law that requires trustees to manage assets with prudence and care. The court papers set out that the trust started as a loss of income protection scheme in Dubai in 2015 and was formalised as the API Trust in Guernsey in April of that year.
This restructuring reportedly saw Sovereign inherit more than $4.9m. and take over responsibility for the scheme’s 1,800 members. Following an actuarial report in May 2015, the fund was found to be 72% funded and it was recommended to the trustee that higher contributions be made in order to achieve full funding by 2020.
But the pilots claim that this advice was ignored, although they were repeatedly told that the trust was financially sound.
Four years later, Sovereign reportedly admitted that there were difficulties and, as well as stopping contributions to the trust, sold the ordinary membership to a Lloyds-insured fund.
The plaintiffs said that this cut off premium income and fatally weakened the trust’s abilities to pay claims.
All disability payments were stopped in February 2020, which the 25 pilots said left them and their families without the support they had been paying for over several years. In the time it has taken for the matter to come to court, three of the original claimants have died.
As well as seeking compensation, the pilots are calling for a full inquiry into the trust’s losses and a proper accounting of its management.
Papers were filed in the Ordinary Division of the Royal Court in September 2021, and the hearing is due to start later this month.
Sovereign Trust will be defending the claims, and in its papers challenged the allegations of breach of trust, and claimed the pilots’ action was out of time, since it was not started within three years of any knowledge the pilots may have had of the alleged failures or breaches.