Pilatus Limited v RBC Trustees Limited: a case of corporate structures, trust assets and gross negligence

The recent decision handed down by the Guernsey Court of Appeal in Pilatus (PTC) Limited v RBC Trustees (Jersey) Limited [2025] GCA091 provides a significant re-affirmation of the obligations imposed on trustees when handling complex trust assets - both in their setup and in their ongoing management - especially when those assets derive value from contractual rights and the practical realities of control. 

What guidance should trustees follow to understand the nature of trust property and their duties where corporate structures form part of a trust arrangement? 

Case overview: Pilatus (PTC) Limited v RBC Trustees (Jersey) Limited   

The case arose following the resignation of RBC Trustees (Jersey) Limited (RBC) as trustee of the Shallan Trust (the Trust), which indirectly owned Shallan Overseas Limited (SOL).   

In 2011, SOL sold a company called Shallan Overseas Investment Limited (SOIL), which owned valuable business interests, to Mr Somji. When the sale took place, RBC took steps to protect the Trust by setting up an agreement that gave SOL the right to repurchase SOIL between 2015 and 2017 (the Option) and retain its own directors on the boards of the Trust's related companies: Primefuels Investments Limited (PIL) and Primefuels Holdings Limited (PFHL).  

When RBC resigned as trustee on 30 October 2015, it also arranged for its subsidiaries to step down as directors of PIL and PFHL at the same time. However, replacement directors were not successfully appointed, resulting in consent being withheld for PIL and the PFHL board meeting being inquorate. As a result, control over PIL and PFHL shifted, allegedly depriving the Trust of representation. When the Option was exercised in 2017, SOIL returned to the Trust, but it was claimed that the earlier loss of control in PIL and PFHL had diminished SOIL’s value, resulting in a loss for the Trust. 

Pilatus (PTC) Limited (Pilatus), the current trustee of the Trust, claimed that RBC had breached its duties by failing to ensure an orderly handover of trust assets and arrange replacement board appointments. Pilatus argued that this conduct was grossly negligent, causing potential prejudice to the value of a contractual option that was an asset of the Trust.  

At first instance, the Royal Court found that, because SOIL, PIL and PFHL were not held as trust assets at the time of RBC’s resignation, there could be no breach of trust in relation to them. The core of the decision was that the Option itself was merely a right, a chose in action, and did not equate to ownership of the underlying companies. As such, the trustee’s duties were confined solely to property actually held in the Trust fund. The Bailiff held that a trustee's duty to act en non père de famille applied only in respect of trust property and did not extend to managing non-trust assets, even if changes in those assets might influence the value of trust property, in this case, the Option.

Referral to the Guernsey Court of Appeal 

Pilatus appealed the Royal Court's decision on the basis that the Court was mistaken in holding that the Option, being a contractual right (chose in action) to repurchase SOIL, was not trust property.  

Pilatus argued that the Option was economically central to the trust fund and, as such, RBC owed duties to take prudent steps to protect the value of that interest - even if legal title to the underlying companies was not held by the Trust at the relevant time. 

The Guernsey Court of Appeal’s decision 

The Guernsey Court of Appeal overturned the Royal Court's decision and, in its analysis, turned to the meaning of "property" in Section 80 of The Trusts (Guernsey) Law, 2007 (Guernsey Trusts Law):  

“"Property" (a) means real and personal property of any description, wherever situated, and any share, right or interest therein, and includes tangible or intangible property and any debt or thing in action, (b) in relation to rights and interests, includes rights and interests whether vested, contingent, defeasible or future…” 

Section 7(1) of the Guernsey Trusts Law provides that "any property may be held on trust". The Court of Appeal confirmed that there was no limit to the kind of property, and as such, the Option, described in section 80 of the Guernsey Trusts Law as a "thing in action" could be held on trust.

The Court of Appeal also considered the decision in Elder’s Trustees v Higgins (1963) 113 CLR 426, which found that a trustee owes duties in respect of an option, and can therefore be liable in breach of trust for failure to exercise an option. The Court of Appeal observed that if a trustee may be liable for not exercising an option, a trustee may likewise incur liability for allowing (by gross negligence, if established) financial harm to be suffered by that same option.

The Court of Appeal acknowledged that the law should not impose duties on trustees which are impossible to fulfil, stating that a trustee’s duty to preserve the value of trust assets would depend on the trustee’s practical control or influence, not just the legal power to dictate outcomes. The positive duty only arises if:

• the trustee’s powers or influence are sufficient to realistically affect the outcome 

• the steps to be taken are reasonable and practical, and  

• there are no legal or third-party obstacles making action futile or disproportionate 

Finally, the Court of Appeal upheld the Bailiff's factual assessment that RBC's conduct met the threshold of gross negligence and confirmed that the test for gross negligence is an evaluative, fact-dependent one. Gross negligence involves a breach of the trustee’s duty to act as a professional trustee, acting en bon père de famille, and whether conduct amounts to gross negligence is dependent on the seriousness or flagrancy of the negligence involved. The key failings in this case included the inquorate PFHL board meeting and the resignations from the companies without replacements.  

You can read more about gross negligence in Guernsey trust litigation in: Evolution of gross negligence in Guernsey trust litigation.

Key takeaways for trustees 

Trustees must take a practical, proactive and professional approach to safeguarding all trust assets, including contractual rights. Under Guernsey Trusts Law, a chose in action held within a trust is trust property, and trustees should take prudent steps to preserve and safeguard its value. 

Use influence with caution

Those with influence over a structure must use it wisely as such duties can extend to assets which the trust does not legally own. The steps taken by trustees should be reasonable, practical and ensure that no legal or third-party obstacle exists that would make the action futile or disproportionate.  

Board members should act prudently

Where a trustee (or its group companies) sits on the boards of underlying companies, or otherwise has influence, this creates a duty to act prudently. Trustees cannot rely on corporate separation to avoid liability where they have set up structures precisely to exercise influence. What matters is real-world control, not corporate formality. 

Foreshadow foreseeable harm

Excluding the statutory “preserve value” duty does not remove or dilute core prudent trustee obligations. Trustees cannot contract out of liability for gross negligence. They must take sensible steps to avoid foreseeable harm to trust property.   

Duties are shaped by context, trustees cannot ignore obvious risks, especially where they helped design the trust and corporate structure. 

Ensure stability

When resigning, Trustees must avoid creating instability that could damage trust property. Trustees must not resign before ensuring that essential roles such as directorships in underlying companies are properly handed over. Guernsey trustees should therefore treat handovers as critical fiduciary events. 

How Ogier can help 

Ogier has one of the largest Dispute Resolution teams across our jurisdictions, advising on technical, strategic and procedural aspects across the spectrum of contentious commercial issues and disputes.

Our team has experience in all matters relating to international arbitral proceedings, and we have a pedigree in local and cross-border trust dispute resolution. Our trusts disputes specialists form part of Ogier's Trusts Advisory Group, working seamlessly alongside Ogier's non-contentious private client and corporate lawyers. 

For more information or to find out how Ogier can advise you in this area, contact a member of the team listed below. 

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Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

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