Professional negligence in Guernsey: a review of recent significant decisions

Recent Guernsey authority has produced important guidance on professional negligence and the boundaries of duties owed by trustees, lawyers and corporate service providers.

In this article, Dispute Resolution expert Bryan de De Verneuil-Smith examines these recent decisions.

Recent cases of significance in Guernsey

Two Court of Appeal decisions, Pilatus (PTC) Limited v RBC Trustees (Guernsey) Limited [2025] GCA 091 (Pilatus) and R. Dorey, McLelland and M. Dorey v Ashton [2023] GCA 008 (Dorey), address professional negligence directly. Pilatus considers gross negligence by a professional trustee in the context of resignation from a complex trust structure, while Dorey addresses whether a lawyer who prepared wills could owe a duty of care to family members who said the wills should not have been made at all.

The Royal Court then applied Dorey in the more recent case of Lucille Holdings PTE Ltd v HSBC Management (Guernsey) Limited and HSBC Alternative Investments Limited [2025] GRC 056 (Lucille), refusing to allow a novel investor claim against a Guernsey corporate director and managing entity to proceed where assumption of responsibility and reliance were not adequately pleaded or evidenced.

The Channel Islands courts have also begun to address the use of artificial intelligence (AI) in legal proceedings. Golden Sphinx Limited (In Creditors’ Winding Up) v Garry Itkin [2026] JRC 138 (Golden Sphinx) in Jersey and The States of Guernsey (Acting by and through the Development and Planning Authority) v Steven Terrance Ogier [2026] GRC 030 (SoG v Ogier) in Guernsey are not professional negligence claims, but they are relevant to professional standards. They remind lawyers and litigants in person that material placed before the court must be checked, that hallucinated authorities can mislead the court, and that the duty to verify legal authorities remains with the person relying on them.

Trustee negligence and complex structures: Pilatus, Guernsey Court of Appeal [2025]

The claim in Pilatus was brought by the current trustee of the Shallan Trust against the former trustee, RBC Trustees (Guernsey) Limited. The trust structure had been connected to the Primefuels business. In 2011, an investment company had been sold to a beneficiary, but a put and call option was retained which allowed the trust structure to repurchase that interest during a later window. That option was exercised in 2017.

The alleged breach arose when RBC resigned as trustee in 2015. Pilatus Limited alleged that RBC failed to ensure an orderly handover and allowed the coordinated resignation of RBC group service companies from the boards of non-trust companies without securing effective replacements. The consequence alleged was a foreseeable loss in the value of the option, because control or influence in the relevant company structure was lost.

The Courts’ decisions

At first instance, the Royal Court held that if relevant duties existed, the conduct amounted to gross negligence. However, the claim failed because the Royal Court held that the underlying companies were not themselves trust property at the date of resignation and that the trustee’s duties did not extend to the management of those non-trust assets, even though the option’s value depended on them.

The Court of Appeal disagreed with that approach to the scope of duty. It held that a contractual right, or chose in action, is property capable of being held on trust, that the option was plainly trust property. Once that was recognised, the proper limits on the trustee’s obligations depended on the standard of gross negligence applied to the facts and not the prior question of what counted as trust property.

The Court of Appeal also held that, while the underlying companies were not themselves trust property, a trustee’s duty to act as a prudent and reasonable trustee - en bon père de famille - could require action affecting non-trust assets. The principle is limited and depends on practical control or influence, whether the steps are reasonable and practical, and whether legal or third-party obstacles would make action futile or disproportionate.

The Court of Appeal upheld the Royal Court’s evaluative finding that the resignation process amounted to gross negligence. Resigning without being clear that effective replacement directors were in place was treated as a gross failure to act as a prudent professional trustee. Causation and quantum were left for later determination.

The decision is significant for professional trustees. It confirms that contractual rights can be real trust assets and that the duty to safeguard trust assets may, in a fact-specific case, require practical steps in relation to non-trust assets. It does not make trustees insurers of value or impose duties where there is no real ability to influence events. The case is therefore important both for plaintiffs and defendants - it recognises a meaningful duty, but also builds in control, reasonableness and causation as limits.

Lawyers, wills and prior beneficiaries: Dorey, Guernsey Court of Appeal [2023]

Dorey concerned professional negligence in the context of wills. Three children of Sir Graham Dorey brought a claim against the advocate who had prepared two wills for him in 2004. The wills were less favourable to them than the position if the wills had not been made. They alleged that Sir Graham lacked testamentary capacity when the wills were made.

After Sir Graham died, the children challenged the wills in probate proceedings. That dispute was compromised and the children then sued the advocate for their probate costs and for the payment made to Sir Graham's widow as part of the settlement. The Royal Court determined, as a preliminary issue, that no duty of care was owed to the children in their personal capacity. The children appealed.

The Court of Appeal’s summations

The Court of Appeal dismissed the appeal, distinguishing between an intended beneficiary claim and a prior beneficiary claim. An intended beneficiary claim is the familiar White v Jones type case, where a lawyer’s negligence prevents a person who was intended to benefit under a will from receiving that benefit. Dorey was different as it concerned a claim by people who said that they would have been better off if the later wills had not been made.

The Court of Appeal held that no duty of care was owed to the prior beneficiaries. The foreseeability of loss was not sufficient. In a novel duty case involving pure economic loss, proximity requires more - commonly an assumption of responsibility by the defendant to the plaintiff and reliance by the plaintiff. The Court of Appeal treated the Isle of Man Privy Council case of JP SPC 4 v Royal Bank of Scotland International Ltd [2022] UKPC 18 (JP SPC 4) as compelling authority on the applicable test.

The Court also held that there was no lacuna requiring the creation of a new direct claim. Probate remedies existed in principle, and the compromise of those proceedings did not retrospectively create a gap in the law. The Court was also concerned that imposing a duty to prior beneficiaries could cut across the advocate’s primary duty to the testator.

Therefore, Dorey is important beyond wills. It is a strong appellate statement that Guernsey will not extend professional negligence duties for pure economic loss merely because loss is foreseeable. In novel duty cases, assumption of responsibility, reliance, duty alignment and the existence or absence of a remedial gap are likely to be central.

Assumption of responsibility in investment structures: Lucille, Royal Court of Guernsey [2025]

Lucille is a first-instance decision, but it is important as an application of Dorey in a commercial investment context. The case concerned an application by Lucille Holdings PTE Ltd for permission to amend its pleadings to pursue a tortious duty of care claim against HSBC Management (Guernsey) Limited (HMG), the director, administrator and managing entity of a Guernsey investment company.

Lucille Holdings had invested US$4 million in a deal involving a Washington D.C. office property. The investment documents referred to an expected investment term and an exit strategy. Lucille Holdings alleged that HMG had assumed responsibility to investors for delivery of the investment strategy, including the exit strategy, and that Lucille Holdings had a claim for pure economic loss.

The Royal Court refused permission to amend the claim against HMG and struck the HMG claim out completely. It followed Dorey and JP SPC 4 and held that the proposed amendments did not show a realistic prospect of establishing a duty of care. The pleaded facts were not capable of establishing an assumption of responsibility by HMG to Lucille Holdings, nor reliance by Lucille Holdings on HMG assuming that responsibility.

The Court’s treatment of the Property Investment Memorandum (PIM) is significant. The PIM was said by Lucille Holdings to be central to the assumption of responsibility case. The Court held that the evidence did not show reliance by Lucille Holdings on HMG and that the PIM did not objectively cross the line into an assumption of responsibility by HMG to Lucille Holdings. Later communications and hoped for disclosure did not cure that defect.

The practical lesson from Lucille is that it is not enough to say that a defendant was important in a structure. A plaintiff must identify words or conduct which objectively amount to an assumption of responsibility to that plaintiff and must prove actual and reasonable reliance. Lucille also shows that the Royal Court will stop a claim at the amendment or strike-out stage where those elements are missing.

AI, verification and professional duties: Golden Sphinx and SoG v Ogier

Golden Sphinx, Royal Court of Jersey [2026]

Golden Sphinx was a Jersey strike-out application, not a professional negligence claim. Its relevance lies in the Master's note of caution on the use of AI. The Defendant, Mr Itkin, had, in the application, referred to a non-existent Jersey prescription statute, non-existent Jersey cases, and a real case which was misdescribed. The Master inferred that AI had been used and that the incorrect references were likely hallucinations.

The Master emphasised that those appearing before the Court are personally responsible for the material placed before it and that misleading the Court will result in sanction. The judgment also noted that the risk is particularly acute in Jersey because of the limited amount of freely available online material about Jersey law and referred to possible procedural controls and sanctions where necessary.

SoG v Ogier, Royal Court of Guernsey [2026]

The underlying dispute in this case was a planning enforcement application, in which Mr Ogier (the Respondent) accepted that he had used AI to assist with his submissions. The Guernsey Court referred to the English Court of Appeal’s warning in D (A Child) (Recusal) [2025] EWCA Civ 1570, confirming that AI is not an authoritative or infallible source of legal knowledge and that hallucinated authorities may mislead the court and increase costs.

The Guernsey Court described it as "of indisputable importance" that all parties, represented and unrepresented, owe a duty to the Court to ensure that cases cited in legal argument are genuine and provide authority for the proposition advanced. Together, Golden Sphinx and SoG v Ogier make the same point: AI may assist with drafting or research, but it does not replace professional judgment, verification or supervision.

Looking forward

Guernsey courts are not expanding professional negligence liability casually. However, they are prepared to hold professionals to the substance of their duties where those duties do exist.

Pilatus shows a willingness to look beyond formal asset labels where a trustee has practical control and a valuable trust asset is at risk. Dorey and Lucille show a disciplined approach to novel duties for pure economic loss, with assumption of responsibility and reliance at the centre. The AI cases add a new operational risk: the duty to verify legal material remains personal and cannot be outsourced to technology.

How Ogier can help

Ogier’s Dispute Resolution team advises on professional negligence, trust and fiduciary disputes, investment structure disputes, and litigation conduct issues across the Channel Islands and the international market. For further insights or specific advice, contact Bryan de Verneuil-Smith or another member of the Guernsey Dispute Resolution team.

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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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