Withered on the vine: Jersey's Royal Court grants and upholds strike out and reverse summary judgment in respect of breach of duty and dishonest assistance claims

The judgments in the case Halabi v Farrow & Ors [2025] JRC169 serve as important reminders of the need for caution and supporting evidence when considering making allegations of fraud, dishonesty or bad faith. 

Acting for the defending trust company and directors in this case, Ogier successfully obtained orders from the Master of the Royal Court striking out the entirety of the plaintiff’s claims and granting reverse summary judgment (the First Judgment). The plaintiff brought an appeal (the Appeal Judgment and together with the First Judgment, the Judgments) before the Royal Court against the First Judgment, which was dismissed (see Halabi v Farrow and Ors [2025] JRC326).  

As a result, the trust company and trust directors were vindicated, and claims alleged to be worth more than EUR50 million have been completely dismissed, without the expense and delays involved in a full pre-trial and trial process. 

The Ogier team was led by partner Nick Williams, working alongside managing associate Matthew Davies (who appeared as successful advocate during both hearings) and associate Charlie Dessain. The team was also assisted by English counsel, David Lascelles of Littleton Chambers.  

Case overview: Halabi v Farrow & Ors 

The case was brought by the plaintiff who was the alleged assignee of the rights of a private trust company, Sijar Trust Company Limited (Sijar). Sijar had previously acted as trustee of a trust established for the benefit of members of the Halabi family, of which the plaintiff was one of the beneficiaries. 

The defendants were made up of the former regulated individual directors of Sijar, and a regulated trust company (the TrustCo) who had provided administration services to Sijar. 

The claims ultimately related to the sale of an asset of the trust (a chateau and vineyard in France), which the plaintiff alleged was sold at a substantial undervalue. 

In his claims, the plaintiff advanced a wide range of serious accusations against:  

1. the individual defendants, comprising breaches of directors’ duty including allegations of bad faith and dishonesty

2. the TrustCo, alleging dishonest assistance in a breach of trust 

Following Ogier’s earlier successful application on behalf of the defendants, in a judgment reported at [2023] JRC 251, the Master of the Royal Court found that the plaintiff's claims were insufficiently pleaded in several material respects. The plaintiff was therefore ordered to provide answers to requests for information.  

Following receipt of the plaintiff's poor attempts to answer to those requests, the defendants brought an application before the Master of the Royal Court. By that application, they sought the following orders: 

1. striking out the entirety of the plaintiff's claims on the basis that they:

a. failed to disclose a reasonable cause of action

b. were scandalous, frivolous and vexatious, and/or

c. were otherwise an abuse of process

2. reverse summary judgment on the entirety of the plaintiff's claims on the basis that the plaintiff had no real prospects of succeeding in his claims.  

The Master of the Royal Court granted the relief sought by the defendants in its entirety, rejecting the plaintiff's claims and acquitting the defendants completely. On appeal, Commissioner Thompson ultimately held that the plaintiff’s claims should be subject to strike out and/or reverse summary judgment.  

The Judgments are important for a number of reasons. 

Pleading allegations of fraud, dishonesty and / or bad faith 

The Judgments emphasise that plaintiffs (and those advising them) wishing to make allegations of fraud, dishonesty, or bad faith must only do so where there is credible supporting evidence.   

Relying on a substantial body of prior decided cases in Jersey, the First Judgment reiterates that the threshold for advancing pleas in fraud, dishonesty and bad faith is necessarily high. As a matter of basic fairness, it is essential that accusations of these types are advanced clearly, precisely and unequivocally.  

Both Judgments found that the plaintiff’s claims in fraud, dishonesty and bad faith were baseless. In the First Judgment, the Master considered that the plaintiff had, improperly, advanced these serious accusations in the hope that evidence to support them might turn up in discovery (the process where parties exchange relevant documents in their possession in litigation). The Appeal Judgment agreed with that conclusion.  

In striking out those claims, the Master said the plaintiff's conduct was "vexatious and/or an abuse of process to make unsubstantiated and/or unjustified allegations, particularly of dishonesty, in a pleading in the hope that something might turn up on discovery". 

In his appeal, the plaintiff sought to reframe his case away from dishonesty and instead on the basis that the conduct of the trust directors was "commercially unacceptable". However, the Appeal Judgment found that this was merely an example of the plaintiff trying to engage in shapeshifting and concluded that there was nothing commercially unacceptable about the way that the trust directors had conducted themselves.   

Both Judgments serve as important reminders that claims of fraud and dishonesty should not be pleaded lightly and, if they are made without sufficient supporting material, they will be summarily dismissed. 

The role of pleadings and ongoing assessment of pleadings 

The Judgments remind parties in litigation of the importance of: 

1. abiding by the rules of pleading, and

2. keeping the merits of your case under continuing review  

The Judgments (including the earlier judgment of the Master from November 2023) contain reminders of the role of pleadings. In particular, the Judgments make clear that pleadings exist to: 

1. identify the issues in dispute so that each side knows what case it has to meet and what evidence it needs to adduce at trial, and 

2. set out each side's case clearly and succinctly  

The plaintiff's claim had already been reviewed by the Master in the context of the defendants' earlier successful application to compel the plaintiff to provide further information. The orders made by the Master in that regard provided the plaintiff with an opportunity to take stock of the state of his pleadings and consider whether they remained viable in light of the extensive deficiencies identified by the Master.  

The Judgments make clear that pursuing claims without merit brings with it the risk of strike out and summary judgment. Litigants should therefore be wary of turning a blind eye to weaknesses in their own case in the hope that the Court will allow such claims to continue.  

The shareholder approval principle in Multinational Gas

In the First Judgment, Master Cadin applied the decision of the English Court of Appeal in Multinational Gas & Petroleum Co v Multinational Gas & Petrochemical Services Ltd [1983] Ch 258 (Multinational Gas), which stands as authority that approval of director's actions by a company's shareholders can be a complete defence to a claim without fraud, bad faith or a risk to the solvency of the company. 

Having determined that the plaintiff's claims based on fraud and dishonesty were liable to be struck out, the Master determined that the plaintiff had no real prospect of succeeding in the remainder of his claims (including alleging a lack of due care and skill) because Sijar's shareholder had approved the actions of the defendants to sell the chateau and vineyard.  

However, in the Appeal Judgment, Commissioner Thompson disagreed with the Master's application of the Multinational Gas principle and overturned his findings. The Appeal Judgment concluded that: 

1. an express resolution of the shareholder was required for the Multinational Gas principle to apply (mere acquiescence was not sufficient), and 

2. in the context of private trust companies, it was not appropriate as a matter of principle for the shareholders of the private trust company to be able to self-indemnify for breaches of duty, particularly in circumstances where the shareholders of the private trust company hold the shares as nominee for somebody else 

Key takeaways 

The Appeal Judgment provides key guidance to private trust companies seeking to obtain shareholder approval, reiterating the steps that directors of such trust companies should take and the extent to which such approval provides a defence to breach of fiduciary duty claims. 

How Ogier can help  

Ogier’s Dispute Resolution team in Jersey regularly advises clients in relation to a range of court procedures. You can contact a member of the team on +44 1534 514000 or email jsy@ogier.com. 

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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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