A cohort of pilots is suing global services provider Sovereign Trust for more than $25m over its alleged mishandling of a fund set up to provide income protection.
The group of 25 pilots, who were all at one time based in Dubai, is 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, according to Guernsey Press.
Sovereign, which runs the government-approved Your Island Pension scheme, 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.
According to court papers, the trust was set up as an income loss protection scheme in Dubai in 2015 and was formalised as the API Trust in Guernsey in April of that year, at which point Sovereign inherited more than $4.9m and assumed responsibility for the scheme’s 1,800 members.
However, an actuarial report in May 2015 found the fund was 72% funded and recommended to the trustee that higher contributions be made to achieve full funding by 2020. But the pilots claim this advice was shrugged off and they were repeatedly told the trust was financially sound.
Four years later, Sovereign reportedly admitted there were difficulties and stopped contributions to the trust before selling the ordinary membership to a Lloyds-insured fund.
Subsequently, all disability payments ceased in February 2020, which the 25 pilots said deprived them and their families of the support they had been paying for.
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, although three of the original claimants have died in the ensuing years.
Papers were filed in the Ordinary Division of the Royal Court in September 2021, and the hearing is due to start later this month, Guernsey Press reported.
Sovereign Trust has said it will be defending the claims, and is challenging the allegations of breach of trust, claiming the pilots have run out of time due to the action not being brought within three years of any knowledge the pilots may have had of the alleged failures or breaches.
