A recent judgment of the Royal Court of Jersey shows how offshore fiduciaries and corporate service providers unquestioned loyalty can be very costly. In Noland and others v. Minerva Trust Company and others (2014) JRC078A, a trust company’s officers did whatever they were instructed without asking questions. The trust company provided directors to a number of Jersey companies which were beneficially owned by a fraudster. Here, money was to be used to invest in German hospitals when the trust company’s officers knew the fraudster did not own any German hospitals, and had no means or intention of purchasing any hospitals.
The court concluded that the trust company’s officers failed to act as an honest person in their position would have done and helped the fraudster by doing what he requested. The court held the trust company liable for dishonest assistance in a breach of trust. The court reasoned that what counted was “ordinary standards of honest behavior.” Dishonesty can apply when one is aware of a doubt as to the legitimacy of what is being asked. “In most cases, an honest person should have little difficulty in knowing whether a proposed transaction, or his participation in it, would offend the normally accepted standards of honest conduct.” A person should act honestly and look at all the circumstances. “? (A)nd exaggerated notion of dutiful service to clients, which produced a warped moral approach that it was not improper to treat carrying out client’s instructions as being all important” is dishonest, the court ruled, regardless of whether the person involved genuinely believed it was honest.
Thus, claimants should be encouraged to seek wide discovery orders against service providers in Jersey as disclosure could assist not only with a claim against the fraudster, but also potentially, if the disclosures merit it, a dishonest assistance claim against the service providers.