By the time it ended, each of the seven parties involved in the dispute would have had a set of more than 400 lever arch files in their “trial bundle”, as the legal paperwork pertaining to a trial is known. With so much paper, so many parties and so many lawyers, the first few months of the 103-day trial had to be moved to a hotel that had been closed for the winter, so that more routine court business could continue to be conducted in St Helier’s Royal Court.
Legal manoeuvres
As for the legal manoeuvres that comprised the trial, the lawyers involved say they don’t expect to see the like again anytime soon. More than once it went to the court of appeal, and in its pre-trial stage, at one point it went to the Privy Council, a London court that functions as a sort of Supreme Court for more than a dozen UK offshore jurisdictions, including Jersey. And then there were the pleadings.
“With most cases, a plaintiff starts off with an order of justice, or statement of claim if you’re in England,” says Carey Olsen partner Robert MacRae.
“The other side files what’s called an answer in Jersey, a defence in England. That’s where most cases end. Sometimes if the defendant counterclaims, you’ll see a pleaded reply.
“But in Alhamrani, replies by the plaintiffs, responding to the defences, were
answered by a rejoinder from the defendants, and then the plaintiffs came back again with a surrejoinder.
“A surrejoinder is the kind of thing you might see referred to by Charles Dickens in Bleak House, but I’ve never seen one of these before in any other case I’ve ever been on. Which says a lot about the trial itself.”
In addition to being memorable for lever-arch files and surrejoinders, the case has left behind some lasting lessons for trustees and others involved in trust law, according to MacRae.
Already courts in some other common law jurisdictions have begun to look for guidance to judgments delivered during some of the “hundred-plus” interlocutory and pre-trial hearings, he notes.
“These judgments cover a wide range of aspects of trust law, such as the rights of the beneficiaries, trustee costs, and trust director responsibilities,” MacRae says.
“For example, the judgment that an honest but negligent director of a corporate trustee cannot, save in very rare circumstances, be made personally responsible for the breach of trust of the corporate trustee itself was cited recently in the English high court.”
MacRae is one of four Carey Olsen lawyers who worked on the Alhamrani case for around two years, assisted by two London barristers and other lawyers from the London law firm Farrers. He is scheduled to discuss the ramifications for trust experts on 25 March at a Carey Olsen and New Square Chambers seminar in London, which will take place at the Royal College of Surgeons in Lincoln’s Inn Fields.
Jersey’s most-expensive trial
The Alhamrani case is said to have broken the record for Jersey’s most expensive in addition to being one of its longest. It first went to court in October 2008, although the initial legal proceedings dated back to 2003.
Five members of the Alhamrani family, which is well-known in Saudi Arabia for business interests that include the retailing of such luxury car brands as Jaguar and Land Rover, sought compensation for losses they claimed totalled more than $120m.
JPMorgan (Jersey) Trust Co was one defendant, but others included Sheikh Abdullah Ali M Alhamrani, the brother of the plaintiffs, and Russa Management Ltd, which was Carey Olsen’s client.
As reported previously in International Adviser, all of the defendants denied the charges, which included breach of trust, conflict of interest, gross negligence and lack of communication between the trustees and beneficiaries.
Family feud
At its most basic level, the Alhamrani case was a family disagreement over money that got carried to an extreme. In addition to JPMorgan (Jersey), the main characters were nine siblings – seven brothers and two sisters – whose late father, Ali M Alhamrani, had had some financial success and left them a large but undisclosed sum.
Although MacRae cannot talk about the details of the case, it is a matter of public record that five of the brothers were the main plaintiffs, while the sisters brought a separate action; second-eldest brother Sheik Abdullah as mentioned was the first defendant in both actions.
The ninth sibling, Sheikh Fahad, was involved to a lesser extent than the others, but was aligned with the five brothers. A final minor party was a trustee that had taken over the trusts that had been in the care of JPMorgan, which resigned as trustee of the Alhamranis’ assets during the course of the trial.
Key lessons
For MacRae, other takeaways from the case, in addition to the idea that “honest but negligent” directors of a corporate trustee cannot be made personally responsible for that corporate trustee’s breach of trust, include a reminder that trustees must ensure that the records of decisions they have made are kept and may be easily accessed years later, if needed.
“Because by that time, the staff who would have made these records can be expected to have no proper recollection of the decisions in question,” he notes.
Another important legal matter that the case highlighted had to do with the growing use of electronically-held records, according to MacRae.
“One problem we didn’t really have in Alhamrani, but which could occur in other cases, is that in order to access the necessary electronic records you could need to reinstate old IT systems that are no longer properly supported by the current technology.
“We had a case like that two or three years ago, when we had to reinstate five different operating systems, one of which involved getting people over from other countries, to Jersey, because there were so few people in the world with experience of such systems. We were also told that the files were so fragile that there was a risk the exercise of trying to recreate the folders containing the information might actually end up destroying it.”
Although there were electronic trial bundles available in Alhamrani, until the day comes when trial bundles and the discovery process are always conducted electronically, MacRae believes, “there will continue to be a lot of paper flying around in these sorts of trials”.
“People have to strike a balance – there’s no point in printing out all email correspondence, for example. But when it comes to important trustee decisions, then it is still important to keep a core documents file in paper form, and ensure that such records are never allowed to be broken up.”
He also urges trustees to ensure that they “always consult their beneficiaries before reaching major decisions”, to protect themselves; to “monitor persons who are given powerful roles as protector, under terms of a trust”, and ensure that this person “understands his or her duties.”
Finally, “trustees need to properly understand the terms of a trust which is worded in unusual terms.”
The Carey Olsen Trusts Seminar, in association with New Square Chambers, will take place Thursday, 25 March 2010 at the Royal College of Surgeons in Lincoln’s Inn Fields, London. The CPD-accredited event is £95 plus VAT and will begin at 1:30pm. For more information see “events” on the Carey Olsen website at www.careyolsen.com, or email marchtrustseminar@careyolsen.com.
