On 30 July 2026, the Royal Court of Jersey (the Royal Court) granted summary judgment in Wood and Ors v Khumalo and Ors [2026] JRC 202 (Wood v Khumalo) in favour of the joint liquidators (the Liquidators) of Jersey-incorporated Gold & General Limited (the Company). Both of the Company's directors were held jointly and severally liable for £77,041,670 plus interest.
The Company held 84,000 shares in Metallon Corporation Ltd (Metallon), its principal asset. Its only directors were Mr Khumalo and Mr Sikwila (the Directors), and the Court considered it very likely that Mr Khumalo was the Company’s ultimate beneficial owner. In February 2020 the Company took on USD$12.5m debt owed by Mr Khumalo to Sir Samuel Jonah. It paid USD$1.25m , and the balance of USD$11.25m plus interest fell due on 8 November 2020 and was never paid.
On 14 October 2021, with that debt nearly a year overdue, the Company transferred its entire Metallon stake to Mr Khumalo himself. In July 2023 Mr Khumalo settled 74,000 of those shares on Three Rivers PTC Limited (Three Rivers), a trust structure that appeared to benefit him and his family. The Company was struck off in 2023. At Sir Samuel’s instance its dissolution was declared void, and it entered a creditors' winding up on 10 May 2024.
The Liquidators sought relief under Article 176 of the Companies (Jersey) Law 1991 (the Companies Law). In the alternative, the Company (acting by the Liquidators) claimed against both Directors under Article 74 for breach of fiduciary duty and of their duties of care, skill and diligence.
Analysis
Nothing was papered: the Court inferred there was no commercial justification
Article 176 gives the Court broad powers to restore the position following a transaction at an undervalue. Article 176 captures a gift, a transaction for no cause, or for a cause worth significantly less than what the company provides. The transaction must be made within five years immediately before the winding up begins, while the company is insolvent or as a result of which it becomes insolvent.
In Wood v Khumalo, the Company gave away its entire Metallon shareholding, its principal asset, and received nothing in return. The Liquidators found no payment or agreement in the records of either the Company or Metallon; the only record of the transfer was its entry in the register of members. Mr Khumalo had therefore taken the Company’s principal asset without written terms, consideration or any recorded benefit to the Company. Mr Khumalo offered no explanation, and the Court inferred that there was none. Following Re Mumtaz Properties Ltd, directors who run a company informally cannot escape liability or be judged by a lower standard because records are missing. The absence of paperwork therefore weighed against the Directors. Where directors cannot explain the rationale for a transaction, the Court may infer that there was no legitimate commercial justification for it.
Article 176(2)’s defence is “narrowly targeted” (Taqa Bratani Ltd v Fujairah Oil and Gas UK LLC), and the absent directors bore the burden of proving. Nothing supported good faith or a reasonable belief that the transfer benefited the Company; placing most of the shares in a trust benefiting Mr Khumalo pointed the other way.
The overdue debt: cash-flow insolvency in plain sight
Because Mr Khumalo was connected to the Company, he had to prove that it was solvent at the time of the transfer and remained so afterwards. He produced no evidence. In any event, applying Cornhill Insurance plc v Improvement Services Ltd, the Court inferred cash-flow insolvency from the unpaid debt to Sir Samuel alone. As against Mr Sikwila, to whom the presumption did not apply, all the evidence pointed to the same conclusion. The USD$11.25m debt, assumed under a settlement which there was no suggestion was other than bona fide, and overdue for almost a year, should have alerted both Directors that the Company was insolvent and that giving away its principal asset was indefensible.
Two directors, two routes to liability
As the recipient of the shares, Mr Khumalo was ordered under Article 176 to make a restorative payment of £77,041,670 plus interest. The Court also found that he had no real prospect of defending the alternative Article 74 claim. The transfer was a “straightforward misappropriation” and a clear breach of both his duty to act honestly and in good faith in the Company’s best interests and his duty of care, skill and diligence. Even if Mr Khumalo was not dishonest, the Court found it difficult to see how a director exercising reasonable care and skill would have permitted the transfer.
Separately, a director who breaches their duties but acts honestly may be relieved of liability under Article 212. Honesty is a prerequisite, although an honest director need not also have acted reasonably. Article 212 was not engaged on the facts.
Mr Sikwila received nothing and was not the counterparty to the transfer. The English authorities conflict on whether Article 176 can attach liability to a director in that position, and there is no Jersey authority, so the Court declined to decide the point. It made no finding of dishonesty against Mr Sikwila under Article 74(1)(a).
Instead, it held him liable for breach of his duty of care, skill and diligence under Article 74(1)(b). As the only other director, he had either: (i) helped procure the transfer or (ii) negligently failed to scrutinise it; “at best he was ‘asleep at the wheel’” (applying the principles in Re Westmid Packing Services). Notably, the Court imposed liability despite making no finding that Mr Sikwila had personally benefitted from the transaction. The Court drew that inference from the size of the transfer, the absence of any benefit to the Company and his deep involvement in Mr Khumalo’s affairs. He was ordered to pay equitable compensation (not an Article 176 payment) of £77,041,670 plus interest, jointly and severally with Mr Khumalo, with no apportionment.
Even on the most generous view, that he did nothing, Mr Sikwila was liable. Default judgment had already been entered against Three Rivers on the lower valuation basis in respect of its 74% stake, and any recovery from Three Rivers must be taken into account in enforcement against the Directors, and vice versa.
Additional findings
Valuation date
The award of £77,041,670 reflected 84% of Metallon’s estimated net value at the transfer date. That value was a best-evidence approximation based on Metallon’s net value at the start of its administration in February 2024 (£91,716,274), and the Court accepted that the true October 2021 value may have been higher or lower. It was corroborated by a statement of affairs signed by Mr Sikwila (showing a net surplus of £100,624,309), which the Court regarded as important as the document nearest in time to the transfer. The Court rejected the alternative figure of £33,415,760 (the value at the date of the Order of Justice), which derived from a 2024 sale of Metallon’s subsidiary that was not at arm’s length, and applied no minority discount. The choice of the transfer date therefore more than doubled the award. The appropriate valuation date will depend on the facts.
Silence is not a defence
Mr Khumalo was served in Switzerland under the Hague Service Convention, and Mr Sikwila by court-ordered substituted service by email and by post to London companies of which he was a director. Because the Swiss Blocking Statute prevented the Liquidators from writing directly to Mr Khumalo, further notice was given through the Jersey Gazette.
Neither Director filed an Answer, and both were deemed to have submitted to the jurisdiction. Rather than seek default judgment, the Liquidators applied for summary judgment on the merits, which may later assist them with cross-border enforcement. The Court followed Duferco SA v CVG Ferrominera Orinoco CA. It considered that a full duty of full and frank disclosure was unlikely to apply but noted that applicants must still draw to its attention any material that undermines their case.
Sequana: a possible future development for Jersey directors
Under BTI 2014 LLC v Sequana SA, directors must take creditors’ interests into account when a company is insolvent or bordering on insolvency. The point was relevant on the facts: the Court found that the Company was insolvent or on the verge of insolvency at the time of the transfer. The Court did not decide whether this so called "creditor duty" forms part of Jersey law, because only the Liquidators were represented. It did, however, see “strong arguments” for recognising the duty and considered Sequana likely to be persuasive.
