In brief

In brief Articles ‘Trust-busting’ after JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev & ors [2017] EWHC 2426 (Ch) Tim Akkouh and Christopher Lloyd Mezhprom v Pugachev is an important ‘trust-busting’ decision of the English Chancery Division (Birss J). The Judge held that the true effect of five detailed trust deeds was to create a series of bare trusts for the settlor, though he would (if necessary) also have concluded that the trusts were shams. The decision makes it easier for discretionary trusts settled for asset preservation purposes to be unwound where the settlor retains substantial control over the trust assets; it will, therefore, be welcomed by those acting for claimants in civil fraud actions. Drafting tips for the 22nd-century practitioner and beyond Robert Mack After catching the brilliant National Geographic series ‘Year Million’, I was left in awe of the changes that may be in store for the human race as we move towards the next stage of evolution. As a trusts and private client practitioner, I started to ponder some of the issues professional advisors may have to address now, and in the near-to-distant future. Fraud Prevention? Dehors? Or What?: why secret trusts are enforced? Benny Chung Two theories—the fraud theory and the dehors the will theory—are often cited to justify the enforcement of secret trusts. While these theories are undeniably popular, they nonetheless suffer from some critical problems. This article seeks to discuss the flaws of these two theories, and justify the enforcement of secret trusts with the conscience-estoppel theory, a theory that is built upon two established equity principles. In depth Recent Swiss Case Law on Trust-related Issues Alexander Wintsch The Hague Trust Convention has been in effect in Switzerland for a decade. This article gives an update on recent Swiss case law dealing with trust-related issues. While the cases are facts driven and deal with a variety of legal issues, none of the judgments summarized below treated the trust at issue as a sham. In private litigation contexts, courts dismissed arguments aimed at looking through trust structures. In contrast, courts took a more aggressive stance in a tax context, where judges were less reluctant to find that the primary purpose of trusts was to avoid taxation. Creditors’ claims against trustees and trust funds Aleksi Ollikainen-Read As the trustee is the legal owner of the trust assets and the only relevant legal person, any creditor access to trust funds must be through him. But the only right of access the trustee has is through his indemnity. Therefore, creditor access is dependent on this indemnity right. If anything severs that indemnity, creditor access is lost. This creates a substantial practical problem, namely that an unconnected breach of trust can destroy creditor access. This article aims to give a relatively detailed introduction to the law of trust creditors, and suggest a solution to the problem of unconnected breach. Sham and illusory trusts—lessons from Clayton v Clayton Grahame Young This article examines the reasoning in Clayton v Clayton [2016] NZSC 29, and some of the issues it raises but does not answer, and suggests some approaches to the drafting of discretionary trust deeds to resist claims that the terms do not establish a valid trust, that is the trust is illusory. Case Notes Crociani v Crociani Eason Rajah QC and Anthony Robinson On 11 September the Royal Court handed down its judgment in Crociani & O’rs v Crociani & O’rs [2017] JRC146 in favour of the Plaintiffs. Eason Rajah and Anthony Robinson discuss the judgment. Mezhprom Bank v Pugachev [2017] EWHC 2426 (Ch) Gregor Hogan In Mezhprom Bank v Pugachev, the central issue was whether creditors of Mr Pugachev could enforce against the assets of discretionary trusts of which he was a beneficiary. Birss J held that, properly construed, the ‘true effect’ of the trust deeds left ownership of the assets with Mr Pugachev or the deeds were shams. From a practical perspective, the decision raises questions as to what sorts of powers can be retained by settlor-protectors and confirms that professional trustees are not immune from findings of sham. Going forward, the distinction between a ‘true effect’ and sham analysis will need to be resolved. Book Review A Practical Guide to the Transfer of Trusteeships Edward Buckland © The Author(s) (2018). Published by Oxford University Press. All rights reserved. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Trusts & Trustees Oxford University Press

In brief

Trusts & Trustees , Volume 24 (2) – Mar 1, 2018

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Publisher
Oxford University Press
Copyright
© The Author(s) (2018). Published by Oxford University Press. All rights reserved.
ISSN
1752-2110
D.O.I.
10.1093/tandt/tty018
Publisher site
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Abstract

Articles ‘Trust-busting’ after JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev & ors [2017] EWHC 2426 (Ch) Tim Akkouh and Christopher Lloyd Mezhprom v Pugachev is an important ‘trust-busting’ decision of the English Chancery Division (Birss J). The Judge held that the true effect of five detailed trust deeds was to create a series of bare trusts for the settlor, though he would (if necessary) also have concluded that the trusts were shams. The decision makes it easier for discretionary trusts settled for asset preservation purposes to be unwound where the settlor retains substantial control over the trust assets; it will, therefore, be welcomed by those acting for claimants in civil fraud actions. Drafting tips for the 22nd-century practitioner and beyond Robert Mack After catching the brilliant National Geographic series ‘Year Million’, I was left in awe of the changes that may be in store for the human race as we move towards the next stage of evolution. As a trusts and private client practitioner, I started to ponder some of the issues professional advisors may have to address now, and in the near-to-distant future. Fraud Prevention? Dehors? Or What?: why secret trusts are enforced? Benny Chung Two theories—the fraud theory and the dehors the will theory—are often cited to justify the enforcement of secret trusts. While these theories are undeniably popular, they nonetheless suffer from some critical problems. This article seeks to discuss the flaws of these two theories, and justify the enforcement of secret trusts with the conscience-estoppel theory, a theory that is built upon two established equity principles. In depth Recent Swiss Case Law on Trust-related Issues Alexander Wintsch The Hague Trust Convention has been in effect in Switzerland for a decade. This article gives an update on recent Swiss case law dealing with trust-related issues. While the cases are facts driven and deal with a variety of legal issues, none of the judgments summarized below treated the trust at issue as a sham. In private litigation contexts, courts dismissed arguments aimed at looking through trust structures. In contrast, courts took a more aggressive stance in a tax context, where judges were less reluctant to find that the primary purpose of trusts was to avoid taxation. Creditors’ claims against trustees and trust funds Aleksi Ollikainen-Read As the trustee is the legal owner of the trust assets and the only relevant legal person, any creditor access to trust funds must be through him. But the only right of access the trustee has is through his indemnity. Therefore, creditor access is dependent on this indemnity right. If anything severs that indemnity, creditor access is lost. This creates a substantial practical problem, namely that an unconnected breach of trust can destroy creditor access. This article aims to give a relatively detailed introduction to the law of trust creditors, and suggest a solution to the problem of unconnected breach. Sham and illusory trusts—lessons from Clayton v Clayton Grahame Young This article examines the reasoning in Clayton v Clayton [2016] NZSC 29, and some of the issues it raises but does not answer, and suggests some approaches to the drafting of discretionary trust deeds to resist claims that the terms do not establish a valid trust, that is the trust is illusory. Case Notes Crociani v Crociani Eason Rajah QC and Anthony Robinson On 11 September the Royal Court handed down its judgment in Crociani & O’rs v Crociani & O’rs [2017] JRC146 in favour of the Plaintiffs. Eason Rajah and Anthony Robinson discuss the judgment. Mezhprom Bank v Pugachev [2017] EWHC 2426 (Ch) Gregor Hogan In Mezhprom Bank v Pugachev, the central issue was whether creditors of Mr Pugachev could enforce against the assets of discretionary trusts of which he was a beneficiary. Birss J held that, properly construed, the ‘true effect’ of the trust deeds left ownership of the assets with Mr Pugachev or the deeds were shams. From a practical perspective, the decision raises questions as to what sorts of powers can be retained by settlor-protectors and confirms that professional trustees are not immune from findings of sham. Going forward, the distinction between a ‘true effect’ and sham analysis will need to be resolved. Book Review A Practical Guide to the Transfer of Trusteeships Edward Buckland © The Author(s) (2018). Published by Oxford University Press. All rights reserved.

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Trusts & TrusteesOxford University Press

Published: Mar 1, 2018

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