JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2017] EWHC...

Facts

• Mr. Pugachev was alleged to have created trusts over assets held through offshore companies, as part of a complex, multi-layered financial structure.
• The court examined company records, communications, and witness evidence to assess whether Mr. Pugachev intended to establish trusts concerning these assets.
• The dispute centered on whether sufficient intention to create a trust existed amidst the use of multiple corporate entities and offshore arrangements.
• Evidence from the time of the alleged trust creation, including both documents and actions, was closely considered by the court.

Issues

1. Whether Mr. Pugachev demonstrated clear intention to create trusts over the relevant assets within layered corporate structures.
2. Whether the language and actions used were sufficient to impose legal obligations characteristic of a trust, rather than merely expressing wishes or preferences.
3. How the degree of control and ownership exercised by Mr. Pugachev affected the determination of whether assets were held on trust.
4. What standards apply to proving the existence of a trust within complex, multi-entity financial arrangements.

Decision

• The court held that the essential element for a valid trust is the settlor’s clear and unequivocal intention to create one.
• It was found that non-binding language such as “hope” or “wish” would normally not suffice to create a trust, as such terms imply moral rather than legal obligations.
• The evidence reviewed—including documents, communications, and witness testimony—did not establish a clear, legally binding intention by Mr. Pugachev to create trusts over the assets.
• The court emphasized that direct evidence, rather than indirect inferences, is required to demonstrate the creation of a trust in structures with multiple layers and corporate entities.
• The distinction between actions indicative of ownership and those demonstrating trust obligations was central to the court’s analysis.

Legal Principles

• A valid trust requires certainty of intention, subject matter, and beneficiaries.
• The intention to create a trust must be demonstrated clearly through words or conduct evidencing a binding commitment, not just moral persuasion.
• Non-binding language or expressions of hope typically do not satisfy the requirement for a trust’s creation.
• The presence of control over assets and methods of asset holding are relevant, but do not override the necessity for proven intention to establish a trust.
• Courts will scrutinize all contemporaneous evidence and documentation when evaluating trust formation in complex or layered financial structures.

Conclusion

The decision in JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev highlights the strict evidential standards required to establish the intention to create a trust, especially within complicated financial arrangements involving multiple entities. The case emphasizes the necessity of clear, unambiguous language and demonstrable, binding intention for trust claims to succeed in such contexts.