In the recent case of Vucicevic v Aleksic  EWHC 2335 the High Court (Bristol District Registry) considered the rules relating to gifts in the context of homemade wills. The court concluded that instead of being an absolute gift, the homemade handwritten (or holographic) will of the testator gifting his properties to the Serbian Orthodox Church (the “Church“) created a gift to the Church on trust for the benefit of the people in need in Kosovo, especially children. The case highlights that the courts are often willing to adapt a flexible approach to seek to give effect to the provisions of a homemade will as long as the testator’s intentions are discernible, even if certain aspects of the will lack clarity. Continue reading
In the latest decision in the long running Pugachev dispute, the High Court considered the effect of five trusts set up by Mr Pugachev, and whether the trusts were shams. Birss J held that he would have been prepared to declare the five trusts shams, but on the true interpretation of the trust documents and considering the powers reserved to Mr Pugachev as protector, all five trusts were, in effect, bare trusts for the benefit of Mr Pugachev.
The first part of the decision has potentially wide effects in relation to assets held in trust subject to freezing orders. Paragraph 6 of the standard form freezing order in the annex to PD25A refers to “any asset which [the Respondent] has the power, directly or indirectly, to dispose of or deal with as if it were his own”. Following Birss J’s decision, this may include discretionary beneficial interests where the settlor has retained sufficient powers so as to be able to exercise effective control.
While the decision does not alter the test applied to whether a trust will be a sham, it is a rare example of the courts being prepared to find that a trust arrangement constituted a sham, and shows that the courts will look critically at the intentions on the part of the establishing trustees. We consider the decision further below.
Transfer into Guernsey trusts set aside on grounds of mistake despite the fact the transfer was made solely to reduce tax
The Guernsey Royal Court recently ordered, under s. 69(1)(a)(iv) of the Trusts (Guernsey) Law 2007 (the “Act“), that a transfer of shares into Guernsey trusts be set aside on grounds of mistake. This was despite the fact that the transfer had been made for the sole reason of reducing tax liability. We consider the case, Whittaker v Concept Fiduciaries Ltd, further below. Continue reading
The ATO in Australia continues to target privately owned and wealthy groups, with specific focus on groups with risky trust structures that exhibit characteristics of tax avoidance or evasion. Continue reading
On 4 September 2017, seven major regulators governing the finance and technology sectors in China (collectively, the Chinese Regulators), jointly published an announcement prohibiting initial coin offerings (ICOs) in China.
The following day, the Hong Kong Securities and Futures Commission (SFC) also made a statement on existing regulations which could be applicable to ICOs and explained that digital tokens may be “securities” as defined in the Securities and Futures Ordinance (SFO), and accordingly subject to the securities laws of Hong Kong. The SFC also warned investors of the potential risks of ICOs.
The announcement by the Chinese Regulators and the statement by the SFC follow similar clarifications and announcements by regulators in the US, Canada, Singapore, Malaysia, Thailand and Dubai, among other jurisdictions, about their respective positions on ICOs. To date, the Chinese Regulators have been the only ones to issue an outright ban. You can read our e-bulletin on the Monetary Authority of Singapore’s position here.
The UK Financial Conduct Authority also issued a consumer warning on 12 September 2017 stating that “ICOs are very high-risk speculative investments” and investors “should only invest in an ICO project if [they] are an experienced investor, confident in the quality of the ICO project itself (eg, business plan, technology, people involved) and prepared to lose [their] entire stake”.
In this e-bulletin we highlight the key points in the announcement by the Chinese Regulators and the statement by the SFC and set out our observations on the future of ICOs.
Herbert Smith Freehills’ continued growth in the areas of tax disputes and private wealth has been reflected in a string of new lawyers joining the firm.
James Rickards has joined the firm’s London office after 15 years’ practice as a barrister at Outer Temple chambers. James has a wide range of experience across trusts and estates matters, as well as mental capacity issues. He also advises on pensions issues. James is a member of STEP. He is praised in the directories for having “great in-depth knowledge.”
William Cheung will soon be joining the firm’s Hong Kong private wealth practice as a mid-level associate. William is a trilingual lawyer (Cantonese, English and Mandarin) with similarly wide experience in the areas of trusts, estates and mental capacity.
In addition to the above hires, the firm’s specialist tax disputes team in London has been joined by Dawen Gao. Not only does Dawen have considerable experience of tax disputes matters, she is also a native Mandarin speaker.
Heather Gething, Head of Herbert Smith Freehills’ tax disputes and investigations team, commented: “These new hires demonstrate both an increase in current activity in the areas of tax disputes and private wealth and the further growth we foresee in these areas – as well as the increasing collaboration between our teams specialising in those fields.”
In a recently released judgment, In the matter of C Settlement  JRC 035A, the Jersey Royal Court confirmed that, in principle, a trustee can withhold information from a beneficiary with capacity about his rights under a trust. However the trustee will need to have sufficient reasons justifying withholding this information. The decision also confirmed that such non-disclosure could be maintained even if the trustee applied to the court for a ‘Beddoe order’ – a process which would normally involve the court seeking representations from all of the trust’s beneficiaries.
We consider this decision further below.
We are delighted to announce that Richard Norridge, our Head of Trust & Estates Disputes and Head of Private Wealth – Asia, has been named as a leading lawyer in the Citywealth Leaders List. Continue reading
Privy Council considers proper approach to establishing the beneficial ownership of jointly-held assets
In Marr v Collie  UKPC 17, a dispute arose between a separated same-sex couple about the beneficial ownership of property purchased during the relationship for investment purposes in their joint names. The Privy Council clarified that the principle in Stack v Dowden1, that beneficial ownership follows legal ownership unless the contrary is proven, is not limited to a domestic context and can apply where the parties’ personal relationship has a commercial aspect. However, the Court made clear that in addition context is key and is informed by the parties’ common intentions.
Even though the dispute in Marr v Collie related to the Bahamas, the Privy Council’s decision is likely to be followed in England, and other common law jurisdictions which apply similar rules. We consider this decision further below. Continue reading