The Trustee And The Creditor

"Family trusts are a well known possible device for trying to place assets ostensibly beyond the reach of creditors...." For some years, it has been feared that the English matrimonial courts are prepared to bend over backwards to assist applicants in their endeavours to access assets held within trust structures but this rather 'world weary' quote comes from a recent Court of Appeal decision in North Shore Ventures Ltd v Anstead Inc [2012] EWCA Civ 11. This case shows that it is not just the judges of the Family Division who are prepared to assist litigants seeking to get at trust assets. North Shore Ventures was a rather extreme case and the Court of Appeal had this to say:- "The circumstances surrounding the appointment and behaviour of the trustees were undoubtedly suspicious. For a wealthy man....to make himself a pauper, with the genuine intention of disposing of his money to his last dollar irrevocably and with no ability to control what was to happen to it, is an unlikely scenario." North Shore Ventures does, nevertheless, provide guidance on the question issue of what constitutes 'control' of relevant documents. Where documents are in the possession of a third party (such as a trustee) who is connected to one of the parties to the dispute, and the court determines that the third party has the documents as 'agent' for the litigant, then the court may well make an order for disclosure of those documents. This 'long arm' principle also seems to operate where the documents are held outside the jurisdiction.

The background

North Shore was owed a sum in the region of $35m by Mr Fomichev and Mr Peganov under a judgment debt which they sought to enforce. Mr Fomichev and Mr Peganov responded by swearing affidavits, according to which they had no assets worth mentioning. Both said that they had disposed of virtually all their property to 'off shore' discretionary trusts. Accordingly, North Shore attempted to obtain information about the trusts. In particular they asked to be provided with:-

The trust deeds Any letters of wishes All documents relating to the settlement of asssets on trust All documents identifying the assets settled on or held by the trustees Various other documents including minutes of meetings of the trustees. Floyd J heard the application and ordered Mr Fomichev and Mr Peganov to produce the documents. That order was then appealed to the Court of Appeal. The appellants argued that they did not have possession or control of...