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Fiduciaries and Trustees Beware!

You have got to admire the creativity of  Mr Skurikin (S). VTB appointed Receivers (R) over assets (Assets)  in a limited liability partnership which were held in trust for a Liechtenstein Foundation (B).

B applied to discharge the Receivership Order (RO) on the basis of a “material change in circumstances” (MCIC). That MCIC was a resolution by B to exclude S as a member of the class of beneficiaries of B. Unsurprisingly R took the view that S was in de facto control over B and/or the Assets and that the application to discharge was nothing more than an abuse of process as it had to have been orchestrated by S himself.

The Judge and Court of Appeal agreed. Not only did they both hold that the application to discharge the RO was an abuse of process (query what exposure might there be for those managing B???) Phillips LJ found that B was also in breach of the existing Worldwide Freezing Order which as we all know carries with it sanctions for contempt of court where appropriate.

Moral of the story. All fiduciaries, foundations & trustees need to be super careful in taking steps to “protect” trust assets where court proceedings are in play and particularly where freezing and receivership orders have been made.

[2020] EWCA Civ 1337