Slutsker v Haron Investments Ltd & Anor

In disputes between spouses, the matrimonial property regime governing their relationship may determine rights in foreign immovables, unless the rights of third parties or local formalities require otherwise. A sophisticated trust or nominee structure may prevent property from falling within the Russian matrimonial property regime where the foreign system recognises beneficial ownership but Russian law does not. A spouse who knowingly acquiesces in such a structure cannot later assume that it preserves the rights available under the matrimonial regime. For limitation purposes, knowledge that property is held under arrangements materially different from the matrimonial regime may suffice; knowledge of every term of the trust is unnecessary. A common intention trust under English law will not be inferred where the parties deliberately adopted a materially different trust structure.

The claimant sought a declaration that he owned 50 per cent of the beneficial interest in a London house acquired during his marriage. He relied primarily on the Russian matrimonial property regime and alternatively on a common intention trust under English law. The property was acquired through a company and subsequently held for an offshore discretionary trust established by his former wife, who was the settlor and first life tenant. The claimant knew that a company and trust structure was being used, but did not participate in establishing the trust or inspect its detailed terms.

The defendants contended that Russian law did not confer any beneficial interest in the property, that any claim concerning the disposition of matrimonial property was barred or defeated by consent, and that no English common intention trust arose.

1. Claim dismissed. The claimant had no enforceable claim to a 50 per cent beneficial interest in the property.
2. The court followed Re De Nicols (No. 2) [1900] 2 Ch. 410 as the conservative basis for applying the matrimonial law of the spouses’ domicile to rights between spouses in foreign immovables. The property regime under the Russian Family Code therefore had to be considered.
3. Under articles 33 and 34 of the Family Code, the purchase money was initially joint family property, regardless of whether it derived from the husband or wife. However, Russian law did not recognise the beneficial interest created when the property was registered in the name of Haron, because Russian law did not recognise an English trust or a separate beneficial interest of that kind.
4. The payment of the purchase price was consequently a disposition of joint family property. The claimant had consented to the acquisition through a company and trust structure. He therefore could not avoid the disposition under article 35.2.
5. Alternatively, if the beneficial interest remained within the Russian regime, any challenge to its transfer to the trust under article 35.3 was time-barred. The claimant knew, or ought to have known, from 2001 that the property was held under arrangements materially different from joint family ownership. He did not need to know every term of the trust deed.
6. If English law applied from the outset, no common intention trust arose. The parties intended a structure benefiting the wife and children, not an arrangement reproducing equal ownership under the Russian Family Code. The reasoning in Stack v Dowden [2007] 2 AC 432 therefore did not assist the claimant.
7. The alternative argument based on section 53(1)(c) of the Law of Property Act 1925 failed because it depended on the claimant already having an equitable interest.