Pleshakov v Sky Stream Corporation and others (British Virgin Islands)

An express trust of shares may arise without a contract between the settlor and beneficiaries. The essential requirements are certainty of intention, certainty of subject matter and certainty of objects. No written instrument or formal language is required unless legislation imposes a formality; intention may be inferred from conduct.

An appellate court must exercise caution before overturning findings or inferences reached by a trial judge who heard oral evidence. It must not simply substitute the inferences it would have drawn at trial.

The appellant claimed that shares in Sky Stream Corporation, registered in the names of the second and third respondents, were held on trust for him. Bannister J found that the respondents had acquired the shares as his nominees and declared that they held them for him absolutely and that he was entitled to registration as owner.

The Court of Appeal allowed the respondents’ appeal and set aside those orders. It treated the claim as dependent on proving an oral nominee agreement and conducted its own evaluation of the evidence. The central issues before the Board were whether the trust claim required a contract and whether the Court of Appeal was entitled to overturn the trial judge’s factual findings and inferences.

1. Appeal allowed. The Board advised that the trial judge’s orders be restored.
2. The appellant’s case was pleaded and pursued as a claim that the respondents held the shares on trust. The pleaded nominee agreement supported that claim but was not essential to it. The point was therefore open on appeal.
3. An express trust does not require a contractual agreement between settlor and beneficiaries. It may be created unilaterally. The necessary requirements are certainty of intention, certainty of subject matter and certainty of objects.
4. Certainty of intention requires neither a written instrument nor formal language. Subject to statutory formalities, intention may be inferred from conduct. The trial judge correctly addressed whether the respondents intended to hold the shares on bare trust.
5. The trial judge was entitled to infer from the evidence that the respondents acquired the shares for the appellant’s benefit. The appellant’s lack of prior ownership of the underlying Transaero shares did not prevent that inference. He controlled the opportunity to acquire them and could direct it to an acquisition vehicle chosen for his benefit.
6. The Court of Appeal correctly stated the need for caution in reviewing findings based on oral evidence, but impermissibly substituted its own assessment of the evidence. The trial judge had made no fundamental error, and differences in the inferences the appellate court would have drawn were insufficient grounds for intervention.
7. The unexplained delay between the Court of Appeal hearing and judgment was highly unsatisfactory.

• Privy Council: Appeal allowed and the trial judge’s orders restored.
• Eastern Caribbean Court of Appeal: Appeal allowed and Bannister J’s orders set aside. Baptiste JA gave the substantive judgment, with Thom and Gonsalves JJA agreeing.
• High Court of the British Virgin Islands: Bannister J found that the respondents held the shares on trust for the appellant absolutely and declared that he was entitled to be registered as owner.