Tetiana Leremeieva et Al v Estera Corporate Services (BVI) Ltd et Al

• Jurisdiction: British Virgin Islands
• Judge: Wallbank J
• Judgment Date: 03 June 2024
• Judgment citation (vLex): [2024] ECSC J0603-1
• Docket Number: CLAIM NO. BVIHCM2017/0118
• Court: High Court (British Virgin Islands)

By Way of Claim:

Between:

(1) Tetiana Ieremeieva

(2) Roman Yeremeiev

Claimants/Respondents

and

(1) Estera Corporate Services (BVI) Limited

First Defendant/Applicant

(2) Sergii Lagur

(3) Stephan Ivakhiv

(4) Sofiia Yeremeieva (a minor)

Defendants

CLAIM NO. BVIHCM2017/0118

EASTERN CARIBBEAN SUPREME COURT

IN THE HIGH COURT OF JUSTICE

COMMERCIAL DIVISION

Appearances:

Mr. Robert Weekes, KC, with him Mr, James Walmsley, Ms. Claire Goldstein and Ms. Victoria Lissack for the First Defendant/Applicant

Mr. Michael Gibbon, KC, with him Ms. Jennifer Jenkins, Ms. Sophie Christodoulou and Mr. William Barnes for the Claimants/Respondents

Mr. Christopher McCarthy for the Second and Third Defendants

Mr. Romauld Johnson for the Receiver

1 Wallbank J (Ag.): This is the Court's Judgment on an amended application filed by the First Defendant (‘Estera’) on 22 ^nd March 2019 (‘the Amended Application’) seeking orders:

• (1) For summary judgment in respect of the whole or part of the claim brought against it, on grounds that the claim has no real prospect of succeeding against Estera; and/or

• (2) That the Claimants' Claim Form and Amended Statement of Claim against Estera be struck out in whole or part, on grounds that the Claimants' Statements of Claim do not disclose any reasonable grounds for bringing claims against Estera;

• (3) Requiring the Claimants to pay Estera's costs of and incidental to these proceedings.

2 Estera's Amended Application alternatively sought orders for security for costs and to have the proceedings bifurcated. Estera communicated on 20 ^th December 2022 that it was not at that time proceeding with its security for costs application. The Claimants contend that this part of Estera's application should thus be dismissed. The application for bifurcation has already been determined by the Court on a previous occasion.

3 The Amended Application was heard over two days, on 17 ^th and 18 ^th October 2023.

1. Introduction

4 Estera is a professional trust company doing business in the Territory of the Virgin Islands (‘BVI’).

5 The First Claimant, Mrs. Ieremeieva, is the widow of Mr. Igor Ieremeiev (‘Igor’). Igor died on 13 ^th August 2015 following a horse-riding accident.

6 The Second Claimant, Mr. Roman Ieremeiev (‘Roman’), and the Fourth Defendant (‘Sofiia’), are their children. Mr. Roman Ieremeiev was born on 8 ^th February 1995, and Sofiia was born on 10 ^th August 2007.

7 During his lifetime, Igor was a prominent Ukrainian businessman and politician, and was involved in a number of trading businesses collectively known as Continuum. Continuum was not a single corporate group, but under this name there was a range of businesses, dealing in numerous goods and services, from oil and petroleum products to dairy produce. Igor had three business partners: Mr. Sergii Lagur, the Second Defendant; Mr. Stepan Ivakhiv, the Third Defendant; and a Mr. Petr Dyminsky who is not a party to these proceedings.

8 It is the Claimants' case that Igor's ultimate interest in Continuum was worth around US$150–200 million.

9 The Claimants say that about six months after Igor died, on 16 ^th February 2016, Mr. Lagur and/or Mr. Ivakhiv informed them for the first time of the existence of a purported Trust over certain of Igor's assets (‘the Trust’).

10 The validity or otherwise of this purported Trust is the key issue in these proceedings. By referring to it as the Trust, this is merely to be taken as shorthand for this purported Trust, without thereby acknowledging its existence.

11 The declaration of trust by which the Trust was purportedly established bore 21 ^st August 2014 as its date of execution (i.e., about a year before Igor died), and it named Roman and Sofiia as beneficiaries, but not Mrs. Ieremeieva. The Trust was entitled the ‘R & S Trust’ – suggesting that it was named for Roman and Sofiia. This declaration of trust can, for convenience, be called the ‘Original Trust Instrument’.

12 The Original Trust Instrument provided that Igor was to be the first trustee, but that Mr. Lagur was to become the sole trustee of the Trust on Igor's death or incapacity. It moreover provided for the appointment of a ‘New Trustee’ by Mr. Lagur, or, failing appointment by him within 6 months, by Mr. Ivakhiv. On the appointment of the New Trustee, Mr. Ivakhiv would become Protector of the Trust.

13 The Original Trust Instrument was ostensibly executed as a deed by Igor, and by Mr. Lagur, before a Ukrainian lawyer called Ms. Slipachuk, on 21 ^st August 2014.

14 The Trust was expressed to be subject to BVI law.

15 The Trust assets were expressed to be:

• (1) 10 Pounds Sterling;

• (2) 1000 shares of nominal value of US$1 each in a BVI company called ‘Yudelle Asset Holdings Limited’ (‘Yudelle’); and

• (3) shares in 15 companies, 10 of which are incorporated in the BVI and 5 in Cyprus.

16 Clause 9.1 of the Original Trust Instrument provided wide exoneration terms for the trustee (‘the Trustee’):

“In the execution of the trusts and powers hereof the Trustee shall not be liable for any loss to the Trust Fund arising in consequence of the failure depreciation or loss of any investments made in good faith by the Trustee or by reason of any mistake or omission made in good faith by the Trustee or of any other matter or thing except wilful and individual fraud and wrongdoing on the part of the Trustee who is sought to be made liable.”

17 Following Igor's death on 13 ^th August 2015, Mr. Lagur ostensibly became the trustee of the Trust.

18 As I have already mentioned, it is the Claimants' case that Mr. Lagur and/or Mr. Ivakhiv did not inform the Claimants of the existence of the Trust for around another 6 months, until February 2016.

19 It appears that Mr. Lagur and/or Mr. Ivakhiv approached Estera about Estera accepting appointment as Trustee of the Trust. On 31 ^st May 2016 Estera and Mr. Ivakhiv executed a Deed of Appointment and Replacement (‘the DORA’) whereby Estera took over as Trustee from Mr. Lagur. On the same day, Estera and Mr. Ivakhiv entered into a deed (‘the Amendment Deed’) which sought to amend the Trust and convert it into a trust subject to the Virgin Islands Special Trusts Act (‘VISTA’). 1

20 It appears that Estera must have had significant contact with Mr. Lagur and/or Mr. Ivakhiv before agreeing upon the DORA and the Amendment Deed. However, the Claimants contend (and complain) that Estera made no attempt to contact Roman or Sofiia before it accepted the trusteeship and converted the Trust to a VISTA trust.

21 The Claimants say (and further complain) that it was some nine (9) months after Estera had assumed the trusteeship and had converted it to a VISTA trust that Estera wrote to the beneficiaries, Roman and Sofiia, for the first time disclosing its appointment as Trustee.

2. The present proceedings

22 The Claimants started the present proceedings on 12 ^th July 2017, making claims against Estera, Mr. Lagur and Mr. Ivakhiv. The Claimants filed a Statement of Claim a few days later on 19 ^th July 2017.

23 The Claimants' primary case is that the Trust is a forgery, perpetrated by Mr. Lagur and/or Mr. Ivakhiv, to use the Trust to control Igor's interest in the Continuum Group for their personal gain. The Claimants advert to several factors which they submit made it unlikely that Igor would have established this Trust, and, conversely, likely that Mr. Lagur and Mr. Ivakhiv were its creators after

Igor's death. The Claimants contend that Mr. Lagur and Mr. Ivakhiv conspired to dissipate the assets of the Trust (or engage in so-called ‘value-shifting’) for their personal benefit. The Claimants contend that the Trust should be set aside as a forgery and other consequential relief should be granted

24 The Claimants' secondary case is that if the Trust was not a forgery, that is, if it had indeed been established by Igor, then it was a sham. The Claimants contend that Igor at all times conducted himself, and lived his life, as if no such Trust existed. The Claimants contend that the Trust should be set aside as a sham on this alternative ground. It is well settled as a matter of law that ‘[i]f held to be a sham there will be no trust at all’. 2

25 For present purposes, we must focus upon the claims made against Estera. It is necessary that I should relate carefully some parts of the case pleaded.

26 The Claimants alleged that Estera owed fiduciary duties towards Roman and Sofiia (my emphasis added), regardless of whether the Trust was valid or not, and that Estera had acted in wilful and dishonest breach of trust in executing the Amendment Deed, acting in the interests of Mr. Lagur and Mr. Ivakhiv at the expense of Roman and Sofia.

27 The Claimants' case was that clause 9.1 of the Original Trust Instrument therefore did not exonerate Estera from liability (i.e. because wilful and dishonest wrongdoing was being alleged against Estera).

28 The Claimants claimed at paragraph 169 of their Statement of Claim:

“Estera is liable as trustee de son tort, alternatively constructive trustee (if the Trust is invalid), alternatively for breach of trust and is liable to reconstitute the Trust Fund and make good all losses to the Trust Fund in the period from 31 ^st May 2016.”

29 At paragraph 170 the Claimants pleaded:

“Further or in the alternative Estera is liable ( whether as trustee de son tort constructive trustee or a validly appointed trustee) to pay damages or equitable compensation.”

30 We see here the advent of the Claimants' case that Estera was a ‘trustee de son tort’.

31 At paragraph 171 the Claimants asserted a claim that Estera is ‘liable to account for the fees which it has wrongfully charged to the Trust Fund and/or reconstitute the Trust Fund in respect thereof’.

32 From paragraphs 172 to 176 the Claimants asserted a claim against Estera for having allegedly dishonestly assisted Mr. Lagur and Mr. Ivakhiv in respect, inter alia, of...