Kirill Ace Stein v Eugene Jaffe [2025] EWHC 2334 (Ch)

[2025] EWHC 2334 (Ch)

Case No BL-2023-000501

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

BUSINESS LIST (ChD)

Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NL

Date 19 September 2025

Before

MASTER BRIGHTWELL

Between

KIRILL ACE STEINClaimant

EUGENE JAFFEDefendant

Laurence Page (instructed by Eversheds Sutherland (International) LLP) for Claimant

Lisa Lacob and Devon Airey (instructed by Peters & Peters Solicitors LLP) for Defendant

Hearing Hearing dates: 19-21, 23 May 2025

Approved Judgment

[1]At a meeting in Moscow on or around 2 June 2012, the parties to this claim met with the Russian businessman, Mr Vasily Anisimov. They discussed the basis on which the claimant, Mr Kirill Stein, would provide litigation assistance to Mr Anisimov in relation to English High Court proceedings issued by Mr Boris Berezovsky against Mr Anisimov in relation to a Russian mining company, CJSC Holding Company Metalloinvest (“Metalloinvest”). It was agreed at that meeting that USD2 million would be deposited by Mr Anisimov with the defendant, Mr Eugene Jaffe, in relation to his defence of the Berezovsky claim, and that the claimant would be paid USD1 million for his first six months’ work. The sum of USD2 million (“the Payment”) was subsequently paid by a company connected to Mr Anisimov to a Marshall Islands company, Pumula Management Limited (“Pumula”). Pumula was apparently owned by the defendant’s wife and later acknowledged by the defendant to be co-controlled by him. None of the said USD2 million was paid directly to the claimant and only a few thousand pounds were used to defray his expenses.

[2]Mr Stein contends that it was agreed at the said meeting that, when Mr Anisimov later caused the sum of USD2 million to be transferred to Pumula, Mr Jaffe (either alone or together with the company) was as he agreed to be constituted as the trustee of that sum for Mr Stein, pursuant to an express bare trust. Mr Stein further contends that Mr Jaffe breached his duties as trustee of such a bare trust by failing to inform him that the sum constituting trust monies had been received, and by paying the money away for his own benefit rather than accounting for it to Mr Stein. Accordingly, Mr Stein claims equitable compensation or an account of the profit made by Mr Jaffe with the assets said to have been trust assets. Mr Jaffe contends that Mr Stein’s entitlement to payment for his work on behalf of Mr Anisimov was dependent on other steps being taken and that the Payment to Pumula was a gesture of good faith.

[3]The claim was issued by Mr Stein in March 2023, some years after the events in question. This is my judgment following the trial of the claim.

The witnesses

[4]There were three witnesses at the trial: the parties themselves, and Mr George Bedineishvili, who gave evidence on behalf of Mr Jaffe. All are clearly highly intelligent individuals.

[5]Mr Stein gave evidence from a wheelchair, having broken a leg shortly before the trial. This, together with the culmination of the litigation process, seemed to intensify the strength of emotion evident in his oral testimony. His answers were almost invariably given at considerable length. Even though his lengthy answers were not irrelevant, as I commented as Ms Lacob struggled to get through her questioning in the available time, they appeared to me to demonstrate the way in which Mr Stein had processed the emotions surrounding the dispute. I do not think that he was seeking to be obfuscatory, but was unable to provide more concise responses. He often sought to begin his answers before the question to him had been completed – I consider this to be a symptom of the strong emotion he felt at having ended up in litigation with a former close friend.

[6]Mr Stein downplayed the closeness of his friendship with Mr Jaffe, describing him as a work friend only and saying ‘we never went out after work’ when they first worked together, but he stayed with Mr Jaffe for several weeks when he came to the UK in 2015. That, together with the informal and relaxed nature of the large quantity of communications passing between them over many years suggests a genuine friendship. Mr Stein said, ‘I think I was quite fond of him, but I would not say he was my friend’. I consider that to be a retrospective rationalisation on Mr Stein’s part, following their falling out. The exchanges between them also show that their friendship was based at least in part on financial mutual benefit. At the time when the key events in this dispute took place, both parties were in some financial difficulty, and aware that the course of future litigation might change that position (as indeed it most dramatically did).

[7]There were a number of times during his evidence when Mr Stein’s emotions were very visibly demonstrated. These tended to coincide with a discussion of his feelings towards Mr Jaffe, or the nature of his friendship with Mr Jaffe, or of his feeling hard done by. When it was put to him that what he says was agreed at the 2 June 2012 meeting would have been an incredible deal, he said, ‘But I worked a lot for that’, with a raised voice and demonstrable anger. It is obvious that he feels very strongly that he has been wronged by Mr Jaffe.

[8]Mr Jaffe was, by comparison to Mr Stein, inscrutable. His responses were much more economically delivered, and his evidence thus was quite a contrast to that of Mr Stein. A part of his evidence which I considered to be unsatisfactory was when he was questioned about the payments made out of the account. Before the trial the defendant’s solicitors had revised the figure which he contended represented the amount of the Payment used to defray Mr Stein’s expenses. His answers on this subject were not convincing; for instance when asked whether a laptop had been purchased for Mr Stein or Mr Bedineishvili, he said in vague terms he had spoken ‘to an IT guy’. I consider this to be the sort of detail with which Mr Jaffe, perhaps understandably, does not normally concern himself.

[9]I considered him, however, to be generally straightforward in his testimony. This was so, for instance, when he explained why he was advised to accept to the US tax authorities and to HMRC that he controlled Pumula. Even though he maintained that the beneficial owner and person in control was his wife, Mrs Olga Jaffe, he unhesitatingly answered that he made requests of her for payments out of Pumula in 2012, for which she gave instructions (something supported by contemporaneous documents), and that he (and not his wife) subsequently decided to shut down Pumula.

[10]Mr Page submitted that I should take account of criticisms of Mr Jaffe made by Cockerill J in her judgment in the Revoker Proceedings, which are discussed below. I will comment on that point in due course, but would note that Mr Jaffe’s evidence was not particularly discursive, nor did he display emotion in his responses. He appears to have taken on board the comments about his evidence after the first trial in those proceedings (see

[2018] EWHC 2918 (Comm)

at [21] to [22]).

[11]Mr Bedineishvili was not present at the key meetings in June 2012. He had previously worked with Mr Jaffe and in early 2012 the two men were discussing a resumption of that collaboration, including in relation to Mr Anisimov’s defence of the claim brought by Mr Berezovsky. While he gives evidence of his awareness of the Payment and says consistently with Mr Jaffe that in the summer of 2012 they awaited confirmation from Mr Anisimov of what the Payment would be used for, he does not say he has any awareness of what was agreed at the meetings. He was not cross examined in any detail, but as his relevant evidence is of general recollections of what he was told many years ago on a matter of which he was only indirectly interested (as he would have expected to be remunerated from some source for services he provided), his evidence is not of any significant weight.

[12]As Leggatt J said in Blue v Ashley

[2017] EWHC 1928 (Comm)

at [66], evidence based on recollection of what was said in undocumented conversations which occurred several years ago is problematic. After referring to his now well-known decision in Gestmin SGPS SA v Credit Suisse (UK) Ltd

[2013] EWHC 3560 (Comm)

, he said at [67]:

‘67 In the light of these considerations, I expressed the opinion in the Gestmin case (at para 22) that the best approach for a judge to adopt in the trial of a commercial case is to place little if any reliance on witnesses' recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts.’

He went on at [68] to [70] to set out further reasons based on academic research, why caution should be applied to evidence based on recollection. I consider all of these comments to be particularly germane to the assessment of the evidence in the present claim.

Factual background

[13]Mr Stein and Mr Jaffe first met in around 2000, whilst they were both working for Alfa Bank in Moscow. They remained in contact thereafter as friends until the dispute which led to the present proceedings.

[14]Mr Stein was born in Ukraine and explains that he moved as a child to the United States of America with his family as refugees. He is a qualified New York attorney, qualifying in the 1990s and initially working for more than one firm, before leaving the law to join OJSC Alfa Bank as an investment banker. He was later engaged by the owners of the business that was to become Eurasian Natural Resources Corporation plc (“ENRC”), and successfully pursued proceedings in the Commercial Court against the founders of ENRC in relation to a success fee which had been agreed but not paid to him.

[15]Mr Jaffe left the Soviet Union as a political refugee in 1989, also moving to the United States. He subsequently worked in various roles in private equity and investment banking. In 2001, he founded Salford Capital Partners Inc (“Salford”), a private equity firm specialising in investments in the former Soviet Union and Eastern Europe. Salford provided investment management services to Mr Berezovsky and to one of his associates, Mr Arkady (or Badri) Patarkatshivili.

[16]From around 2004, Messrs Berezovsky and Patarkatshivili invested in a fund managed by Salford, and called the New World Value Fund (“NWVF”), whose assets were invested in Value Discovery Partners (“VDP”). VDP’s articles provided for the partnership to carry on business in relation to investments, and provided for the partnership to be terminated by 1 July 2012, with Salford to have a right to carried interest in the net investment return: see Krys v KBC Partners LP

[2015] UKPC 46

at [19] (Lord Mance), an appeal from the British Virgin Islands. In early 2012, Mr Jaffe was looking to extend the partnership term, having sought finance to buy some or all of the assets himself, and not wanting to sell or distribute the assets himself at that time because he believed they were worth more than the value for which they could then be realised, and that his carried interest would be adversely affected by a realisation then. The value of VDP, or its assets, was also adversely affected by the fact that Mr Berezovsky claimed an interest in them. See Recovery Partners GP Ltd v Rukhadze

[2022] EWHC 690 (Comm)

at [76]–[82] (Cockerill J).

[17]Furthermore, Mr Patarkatshivili died in 2008. Mr Jaffe subsequently fell into a dispute with his family and with a former director of Salford, Mr Irakli Rukhadze, who became aligned with the family. It was Mr Jaffe’s unchallenged evidence that, in 2012, he was already considering bringing proceedings against Mr Rukhadze and others, alleging that they had breached their fiduciary duties to two entities established after Mr Patarkatshivili’s death and intended to protect the assets in his estate in different jurisdictions. Those proceedings would later be issued by the two entities (Recover Partners GP Ltd and Revoker LLP), and result in success for the claimants on liability (see

[2018] EWHC 2918 (Comm)

). There was then a separate trial before Cockerill J on quantum (

[2022] EWHC 690 (Comm)

, recently upheld on second appeal to the Supreme Court (

[2025] UKSC 10

). The quantum trial is of some relevance to the present dispute because the payment of USD2 million with which it is concerned was raised as an issue in that trial, and Mr Jaffe was cross examined on it.

[18]At the time when the events in dispute in the present proceedings were taking place, in 2012, Mr Jaffe thus believed that was entitled to, and was seeking to receive, a large sum of money via his carried interest in NWVF. He indicated in evidence that he believed his interest in the claim pursued in the Revoker Proceedings to be worth close to USD100 million (and he rejected an offer to settle his claim for half that sum). In due course, that claim would be vindicated, through the Revoker Proceedings. In 2012, he was cash poor and was borrowing money from a number of different sources. That included from the USD2 million which forms the subject matter of this claim.

[19]It was in this context that Mr Jaffe and Mr Anisimov came back into contact in May 2012, having, on Mr Jaffe’s case, not been in contact for some months following what he describes as the ‘divorce’ from Mr Patarkatshivili’s family in 2011. He had previously approached Mr Anisimov on behalf of the family to secure finance in order to litigate on the family’s behalf.

[20]At this time, Mr Anisimov was a defendant to a claim pursued by Mr Berezovsky, in which Mr Berezovsky alleged that he had a beneficial interest in Metalloinvest and in OAO Russkiy Alyuminiy, an aluminium company operating in Russia. In the event, Mr Berezovsky discontinued that claim in October 2012, but as at June 2012 Mr Anisimov was preparing his defence to it.

[21]Mr Jaffe’s position on the various issues discussed between him and Mr Anisimov before Mr Stein became involved is explained in his first witness statement in the following terms:

‘21. In around mid-May 2012, I met with Anisimov. The meeting was in London. I think it took place at a club, possibly The Arts Club or Annabel’s. I attended with George Bedineishvili (“Giga”) who had previously been head of Salford Georgia and who I was thinking of bringing back to work at Salford. 22. At that meeting, Anisimov asked if I could help him in relation to defending the claim brought against Anisimov by Boris (“the Berezovsky Claim”). Anisimov also told me that the Family were preparing to bring a claim against him, and that he would need help with this too. I said I could help but would need a team. Anisimov knew that I had a big organisation and access to resources so would be able to set up a team and structure. 23. I also told Anisimov what I would need from him. Anisimov knew that the Fund was due to expire on 1 July 2012. There were issues to be resolved in relation to distribution of the Fund’s assets. This was a very difficult situation, and the Family were taking an aggressive position and taking actions which were detrimental to the value of the Fund’s assets. We discussed how it would be beneficial for me if Anisimov could agree, as part of a settlement with Boris, that Anisimov would acquire Boris’ stake in the Fund. We also discussed the possibility of Anisimov buying out both Boris and the Family. 24. I also told Anisimov that I needed funds to pursue the Revoker Claims and for Salford, which faced funding issues at that time. I recall saying that I needed around $2.5 million to start the Revoker Claims and $1 million for Salford. 25. I said I thought Giga could be involved but I didn’t think Giga was the right person to lead the legal aspects of the work with Anisimov. Given his legal background, I thought Kirill would be a good asset and proposed him to Anisimov who liked the idea. I suggested Kirill could head the team working on the Berezovsky Claim (which I will refer to here as “the Berezovsky Claim Project”). We discussed the budget for the Berezovsky Claim Project but did not arrive at precise figures. I told Anisimov that Kirill would be expensive and there would be legal and other costs. I also suggested that given his background in investment banking, Kirill could be involved with negotiating Anisimov’s investment in the Fund (which I will refer to here as the “M&A Project”). We discussed how Kirill could be rewarded by a stake in the Fund if successful although we did not agree on the detail. Anisimov and I agreed to meet with Kirill to discuss these projects 26. We discussed how a structure and team could be set up that would be used for the Berezovsky Claim Project (and defending potential litigation against Anisimov by the Family) and the M&A Project for Anisimov, and the Revoker Claims for me. Although I refer to separate projects in this statement, in reality they were like separate streams of one larger project. At least as far as Anisimov was concerned, he wanted to get out of the trouble he was in with Boris and the Family, and these projects were all aimed at that, with the main strategy being through the Fund.’

[22]I would at this point note that the claimant challenges in particular the suggestion that, once he became involved, these separate projects were regarded by Mr Anisimov as ‘separate streams of one larger project’. It is the claimant’s position that Mr Anisimov’s interest was only in defending the claim then pursued against him by Mr Berezovsky and not in becoming more involved in the dispute between Mr Jaffe and the Family, including by agreeing to buy out Mr Berezovsky’s share in NWVF.

The meetings

[23]It is common ground that there were two meetings in Moscow, on 1 and 2 June 2012 and that an agreement was reached at the second meeting. While neither party is sure the dates are correct, they are agreed that I should proceed on the basis that they are. The meetings were attended by Mr Stein and Mr Jaffe, together with Mr Anisimov. Mr Jaffe’s recollection is that they were attended also by Mr Vasily Emme, Mr Anisimov’s chief legal counsel, who also advises him on commercial matters. It is common ground that Mr Emme did not participate in the material discussions.

[24]Mr Stein explains that Mr Anisimov wished for him to advise on litigation strategy and to assist with a potential successful settlement of the Berezovsky claim, and other associated claims. At the first meeting, the possibility was discussed of Mr Anisimov settling the claim by buying out Mr Berezovsky’s interest in NWVF at a discount. Mr Stein’s view was that such a deal would have improved Mr Jaffe’s position in his dispute concerning the partnership operating the NWVF, and that it would have assisted him in reaching an agreement to delay the date by which the assets had to be realised or distributed.

[25]Mr Stein’s evidence in chief as to the oral agreement he reached with Mr Anisimov is as follows:

‘4.15 At the Second Meeting I told Mr Anisimov that I would accept his proposal to provide him with the Services subject to acceptance of my terms; namely, USD $1 million, to be paid upfront and on a non-refundable basis, for every 6 month period in which the Services were provided (the “Fee”). I also asked for all my expenses associated with the Services to be paid and asked for an initial USD $1 million to be made available, again in advance and on a non-refundable basis, to pay for any legal or other expenses associated with providing the Services (the “Initial Expense Payment”) (the Fee and the Initial Expense Payment being the “Initial Payment”). 4.16 In response to my proposal, I specifically recall that Mr Anisimov said in Russian, “Dogovorilis’

. Po rukam”, meaning “shake hands”, which is the equivalent of saying “deal”, and asked “kuda perevodit’ den’gi?”, meaning where should he send the Initial Payment.’

[26]Mr Stein goes on to explain that the receipt of moneys into his own account would, as a US citizen, cause him administrative and tax difficulties, thus he asked for a more efficient corporate structure to be put in place. He says that he ‘wanted to create a structure, and for Mr Anisimov to sign an agreement novating the engagement to that structure, to facilitate the Initial Payment and the ongoing fees and expenses’. He goes on:

‘4.19 In response to this [i.e. discussion of the time it would take to create a structure], I specifically recall that Mr Anisimov said, “I need tomorrow”, which I understood to mean that he needed me to start work immediately. I recall that I replied, “Well, I’m sorry”, as I had already decided that I was not going to agree to start work and take on expenses without payment upfront. 4.20 I recall that it was at this point that the Defendant said words along the lines of “Davaite cherez menya” meaning, “Let’s do it through me”, meaning that he would receive the Initial Payment from Mr Anisimov and route the money to me. I recall that Mr Anisimov said this arrangement was acceptable to him if it was also to me, and I confirmed that it was.’

[27]Mr Stein also gives evidence that the specific details of any structure, or of how the payment would be made after Mr Jaffe’s intervention, or of an office or team to manage Mr Anisimov’s interest in the NWVF should a deal proceed, were not discussed at that second meeting on 2 June 2012.

[28]It is thus Mr Stein’s case that he indicated to Mr Anisimov, and Mr Anisimov agreed, that Mr Stein would not start work until he had received funds as agreed.

[29]Mr Jaffe states that he does not recall specifically what was discussed at the two meetings on 1 and 2 June 2012, but in his first witness statement gives the following explanation of what he says was agreed in principle at the second meeting:

‘32. We agreed there would be a structure owned by me. I think this idea came from both Anisimov and Kirill, or at least I remember that they both wanted it to be structured in this way. From Anisimov’s point of view, I believe this was because Anisimov knew me well and did not know Kirill. Kirill’s concern was always to do with taxes and making sure he was not liable to pay tax. It was also agreed that Anisimov would deposit $2 million with me in relation to the Berezovsky Claim Project. This was partly a sign of his commitment to the project (and the other projects). I would be allowed to use it to pay for immediate expenses such as the legal cost of creating the structure. Otherwise, the money could not be spent until a budget, strategy, structure and team could be presented to Anisimov, and if Anisimov was happy with those, a formal agreement entered into. Subject to agreeing those points, Kirill would be paid $2 million per year as a salary. Once a formal agreement was entered into with Anisimov, it was agreed that $1 million of the $2 million could be paid to Kirill as advance payment for his first 6 months work. 33. We also discussed compensation for Kirill for the M&A Project and that if successful Kirill would be rewarded with either a significant success fee or a stake in the Fund, although the detail was not agreed. Given his background in investment banking, Kirill understood that he would work on the M&A Project on the basis that his “success fee” would only be paid if the deal went through. 34. We also discussed how Anisimov would provide me with $2.5 million funding for the Revoker Claims which I could spend as I wanted (including how much to pay Kirill for his role), and $1 million funding for Salford. 35. Anisimov also indicated that further funding would be agreed in the future including for the Berezovsky Claim Project and Revoker Claims. 36. We agreed that I (or my team) would work with Anisimov’s team on receiving the funds from Anisimov including structure and agreements. We agreed that in the meantime Kirill would start to read various background documents and work would start once we had received the $2 million, with the expectation that everything would be fully agreed with Anisimov by no later than July.’

Later events

[30]Mr Jaffe’s evidence is then that he had further meetings with Mr Anisimov after 2 June 2012, and that he recalls that, by around mid-June, he had reached agreement with him that Mr Anisimov would provide him with USD5.5 million, with USD2.5 million for the Revoker claims and USD1 million for Salford, these sums being a loan which would be written off if Mr Anisimov invested in NWVF. He says that, ‘the other $2 million was the funds being deposited with me as discussed at the meetings with Kirill’.

[31]Mr Jaffe also gives evidence of further meetings he had with Mr Anisimov and Mr Emme in July, August and September 2012. He says that Mr Anisimov indicated in July 2012, and later maintained, that the USD2 million which had been received by Pumula was to be part of the USD3.5 million he had promised to fund the Revoker claims and Salford (that not being Mr Jaffe’s understanding of what had earlier been agreed). Mr Jaffe indicates that, around the time of the London Olympics in early August 2012, which Mr Anisimov attended as President of the Russian Judo Federation, Mr Anisimov was showing signs of having gone off the idea of the project.

[32]Mr Jaffe also says this:

‘42. Kirill and I used the name “Z” or “Fund Z” or “Project Z” to refer to a structure and a team to be used for the Berezovsky Claim Project and potential litigation against Anisimov by the Family, and the M&A Project (and which could also be used for the Revoker Claims in the future, with me as the “client”). I will refer to this here as “Project Z”.’

[33]It is then common ground that Mr Stein thereafter began work for Mr Anisimov. Mr Stein has indicated (and it is unchallenged) that, in the three months or so following the June meetings, he travelled four to eight times to London and four or five times to Moscow in connection with Mr Anisimov’s defence of the claim brought by Mr Berezovsky. Among other things, he attended a mediation in July 2012 held at the London offices of Freshfields Bruckhaus Derringer LLP (“Freshfields”), Mr Anisimov’s English solicitors in that litigation. Mr Stein also worked on putting together a corporate structure and team and managing Mr Anisimov’s interests in the NWVF, in case the deal to purchase Mr Berezovsky’s interest in the fund was successful. The relevance of that work to the payment in dispute in the present proceedings is not common ground.

[34]A structure was set up for the payment of the sum discussed at the meeting on 2 June 2012. Pumula was incorporated in the Marshall Islands on 15 June 2012. Mr Jaffe’s evidence is that Pumula was owned by his wife, Olga. He says that he was not involved in the incorporation of the company, which would have been overseen by Ms Kira Gabbert, the treasurer of Salford. The directors of Pumula were provided by BBT Treuhand AG (“BBT”), a corporate services provider based in Liechtenstein.

[35]The sum of USD2 million was transferred to Pumula on 28 June 2012, by a company called Dryden Group Ltd (“Dryden”), pursuant to a purported loan agreement dated 25 June 2012. Ms Gabbert was unable to confirm to BBT that Dryden was beneficially owned by Mr Anisimov, although there is no dispute for the purposes of the present proceedings that the money was paid to Pumula by or on behalf of Mr Anisimov, Mr Jaffe saying in evidence that he knew the money was coming from a company controlled by Mr Anisimov. Mr Jaffe accepted unhesitatingly that the loan from Dryden to Pumula, which was written off shortly after it was made, was a sham. A letter dated 28 June 2012 and signed on behalf of Dryden and to be provided to BBT says ‘We hereby confirm that the amount of the loan (USD 2M) granted by Dryden Group Limited to Pumula Management Limited, per loan agreement dated 25 June 2012, originates from John Patterson. We trust to have informed you sufficiently.’ These events were occurring just as Salford’s contract to sell the VDP assets came to an end, on 1 July 2012. There may have been a short delay before Pumula’s bank agreed to accept the Payment.

[36]Mr Jaffe suggested in his witness statements that Mr Anisimov in November 2015 started to demand repayment of the loan to Dryden, despite it having been written off. A company called Gelderland Holdings Ltd (“Gelderland”) wrote to Pumula on 26 November 2015 as Dryden’s assignee, seeking repayment of the Pumula loan with interest. This led to negotiations and an agreement with him in early 2016. Mr Stein responded to this evidence by saying that Mr Jaffe had told him he was under pressure from Mr Anisimov to repay certain loans, but that he did not suggest they were connected to the services he had provided.

[37]It appears that a small number of expenses incurred by Mr Stein were defrayed out of the USD2 million received by Pumula. On any view, the total of such expenses was no more than around £20,000. In cross examination, Mr Jaffe was clear in stating his understanding that the money was owned by Pumula.

[38]The balance of the funds was, however, used by Mr Jaffe for his own and for Salford’s expenses, as he admits. Mr Jaffe also indicates that he told Mr Stein that he was ‘effectively borrowing from the $2 million’ by making payments out of the money paid to Pumula for his own purposes, saying that ‘when an agreement was signed with Anisimov [he] would deal with it by making it whole’. Some of the payments were to a Liechtenstein company called Virosat Investments Inc, connected with Mr and/or Mrs Jaffe. Mr Jaffe goes on to say the following:

‘81. When Anisimov told me in July 2012 that he considered the $2 million was part of the $3.5 million he had agreed to fund the Revoker Claims and Salford, initially this didn’t change how I viewed the $2 million as I was not sure that Anisimov was clear that he saw the $2 million in this way. After he told me this again in August, I felt more confident that I could use the $2 million as I wanted, but I was still cautious. I have seen from the Pumula Statement of Account that I requested one payment in late August, but then did not request any other payments until mid-September 2012. 82. From mid-September, I had no doubt that the $2 million was mine to do what I wanted with. I do not remember specifically what payments were made from the $2 million after that.’

[39]From mid-July 2012, Macfarlanes LLP (“Macfarlanes”) was instructed by Mr Stein, as he explains it, ‘to assist the preparation of the Fund Management Structure if the Deal was successful as they were Salford Capital’s long time counsel’. The instruction was at least initially understood to be made on behalf of Mr Jaffe. Mr Stein said in his oral evidence that he had no previous knowledge of Macfarlanes and suggested that he was unhappy with their instruction. Macfarlanes liaised with Ms Kira Gabbert, described by Mr Jaffe as the Treasurer of Salford (and by Mr Stein as fulfilling a CFO-type role), in receiving these instructions.

[40]It is Mr Jaffe’s case that the instruction of Macfarlanes was in relation to the Berezovsky Claim Project, and not in case the deal for Mr Anisimov to purchase his share in the NWVF came to fruition. Accordingly, it is his case that the structure to be created was part and parcel of the agreement (on his case, in principle) reached on 2 June 2012, and its conclusion was a condition which required to be satisfied before Mr Stein would become entitled to the sums agreed in principle at the meeting on 2 June 2012.

[41]I made a confidentiality order in respect of the documents disclosed by the defendant in relation to this advice, and sat briefly in private during the trial whilst Mr Stein was cross examined on it, as Mr Jaffe asserts continuing privilege over the advice. I have excised from this public judgment references to the details of the advice (as opposed to the fact that it was obtained).

[42]Mr Jaffe indicates that in late August and early September 2012, Mr Anisimov told him that he (Mr Jaffe) could not be involved in Project Z. He says this:

‘67. Anisimov wanted us (me and him) to focus on settlement with the Family. He told me that no more money was coming for the Revoker Claims while a deal with the Family was being sought (which might have included settling my claims against the Family). It was at this meeting that Anisimov told me that he considered that I could keep the $2 million. He appreciated what I had done for him and wanted to help Salford, and he saw me as a friend and an ally.’

[43]Mr Anisimov dispensed with Mr Stein’s services in mid to late September 2012. There does not appear to be any written record of precisely when this occurred. This was before Mr Berezovsky discontinued his claim against Mr Anisimov, which appears to have been in early October 2012.

[44]Mr Stein’s evidence is that he asked Mr Jaffe to speak to Mr Anisimov on his behalf about the payment discussed in June 2012. In a text message sent on 25 September 2012, consistent with the way in which they then communicated, Mr Stein wrote:

‘Sweetheart, when you speak to VV [i.e. Mr Anisimov] and if nothing moves forward, remind him that in May we agreed for a $1mn advance for six months. Accordingly, my view is that he owes me this million and not some kind of monthly payment. …’

Later that day, Mr Stein wrote, ‘I just received a message from little Vasya [i.e. Mr Emme] that big Vasya told him today that he never did agree anything with you.’

[45]After Mr Jaffe informed him that he could make no progress, Mr Stein arranged to meet with Mr Anisimov alone. They met in late September or early October 2012 in the lobby at Claridge’s Hotel in London. Mr Stein’s evidence states the following:

‘9.5 … I recall reminding him of what we had been agreed at the Second Meeting. I remember explaining to him that I had taken him as a man of his word, had been working hard for him, and had travelled everywhere I had been asked. I further recall telling him that I thought it bad enough that he reneged on our agreement and had not paid me anything for my work, but I was out-of-pocket for the expenses I had incurred in performing the Services. It was a very short discussion, but I recall I was quite forceful and blunt. 9.6 I recall that Mr Anisimov was gruff but not impolite. He seemed to me to be uncomfortable and did not say much. When I raised the issue of payment he became angry and got up. I specifically recall that he said wording in Russian along the lines of, “I already gave everything”. I recall I then asked him to pay me at least my expenses which I had been paying from my own personal funds and he replied in Russian along the lines of, “I’ll give you your expenses. Speak to [Mr] Emme”. I recall that he then shrugged, waved his hand in the air and walked away.’

[46]It is not disputed that Mr Anisimov arranged for the sum of USD50,000 to be paid following this meeting. The money was paid to a company called Zilar Investments Ltd, which Mr Stein describes as his wife’s company. The payment was made by Vasson which, as I have explained above, was connected to Mr Anisimov.

Discussions about the receipt of the payment

[47]Mr Stein’s case is that, after the June 2012 meetings, he was regularly chasing Mr Jaffe regarding payment of the sum agreed. He said that he regularly spoke to Mr Jaffe, such that the significant number of text (etc) messages which have been disclosed in these proceedings does not represent the totality of the communications between the parties, especially on this point.

[48]A small number of emails and text messages among the large number disclosed were referred to at the trial. The key messages were as follows: i) On 14 June 2012, Mr Jaffe messaged Ms Gabbert to tell her, ‘Small change. Instead of 2.5m it is going to be 3.5 loan (3 years, 5%). 2m same (plus write off)’. ii) On 21 June 2012, after Mr Stein had asked, ‘How is the issue that concerns me?’, Mr Jaffe replied, ‘They are sending it tomorrow. We had to create everything from scratch – did not come from him and does not come to me’. This is clearly a reference to the structuring of the Payment. Mr Stein replied, ‘Fine. It will also not go 2 me. But please let me know some details soon, so that a proper structure can be put in place.’ iii) On 27 June 2012, Mr Jaffe wrote an email to Mr Stein:

‘Da. Good news and bad news. Money come in. But were sent back because we could not show where it came from. Dealing with it now. Agreed with VV [i.e. Mr Anisimov] on proper solution going forward. Need to solve it short term though. Will call when land in London. iv) On 4 July 2012, Mr Jaffe wrote to Mr Stein, saying ‘Got the money!!!’ v) A few minutes later, he wrote to Mr Stein: ‘Next is funding (I borrow) for suing the Family/Irakli (a lot of shit will float up [in Russian]) – coming soon. And we need to put proposal for funding for Z for 1 year. Full Team in place and set up within 1 month. Then the fun begins.’ vi) Later that day, after an exchange about where they were to meet in London, Mr Stein wrote: ‘Which money did u get? The second 3.5?’ vii) Mr Jaffe responded, ‘The first! Once we get the second, we start preparations for case against Family/Irakli. Agreed with Giga. This is going to be huge help for you and all of us. We shall meet for dinner – three of us.’

[49]As I have mentioned, there were discussions between the parties about the Payment around the time when Mr Anisimov indicated that he no longer wished to use Mr Stein’s services. Mr Stein alleges that after Mr Anisimov had terminated the services he was providing, Mr Jaffe promised to pay him the sum of £500,000 when he was able to do so (it also being Mr Stein’s evidence that Mr Jaffe was in some financial difficulty at the time), but that he never did so. Mr Jaffe responds that he agreed to pay this sum ‘if more than $100 million was recovered in the Revoker Proceedings’. Neither side suggests that this was a legally enforceable agreement.

[50]It is Mr Jaffe’s evidence that, in late 2015 or early 2016, Mr Stein accused him of ‘screw[ing] him over in 2012’, having received the USD2 million payment. Mr Stein denies this, and says that he did not learn that the Payment had been received until the Revoker Proceedings were entering the quantum phase.

The Revoker Proceedings

[51]It was in the context of the Revoker Proceedings that the dispute between the parties arose. The Payment that was made from Dryden to Pumula featured in the quantum trial within those proceedings.

[52]Mr Stein indicates that his wife provided some funding to the claimants for the Revoker Proceedings, and that he acted as a consultant in relation to the proceedings, both before they were issued and thereafter.

[53]The phase 1 trial established liability only in favour of the claimants, Cockerill J holding that the defendants had breached their fiduciary duties by appropriating a business opportunity relating to the Family, vested in Mr Jaffe’s companies.

[54]The way in which the Pumula payment arose at the trial is summarised by Cockerill J in the phase 2 judgment (

[2022] EWHC 690 (Comm)

at [636]-[637]. The role of the argument within those proceedings is not material, but to place it in context, the question was raised by the defendants whether Mr Jaffe could and should have caused the claimants to issue the claim sooner:

‘636. A huge amount of time, attention and money was focussed on the question of Mr Jaffe's ability to start the litigation earlier than 2016. As is apparent from the above that entire argument rested on an extremely slim foundation. Ultimately the point has proved completely irrelevant. 637. Had it been relevant and live I would have tended to the view that Mr Jaffe was financially able to commence some form of litigation earlier than he did, but that the case that he could have afforded to commence this heavy litigation was not made out. One part of this was the absence of certain material which would have had to come from Mr Jaffe, and which he was unwilling to provide in any acceptable form. However the other was a consideration of his outgoings. Any such discussion would have required a detailed consideration of his expenditure which was essentially unfeasible within the constraints of the trial and the myriad other issues – and was ultimately not attempted. In essence the evidence showed that Mr Jaffe did not have significant independent means; he was dependent on the loans which came to him via Mr Anisimov and which he might have been able to raise elsewhere. While those loans were for significant sums and (as noted below) I was not minded to accept Mr Jaffe's evidence as to the purposes of those loans, the evidence disclosed showed that Mr Jaffe had a number of significant outgoings. Further as I have noted at the outset of this judgment this is highly expensive litigation. The sums loaned by Mr Anisimov would not cover the Defendants' incurred costs for Phase 2.’

[55]Mr Jaffe was cross examined at considerable length about the Payment at the phase 2 trial. The judge mentioned the Pumula payment in the phase 2 judgment at [95], describing Pumula as Mrs Olga Jaffe’s company. She then provided an analysis of the evidence on this issue in an appendix. This recorded that:

‘49. The inference sought by the Defendants is said to arise because there were two payments made to Mr Jaffe (the first via a company in Mr Jaffe's wife's name) by Mr Anisimov of $2 million and $10 million, at the times of the prosecutor interview and Anisimov evidence respectively. The US$2 million was paid pursuant to a purported loan agreement (later written off) which Mr Jaffe accepts was a sham. …. 51. At the end of the day I do not consider, for the reasons which I have given, that evidence which goes to Mr Jaffe's credibility is of any practical moment. However I would accept a certain amount of the Defendants' case on this. On the basis of the limited materials available I do regard it as more likely than not that Mr Anisimov paid Mr Jaffe for aligning himself with Mr Anisimov. I do not consider that it is relevant, nor do I have material to establish whether the payment was specifically for giving evidence, or more general alignment (though I would if pressed conclude the latter, because payment for such a relatively inconsequential interview as I conclude below it was, seems unlikely), or whether the evidence which Mr Jaffe gave was untrue. I do consider that Mr Jaffe's slightly uncharacteristic reticence after the event supports the tentative conclusion that the evidence giving was part of an alignment with Mr Anisimov. Mr Jaffe had adopted a new strategy and he did not want to broadcast it. …. 74. As for the allegation that Mr Anisimov paid Mr Jaffe for his evidence, this is another point which was relevant to credibility only, since permission to amend was refused. It is accordingly another point where the evidence base was incomplete and my views on what I have seen and heard must be read with that rider. Here I would (if credibility were relevant) come to a similar conclusion to the conclusion I reached on the US$2 million payment. I would not consider that it is more likely than not (let alone an irresistible inference) that Mr Anisimov paid Mr Jaffe to give this evidence. However, nor would I consider the payment was entirely unrelated to Mr Jaffe's alignment with Mr Anisimov.’

[56]Mr Stein relies on the way in which the issue became part of the issues in the Revoker Proceedings for two principal reasons. First, he says that it is when he saw a draft witness statement for Mr Jaffe prepared for an interim application before the phase 2 trial (and which became his fifth witness statement in those proceedings) that he first became aware of the Pumula payment. In his evidence, Mr Stein says that he became angry at this, and accused Mr Jaffe of having stolen the money and then lied to him in the intervening period. Secondly, Mr Stein suggests that some of the evidence given by Mr Jaffe in the phase 2 trial was untrue, particularly as he told the court that he had told Mr Stein about the Payment when it was received by Pumula. It should also be noted that Mr Stein relies on some of the evidence given by Mr Jaffe in the Revoker Proceedings, suggesting that he has subsequently changed his case.

[57]By contrast, Mr Jaffe says that Mr Stein did not express any surprise about the Payment having been received from Mr Anisimov until, in February 2023, he demanded that Mr Jaffe pay him USD1 million from the USD2 million received from Mr Anisimov.

Mr Jaffe’s evidence in the Revoker Proceedings

[58]The claimant’s analysis depends in part on consideration of what Mr Jaffe said about the Payment in the Revoker Proceedings, both in his fifth witness statement in those proceedings, and in cross examination on days 4 to 6 of the phase 2 trial before Cockerill J in October 2021.

[59]In that fifth witness statement, dated 23 July 2021, after explaining that the Payment was made to Pumula by a company on behalf of Mr Anisimov, Mr Jaffe said this:

‘33. The deal agreed with Mr Anisimov was that he would fund the third party in the sum of US$1,000,000 every six-month period and he would also pay all disbursements incurred. The deal was that the money would be paid in advance on a non-refundable basis. The third party did not previously know Mr Anisimov and, therefore, had concerns about receiving money from Mr Anisimov directly (or from a company on his behalf). Therefore, he preferred that a structure be created in which he would give advice, funds would be deposited into that structure and then paid to him from that structure. The creation of such a structure would take some time but the agreement with the third party specified that payments were to be made up-front every six months. Since the third party did not want to commit to the agreement until the funds were in place, because Mr Anisimov wanted to reach a solution as soon as possible, and because I had introduced him to Mr Anisimov, it made sense for the funds to be deposited with me until such time as the structure was created. …. 37. In the circumstances, I did not arrange for the money to be transferred onward to the third party. The issue relating to the payment of US$2,000,000 from me to the third party is between me and the third party and is unrelated to these proceedings.’

[60]Mr Stein was not identified during the Revoker Proceedings, even though he was referred to repeatedly as the individual or third party for whose benefit the Payment had been paid to Pumula. I was told without contradiction that this was because Mr Stein did not wish to be identified, and that Mr Jaffe sought to protect his identity despite encouragement to reveal this, including from the trial judge.

[61]In cross examination in the Revoker Proceedings, the case put to Mr Jaffe was that the Payment was his money to do with as he liked such that he could have used it to commence those proceedings sooner, or that it was intended to be used for that purpose. His ability to fund the Revoker Proceedings is not the point that is in issue now. Mr Jaffe indicated during that cross examination that he had a USD2 million windfall not in June, but by September 2012, and that ‘Mr Anisimov indicated that he didn’t want to utilise the services of a third party anymore’. He also said that he had a liability to pay USD1 million to the individual (i.e. Mr Stein), and another liability to spend the same on lawyers and various disbursements, but ‘how I were to fund it and from which account, it didn’t matter whether it’s Pumula or something else’.

[62]During that cross examination Mr Jaffe also said that, because the Payment represented a loan that was immediately written off, Mr Anisimov did not come into the question whether he (Mr Jaffe) was free to spend it. Mr Jaffe indicated that ‘my agreement with the third party was that I needed money at the time and part of it, assuming I put it back later, I’m free to use, and that’s exactly what I did’. This evidence is different from the evidence given in the current proceedings, where Mr Jaffe said that he needed to be sure that he was free to spend the money from Mr Anisimov’s perspective. Mr Jaffe’s evidence in this claim is, however, that he told Mr Stein that he was effectively borrowing from the USD2 million.

[63]On the fifth day of the phase 2 trial, Mr Jaffe was cross examined about the incorporation of Pumula. He said that the idea for setting up Pumula arose after he had had a conversation with Mr Anisimov about him paying the unidentified third party. He accepted that the Payment was never going to be a loan, but a payment for services and disbursements, and he accepted as he did in the present claim that the loan agreement was a sham as it was always intended to be written off, but said that all parties knew the true position, including Mr Stein. He also said in a similar vein that there was an agreement to postpone payment, including to Mr Stein, until the autumn of 2012.

[64]Mr Page placed particular reliance on an answer given by Mr Jaffe, said to be in direct support of the claimant’s case. It was not suggested that this was a concession, but a prediction with which the claimant hopes that the court will now agree. ‘Q … Where is the audit trail between you and the third party? A. When you say “audit trail”, what do you mean? Q. A document that the third party would be able to turn round and say, “Mr Jaffe, give me the 2 million”? A. Ah, you’re talking about where is formal agreement between - - Q. Or anything, or even email or text exchanges consistent with there being an obligation on you to pass money on to a third party. A. Well, it’s between third party and Anisimov. If you’re suggesting that we were to set up the structure - - well, the third party were to set up that structure and I suddenly to default and try to screw that third party, well, probably there was enough between him and Anisimov to prove that I was to be liable for it. But that was not the case. …’

The question arising in the present claim

[65]Despite the width of the factual background relied on by the parties, there is a single principal question arising (with subsequent questions in the event that it is answered in the positive). This is whether Mr Anisimov was the settlor of an express bare trust in respect of the Payment for the benefit of Mr Stein, of which trust Mr Jaffe alone or Mr Jaffe together with Pumula were the trustees. Paragraph 17 of the amended particulars of claim pleads that the relevant terms of the trust were the following:17.1 The Defendant was the sole trustee of the Trust and Pumula was controlled by the Defendant and/or authorised to and did act as nominee of the Defendant. Alternatively, the Defendant and Pumula were both trustees.

17.2 The subject matter of the Trust was the Payment and the Trust was constituted by the receipt of the Payment by Pumula.

17.3 The sole beneficiary of the Trust was the Claimant.

17.4 The Trust was a bare trust pursuant to which the Defendant was obliged to simply inform the Claimant that the Payment had been received and thereafter to cause the Payment to be transferred in full and without deduction on to the Claimant.’

[66]The claimant’s primary case is that Mr Jaffe was the sole trustee of the express bare trust alleged to have been created by Mr Anisimov, with Mr Jaffe being constituted as trustee upon receipt of the Payment by Pumula on the footing that Pumula was his nominee and also controlled by him. The alternative case is that the intended number of trustees expanded after 21 June 2012 when the arrangement between Dryden and Pumula was put in place.

[67]The statements of case proceed on the assumption that English law applies to all material questions. The parties were agreed that I should proceed on the basis that, whatever the putative proper law of the trust that is alleged to have been created, it is to be assumed to be the same as English law.

[68]The test as to when an express trust is created in English law was set out thus by Aikens LJ in Williams v Central Bank of Nigeria

[2013] EWCA Civ 785

at [37] (cited in the current edition of Underhill & Hayton, at 10.1):

‘37. Put very generally, in English law an express trust is created when a person, (the settlor), directs that certain identified property (the trust property) will be held either by him or others (as trustees) under a legal obligation which binds the trustees to deal with that property, which is owned by them as a separate fund, for the benefit of another (the beneficiary) who has an equitable proprietary interest in the trust property and its fruits from the moment that the trust is created. (See Underhill & Hayton: Law of Trusts and Trustees (18th ed 2010) at para 1.1 and 3.1. There are, of course, other ways of creating express trusts with which we are not concerned.) Thus, if it is intended that a document is to create an express trust, it is sufficient that it is demonstrated with reasonable certainty: (a) there is an intent to create a trust; (b) that the trust property is intended to be kept separately from other property of the trustee; (c) the identity of the trust property; (d) the person(s) intended to be beneficiary(ies); and (e) the purpose of the trust and that it is administratively workable. (Ibid. para 7.1.)’

[69]The editors of Underhill & Hayton go on to state the uncontroversial requirement that the trust must be for the benefit of persons so that some person has standing to enforce the trust, if it is non-charitable. They then point out that whether an intention to create a trust is sufficiently evinced is in each case a question of objective contextual interpretation; the question most often arises in relation to the construction of written words, but not always so. There must, however, be an external manifestation of the intention to create a trust. So, as the editors say at 10.2:

‘Equity will not take cognisance of a private unexpressed intention to create a trust. It is unnecessary that the settlor's intention to do so be communicated to the beneficiary at the time the trust is created, but a failure to communicate the intention to create a trust to any beneficiary may raise a strong inference that the settlor did not intend to create one. The important point is that the settlor's intentions to create a trust must be externally manifested somehow, eg by saying something to someone else or writing them down in a form that is discoverable by others later. Otherwise, the intended beneficiary and/or trustee cannot decide whether to accept or disclaim the settlor's bounty and/or the office of trusteeship, nor will third parties who come into contact with the relevant assets be able to tell whether they are subject to a trust or not.’

[70]Mr Page submits that there was certainty of intention, by dint of Mr Anisimov’s words on 2 June 2012 and by his conduct on 25 June 2012, when he caused the Dryden/Pumula loan document to be executed. He relies on a series of other propositions taken from authority:(a) The court is concerned with discerning the intention of the settlor. The intention of the trustee is irrelevant: High Commissioner for Pakistan in the United Kingdom v Prince Muffakham Jah

[2020] Ch 421

at [244].

(b) The use by the settlor of the word ‘trust’ is not required. The question for the court is whether in substance a sufficient intention to create a trust has been manifested: Re Kayford (in liquidation)

[1975] 1 WLR 279

at 282, Megarry J.

(c) There must be an intention to create a trust, and it is an objective question. The arrangements entered into must objectively have the effect in law of creating a trust: Challinor v Juliet Bellis & Co

[2015] EWCA Civ 59

at [57], [59], citing Twinsectra v Yardley

[2002] 2 AC 164

at [71], Briggs LJ.

[71]In the High Commissioner for Pakistan case, Marcus Smith J made the following comment about the three certainties, which I consider relevant in the present circumstances:

‘245. Although conceptually speaking the three certainties are separate, they can seldom in practice be segregated. In the present case, assuming there was an intention to create a trust, there can be little doubt as to the second and third certainties. …. [emphasis in original]’

[72]Precisely the same comment can be made in this case. The subject matter of the alleged trust is the Payment (or, perhaps, such of the Payment as was not used to defray Mr Stein’s expenses), and the beneficiary is Mr Stein. The trust would also be a bare trust, being a relationship where(i) the nominee or bare trustee holds property on behalf of a (usually single) beneficial owner;

(ii) the nominee or bare trustee has no active powers of investment, other than to deal with the relevant asset as instructed by the beneficial owner; and

(iii) save where it would be illegal to do so, the nominee or bare trustee must deal with the asset as instructed by the beneficial owner: Kazhakhstan Kagazy plc v Zhunus

[2021] EWHC 3462 (Comm)

at [273].

[73]Mr Page also submits that the intention to create a trust does not need to be evinced in words, and that a declaration can be established by words or conduct, so long as it amounts to clear evidence of the requisite intention. For that proposition, he cites Paul v Constance

[1977] 1 WLR 527

at 532. I note that, in Challinor v Bellis, Briggs LJ said at [59] that a person creates a trust by their words or conduct (emphasis added), and their subjective intentions are irrelevant. In Paul v Constance, it was held that when an unmarried couple placed money in the name of one of them, who frequently said to the other that ‘the money is as much yours as mine’, the use of the words was itself a declaration of trust. It would be an unusual case where a trust was declared with no words of any kind being used, and it is not Mr Stein’s case that this is such a case: he relies on what was agreed with Mr Anisimov at the meeting on 2 June 2012 at which many words were no doubt exchanged, followed by the conduct of causing the Payment to be made to a company either controlled in fact by or connected to Mr Jaffe.

[74]As I am reminded, the court has to consider separately what was said by the alleged settlor, and whether there was an intention to create a trust. As Arnold LJ said in Gill v Thind

[2023] 1 WLR 2837

at [57]-[58]:

‘57. … in the case of an oral declaration, it may well not be possible for the court to make a finding as to the exact words used by B, and so the court may only be able to make a finding as to their gist. In those circumstances, there would be nothing wrong in the court running the two questions together and asking whether, on the balance of probabilities, B said words that were such as to demonstrate an intention to declare a trust. 58. Turning to the standard of proof, it will be noted that I have referred to the balance of probabilities and have not used expressions such as “clear evidence”. Quasi-criminal (eg committal) proceedings aside, the standard of proof in civil cases is always the balance of probabilities: In re B (Children) (Care Proceedings: Standard of Proof) [2009] AC 11. No different standard of proof applies to proving an oral declaration of trust. I do not think that Scarman LJ [i.e. in Paul v Constance] meant to say anything different when, during the course of an extempore judgment, he accepted counsel’s submission that there must be clear evidence of an intention to create a trust. Rather, I consider that what he meant was that the words and conduct relied upon must demonstrate a sufficiently clear intention to create a trust.’

[75]On the facts of the present case, and with reference to how the Payment was applied by Mr Jaffe, it is also worth bearing in mind how Millett LJ stated the requirement for the trust property not to be at the free disposal of the transferee or trustee: Paragon Finance plc v Thakerar

[1999] 1 All ER 400

at 416. ‘It is fundamental to the existence of a trust that the trustee is bound to keep the trust property separate from his own and apply it exclusively for the benefit of his beneficiary. Any right on the part of the defendant to mix the money which he received with his own and use it for his own cash flow would be inconsistent with the existence of a trust.’

[76]A point which I raised with counsel more than once was whether the facts might tend to show that there had been a Quistclose trust arising in relation to the Payment once it had been transferred to Pumula. Mr Jaffe’s version of events might be thought to point to such an arrangement: he indicates that the money was paid to Pumula to be held pending a suitable structure being put in place, and that Mr Stein’s entitlement to the moneys would not arise until that had been done. He was also unsure at first, on his case, whether he (or Pumula) was entitled to spend the money for his own purposes. This would appear to be on one view consistent with a Quistclose trust, i.e. where the recipient holds the moneys on resulting trust for the transferor, subject to a power to apply them with an intended purpose: see Twinsectra at [13], Lord Hoffman.

[77]Lord Millett made the following statement in Twinsectra, in the context of Quistclose trusts, at [73]-[74]: ‘73. A Quistclose trust does not necessarily arise merely because money is paid for a particular purpose. A lender will often inquire into the purpose for which a loan is sought in order to decide whether he would be justified in making it. He may be said to lend the money for the purpose in question, but this is not enough to create a trust; once lent the money is at the free disposal of the borrower. Similarly payments in advance for goods or services are paid for a particular purpose, but such payments do not ordinarily create a trust. The money is intended to be at the free disposal of the supplier and may be used as part of his cashflow. Commercial life would be impossible if this were not the case. 74. The question in every case is whether the parties intended the money to be at the free disposal of the recipient: In re Goldcorp Exchange Ltd

[1995] 1 AC 74

, 100’.

[78]This mirrors what he had said in Paragon Finance, and the question stated at [74] may arise whenever it is disputed whether a trust has arisen in a commercial context. If the money represented by the Payment was, as Mr Jaffe contends, beneficially owned by Pumula, then it was at Pumula’s free disposal and there can have been no trust over it.

[79]Both parties, for obvious reasons, eschew any reliance on a Quistclose trust in the present case. Mr Anisimov would have been the beneficiary under such a trust. From the claimant’s perspective, it would defeat his claim that he was beneficially entitled to the Payment under a bare trust as soon as the money was transferred to Pumula. For the defendant, the existence of such a trust would mean that any use by him of the Payment without Mr Anisimov’s consent or beyond the purposes for which it was held was a breach of trust as against Mr Anisimov, with whom he is now in dispute in relation to other matters.

The claimant’s case as to the trust arising

[80]Mr Page set out in closing eight propositions which are common ground between the parties as to what transpired at the meetings, as follows. I take the list of propositions from the claimant’s closing written submissions: i) Both men agreed that the meetings took place (and the precise dates do not matter although the dates of 1 and 2 June 2012 are most likely). ii) The parties agree that the meetings took place at Mr Anisimov’s offices in Moscow, and that Mr Anisimov, Mr Stein and Mr Jaffe were present (it not being material whether or not Mr Emme was present at the second meeting as nobody suggests that he contributed materially to the discussion). iii) The parties agree that Mr Anisimov discussed the Berezovsky Claim, and Mr Anisimov’s proposal to engage Mr Stein to work on his defence. iv) The parties agree that Mr Anisimov stated he would deposit USD2 million with Mr Jaffe. v) The parties agree that this money was to be paid (in Mr Jaffe’s words) “in relation to the Berezovsky Claim Project”. vi) The parties agree that Mr Anisimov indicated the money was to be used ultimately to pay Mr Stein USD1 million as a fee for his first six months of work. vii) The parties agree that Mr Anisimov stated the money could be paid to Mr Stein in advance of him starting work. viii) The parties agree that they did not discuss the finer details of how, precisely, Mr Anisimov would transfer money to Mr Jaffe and how those mechanics would be structured.

[81]It should be noted, however, that Mr Jaffe’s evidence is that any agreement was in principle, and that USD1 million of the USD2 million could be paid to Mr Stein as an advance payment for his first six months’ work, once a formal agreement was entered into with Mr Anisimov. Subject to that, I would accept the summary above as a statement of what is agreed between the parties.

[82]Mr Page then asks me to make a series of factual findings, first about what was said and agreed at the 2 June 2012 meeting, and also in relation to matters that happened subsequently. I bear in mind that the question I have to decide is whether Mr Stein has satisfied me, on the balance of probabilities, that Mr Anisimov objectively intended to create an express bare trust of the Payment for Mr Stein. Neither side suggests that I am in a position to make a finding as to the precise words used at the second meeting.

[83]Mr Page set out Mr Stein’s position on what happened in early June 2012 by reference to the wider picture in which Mr Stein then found himself involved. The evidence suggests that Mr Jaffe was then in some financial need, despite the fact that he (correctly) understood that there were good claims in what was to become the Revoker Proceedings, which would ultimately lead to him becoming entitled to a very large sum of money. I also accept that Mr Jaffe appeared to consider himself to be aligned with Mr Anisimov at that time, and that the only sum that seems to have been paid by Mr Anisimov was the Payment, despite there being discussion of further payments, for the claim against the Family (Mr Stein contending that Project Z, referred to above, covered only this claim), and for Salford.

[84]Another feature stressed by Mr Page was the apparent formality and distance between Mr Jaffe and Mr Anisimov. That is apparent, on Mr Jaffe’s own case, from his evidence that he did not consider himself free to make use of the sum represented by the Payment until late in the summer of 2012. Because of that evidence, I do not accept Mr Page’s submission that Mr Jaffe appears to equate his own status with that of Mr Anisimov. Both parties were in a real sense seeking to obtain an advantage through their association with Mr Anisimov, and were to an extent dependent on him accordingly. That is also the case with Mr Stein, who explained his diffidence when meeting Mr Anisimov at Claridge’s Hotel in September 2012, commenting on the fact that Mr Anisimov was, in his words, ‘a billionaire Russian oligarch with … security provided by ex-KGB guys’, and well connected as evidenced by his position as head of the Russian Olympic judo team.

[85]I will comment on some of the specific findings which the claimant invites me to make, bearing in mind that the central finding upon which the claim turns requires an assessment to be made in light of the evidence about the meetings but also the evidence of what happened subsequently. I also have squarely in mind that what I am assessing is the intention, viewed objectively, of Mr Anisimov. I have heard no evidence from him and have not been taken to any documents written by him or sent directly to him. Mr Page asks me to make findings about what was said and agreed at the meeting but, again, I am not asked to find that any particular words were used, which might have magnetic importance when considering whether or not Mr Anisimov intended by his words and conduct to create a trust.

[86]First, I am asked to accept Mr Stein’s account of the first meeting, of which Mr Jaffe provides no recollection. I accept that the use of Mr Stein’s services in relation to the Berezovsky claim was discussed, and the prospect of Mr Anisimov purchasing Mr Berezovsky’s interest in NWVF was also discussed. Mr Page is correct to say that Mr Stein’s account of the first meeting was not challenged. I do bear in mind, as Ms Lacob pointed out, that this was the beginning of the business relationship between Mr Stein and Mr Anisimov, and it was the first time they had ever met. It occurred as Mr Jaffe had brought the parties together, Mr Anisimov now relying on Mr Jaffe for professional support in relation to the ongoing litigation he faced.

[87]Mr Page then asks me to find that the scope of the services to be provided by Mr Stein related to the Berezovsky Claim Project and not a wider stream of work, i.e. which Mr Jaffe characterises as Project Z, and to include the M&A Project (see above at [20]). I accept that the scope of works to be carried out by Mr Stein as discussed at the June meetings was the Berezovsky Claim Project. That is the reason why the introduction had been made and Mr Jaffe’s evidence, both in these proceedings and in his fifth witness statement in the Revoker Proceedings, is that Mr Stein’s fee (of USD1 million) was discussed in this context. It seems more likely than not that a possible wider stream of work was discussed at the second meeting – by 14 June 2012, Mr Jaffe was telling Ms Gabbert that there would be a further loan of USD3.5 million, rather than USD2.5 million. This wider work stream was very much on Mr Jaffe’s mind and it is unlikely that in a lengthy meeting he would not have mentioned it.

[88]Next, it is submitted that Mr Anisimov did not require Mr Stein to present him with a budget, team or office for approval before any money could be spent. Some modest expenses on behalf of Mr Stein were paid from the Payment received by Pumula and there is no reason to suppose that Mr Anisimov had any interest in monitoring such payments. Those payments were not made by Mr Stein, however, and I do not consider that they assist in relation to the fee, which was of USD1 million and not of the full amount of the Payment. I would note that it was no part of the claimant’s case that there was an express trust over only half the value of the Payment, being the amount that was agreed to be his fee. I would agree that the evidence suggests that Mr Anisimov did not require his approval to be given before any money could be spent. The relevant question here, it seems to me, is whether there were any conditions to be satisfied before Mr Stein would be entitled to his payment, or whether he was to be beneficially entitled to it as soon as it was paid over to the structure owned by or associated with Mr Jaffe.

[89]On that note, Mr Page asks me to find that Mr Anisimov did not wish to enter into a formal written agreement with Mr Stein before their arrangement became binding. I would agree that there is no reason to suppose that Mr Anisimov wished to document a bilateral agreement with Mr Stein. He does appear to have been astute to ensure that the flow of funds from entities associated with him was documented. Despite the fact that the Dryden/Pumula loan was written off almost immediately after the Payment had been made, Mr Anisimov nonetheless sought later to recover the Dryden loan with interest. There is no evidence as to his own understanding of these contradictory positions, but they are not consistent with an understanding that Mr Stein would immediately become the beneficial owner of the Payment as soon as it was transferred to Pumula. As I explain further below, I consider that the proposed BVI structure on which Macfarlanes were advising was intended by Mr Anisimov to be the conduit for the payment of Mr Stein’s fees, and that this was intended by Mr Anisimov to be a pre-condition for Mr Stein’s receipt of those fees.

[90]It is also submitted on behalf of the claimant that the evidence demonstrates that Mr Anisimov’s intention was for the Payment to be paid on to Mr Stein in full. The key point here is the submission that Mr Jaffe understood at the end of the second meeting that the money he would be receiving would not be his to spend as he wished.

[91]I agree that this is a key factor. Certainly, Mr Jaffe appears to have considered that there was some impediment to his using the Payment for his own purposes. His evidence in the Revoker Proceedings was that he did not arrange to send the money on to Mr Stein once his services were no longer required, and that he had a windfall in September 2012. That is consistent with his evidence in this claim, that Mr Anisimov told him then that he considered that he (Mr Jaffe) could keep the USD2 million. He said in the witness box that, ‘as far as [Mr] Anisimov was concerned, he gave this money for the project’, and then later considered it to have been part of the sum of USD3.5 million to be provided for Salford and for the Revoker Proceedings.

[92]The documentary evidence shows that an attempt was made by Mr Anisimov in 2015, through Gelderland, to recover the amount of the Payment on the basis that the Dryden/Pumula loan was outstanding. Mr Stein was aware that Mr Anisimov was making demands of Mr Jaffe at that time in relation to loaned funds, but it was not made explicit to him that these included the Payment.

[93]I consider it more likely than not that Mr Jaffe’s evidence of his conversations with Mr Anisimov in September 2012 is correct. There were some significant payments out from Pumula in July and August, but the withdrawals became more frequent from mid-September 2012. The text messages between Mr Jaffe and Mr Stein and Ms Gabbert I have referred to above show that there was uncertainty as to what moneys Mr Anisimov would be providing, and support Mr Jaffe’s evidence that, weeks after the June 2012 meetings, Mr Anisimov was suggesting that the USD2 million Payment was to be part of the sum of USD3.5 million which had been discussed for other purposes. Mr Anisimov also indicated to Mr Stein (via Mr Emme) on 25 September 2012 that he never agreed anything with Mr Jaffe about the payment.

[94]This all suggests that Mr Anisimov was taking a fluid view of the purpose of the Payment from shortly after it had been made, and it may be surmised that he always took such a view. Whilst it is Mr Anisimov’s intention which falls to be assessed, these factors also suggest that Mr Jaffe understood that Mr Anisimov continued to have a say in how the Payment was to be deployed, even though he does not suggest that Mr Anisimov retained any contractual entitlement to do so. Mr Jaffe indicated in evidence that if Mr Anisimov had in or after September 2012 suddenly told him that the USD2 million had to be used to pay Mr Stein and other project expenses, he would probably have complied, given his relationship with Mr Anisimov, although he would probably then also have asked Mr Anisimov to help him financially.

[95]None of these matters tend to show that Mr Anisimov’s intention at any material time was that Mr Stein was to be immediately entitled to the Payment as soon as it was paid over to Pumula, with the only impediment to payment on to Mr Stein being the latter’s wish to set up a structure for his own tax purposes. A more probable explanation is that he agreed to put up some funds up front, to cover Mr Stein’s proposed fee plus other expenses, but how and when they would be paid on would be a matter for future discussion. This would have served the dual purpose of facilitating Mr Stein’s immediate work by reassuring him that the money for payment of his fee would be readily available, but also of Mr Anisimov assuring Mr Jaffe that he was prepared to work closely with him as their interests were now in alignment, as Cockerill J found them to be in the Revoker Proceedings.

[96]It is furthermore not clear to me why a trust would have been required over the entirety of the Payment and not only over the sum of USD1 million which was to constitute Mr Stein’s fee for the first six months’ work. On Mr Stein’s case, in addition to the sum for his fee, he asked for a further USD1 million to be available for all his expenses associated with the services he was to provide, i.e. in relation to the Berezovsky Claim Project. It was Mr Stein’s oral evidence that he did not require an office or a team to provide these services. He indicated that what he really needed was a printer, saying that he paid for a printer and other expenses such as flights, hotels and telephone bills. In light of that evidence, the need for a further USD1 million, not subject in any way to Mr Anisimov’s approval, has not been explained.

Further discussion

[97]In light of the points above, and for the following additional reasons, I am not persuaded that Mr Anisimov, by his words and conduct, demonstrated an intention to create an express trust over the Payment in favour of Mr Stein.

[98]The focus of enquiry must be on Mr Anisimov himself. That enquiry is obscured by lack of evidence about Mr Anisimov, including in relation to the transaction in issue. As I have indicated, there are no particular words that he used which are said to point to the establishment of a trust. There is no suggestion that he would have understood the concept of a trust, with a separation of legal and beneficial ownership. As the test of whether there was certainty of intention to create a trust is objective, that is not itself fatal, but it requires some careful analysis to ascertain whether Mr Anisimov intended that beneficial ownership in the money was to pass to Mr Stein as soon as the Payment was made from Dryden to Pumula.

[99]There is no suggestion from either side that Mr Anisimov had any concern with the way in which Pumula was structured; Mr Jaffe’s case is that Mr Stein’s entitlement to any of the Payment was contingent on an appropriate structure being put in pace, but not that Mr Anisimov was in any way concerned with the ownership or control of Pumula. Given that his evidence was that his wife acted in accordance with his requests, I do not consider that it matters whether Pumula was controlled by Mr or Mrs Jaffe; in either case there would be no impediment in fact to the constitution of a trust, if intended, with Pumula as nominee. But I also assume in the claimant’s favour, without needing to decide the point on the question of Mr Anisimov’s intention, that Mr Jaffe controlled Pumula. It is clear that Mr Jaffe was able in fact to access the money held by Pumula, as shown by his evidence that he was able to borrow the money from Pumula (which he also characterised at times as borrowing from his wife).

[100]Ms Lacob submitted on behalf of Mr Jaffe that it is improbable that Mr Stein would at his second-ever meeting with a powerful oligarch demand an up-front and non-refundable payment of USD1 million, and equally improbable that Mr Anisimov would unconditionally agree to this. Mr Stein’s evidence suggested that he was to a significant extent awed by the oligarchs with whom he dealt. He said that when he sued three powerful oligarchs, he had to change his life completely and go into hiding. I have set out above Mr Stein’s evidence that he was diffident when meeting Mr Anisimov at Claridge’s Hotel in September 2012. He also described the agreements he made with other oligarchs as ‘life-changing’.

[101]It is clear from Mr Jaffe’s evidence that a request for an up-front payment of USD1 million was made. In light of Mr Anisimov’s subsequent conduct, including shortly after the meetings and before the Payment was made, I do not consider that it has been established that he intended the Payment to be non-refundable such that Mr Stein would be beneficially entitled to it, regardless of whether a structure as discussed was created and indeed of whether Mr Stein continued to provide services. I consider it most likely that Mr Stein left the 2 June 2012 meeting without a clear understanding of precisely when he would get his money, even though it was to be paid to or on behalf of Mr Jaffe forthwith. I also consider that, after 13 years and much rumination on this very point, Mr Stein’s recollection of what was orally agreed at the meeting is entirely unreliable, however honestly he now believes it to be correct (and I consider his evidence to have been given in good faith).

[102]Ms Lacob suggested that it was improbable that Mr Stein did not realise when told by Mr Jaffe on 4 July 2012 that he had ‘got the money’, that he was or at least may be referring to the Payment. I agree. By then, several weeks had passed since the June meetings, and Mr Stein had begun his work. He did not satisfactorily explain why he was prepared to work for so long if he had indicated in early June that he would not do any work without up-front payment for six months. This is so especially when he said in cross examination that he thought at the outset that if Mr Jaffe had said after a couple of weeks or so that he did not have the money, he would have stopped work.

[103]Mr Stein now accepts via his closing submissions that Mr Jaffe was referring in the 4 July 2012 message to the Payment, although he denies that he realised that at the time. When he was asked in cross examination about his contemporaneous understanding of the message, he suggested to Ms Lacob that she was being cryptic and then became highly exercised and raised his voice. With all that has happened in the years since, and with the emotions caused by his rift with Mr Jaffe, I again consider that Mr Stein’s recollection of what he understood at the time is likely to be unreliable.

[104]I think it more likely than not that Mr Stein either knew at the time that Mr Jaffe was referring to the Payment, or at least realised that he might have been referring to the Payment and chose not to pursue matters while discussions with Mr Anisimov about the parties’ ongoing roles continued. While I accept that Mr Stein and Mr Jaffe spoke frequently as well as exchanging messages, the absence over many weeks of any chasing for payment in the many messages which have been disclosed leads me to consider that Mr Stein was not chasing Mr Jaffe for the Payment on the telephone in the weeks after the June meetings as he now suggests.

[105]Mr Stein’s evidence is that his question, ‘Which money did u get? The second 3.5?’ was a reference to different sum of USD3.5 million than that which had been discussed with Mr Anisimov in relation to Salford and/or the Revoker Proceedings. He indicated that he thought this additional sum was to come from Mr Anisimov or from a Mr Vladimir Palikhata. It is clear because he mentioned it that the figure of USD3.5 million was known to him as something that Mr Anisimov might be sending, and this must most likely have been communicated to him by Mr Jaffe. This accords with Mr Jaffe’s message to Ms Gabbert of 14 June 2012. In circumstances where there has been no evidence elsewhere of any other discussion of USD3.5 million, I consider that only one such sum had been discussed as well as the Payment of USD2 million, and that Mr Stein knew that Mr Jaffe, or his nominee, had received the Payment. It does not seem to me that Mr Jaffe was concealing the fact of the Payment. Accordingly, I do not accept Mr Stein’s forcefully delivered evidence that Mr Jaffe’s case is ‘lie upon lie upon lie upon lie’. I consider that the unshakeable belief Mr Stein has formed that this is so has clouded both his recollection and his assessment of events.

[106]Mr Stein indicated when cross examined that, when he had learnt of the receipt of the Payment, he would have asked Mr Jaffe to transfer some small part of it to him so that he could take advice on setting up a structure. I do not accept this. I find that the advice provided by Macfarlanes was not concerned with a structure for separate litigation of future claims, but in relation to the services which were being provided and to be provided by Mr Stein in the Berezovsky Claim Project.

[107]I find on the balance of probabilities that the parties to this claim and Mr Anisimov left the meeting on 2 June 2012 with an understanding that the payment of any sums to an entity on behalf of Mr Stein (which entity had not then been identified, and other than in general terms never was) would be subject to further discussion and negotiation. The fact that, even on Mr Stein’s case, the payment was not to be made to him directly but to a structure yet to be created itself is a factor pointing to a lack of intention objectively to create an immediate bare trust upon the Payment being made to a company on behalf of Mr Jaffe.

[108]As I have already indicated, I find that Mr Anisimov caused the Payment to be made to enable Mr Stein’s work to commence, but subject to further negotiation before he would be entitled to payment of his fee. The fact that Mr Anisimov indicated at the Claridge’s meeting words along the lines of ‘I already gave everything’ does not in my view assist in determining his intention back in June 2012. Mr Stein does not purport to recall any of the precise words used by either party at that meeting. He explains why he was understandably reticent. His explanation of what he said himself at the meeting is vague. He does not state what words he used in order to explain his understanding of what had been agreed in June 2012. I consider it inherently improbable that Mr Stein would have said to Mr Anisimov that he had been entitled to full payment before starting any work, not least because of his fear of antagonising him and the repercussions that he might anticipate. It is also improbable that he would have said that because, as I have found, discussions had until recently continued through Mr Emme as to the terms of the services agreement concerning the Berezovsky Claim Project.

[109]I also consider it to be improbable that Mr Anisimov would have caused £50,000 to be paid to Mr Stein’s wife’s company if he believed that he had agreed to pay USD2m to Mr Stein and that this had already been fully satisfied. If that had been his belief, he would likely at the very least have remonstrated with Mr Jaffe, but there is no evidence that he did so. Mr Stein suggested that the £50,000 may have been paid because Mr Jaffe asked Mr Anisimov not to say anything, but that does not explain why Mr Anisimov would have gone along with such a request. Further, the words which Mr Stein recalls Mr Anisimov having used, along the lines of ‘I already gave everything’, are themselves ambiguous. They would be consistent with an agreement to pay USD2 million to Mr Jaffe’s nominee subject to conditions before Mr Stein would be entitled to anything.

[110]I should finally mention two matters, one relied on by each party, neither of which I consider to have much weight, and which do not affect the view I have expressed above.

[111]Ms Lacob submitted that the evidence suggested that Mr Stein did not complain about the use Mr Jaffe had made of the Payment until after the conclusion of the phase 2 trial in the Revoker Proceedings, including during the preparation for trial in those proceedings. Largely, I suspect, because she ran out of time, this was not explored in any real detail in cross examination. It seems to me likely that an issue was raised by Mr Stein before the phase 2 trial took place, not least because Mr Jaffe indicated in evidence that there was or may be an issue between him and the third party (i.e. Mr Stein) as to what had happened to the Payment.

[112]By the same token, Mr Page submitted that Mr Jaffe had changed his account of what was said at the 2 June 2012 meeting several times, with particular reference to what he said in evidence in the Revoker Proceedings. He points out that in his fifth witness statement there, Mr Jaffe said that the ‘deal was that the money would be paid in advance on a non-refundable basis’, which was later qualified, and which he does not say in his principal witness statement in these proceedings, where he indicates that the Payment was ‘partly a sign of his commitment to the project’.

[113]Mr Jaffe was not cross examined on the material ways in which it might be said that his evidence in the Revoker Proceedings was inconsistent with his current evidence. Mr Page asked Mr Jaffe to confirm that he believed at the time that the evidence he gave in 2021 was accurate, but he was not cross examined about the evidence he then gave. In all the circumstances of this case, I consider Mr Jaffe’s statement that the money was paid on a ‘non-refundable basis’ to be capable of bearing more than one meaning, and that it can be read consistently with Mr Jaffe’s case that the money, once paid over, belonged beneficially to Pumula and no longer to Mr Anisimov. Furthermore, I do not consider anything Mr Jaffe said in 2021 to have been an admission of liability to Mr Stein, although he seems by then to have recognised, when saying that any issue concerning the Payment was an issue between him and Mr Stein, that Mr Stein may have a sense of grievance at not having received any of the Payment.

[114]Further, I do not consider that the hesitation which Cockerill J expressed in phase 2 of the Revoker Proceedings regarding Mr Jaffe’s evidence is material in the present dispute. She indicated in terms that evidence as to his credibility was of no moment and, in relation to the Payment, referred to ‘Mr Jaffe’s slightly uncharacteristic reticence after the event’ (see the Appendix to the phase 2 judgment at [51]). It seems to me that Mr Jaffe’s inability to identify Mr Stein in order to protect his identity affected Cockerill J’s assessment of his evidence.

[115]Accordingly, and for all the reasons I have set out above, I am not satisfied that the claimant has established that the words and conduct of Mr Anisimov demonstrate a sufficiently clear intention to create a trust. In the absence of any trust having been constituted, it follows that the claim for breach of trust must be dismissed.

Other issues

[116]The reasons I have given above are sufficient to explain why I consider that the claim should be dismissed. The defendant argued a number of other reasons why the claim should be dismissed in any event. To some extent these arguments can be characterised as reasons why Mr Anisimov had no intention to create a trust. Others are reasons why, even if I came to the view that Mr Anisimov did intend to create a trust, the claim ought not to succeed.

[117]Ms Lacob contended that any claim for breach of trust would be time barred, save to the extent that Mr Jaffe had received moneys himself, as more than six years have passed since the sum representing the Payment was spent. The Limitation Act 1980 provides for a six-year limitation period in respect of an action by a beneficiary to recover trust property or in respect of any breach of trust, save where there has been a fraudulent breach of trust to which the trustee was a party or privy, or to recover trust property or its proceeds in the possession of the trustee, or previously received by the trustee and converted to his use: see section 21(1), (3). It appears clear that Mr Jaffe applied some of the Payment for his own purposes, but the individual payments were not explored at the trial. Had the claim otherwise succeeded, an account or inquiry would have been required to determine the extent of the limitation defence, and possibly for other purposes.

[118]The defendant sought also to rely on the defence of laches, whereby a court of equity may decline to permit a party to vindicate their right where they have slept on that right. Again, the question does not arise in light of my finding that there was no intention to create a trust. However, it is established that, for laches to be applicable, there must be something that makes it inequitable to enforce the claim. It was said by the Supreme Court in Betterment Properties (Weymouth) Ltd v Dorset County Council (No.2)

[2014] AC 1072

at [31] that the inequitable factor may be reasonable and detrimental reliance by others on the claimant’s conduct, or some sort of prejudice arising from the fact that no remedy had been sought for a long time. Mere delay is never enough without more. Mr Jaffe had paid away the Payment shortly after the events of June to September 2012, and it was not suggested that the delay affected the fairness of the trial process (as in Schulman v Hewson

[2012] EWHC 855 (Ch)

). In those circumstances, it seems to me improbable that laches would have been available as a defence if Mr Anisimov had intended to create a trust.

[119]There was also a defence pleaded in reliance on section 61 of the Trustee Act 1925, which provides for the court to have discretion to relieve a defendant trustee from liability where he or she has acted honestly and reasonably and ought fairly to be excused. Such a defence is fact sensitive and I cannot sensibly comment on how it would have applied had the facts as found been different.

[120]Ms Lacob argued a further interesting point. This was the contention that the failure to comply with section 19 of the Trustee Act 2000 in the appointment of Pumula as a nominee for Mr Jaffe meant that any trust was not properly constituted. Again, this point does not arise on the facts as I find that Mr Anisimov, in not intending to create a bare trust in favour of the claimant, did not constitute such a trust when causing the Payment to be made to Pumula. It follows that he did not intend for Pumula to be a nominee for Mr Jaffe (alternatively for itself and Mr Jaffe as joint trustees).

[121]Section 19(2) of the 2000 Act provides that a person may not be appointed as a nominee unless either(a) it carries on a business which consists of or includes acting as a nominee or custodian, or

(b) it is a body corporate which is controlled by the trustee, or

(c) it is recognised (by the Law Society) under section 9 of the Administration of Justice Act 1985. For these purposes, control is determined in accordance with section 1124 of the Corporation Tax Act 2010. It is clear that if Pumula had been a nominee for Mr Jaffe as trustee, none of the relevant conditions in section 19(2) would have been satisfied.

[122]Mr Page responded by relying on section 24 of the 2000 Act. This provides that a failure by the trustees to act within the limits of their powers conferred by that part of the Act in (inter alia) authorising a person to act as nominee or custodian does not invalidate the appointment. He submitted, therefore, that a trustee who breaches sections 16 and 19 and appoints a nominee not permitted by those provisions, may commit a breach of trust as against the beneficiaries of the trust, but the appointment is not invalidated, including where the appointment is part of the formation of the trust.

[123]I agree with Mr Page’s submission. Furthermore, I do not consider that sections 16 and 19 of the 2000 Act are concerned with the formation of a trust. Equity has long recognised that a bare legal estate can be vested in a person in trust for a trustee (i.e. as nominee): see, e.g., Angier v Stannard (1834) 3 My & K 566. The clear purpose of the relevant part of the Trustee Act 2000 is to regulate the powers of trustees of existing trusts, and not to prevent such an arrangement from coming into existence except in the circumstances provided in section 19(2). In referring to the powers of trustees, the appointment of a nominee for the purposes of section 16 will take effect only once the trust has been validly constituted.

[124]It should also be borne in mind that the payment to Pumula was itself a valid transaction; the opposite has not been suggested. If there were otherwise an intention that it should hold as nominee (which in the event I have held there was not) then, if Ms Lacob were right as to the effect of section 19, the question would arise as to how Pumula held the money once it had been received. It seems to me that equity would not have permitted Pumula to deny the intended trust in such circumstances, and thus to use the statute as an instrument of fraud, and that a constructive trust would arise by analogy with Rochefoucauld v Boustead

[1897] 1 Ch 196

. The point, however, does not arise for determination.

Conclusion

[125]For the reasons I have set out above, the claim will be dismissed.

Cited in 1 later judgment

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