TRUSTEE DE SON TORT AFTER THE BVI COURT OF APPEAL’S DECISION IN IEREMEIEVA V ESTERA

In a recent win for our BVI Litigation team, the Eastern Caribbean Supreme Court of Appeal overturned a first instance decision in relation to the trustee de son tort principle.

The Court of Appeal has recently revisited the doctrine of trustee de son tort in Ieremeieva v Estera Corporate Services (BVI) Limited¹ (the Proceedings), overturning a first‑instance strike‑out decision in the BVI Commercial Court, and confirming that this area of equitable jurisprudence is developing and dynamic, such that strike-out on the facts of the case was unsuitable.

The appeal raises important questions about when a Court may impose a finding of trusteeship de son tort, and how the modern law following the UK Supreme Court’s decision in Mitchell v Al Jaber² should be applied in the BVI.

Background

The Proceedings arise out of a dispute concerning the so‑called ‘R&S Trust’, said to have been settled in August 2014 to hold shares in various BVI and Cypriot companies that form part of the wider Continuum group, an enterprise historically owned in part by the late Ukrainian businessman, Igor Ieremeiev.

Following Mr Ieremeiev’s unexpected passing, a trust deed was produced by two of Mr Ieremeiev’s former business partners, Mr Ivakhiv and Mr Lagur (the Second and Third Defendants in the Proceedings) naming Mr Ieremeiev’s children as beneficiaries and excluding his widow, Mrs Tetiana Ieremeieva. The Claimants (Mrs Ieremeieva and her son) allege, as their primary case, that the trust deed was fabricated to enable Mr Lagur and Mr Ivakhiv to retain control of the Continuum group and to divert value away from Mr Ieremeiev’s estate.

Estera Corporate Services (BVI) Limited (Estera) was approached by Mr Lagur to act as trustee of the R&S Trust.

The Claimants’ Case

The Claimants’ primary position is that the R&S Trust is a forgery or sham. They argue that Estera is liable as a trustee de son tort, i.e. as a person who, without valid appointment, assumed control over property and acted in the capacity of a trustee such that fiduciary duties arose by operation of law.

Estera’s Strike Out Application

Estera applied to strike out the claims on the basis that it could not be a trustee de son tort where the Claimants themselves argue that the R&S Trust was invalid. Estera’s case is that:

• A trusteeship de son tort requires a pre-existing valid trust or fiduciary relationship;
• If the trust deed was fabricated, as the Claimants allege, there was no pre-existing trust and no other fiduciary relationship is pleaded; and
• Therefore, the Claimants’ claims are legally unsustainable.

The First-Instance Decision

In a judgment dated 18 June 2024, Wallbank J accepted Estera’s arguments. While acknowledging that a trusteeship de son tort does not require an express trust, the Judge held that there must be a pre-existing trust or fiduciary relationship capable of grounding institutional constructive trust obligations. Because the Claimants allege that no valid trust existed, the Judge concluded that Estera could not be liable as a trustee de son tort and struck out the relevant claims.

The Appeal

The Claimants appealed, contending that the Judge had erred in two principal respects, by:

1. Characterising the issue of trusteeship de son tort as a short question of law suitable for determination on strike-out; and
2. Holding that a trusteeship de son tort requires a pre-existing trust or fiduciary relationship. Instead, the Claimants assert that the key requirement is simply that the relevant person has voluntarily assumed the role and character of trustee.

The appeal was heard in December 2024. At that time, the UK Supreme Court was considering Al Jaber, a case addressing fiduciary obligations and the circumstances in which duties arise through the assumption of control over property. The Supreme Court’s judgment in Al Jaber was handed down in November 2025, and both parties in the Proceedings made supplemental submissions on its relevance to the Court of Appeal.

The Court of Appeal’s Decision

In a judgment delivered by the Honourable Madame Justice Ellis on 12 February 2026, the Court of Appeal overturned the strike out decision on the trustee de son tort point. Its key conclusions were:

1. Trustee de son tort is a developing and flexible doctrine

The Court rejected the notion that trustee de son tort is a narrow or settled doctrine. Drawing extensively on Al Jaber, it held that it is a developing area of the law based on the arrogation of fiduciary power over property by a person who has assumed its custody and administration. It was clear that Estera owed fiduciary duties and it was not in dispute that Estera would have largely held title to the relevant property.

Al Jaber gave much force to the Claimants’ argument that this area of the law remains dynamic and that the Judge erred in principle when he determined no reasonably arguable claim could be advanced on the Claimants’ pleaded case.

2. The alleged invalidity of the trust did not prevent the operation of a constructive trust

The Court held that there was sufficient conflation of all categories of institutional constructive trusts such as to leave open questions as to the circumstances where a trusteeship de son tort can or should be imposed. Where the law is in a state of development, it will usually be inappropriate for a court to decide legal issues in a novel situation.

The Influence of Mitchell v Al Jaber

The Court of Appeal drew heavily on the UK Supreme Court’s modern restatement of fiduciary principles:

• Fiduciary duties can arise ad hoc, without title, possession, or a pre‑existing fiduciary office.
• It is enough that a person assumes command or control, or custody and administration, over property in circumstances where equity requires them to account.
• A single act may simultaneously create and breach fiduciary duties.

The principles applied in Al Jaber undermined the narrow interpretation adopted by the Judge at first instance in the Proceedings and supported the Claimants’ appeal that Estera’s conduct could, on the facts alleged, constitute a trusteeship de son tort.

Since striking out is a nuclear option that should only be deployed in the clearest of cases, the Court of Appeal determined that strike-out was not appropriate given the novel situation presented in the Proceedings.

Conclusion

The appeal confirms that the doctrine of trustee de son tort, and the law on constructive trusts in general, is dynamic and continues to evolve. The Court’s decision restores the Claimants’ primary case and ensures that the Commercial Court will now be required to determine, for the first time at trial level in the Territory of the BVI, the circumstances in which such a trusteeship may arise and how the principles articulated in Al Jaber should be applied.

Jennifer Jenkins, Sophie Christodoulou and Marija Emberson from Mourant represent the Claimants in the Proceedings, alongside Michael Gibbon KC & Hannah Illet of Maitland Chambers.