What is a sham trust?
In the case of Snook v London and West Riding Investment Ltd [1967] 2 QB 786, the court defined a sham trust as a trust that is intended by the parties to give the appearance of creating legal rights and obligations different from the actual legal rights and obligations that the parties intend to create.
The court is prepared to pierce the veil created by the sham trust by examining:-
- Who paid for, controlled and managed the assets;
- The tax returns and financial records;
- Attendance notes from solicitors and accountants;
- Whether the trust arrangement was ever mentioned; and
- Whether the parties behaved as though the trust genuinely existed.
Teixeira v Moaven and Others [2026] 1215 (Ch)
Background
Amir Abbas Moaven (Abbas) died on 16 May 2012 with the will dated 20 April 2012 (2012 Will). He had been married to Gabriela Teixeira since November 2022 with two children Elis Moaven and Aryan Moaven. The 2012 Will left the estate in equal 1/3 shares to Gabriela, Elis and Aryan with children’s shares not vesting until between ages 26 and 35 as determined by trustees, who are Abbas’ brother, Amir Ahmad Moaven (Amir), accountant Mr Faiz and solicitor Mr Pittalis.
The estate consists of four properties worth up to £5 million. On 19 April 2012, just around a month before he died, Abbas executed four declarations of trust purporting to confirm long-standing arrangements whereby each property was held 1/3 each for himself, Amir and Mrs Nazemi.
In November 2016, Gabriela applied to the court to remove the executors due to conflicts of interest due to Amir’s claim to beneficial interests in the properties. In July 2020, all of the executors were removed and replaced by Mr Treherne and Ms Bunker.
The trial was to determine the validity of the declarations of trust and beneficial ownership of the properties in order to establish the estate’s value.
Decision
The court found that:-
- There was no evidence supporting the alleged tri-partite arrangement in respect of the declarations of trust;
- Abbas dealt solely with the solicitors and provided all funding for the properties;
- Neither Mr Faiz and Mr Pittalis had been aware of any such arrangements prior to April 2012;
- The declarations were to dilute the estate not to confirm any true arrangement; and
- The declarations were shams having no legal/equitable effect and the entirety of the properties’ value fell into the estate.
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Ronny Tang is an Associate in our expert Dispute Resolution team, specialising in defamation claims, contentious probate
and inheritance claims, Trusts of Land and Appointment of Trustees Act 1996 claims, Equality Act 2010 claims and Protection From Harassment 1997 claims.
If you have any questions concerning the above related subject, please contact Kate, Ronny or another member of the team in Derby, Leicester, or Nottingham on 0800 024 1976 or via our online enquiry form.
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