KembaraXtra - Legal Terms - Sham Trust

A sham trust is a trust that appears to have been validly created but was never genuinely intended to operate as a trust according to its stated terms.

Such trusts are often established to protect assets from creditors in the event of bankruptcy or insolvency while allowing the settlor to continue exercising unrestricted control over the property.

For a valid trust to exist, there must be a genuine intention to create enforceable trust obligations. Where the settlor intends the trust document to operate merely as an “insurance policy” against future creditors, that intention is absent.

In Midland Bank plc v Wyatt [1995] 1 FLR 696, the court held that a trust established solely to shield assets from creditors, without any genuine intention that the trust should operate, was a sham.

Once a court determines that a trust is a sham, it ignores the trust arrangement and treats the beneficial ownership of the assets as remaining with the settlor.

A sham trust should be distinguished from an illusory trust, although both may ultimately result in the trust being ineffective.

KembaraXtra - Legal Terms - Sham Transaction

A sham transaction is a transaction that appears to create legal rights and obligations but is not intended by the parties to have the legal effect that it outwardly suggests.

The classic definition was given by Lord Diplock in Snook v London and West Riding Investments Ltd [1967] 2 QB 786, where he identified three essential elements of a sham.

First, acts are performed or documents are executed by the parties.

Secondly, those acts or documents appear to create legal rights and obligations in the eyes of third parties.

Thirdly, the parties share a common intention that the apparent legal rights and obligations are either different from the true legal position or that no genuine legal rights and obligations are intended to exist at all.

This principle was reaffirmed by the Court of Appeal in Hitch’s Executors v Stone [2001] EWCA Civ 1224, where Lord Justice Arden emphasized that a finding of sham requires proof of the parties’ common intention. If a transaction is found to be a sham, the court disregards its apparent form and gives effect to the parties’ true legal relationship.

KembaraXtra - Legal Terms - Sham Plea

A sham plea is another name for a false plea.

It refers to a defence or pleading that is not genuine and is advanced merely to delay proceedings, mislead the court, or avoid liability rather than to raise a legitimate legal issue.

A sham plea contains no real factual or legal substance and is not made in good faith.

Where a court concludes that a plea is merely a sham, it may strike out the pleading or refuse to allow the party to rely upon it.

The courts discourage sham pleas because they waste judicial resources and undermine the efficient administration of justice.

KembaraXtra - Legal Terms - Sham Marriage A sham marriage is a marriage entered into for an ulterior purpose rather than for the genuine purpose of establishing a marital relationship. The parties do not intend to live together as spouses or build a family life. Instead, the marriage is used to obtain another advantage, such as immigration status, financial benefits, or some other legal benefit. Under English law, a sham marriage is not automatically void simply because the parties never intended to cohabit. Provided the legal requirements for a valid marriage have been satisfied, the marriage will generally be regarded as legally valid despite the parties’ motives. However, a sham marriage may be voidable if genuine consent was lacking. This may occur where one party was deceived about the identity of the other spouse or where consent was obtained through duress or coercion. An example of duress is where a person enters into marriage solely to escape threats to life, physical safety, or liberty, such as escaping imprisonment under oppressive conditions in another country. In such circumstances, the marriage may be annulled because the apparent consent was not freely given. Modern immigration legislation specifically targets sham marriages entered into for immigration purposes. Criminal offences exist to deter individuals from using marriage as a means of unlawfully obtaining immigration status or circumventing immigration controls. Accordingly, while a sham marriage may remain legally valid unless annulled, those involved may nevertheless face criminal prosecution where the marriage was entered into for fraudulent immigration purposes.

KembaraXtra - Legal Terms - Shadow Director

A shadow director is a person who is not formally appointed as a company director but whose instructions or directions the company’s directors are accustomed to follow.

The definition is contained in section 251 of the Companies Act 2006.

A shadow director:

• does not hold official office;
• is not simply a professional adviser (such as a solicitor or accountant giving independent advice); but
• effectively controls or influences the company’s decisions by directing the board.

To qualify as a shadow director:

• the board must habitually act on the person’s instructions or directions;
• occasional influence is generally insufficient; and
• giving professional advice alone does not create shadow director status.

Certain provisions of company law apply to shadow directors, including rules relating to:

• directors’ duties (in appropriate circumstances);
• transactions requiring shareholder approval; and
• liability for certain breaches of company legislation.

The concept prevents individuals from exercising the powers of a director while attempting to avoid the legal responsibilities that accompany formal appointment.

KembaraXtra - Legal Terms - SFO (Serious Fraud Office)

SFO stands for the Serious Fraud Office.

The Serious Fraud Office is the UK government agency responsible for:

• investigating serious or complex fraud;
• prosecuting major fraud cases;
• tackling bribery and corruption; and
• enforcing certain corporate criminal offences.

The SFO investigates cases involving:

• large financial losses;
• sophisticated fraud schemes;
• international corruption; and
• complex corporate wrongdoing.

It operates independently under the superintendence of the Attorney General and has extensive investigative powers.

KembaraXtra - Legal Terms - Sexual Penetration of a Corpse

Sexual penetration of a corpse is a specific criminal offence under section 70 of the Sexual Offences Act 2003.

A person commits the offence if he or she:

1. intentionally penetrates any part of the body of a deceased person;
2. uses any part of his or her own body or any object; and
3. the penetration is sexual in nature.

Because the victim is deceased:

• questions of consent do not arise; and
• the offence exists to protect the dignity of the deceased and uphold public morality.

This offence criminalizes acts commonly described as necrophilia involving penetration.

KembaraXtra - Legal Terms - Sexual Offence

A sexual offence is any criminal offence involving sexual intercourse or another prohibited sexual act.

The principal sexual offences under the Sexual Offences Act 2003 include:

• Rape
• Assault by penetration
• Sexual assault
• Various offences involving sexual activity with children

Individuals convicted or cautioned for specified sexual offences are subject to the sex offender notification requirements (commonly known as the sex offenders register).

Those subject to notification requirements must:

• register with the police;
• notify the police of changes to personal details, including any change of address; and
• comply with continuing reporting obligations for the prescribed notification period.

Failure to notify a change of address within 14 days is a criminal offence punishable by:

• summary conviction: up to 6 months’ imprisonment and/or a fine; or
• conviction on indictment: up to 5 years’ imprisonment.

These notification requirements are intended to assist police in monitoring offenders and protecting the public.

KembaraXtra - Legal Terms - Sexually Transmitted Disease (STD)

A sexually transmitted disease (STD) is an infectious disease that is primarily spread through sexual contact. Common examples include:

• HIV infection
• Syphilis
• Gonorrhoea

In family law, an STD may have legal consequences. Under section 12(1)(e) of the Matrimonial Causes Act 1973, a marriage is voidable if, at the time of the marriage:

1. one spouse was suffering from a sexually transmitted disease; and
2. the other spouse was unaware of the condition.

The innocent spouse may petition the court for an annulment, treating the marriage as voidable rather than automatically void.