[2025] EWHC 2830 (Ch)

In February 2022, the FCA imposed a number of requirements on HPL and its operations which included :-

According to Mr Flanagan, as part of HPL’s dealings with the FCA, it appears that the FCA required that sums which had been removed from HPL SIPPS and other pensions be returned. Mr Flanagan does not deal with this in any real detail in his witness statements and has exhibited only what appears to be a fraction of the correspondence and dealings as between HPL and the FCA. Mr Kubik provides no details relating to the involvement of the FCA into HPL but his appointment as joint administrator post dated these matters, having occurred on 29 July 2022.

From what has been exhibited, it appears that the FCA required the return of client funds to HPL in February/March 2022. In an email dated 21 March 2022, Ms Thomas from the FCA confirmed that the FCA was content with the proposal for the client monies to be returned to the Hartley Pension Trustees account in 7 working days ( 29 March 2022) on the proviso that this was a segregated account for client monies.

The email to which this one was a reply is not in evidence. Furthermore, part of it has been redacted for reasons which were not explained to the Court. Mr Flanagan then relies on certain bank statements which he asserts demonstrate that £13,000,000 was paid to HPL, or more accurately the sum of £13,000,000 was transferred as a capital return on 5 April 2022 and paid into a bank account in the name of ‘Harley Pensions Trustees – client’.

The transfer(s) which Mr Flanagan relies upon was not transferred in the timescale sought by the FCA. There is an exchange of emails between the FCA and Mr Dennis McHugh of Hartley Pensions. In an email dated 5 April 2022, Mr McHugh confirms that ‘the remaining funds of over £12 million have just been received and we will allocate same to member accounts within 5 working days as previously agreed, that being 12 April 2021[sic] I can also confirm that the initial amount received of over £5 million will be distributed to member accounts today’ ‘We will confirm when all funds have been distributed as previously requested.’ No further emails have been exhibited and there is no evidence of the confirmation which had been sought by the FCA relating to the type of account or evidence that the sums were returned to the accounts from which the sums had been taken, without authority as now admitted by Mr Flanagan. Mr Mc Hugh states in his email dated 5 April 2022 to Ms Thomas of the FCA that the bank statement he attached to that email showed the funds received today ( 5 April 2022) and he asks her to note ‘some’ outward payments which he states have been distributed back to member accounts. The bank statement which is referred to also appears exhibited to Mr Flanagan’s fourth witness statement. This shows the sum of £13,000,000.00 being paid into an account in the name of Hartley Pensions Trustees-Client with a reference of ‘capital return’.

Mr Flanagan also relies on bonds he states were issued by GM 1001 on 5 April 2022 for the sum of £6,999,990 and a bond created and issued by GM 1003 on 5 April 2022. He explains that as GM 1003 does not have its own bank account, this explains that the totality of the £13,000,000.00 was provided by GM 1001.

By April 2022, the sums in relation to the Cyan transaction had already been provided to Orex, by agreements dated 12 October 2020 and 30 April 2021. Mr Flanagan asserts that GM, ‘replaced all of HPL’s lending in the Cyan Transaction’. In the same witness statement (his fourth), he also states that, GM 1001 and 1003 together provided £13,000,00.00 of funding to the Cyan Transaction. There are no documents which support what Mr Flanagan asserts, namely that the GM Companies replaced HPL in relation to the Cyan transaction as the lenders. He relies on his assertion that this was the effect of the sums paid he asserts by the GM Companies.

Originally, the GM Companies’ case relied upon a further management agreement dated 26 January 2022 between Cyan, as loan manager and GM 1001 as client. It is unclear when this management agreement was executed. It has similar terms to the October 2020 management agreement and additionally, on the GM Companies case, it is not accurate in that Cyan is asserted to be the the SPV nominee rather than the loan manager.

In support of the position of the GM Companies and in particular the operation of the lending, two further witnesses attended and were cross examined. Mr Robert Garwood states in his witness statement dated 9 October 2024, that he and his wife, Sue Garwood, had what he called a professional relationship with the Wilton group. He states that they had participated in a number in investment opportunities arranged by various Wilton companies, including secured lending opportunities. In his statement he sets out details of the investments he and/or his wife made. He refers to WSL High Road-Leytonstone which is dated 30 September 2020, a transaction relating to ‘Spellbrook’ which occurred on 16 July 2021 and was arranged by Guiness Mahon Limited and the ‘Meraki/Huber Transaction’ on 22 July 2020. He exhibits the investment certificates and the redemption certificates for these three transactions. The documents do not state that the security over the relevant property was for his benefit or that the relevant ‘loan manager’ was acting as an agent for the investors. Mr Garwood states that ‘based on discussions with James Robson, who I believe ran the Wilton secured lending business and Grace Rogers, who was an administrative assistant who worked with Mr Robson, my understanding of the syndicated loan arrangements was that we participated directly as lenders in any given transaction. We were entitled to the interest arising on the transaction, from which a fee was paid to the loan manager. We were also entitled to the benefit of the security taken over the property that was used to secure the repayment of the loan. The money we invested was transferred to the loan manager on this basis and for this purpose.’ Mr Garwood and his wife did not invest or were involved in the Cyan transaction.

In cross examination, Mr Garwood confirmed that he had been provided with his witness statement by solicitors acting for the GM companies and that he had read it. He was clear that he and his wife had provided money but his evidence as to the details of the transaction were much less clear. He accepted that no details were provided in the documents which he had referred to in his witness statement as to how the transactions were structured. He stated that the documents had not been attached to his witness statement or sent to him when he signed it. He also confirmed that the documents did not show any direct contractual relationship as between him and/or his wife and the borrower. He was asked questions relating to an investment in Artisan Hotels made by his wife, but ultimately that transaction did not proceed.

Mr Pierre Rossier was also cross examined on his witness statement dated 10 October 2024. He stated that he was previously a director of Wilton Group Limited having served as a director from 30 June 2015 until 19 July 2022. In his statement, he stated that he had referred a number of clients to Wilton including a Mr Frank McNulty. He refers to a number of transactions, being Chelsea Barracks, WSL High Road Leytonstone and Hampstead Heath Garden House. The documents he exhibits show that Mr McNulty received a redemption in relation to the first two transactions. He states that the loans were managed on a fiduciary basis meaning that the lender was entitled to accrued interest on the loans and the integral repayment and was also entitled to benefit from security taken over UK properties. He states that the loan managers, being WSLL, Guiness Mahon Ltd, Ely Hamilton Ltd and Wilton Management Ltd were entitled to a fee for acting as loan managers. He states that the security was taken either through a nominee company or through the loan managers. He states that the loan managers in relation to the loans he referred to were WSL Chelsea Barracks ltd, WSL High Road Ltd and WSL Garden House Ltd. He states that none of the loans were made directly to the end borrowers and he exhibits the loan participation certificates which he asserts evidences the loans.

The documents which he attaches are silent in relation to the security issue. Mr Rossier accepted that the documents he attached to his statement provide no details about the structure of the transactions. He accepted that none of the documents demonstrated a direct contractual relationship as between Mr Mc Nulty and the ultimate borrower.

Mr Rossier explained that his role when he was on the board did not relate to the loans but he was involved in strategy and implementation of strategy. He explained what he understood the position to be and not whether that position was actually evidenced in the documents themselves. He accepted that the documents did not refer to agency either and he also stated that he had not read the documents which he had exhibited. Those documents had been provided to him by Mr Flanagan. He was asked about his knowledge relating to the security nominees for each of the transactions he referred to in his statement as there was no reference to those three entities being security nominees. He replied that he was not able to say who had provided him with that information relating to security nominees. He was taken to the documents which actually showed that at the time that the WSL High Road transaction took place, Mr McNulty was not listed as an investor. He had no explanation for that.