CL-2025-000062 - [2025] EWHC 1506 (Comm)

Fecha: 18-Jun-2025

Express Trust

100.

On express trust the issue between the parties was whether the three certainties were arguably present. In particular Eraaya submitted that:

There is no certainty of intention in that there was no evidence of an instruction to GLAS to hold the monies on trust for Selvi and that the role of the alleged trustee is being completely ignored. It was also submitted that the argument that GLAS necessarily holds the monies on trust for someone is defective because it depends on Twinsectra which relates to the very different situation of money in a solicitors’ client account;

There is no certainty of objects (i.e. beneficiaries) – by reference to the ambiguity in the “at least Selvi” case;

There is no certainty of subject matter because logically the trust cannot attach to the whole US$40m;

Such a trust was contrary to the wording in the Offering Circular (“Until the Collateral Documents are entered into the Bonds will be unsecured”) which plainly contemplated the Bonds being unsecured until the Pledge was entered into.

101.

So far as certainty of intention is concerned, the relevant enquiry is whether the parties intended (as ascertained from the terms of the arrangement and overall circumstances of the case) the Unutilised Proceeds to be at GLAS’s free disposal. What GLAS knew is neither here nor there. So long as it is arguable that at least Selvi and Elara (and also Eraaya) understood that the Unutilised Proceeds were not to be at GLAS’s free disposal, but would only be released to Eraaya once the Collateral was in place, certainty of intention is sufficiently arguable.

102.

As I have already indicated on the facts that proposition is arguable. There is evidence to support an argument that:

Selvi expressly told Elara that it would only transfer funds to GLAS “on condition that GLAS would not be able to pay Selvi’s purchase money to [Eraaya] until the pledge over the shares in Ebix had been put in place”. Elara was acting as Eraaya’s agent in those discussions with Selvi, as Eraaya itself asserts, and Elara agreed to those conditions.

Elara subsequently took steps to implement that bargain by initially proposing an escrow arrangement to Eraaya and subsequently, with Eraya’s agreement, inserting clause 3.4 into the draft Second Settlement Agency Agreement.

103.

While Mr Head contended that there had to be words by which it was communicated to GLAS that it was going to be holding the moneys on trust, I am not persuaded that that is necessarily right; if GLAS was not to act without Elara’s say so, it was possible for the funds to be held on trust without matters ever being explicit to GLAS. Indeed GLAS’s likely difficulty with the instruction given its own agreement with Eraaya may have been some reason for approaching the matter in the way it was done (if the Elara/Bondholder narrative proves to be correct).

104.

On the other certainties, while the case as formulated in the skeleton was capable of being criticised as failing this test, the Bondholders were clear orally: the object is all of the Bondholders. That point may not succeed, but it is arguable. Similarly it is arguable that the trust attaches to the whole of the US$40m less any fees. The submissions as to the lack of detailed foundation for this in the evidence are noted; but this is not a trial or even a mini-trial.

105.

As to the Offering Circular wording this has to be looked at in context. Eraaya’s argument that the “Risk Factors” in the Circular envisage a scenario in which the Collateral is not granted and the Bonds are left unsecured involves picking out one piece of a lengthy and complex wording and ignoring all the other bits of wording which lay out a structure of acquisition (before which there could be no security), followed within a distinct time frame by a pledge. The scenario described does not contemplate a situation in which Ebix had already been acquired with money to spare with the result that the Unutilised Proceeds could not be used for the purpose for which they were paid.

106.

Another strand of the potential argument for a trust is the mirror image. Eraaya’s own Particulars of Claim do not assert a proprietary right to the Unutilised Proceeds. Eraaya has not brought any proprietary claim against GLAS, who hold the money. It is certainly well arguable that GLAS, as Settlement Agent, holds the Unutilised Proceeds on trust for someone. The logic of Eraaya’s own case is that, unless and until Elara gives the confirmation, GLAS continues to hold the Unutilised Proceeds on trust for either Eraaya or the Bondholders – and if not Eraaya, logically it is the Bondholders.