Nicholas Barnett v General Subsidiary 2 Limited & Ors

ICC Judge Agnello KC: Introduction

1. The issue which I need to determine is who effectively is entitled to the sums (the Funds) currently held by Mr Barnett, the Applicant, as the administrator of the three companies referred to in the title above. On 21 April 2022, Mr Barnett, was appointed as Administrators of General Consolidated Limited ( GS ) and Orex Consultancy Limited ( Orex). On 4 May 2022, he was also appointed as administrator of General Subsidiary 2 Limited (GS2). I will refer to these three companies as the Orex Companies. Those appointments were made by the security holder, WSL-Cyan Limited (Cyan). Mr Barnett currently holds the sum of £5,666,844 as the Funds from the realisations of Orex Companies. He has already made earlier distributions of sums received to the secured creditor.

2. GS2’s business was to operate banking facilities for secured lending. GC’s business was to facilitate the making of loans, in particular loans secured on property of the borrowers. Orex’s business was that of lending, specifically to borrowers under the Coronavirus Business Interruption Loans Scheme. Mr Augousti was a director and ultimate beneficial owner of the Orex Companies.

3. The Orex Companies obtained the funds which were the subject of their onwards lending from Cyan which in turn sought the funding for the lending from other sources. The sums available for onward lending by Cyan came from other members of the Wilton Group of Companies. Cyan was a member of the Wilton Group and was a wholly owned subsidiary of Wilton Nominees Limited which in turn was a wholly owned subsidiary of Wilton UK (Group) Limited (Wilton UK). Cyan did not have a bank account and it used the banking facilities of other Wilton Group companies. In particular, sums were transferred to and from Wilton Secured Lending Limited (WSLL) which appeared to operate the finance operations for the Wilton Group. Mr Michael Flanagan was a director of Cyan until 11 October 2023 when he was removed by another group member, being Wilton Nominees Limited and replaced by Mr Stavros Loizou. Cyan went into administration on 11 December 2024 with Mr Andrew Andronikou appointed as one of the Joint Administrators of Cyan. Wilton UK went into administration on 3 April 2023 with Mr Andronikou being appointed as one of the Joint Administrators. Wilton UK indirectly owns, via another group member, Wilton Nominees Limited.

4. Cyan is the company in the Wilton Group which has the benefit of security over the Funds held by Mr Barnett. Its Joint Administrators’ position is that in accordance with the security documentation, the Funds belong to Cyan under the terms of the security documentation.

5. Mr Michael Flanagan is a director of GM Secured Lending Opportunities 1001 Limited ( GM1001), GM Secured lending Opportunities 1002 Limited (GM 1002) and GM Secured Lending Opportunities 1003 Limited (GM 1003) (together the GM Companies). Mr Flanagan was also a director of many of the Wilton Group companies, including, as noted above, Cyan, Wilton UK, WSLL and Hartley Pensions Limited ( HPL).

6. The GM Companies assert that they provided the funding to the Orex Companies as part of a syndicate of lenders and that Cyan was acting as a nominee/agent of the syndicate. Mr Flanagan asserts that the GM companies provided funding to the Orex Companies via Cyan in a total sum of some £15,000,000 and that they have the economic interest in the funds because they remain the only unpaid lender. GM 1003 was dissolved via compulsory strike off on 31 December 2024.

7. Another member of the Wilton Group is HPL, a pensions service provider which administers self-invested pension schemes (SIPP schemes) as well as small self administered pensions schemes containing around 840 members. Mr Flanagan was also a director of HPL. It went into administration on 29 July 2022 with Mr Peter Kubik and Mr Brian Johnson being appointed as Joint Administrators. HPL asserts that it considers that there is a trust to its benefit over the Funds. It asserts that the sums totalling £15,000,000 were transferred from HPL members accounts and from the pension funds without authority to WSLL and thereafter used as part of the funds lent by Cyan to the Orex Companies. However, Mr Kubik sets out in his evidence that he has not been able as yet to complete his investigations and therefore whilst he considers that a trust is created in favour of HPL, he still needs to carry out further investigations. Helpfully, Ms King, acting for HPL, produced an additional skeleton argument during the hearing which set out the legal basis of the trust argument made by HPL through its joint administrators (the HPL administrators), albeit this was limited by the investigations not having been completed by Mr Kubik.

8. Mr Simon Nuttall is a holder of a pension which was administered by HPL. He has brought an application for a representation order asserting that he acts on his behalf and on behalf of other beneficiaries of pension schemes. At the start of the hearing, I heard his application and refused to make the order. Such an order would have caused the adjournment of the trial fixed before me. Additionally, it seemed to me that the interest of the pensions could ably be represented by the HPL administrators. During the course of the hearing and also in his written submission and evidence, Mr Nuttall made various allegations concerning the conduct of the HPL administrators. Those issues were not replied to by the HPL administrators other than denying them in general terms. Such matters do not form part of the issues I have to determine and accordingly they form no part of this judgment. In determining the issues which relate to the preliminary issue, I have therefore taken no account of the criticisms raised by Mr Nuttall or indeed criticisms made by others against any of the office holders and their conduct. Mr Nuttall invites me to appoint another person to take charge of the sums and thereafter effectively to distribute to the beneficiaries of pensions schemes.

9. Mr Nuttall was one of the parties allowed to file evidence in accordance with the order of Chief ICC Judge Briggs dated 7 May 2025. He has filed evidence in compliance with that order. He asserts that the majority, if not all the Funds belong to the HPL pension beneficiaries rather than any other party.

10. Mr Augousti, a director of the Orex Companies and ultimate beneficial owner asserts that he has an interest in the sums being held by Mr Barnett. He maintains that he is an unsecured creditor of the Orex Companies. He believes that the Orex Companies, despite the companies being in administration, were expected to have a surplus. His position appears to be that he supports the claim of Cyan, the secured creditor as effectively being entitled to the Funds. He asserts that if the court determines this to be the position, then he alongside other unsecured creditors, have an interest in the Funds.

11. Before me, Mr Barnett took a neutral stance in that he was seeking the directions as to the ownership of the Funds. I am grateful Mr Groves for setting out the history of the proceedings and the numerous other applications which have been issued in these proceedings. I do not propose to set out the procedural history or deal with any other proceedings as yet not determined by the court beyond the preliminary issue. The preliminary issue

12. By order dated 7 May 2025, Chief ICC Briggs directed the determination by way of preliminary issue, ‘ ….the entity or persons with an economic interest in the Companies and who are ultimately entitled to the funds currently held by Mr Barnett derived from and following the collection of the loan book of the Companies ….’

13. It became apparent early on in the trial that the wording of the preliminary issue was not as clear as it could have been. It seemed to me that the words ‘economic interest’ should be taken as encompassing beneficial interest. The economic interest would encompass a person who has the actual interest in the funds rather than their legal owner. Another way of describing this would be to ask who had the beneficial interest in the funds. I have approached this preliminary issue as a way of asserting a beneficial interest rather than legal title. This also accords with the way in which those asserting an economic interest have set out their case. None of the parties before me objected to this approach. Witnesses and issues to be determined

14. An order was made for the attendance of certain deponents of witness statements. Mr Andronikou, Mr Barnett, Mr Augousti, Mr Flanagan, Mr Rossier, Mr Garwood and Mr Loizou attended and were cross examined. Mr Kubik was unable to attend the first two days of the trial and made an application pursuant to 12.28(4) of the Insolvency Rules 2016, seeking permission to rely upon his written evidence as his evidence in chief without requiring his personal attendance at the hearing. After hearing from other parties, I granted Mr Kubik’s application despite the objection of the GM Companies and Mr Nuttall. The issue is then as to what weight I give to the evidence of Mr Kubik as set out in his witness statements.

15. The witnesses who gave evidence were cross examined on a very wide range of issues. With the exception of Mr Flanagan, Mr Rossier and Mr Garwood, many of the issues raised in cross examination by various parties were not, in my judgment, relevant to the preliminary issue. There was extensive cross examination of Mr Barnett in relation to his involvement with Mr Flanagan and in particular questions relating to Mr Stuart Cottingham, a partner/manager who worked with Mr Barnett. Mr Nuttall asked many questions which touched upon conduct of the relevant office holders and their dealings. I do not propose to go through the evidence, either in the witness statements or provided during cross examination in this case unless it is relevant to the preliminary issue. Summary of claimants asserting an economic interest in the funds

16. The following is a summary of the various claimants asserting an economic interest in the funds :- (i) the GM Companies assert that the funds were provided by a syndicate of lenders and forwarded to the relevant Wilton group company and thereafter to Cyan, upon terms which result in the economic interest being held by those lenders. The GM Companies assert the syndicate of lenders include themselves and/or they have an economic interest by reason of the GM Companies having paid the original lenders the sums due under their investments. (ii) HPL asserts, on behalf of holders of SIPPS or pension schemes (the beneficiaries) that the beneficiaries hold the economic interest by reason of HPL having transferred the sums totalling circa £15,000,000 without the authority of the beneficiaries, to other Wilton Group companies and in particular to Cyan for the purposes of the Cyan lending to the Orex Companies. Mr Kubik is still investigating the transfers in and out of the various HPL accounts and he also raises concerns relating to the provenance of the alleged payment to HPL beneficiaries of £13,000,000 made in around April 2022. Accordingly, the claim to the economic interest can only be advanced with the above reservations. Mr Nuttall asserts that the Funds belong to the beneficiaries. (iii) Cyan asserts its economic interest arises from the valid security interest held by Cyan over the business and undertaking of the Orex Companies. It accepts that the sums which were provided to it must have originated from other members of the Wilton Group, but asserts that those who provided the funds do not have an economic interest in the funds. There is no challenge to the charges created over the Orex Companies pursuant to the security documentation or to the validity of the security documentation itself. As such there is no need to consider the actual documentation. The GM Companies assert that despite the terms of the security documentation, Cyan was acting as an agent for its undisclosed principal being the lenders.

17. Mr Augousti does not directly assert an economic interest, but asserts that he has an interest as an unsecured creditor of the Orex Companies as well as being the sole director and ultimate beneficial owner. He maintains that the Orex Companies were expected to have a surplus after paying their secured liabilities to Cyan. He supports the position that Cyan has the economic interest. His position as an unsecured creditor does not need to be dealt with separately in that his ‘interest’ arises effectively from Cyan being successful in its claim.

18. Mr Nuttall’s position is therefore that he asserts the economic interest in the Funds belongs to the beneficiaries. He spent a lot of his submissions as well as in his evidence criticising what has occurred to date in the various insolvency processes and inviting me to appoint another office holder to deal with the interest of the beneficiaries in the Fund. As I stated during the hearing, the only matter listed for hearing before me was the preliminary issue. I do not propose to deal with othes issues raised. As is clear, the determination of the preliminary issue relates to a consideration of the claims of the parties identified above. None of those claims arise or are affected by criticism of the conduct of the various office holders. The evidence of Mr Loizou as well to a large extent, the evidence of Mr Barnett and the other insolvency office holders is also not relevant, save for any references by both Mr Kubik and Mr Andronikou, to the transfers in and out of HPL from the Wilton Group accounts.

19. Effectively, unless either the GM Companies or HPL/the beneficiaries establish their economic interest, Cyan will have the economic interest. No one suggested or submitted that the security held by Cyan was invalid or ineffective in any way. Summary of submissions as to the relevant legal principles

20. On behalf of the GM Companies, Ms Chaffin-Laird submits that Cyan acted as their agent in entering into the various loan and security agreements, asserting that Cyan was essentially ‘a SPV nominee’ to enter into the lending transaction with the underlying borrower as the GM companies are not named in the loan agreements or the security documentation, reliance is placed on Cyan acting for them as agent for an undisclosed principal.

21. A useful summary of the general principles is located in Bowstead & Reynolds on Agency (23 rd Edn) at ¶8-068:- “(1) An undisclosed principal may sue or be sued on a contract made on the principal’s behalf, or in respect of money paid or received on his or her behalf, by an agent acting within the scope of the agent’s actual authority. Where a contract is involved, the agent on entering into it must have intended to act on the principal’s behalf. (2) (Perhaps), an undisclosed principal may also be sued on any contract made, or in respect of money received, on the principal’s behalf, by an agent acting within the authority usually confided to an agent of that character, notwithstanding limitations put upon that authority as between principal and agent. (3) Where an agent enters into a contract, oral or written, without reference to agency, evidence is admissible to show who is the real principal, in order to charge the principal or entitle the principal to sue on the contract. (4) The terms of the contract may, expressly or impliedly, exclude the principal’s right to sue and the principal’s liability to be sued. The contract itself, or the circumstances surrounding the contract, may show that the agent is the true and only principal.”

22. Cyan submits that the clear wording of the security documentation effectively excludes the principle of undisclosed principal applying. The evidence relied upon by the GM Companies in support of their case in relation to the agency/principal assertion is challenged by all the other parties with the exception of Mr Barnett who remains neutral in these proceedings. Ms Chaffin- Laird submits that, on the evidence, the GM Companies case is established. It is therefore necessary to deal with the evidence relied upon before dealing further with the legal principles of principal and agent.

23. According to Mr Kubik, he is still investigating the transfers to and from HPL in order to be able to assess whether repayment in full of sums taken from the HPL members accounts has been returned. There is also an issue as to the provenance of certain sums which the GM Companies assert have been paid to HPL. With these reservations, Ms King provided in her supplementary skeleton a useful summary in relation to the relevant general trust principles which apply to the HPL potential claim.

24. Snell’s Equity ( 35 th edition ) at paragraphs 26-011-26-012 states the general principles as follows:- “(a) No universal test. It has been said that there is a: “jurisdiction by which a court of equity, proceeding on the ground of fraud, converts the party who has committed it into a trustee for the party who is injured by that fraud.” But in common with all other situations where a trust may be imposed by operation of law, it would be incorrect to interpret such a statement as a general test for when a constructive trust will be imposed. While the cases recognise many instances of fraud where a trust has been imposed, there is no “universal principle that wherever there is personal fraud the fraudster will become a trustee for the party injured by the fraud”. The cases where the defendant fraudulently relies on the informality of a transaction to deny the beneficial interest of the claimant have been considered elsewhere. Some of the remaining instances are considered in this section. (b) Fraudulent taking. A distinction must be drawn between fraud consisting in the outright taking of a person’s property, wholly without his consent, and a transaction induced by a fraudulent misrepresentation. In the first case, it has been said that a thief who steals the property of another holds it on constructive trust for the claimant. The thief’s possessory title is subject to the claimant’s equitable entitlement to have the property specifically restored to him so that he holds it as a constructive trustee. Where the thief steals money from the claimant’s bank account, the resulting credit in the thief’s account is held on trust for the victim. The victim becomes beneficially entitled to thief’s contractual right to draw against the bank. In each case, the consequence is that the claimant can rely on the equitable rules of tracing to recover his money rather than the less convenient common law rules of recovery.”

25. The imposition of a constructive trust is not a discretionary remedy but institutional rather than remedial. Accordingly, the factual circumstances will govern whether at law a constructive trust is imposed. It requires certainty of of subject matter and of the beneficial object of the trust. The defendant may still retain the property or the property can be traced into the hands of another party.

26. In Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 Lord Browne-Wilkinson discussed the legal consequences of a theft on title to stolen goods by using the example of a stolen bag of coins: “The argument for a resulting trust was said to be supported by the case of a thief who steals a bag of coins. At law those coins remain traceable only so long as they are kept separate: as soon as they are mixed with other coins or paid into a mixed bank account they cease to be traceable at law. Can it really be the case, it is asked, that in such circumstances the thief cannot be required to disgorge the property which, in equity, represents the stolen coins? Moneys can only be traced in equity if there has at some stage been a breach of fiduciary duty, i.e. if either before the theft there was an equitable proprietary interest (eg. the coins were stolen trust moneys) or such interest arises under a resulting trust at the time of the theft or the mixing of the moneys. Therefore, it is said, a resulting trust must arise either at the time of the theft or when the moneys are subsequently mixed. Unless this is the law, there will be no right to recover the assets representing the stolen moneys once the moneys have become mixed. I agree that the stolen moneys are traceable in equity. But the proprietary interest which equity is enforcing in such circumstances arises – under a constructive, not a resulting, trust.”

27. In Foskett v McKeown [2000] 3 All ER 97 a property developer (Mr Murphy) held monies on trust to carry out a development. He instead mixed those monies with his own in his bank account and subsequently used the mixed monies to pay premiums on a life assurance policy on his own life, vested in trusts for his children. After his death, the life assurance company paid out on the policy. The beneficiaries of the development monies trust made a proprietary claim to a share in the monies paid out by the life assurance company. Lord Millett explained at 120 that: ‘A beneficiary of a trust is entitled to a continuing beneficial interest not merely in the trust property but in its traceable proceeds also, and his interest binds every one who takes the property or its traceable proceeds except a bona fide purchaser for value without notice. In the present case the purchasers' beneficial interest plainly bound Mr Murphy, a trustee who wrongfully mixed the trust money with his own and whose every dealing with the money (including the payment of the premiums) was in breach of trust. It similarly binds his successors, the trustees of the children's settlement, who claim no beneficial interest of their own, and Mr Murphy's children, who are volunteers. They gave no value for what they received and derive their interest from Mr Murphy by way of gift.”

28. Lord Neuberger in Sinclair Investments (UK) Ltd v Versailles Trade Finance Ltd [2012] Ch 453 stated that: “I do not doubt the general principle, reiterated by Lord Millett in Foskett v McKeown [2001] 1 AC 102 , that if a proprietary claim is to be made good by tracing, there must be a clear link between the claimant's funds and the asset or money into which he seeks to trace. However, I do not see why this should mean that a proprietary claim is lost simply because the defaulting fiduciary, while still holding much of the money, has acted particularly dishonestly or cunningly by creating a maelstrom. Where he has mixed the funds held on trust with his own funds, the onus should be on the fiduciary to establish that part, and what part, of the mixed fund is his property. Unless constrained by authority, I should therefore be very reluctant to accede to the defendants' case on this point . In fact, it seems to me that authority actually supports my view .” (§ 138)

29. Where a defendant claims to be a bona fide purchaser, he has the burden of proving that: Barclays Bank Plc v Boulter [1998] 1 WLR 1 : “It is well established at this level of decision that the doctrine of bona fide purchaser for value without actual or constructive notice is a defence which can be raised to defeat a claim of an equitable right or interest and that the burden is on the person raising that defence to plead and prove all its elements: it is a “single defence.”” (8F-9A per Mummery LJ).

30. None of the parties disputed these general principles of law in relation to constructive trusts. On the facts of this case, Ms Chaffin-Laird disputed that a trust claim arose because on the GM Companies case, the sums which had been removed from the HPL members accounts had been repaid. Mr Shaw on behalf of Cyan raised the issue that the tracing exercise may not be possible because whilst tracing from HPL to Cyan was clearly possible, the tracing to the Orex Companies may not be possible in so far as the Orex Companies were bona fide purchasers for value. There was no evidence before me relating to the knowledge or otherwise of the Orex Companies on this issue. When this issue was raised before me during the hearing, Mr Augousti submitted a lack of knowledge on behalf of the Orex Companies, but this is, in my judgment, simply not evidence directed at the issue with the burden firmly on the recipient of the relevant property subject to the constructive trust. A further difficult legal issue arose in so far as the funds are due to be paid under the security documentation to Cyan, that party will hold the funds on trust for the HPL members. Despite these issues which were not really developed before me, the starting point is to evaluate the evidence presented before me and to make findings.

31. I will set out the factual background and consider the evidence provided by the factual witnesses, being Mr Flanagan, Mr Garwood and Mr Rossier on behalf of the GM Companies which relate to the preliminary issue. This will include considering the documentation included in the evidence before me. Factual Background- the Wilton Group and its operations

32. The background to the Wilton group of Companies is provided by Mr Flanagan in certain of his witness statements . The administrators of Cyan and HPL make no specific comments in relation to the background provided by Mr Flanagan, but do dispute his assertions relating to the lending operations and in particular the Cyan transaction.

33. According to the fourth witness statement of Mr Flanagan dated 10 October 2024, he established the Wilton Group of companies ( the Wilton Group) about 23 years ago. He states that the companies initially offered accountancy and tax advice but then the Wilton Group business expanded into additional sectors, being professional services, investments, pensions and insurance. He asserts that the overall group business was successful responsible for over £4 billion of assets.

34. Mr Flanagan’s mother, Margaret Flanagan and his partner Nicole Hewson, are the persons with significant control of the Wilton Group.

35. Mr Flanagan states that he has always played a leading role in the Group’s business, taking the title of Chief Executive Officer in around 2016. According to him, the Group operated in four different places, being the UK, Ireland, the Isle of Man and United Arab Emirates. The UK business was held by Wilton UK. He states that having set up how the overall structure of the Group’s business and in particular the way in which lending would be structured, he then delegated the day to day running of the Group’s different divisions to others. From 2016, he remained a member of the ‘Wilton Lending Committee’ and had, he asserts, knowledge of most pending transactions arranged by the Wilton Group.

36. Mr James Robson was in charge of what Mr Flanagan called ‘the Investments Division’ until his resignation effective on 31 December 2022. Mr Flanagan then took over the running of what he called ‘the secured lending business’ which it appears was in the investments division. The UK holding entity was Wilton UK which, according to Mr Flanagan was the UK holding entity and which also carried on business as an accountant and tax advisor. According to Mr Flanagan, Wilton UK held the shares in the subsidiaries which included, HPL.

37. Alongside other businesses, the Wilton UK carried out what he described as a loan management business which brokered bridging finance as between lenders and borrowers. Mr Flanagan states that these loans were funded by the raising of funds from the Group’s existing clients. According to him, in 2022, the Group’s management decided to spin off its lending and loan management business into the GM companies. According to him, the loan management business was then rebranded as Guiness Mahon.

38. According to Mr Flanagan, he sourced investment for businesses by presenting various ‘syndicated’ lending opportunities to groups of private investors. He states that most of these lending opportunities were property development loans. He states in his fourth witness statement that he considered that these might be both lucrative and not excessively risky as they had the benefit of security over the property in question. He states that some of these investors were pension scheme investments which came through HPL.

39. He explains as follows at paragraph 22 of his fourth witness statement :- ‘By ‘syndicated lending opportunities’, I mean that each lender (who were sometimes called investors) in a given secured lending opportunity would participate in the said opportunity by contributing a set amount of money which would then be pooled together and used to make loans directly to underlying borrowers. I note that sometimes the contemporaneous documents refer to the loan syndicate members as “investors” – these are one and the same.’

40. He describes how the investment opportunities operated in paragraphs 24 and 25:- ‘24. I should also clarify that the loan managers had no discretionary authority to make investments on behalf of the individual lenders but had to invest in the specific opportunity or transaction in which the investors wish to invest. The individual lenders/investors were presented with a presentation or pitch on each investment opportunity and would decide whether to invest in that particular transaction. Two examples of these investor presentations are exhibited at pages 1 to 4, including the presentation for the Cyan Transaction (as defined at paragraph 41 below). As with many of the secured lending transactions set up by Wilton, this lending transaction was for a property development with security taken over the property. More generic marketing materials can be seen at pages 5 to 8 which explain that “Wilton operate[d] a successful lending business to provide investors with a safe yet lucrative investment proposition”. We would always conduct ample due diligence on potential borrowers before “submit[ting] the opportunity to investors and subsequently agree to lend funds to the applicant”.

25. Each syndicate member would then transfer the funds it had committed to the control and management of a corporate vehicle (which I refer to as a ‘loan manager’) which would in turn facilitate loans to the underlying borrower of each secured loan but would not have the benefit of the money transferred to the syndicate members. Sometimes the loan manager would enter into the lending transaction directly with the underlying borrowers on behalf of the lending syndicate and sometimes the loan manager would set up an SPV nominee to enter into the lending transaction with the underlying borrowers. As I explain further below, two of these loan managers were Wilton Secured Lending Limited (“WSLL”) and Guinness Mahon Ltd (“GML”), and one such SPV nominee was WSL-Cyan Limited (“WSL-Cyan”)[Cyan].’

41. At paragraph 26, Mr Flanagan states, ‘ The commercial purpose of the syndicates was simply to enable the syndicate members to invest in secured lending transactions for a profit’. At paragraph 27, he states as follows in relation to the existing documentation :- ‘To be clear, there was no need for any intercreditor agreements or any similar documents to govern the syndicate members’ relationships with each other. This is because each syndicate members’ relationship was only with the loan manager, which collected funds from syndicate members, managed those funds and repaid them with interest. The loan manager also issued each syndicate member with a loan participation and loan redemption certificate. There was in fact no legal relationship between the loan syndicate members themselves, who did not know of each other’s i dentities and did not correspond with each other. Thus, while the arrangements are described in this witness statement and in other contemporaneous documents as ‘syndications’, it is perhaps easier to think of them as pooling arrangements rather than syndications in a traditional sense.’

42. The SPV which Mr Flanagan asserted was set up for the sole purpose of being a nominee in a lending transaction and for holding the benefit of any underlying asset or security didn’t have a bank account. It used the bank account of other Wilton Group companies. As stated by Mr Flanagan at paragraphs 37 and 38, ‘As the nominees had no bank account, WSLL instead was used to collect funds from and distribute returns to and from the loan syndicate members. WSLL provided this management service for a number of different loans providing same function and setting up new nominee SPVs. The only purpose for which the loan syndicate members ever sent money to WSLL was to participate directly in the various secured lending syndicates. This is demonstrated by the accounts of Wilton (IOM) Limited, Wilton UK, WSLL and finally GML, see paragraph 39 below. Wilton (IOM) Limited and Wilton UK, were never loan managers but held and operated client accounts for the syndicated loan monies.’ ‘For each syndicated loan transaction, WSLL issued loan participation certificates, interest certificates and loan redemption certificates. I exhibit at pages 193 to 220 each of the loan participation certificates, interest certificates and loan redemption certificates issued by WSLL to HPL, Galepso and the GM Companies in relation to the Cyan Transaction. Pausing here, I note that each certificate stated that the “Borrower” was “Cyan”. It should instead state that the “Transaction” was “Cyan”.’

43. I turn now to consider the evidence in relation to the Cyan transaction. The Cyan Transactions and lending

44. There are two loan agreements between Cyan (as lender) and Orex (as borrower) being a loan agreement dated 12 October 2020, whereby Cyan agreed to provide Orex with a loan in the sum of £5,000,000 and a further loan agreement dated 30 April 2021 between Cyan and Orex whereby a further loan in the sum of £15,000,000 was provided. The security for the October 2020 and April 2021 loans included (i) fixed and floating security granted by GS2 to Cyan by a security agreement dated 13 November 2020, and (ii) fixed and floating security granted by General Consolidated to Cyan by a security agreement dated 30 Aprill 2021. As is clear from the loan agreements as well as from the security documentation, there is no reference therein to any other parties to the loan agreements or any other parties holding or having any interest in the benefit of security over the Orex Companies under the terms of the security arrangements. It is no part of the GM companies’ case that either the loan agreements or the security documentation expressly or by implication referred to either the ‘agent or loan manager’ or to the ultimate lenders, being according to Mr Flanagan, the members of the relevant syndicate.

45. The sums lent by Cyan to Orex were paid from a bank account either in the name of WSLL, or another Wilton Group company, to a bank account held by Orex or to a bank account held by GS2. On behalf of Cyan, it is accepted that another Wilton Group member forwarded the funds used for the purpose of the Orex Companies lending. The funds provided to Cyan for the purposes of the lending to Orex

46. Mr Flanagan states at paragraph 43 that there were five members of the Cyan loan syndicate, being HPL, Galepso Limited, and the GM Companies. As the documentation sets out, the GM companies were not members of the syndicate (adopting for current purposes, Mr Flanagan’s language) when the lending was made to the Orex Companies in October 2020 or in April 2021. GM 1001 and GM 1002 were incorporated on 7 January 2021 and GM 1003 was incorporated on 3 December 2021. The original lending made in April 2021 did not come from any of the GM companies but came from other parties according to the documentation.

47. The documentation relied upon by Mr Flanagan relating to the Cyan transaction sets out the following. Cyan was acquired in around September 2020 changing its name from Lidney Ltd to WSL-Cyan Limited. The sole shareholder of Cyan is Wilton Nominees Ltd. The sole shareholder of Wilton Nominees Ltd is Wilton UK. Mr Flanagan relies upon a management agreement between WSLL ( as guarantor), Cyan and Wilton UK under which Wilton UK would provide administration services to Cyan. The agreement is unsigned and undated. Mr Flanagan accepts that the agreement is unsigned and undated and states in his written evidence that the failure to sign must have been an administrative error. The agreement itself does not take the issues before me much further as it relates to management services to be provided to Cyan by Wilton UK.

48. Mr Flanagan also refers to a loan management agreement dated 5 October 2020 between WSLL and Cyan. Whilst not defined at the start of the loan management agreement, under subsequent provisions, Cyan is the party called the ‘loan manager’ and the ‘client ‘ is WSLL. Mr Flanagan acknowledges that there is an error on page 10 where the ‘client’ is described as Wilton UK rather than WSLL. Under its terms, WSLL provided funding for bridging loans and Cyan, as the loan manager, facilitated the opportunity of WSLL to grant loans to borrowers referred to WSLL by Cyan as the loan manager. Cyan was to provide any such information that WSLL advises was required so as to make an informed assessment in relation to the offer of any loan. Cyan was to provide ‘full and proper administration services’ which included administrating the collection of any amounts due under any loan. The loan manager was entitled to charge a retainer and/or an arrangement fee from any borrower. As consideration for the services provided by the loan manager, the loan manager was to receive a percentage of the interest payable under any loan as agreed between the parties in writing at the time of granting the loan. The loan manager and the borrower were to enter into a separate facility agreement in relation to each loan.

49. Pursuant to clause 9.2, ‘Each loan shall be secured by way of a legal charge against the security address of the relevant borrower, ( ‘Legal Charge’) ( in the name of Loan Manager) who shall on completion execute a Deed of Assignment by way of a TR4 in favour of the Client [WSLL].The solicitor or a legal representative appointed by the client shall hold the TR4 on file’ Clause 9.3 states that the Solicitor shall register each legal charge in relation to each Security Address.’

50. Mr Flanagan then states in his written evidence that although the loan management agreement refers to Cyan as being the loan manager, in fact the agreement was not operated in accordance with its terms. He states that Cyan’s true function was that of a security nominee and that the loan manager was in reality WSLL. He also asserts that Cyan was the nominee holder of security for the syndicate members and that ‘everyone involved in the Cyan transaction understood that it was to be managed in the manner described above and no party ever questioned the operation of this arrangement’.

51. In support of the way he asserts the business was operated in relation to lending, Mr Flanagan describes and provides documents relation to other earlier transactions, including WSL High Road Limited. The documentation which is relied upon in relation to this earlier transaction does not provide for any documents expressly asserting that the members of the syndicate had the benefit of security over the fund which they lent onto the ultimate borrower through WSLL and using, according to Mr Flanagan, a different SPV nominee company, being WSL-High Road Limited. In relation to the WSL-High Road Limited transaction, there are also certain errors in relation to the names and parties referred to. Mr Flanagan explains that these are simply administrative errors. He accepts that some of the documents do not distinguish between the SPV and the loan manager. He and Mr Robson were directors of WSLL which he asserts was the loan manager for the Cyan transaction. He explains that previously, each SPV had its own bank account for the receipt of sums received via the loan manager, WSLL. This position changed when banks sought to close the bank accounts of smaller unregulated lenders effectively to reduce the risk of money laundering. From about December 2019, WSLL opened a single bank account with Hampden Bank which he states identified which money belonged to which client rather than having segregated client accounts.

52. Mr Flanagan accepts that the arrangements as between Cyan ( as he asserted being the security nominee or SPV ) and WSLL were imperfectly documented, but he asserts from his position in the Group and from his review of documents executed in respect of the Cyan transaction, he knows that WSLL was the loan manager and Cyan was the nominee for the loans and security in respect for the Cyan transaction. He relies on the accounts of those various entities to demonstrate that the loans were not listed in the accounts as assets of those companies.

53. Mr Flanagan relies on documents which he asserts evidence the lending from HPL and Galepso in relation to the Cyan transaction. In relation to HPL, Mr Flanagan states at paragraph 67 of his fourth Witness statement, ‘HPL and the Group have a history of doing business together with HPL choosing to fund secured lending transactions organised by a number of Group and non-Wilton companies. HPL participated in transactions by providing new capital or by rolling over capital as it matured on existing deals. The Group held money in a segregated client bank account for this purpose. WSLL also held monies on behalf of HPL.’

54. He states that WSLL issued, on headed WSLL notepaper, loan participation certificates, (with a heading of ‘Bridging finance confirmation of invested certificate’) interest certificates and loan redemption certificates. The certificates state, ‘We are pleased to confirm that you, the investor, have successfully invested [insert sum] into the below secured lending opportunity’. Mr Flanagan states in his written evidence that the reference in each of these certificates to ‘Cyan’ as borrower is incorrect and instead it should have referred to the Cyan transaction.

55. The documents in relation to Cyan show the following :- (1) Investment certificate with HPL as lender and ‘Cyan’ as borrower with an amount loaned of £2,500,000.00 with a start date of the loan of 9/10/20 and redemption date 30/4/22 with interest of 5% per annum; (2) Investment certificate with HPL as lender and ‘Cyan’ as borrower with an amount loaned of £2,500,000.00 with a start date of the loan of 22/10/20 and redemption date 30/4/22 with interest of 5% per annum; (3) Investment certificate with HPL as lender and ‘Cyan’ as borrower with an amount loaned of £500,000 with a start date of the loan of 14/5/21 and redemption date 30/4/22 with interest of 5% per annum (4) Investment certificate with HPL as lender and ‘Cyan’ as borrower with an amount loaned of £2,102,000.00 with a start date of the loan of 19/5/21 and redemption date 30/4/22 with interest of 5% per annum; (5) Investment certificate with HPL as lender and ‘Cyan’ as borrower with an amount loaned of £250,000.00 with a start date of the loan of 4/6/21 and redemption date 30/4/22 with interest of 5% per annum ; (6) Investment certificate with HPL as lender and ‘Cyan’ as borrower with an amount loaned of £1,500,000.00 with a start date of the loan of 16/7/21 and redemption date 30/4/22 with interest of 5% per annum; (7) Investment certificate with HPL as lender and ‘Cyan’ as borrower with an amount loaned of £260,000.00 with a start date of the loan of 10/9/21 and redemption date 30/4/22 with interest of 5% per annum.

56. According to these documents, a total of just under £10 million was provided by HPL for the Cyan transaction during the period October 2020 and September 2021. In relation to the further £5,000,000.00 forwarded by HPL, Mr Flanagan states that GM 1001 issued bonds to investors through a bond subscription with GM 1001 and the sums paid over under the bond were then used by GM 1001 to invest, including in the Cyan transaction. He states that the bond participation certificate for an initial funding of £5,485,921.56 is recorded by the transfer from HPL to a bank account held by GM 1001 from the bank account of WSLL on 7 January 2022. The bank statement does not identify that HPL was the payor in that the bank statement refers to WSLL GM Bonds. There is a document entitled ‘Bond Certificate’ with an issue date of 7 January 2022 which states that HPL is the holder of 5,485,921.56 of ‘unsecured bonds of nominal value of £1 created and issued by GM Secured Lending Opportunities 1001 Ltd’. The bond certificate is executed according to its terms as a deed and dated 7 January 2022.

57. In his written evidence he states that HPL then requested a redemption notice for the return of £485,867.56 and accordingly the funds provided by HPL totalled £5,000,054. He produces a bond redemption certificate for the sum of £485,861.56 which is £6 less than the total amount of funds actually returned to HPL. It is not clear as to the actual background to certain funds being returned to HPL in early 2022. Mr Flanagan produced a bank statement which he asserts shows that HPL was repaid back the sum of £485,861.56 on 16 February 2022. The entry on the bank statement states ‘HSAS SIPP redemption’. In my judgment, it is not possible on the evidence before me to ascertain the background to the transfer back to HPL of the sum of £485,861.56. The HPL Administrators challenge the other repayments made at later dates, but as stated by Mr Kubik, he is still in the process of his investigations.

58. A further bond participation certificate is then exhibited by Mr Flanagan, with this one being for £5,000,060. This certificate which is dated 16 February 2022 is unsigned and Mr Flanagan provided no explanation as to why it is unsigned. It does contain the same wording as the earlier bond certificate in that it states, “issue of unsecured bonds or nominal value of £1 each created and issued by GM Secured Lending Opportunities 1001 Limited”.

59. Mr Flanagan states that HPL therefore participated in the Cyan transaction and provided a total of £14,612.00. Mr Flanagan asserts that HPL has been repaid a total sum of £15,613,256.69 which represents its interest and principal. Therefore, Mr Flanagan asserts that HPL is no longer a lending syndicate member in relation to the Cyan Transaction. Mr Nuttall as well as the HPL Administrators dispute the validity of the repayments relied upon by Mr Flanagan including the provenance of the sums used for the payment of £13million.

60. As he accepted in his cross examination before me, none of these sums which were transferred from HPL to Wilton Group entities were transferred with authority of the beneficiaries, either the beneficiaries of the SIPPS or the pensions schemes held and managed by HPL. At the time of all the transfers, Mr Flanagan was a director of HPL. This admission made by Mr Flanagan was not in his numerous witness statements which had been filed in these proceedings. His witness statements all dealt with the various transactions on the basis that the investment by HPL, whether it was directly or through the bonds issues relied upon by Mr Flanagan, were all based on HPL having the authority to make the investments.

61. An example of this premise is noticeable in paragraph 73 of Mr Flanagan’s fourth witness statement whereby he explains not only HPL’s involvement, but also its preference to invest in bonds :- ‘Pension schemes tend to prefer to invest through bonds than as direct lenders in secured lending transactions. This is because bonds attract investors and spread the risk across multiple secured lending transactions which is inherently less risky and more appealing to pension schemes as they are not reliant on a single transaction succeeding. It is also much easier for a pension scheme to place the piece of paper which represents a bond in their records, so overall it is seen by them as a ‘neater’ and ‘cleaner’ form of investment. Bonds do however have the disadvantage of providing a lower return on investment (e.g. the ultimate bond holder would get 4% whereas the direct lender would get 8%). HPL originally joined the Cyan Transaction as a syndicate member because the Wilton Lending Team did not have a bond offering, however over time they saw that there was a market for bonds. Therefore, by the time HPL came to invest the second time it chose to do so as a bond holder.’

62. He maintains, despite this lack of authority for the transfer of the HPL sums, that HPL has been repaid in full and therefore the lack of authority issue is not important.

63. The other member of the Cyan syndicate, according to Mr Flanagan was Galepso Management Ltd. There is an investment certificate with Galepso Management as lender and ‘Cyan’ as borrower with an amount loaned of £5,000,000.00 with a start date of the loan of 30/7/21 and redemption date 30/10/21 with interest of 5% per annum. According to Mr Flanagan, the £5,000,000 from HPL in relation to the bond issue was used to redeem and replace Galepso with GM 1001 on the basis of the HPL bond. There is a bridging finance redemption certificate which refers to Galepso as the lender , Cyan as the borrower with the amount loaned in the sum of £5,000,000 with the start dated of 30 July 2021 and redemption on 30 October 2021 with a payment of £5,062,500.34. Again, Mr Flanagan asserts that the certificate is inaccurate in stating that Cyan was the borrower. Mr Flanagan asserts that Galepso has been repaid by the sums provided under the bond by HPL and thereafter HPL itself was repaid so that the entity with an interest is the GM Companies. For current purposes it is not necessary to seek to ascertain how much is the value of the respective economic interests of each of the GM companies, including whether GM 1003 can actually assert any interest.

64. In support of his case that the GM companies had the economic interest in the funds, Mr Flanagan also relied on various ‘Bridging Finance Interest Repaid Certificate’ as follows:- (1) Interest payment of £62,500 paid to HPL from the borrower , ‘Cyan’ start date 9/10/20 repaid on 11/2/21; (2) Interest payment of £205,940.78 paid to HPL from the borrower , ‘Cyan’ start date 9/10/20 repaid on 24/9/21; (3) Interest payment of £48,852.22 paid to HPL from the borrower , ‘Cyan’ start date 9/10/20 repaid on 22/10/21; (4) Interest payment of £315,000 paid to HPL from the borrower , ‘Cyan’ start date 9/10/20 repaid on 6/12/21; (5) Interest payment of £558,713.73 paid to HPL from the borrower , ‘Cyan’ start date 9/10/20 repaid on 19/1/22; (6) Interest payment of £151,723.81 paid to HPL from the borrower , ‘Cyan’ start date 9/10/20 repaid on 19/1/22;

65. Reliance was also placed upon series of ‘Bridging Finance Redemption Certificate’ which show the following:- (1) Partial repayment to HPL from borrower ‘Cyan’ of £1,000,000 start date of 26/1/21 redemption date 8/3/22; (2) Partial repayment to HPL from borrower ‘Cyan’ of £191,746.99 start date of 26/1/21 redemption date 15/6/22.?]

66. Mr Flanagan refers to a WSLL ledger in relation to WSLL and Cyan which he states supports the repayments he asserts were made to HPL totalling £15,613,138.70. He also refers to the redemption certificates and interest certificates of the kind described above. These show the following :- (i) £62,500 paid on 11 February 2021, (ii) £205,940.78 paid on 24 September 2021, (iii) £48,852.22 paid on 22 October 2021, (iv) £315,000 paid on 6 December 2021 , (v) £558,713.73 paid on 19 January 2022, (vi) £1,000,000 paid on 8 March 2022, (vii) £191,746.99 paid on 15 June 2022 , (viii) £13,661.17 paid on 15 June 2022,

67. The bank statements relied upon by Mr Flanagan demonstrate that about three of these payments came from an account in the name of WSLL with references that the payments were made to ‘HSAS SIPP CYAN interest’

68. Mr Flanagan asserts that £13,000,000.00 was repaid to HPL from the GM 1001 bank account into the account in the name of Hartley Pensions Trustees Limited. The bank statement relied upon by Mr Flanagan for the period 1 April 2022 to 29 April 2022 is in the name of GM Secured Lending Opportunities Ltd ( and not GM 1001). The balance brought forward on that account prior 4 April 2022 is £140,601.63. On 5 April 2020 there were then three transactions, being a credit into the account from Wilton Secured Lending Limited V19 Bonds in the sum of £13,000,025.00, a transfer out to Hartley Pensions trustees Limited in the sum of £13,006,000.00 and a further transfer to Hartley Pensions Trustees Limited in the sum of £25. The bank statement also shows a series of transfer then made into the accounts on 20 April 2022 from ‘Hartley Pensions L GM Sec Lend Return’ in numerous payments of £50,000 and one £422,260.20 totalling £446,260.20.No explanation has been provided in relation to these sums transferred from ‘Hartley Pensions’ to GM 1001.

69. The background to the repayments which Mr Flanagan asserts were made to HPL need to be placed into their factual context. The involvement of the FCA in relation to HPL

70. In February 2022, the FCA imposed a number of requirements on HPL and its operations which included :- a. A prohibition on HPL in any way dealing with its assets without the prior consent of the FCA. b. A prohibition on HPL directing the pension trustees to transfer any cash held for the members of the SIPP and SSAS schemes to any person in the Wilton group or any person otherwise connected to HPL. c. A prohibition on new business from 4 March 2022 unless expressly authorised by the FCA. d. Compliance with liquid capital requirements.

71. 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.

72. 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.

73. 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’.

74. 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’.

75. 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.

76. 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.

77. 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. Mr Robert Garwood and Mr Pierre Rosier

78. 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.

79. 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.

80. 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.

81. 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.

82. 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. The HPL claim – Mr Kubik’s evidence

83. In his witness statement dated 11 October 2024, Mr Kubik explains that he and Mr Johnson were appointed on 29 July 2022 as the joint administrators of HPL, being, a personal pension service provider authorised by the FCA. HPL’s principal business is the establishment, operation and administration of various self invested personable pension schemes ( SIPPS ) and small self administered schemes ( SSAS ) operating approximately 17,000 of SIPPS and SSAS. There are 21 separate SIPPs containing circa 16,500 SIPP accounts with each SIPP being governed by a trust deed and rules. According to Mr Kubik, the trust deed and rules of the various SIPPS set out the powers of the SIPP operator, ( being HPL or HPL under power delegated to it by previous operators ) administrator and trustee. The trust deed and rules are not in evidence, but it would appear that HPL would hold the scheme assets on trust for the beneficiaries. HPL also administers around 350 SSAS containing about 840 individuals. Each SSAS is governed by its own trust deed and rules. These are not in evidence before me.

84. Mr Kubik states that from his review in his role as Joint Administrator, between 13 January 2020 and 29 October 2021, the sum of £25,886,785 has been misappropriated from a number of SIPPS and SSAS operated by HPL. He states that the misappropriated monies were transferred from various SIPPS and SSAS accounts and he believes this occurred without the consent of the beneficiaries. From his investigations to date, he states that sums were transferred from HPL to WSLL, Wilton UK or another entity called Argon Financial Limited/Segray Group Limited. He believes that certain sums were taken from HPL accounts without the authority of beneficiaries to the various relevant SIPPS or SSAS. He states that some of the sums taken out appear to have been replenished over time but he is unable to say that all the sums have been fully repaid. He also has concerns relating to the origin of the sums which appear to have been used by the GM companies (or Mr Flanagan ) to pay back to the HPL beneficiaries the sums which had been removed. He states that certain sums which he believes were taken without the authority of the beneficiaries were replenished over time, but he is unable to say whether those sums have been fully repaid.

85. He explains that it is unclear from the bank statements he has seen whether all the principal amounts have been repaid and that the interest redemption statements provided by Mr Flanagan do not match the payments received into the HPL accounts. He considers that, in any event, the source of the funds used for repayment requires, in his opinion, further investigation. The primary payment made into HPL members accounts relied upon by the GM Companies is the sum of £13,000,000 which according to Mr Flanagan, was paid to HPL on around 5 April 2022.

86. He understands that the source of this payment was an Isle of Man trust called the ‘Voula Settlement’. He believes (although he does not provide any detail as to this belief or where he obtained this information) that the trust was established by individuals from Ukraine who may have connections with politically exposed persons from Ukraine. He has concerns relating to money laundering and he states that he is in communication with the Wilton/Cyan Joint Administrators who hold information relating to the Voula Settlement.

87. He exhibits email correspondence between Hubwise, the platform used by HPL for managing funds and Mr Blaine Davis wealth management analyst at Wilton UK. Mr Davies sent an email to Hubwise notifying them that Wilton UK was preparing to make a payment of £13 million which Mr Kubik believes was from the Voula Settlement. Mr Davies stated in a further email that the payment should be transferred to GM 1001. Hubwise had concerns relating to the size and provenance of the funds. Internal emails within the Wilton Group discuss the response to Hubwise. The latter entity had explained the money laundering concerns raised by reasons of the size of the transaction and the fact that the payment was being directed to a third party account. Additionally, despite requests, the details of the ultimate beneficial owner had not been provided to Hubwise.

88. Thereafter, Mr Kubik notes that instructions were given to transfer the funds to WSLL who then forwarded the payment to GM 1001. Mr Kubik’s concerns as he set out in his witness statement is that the circular way the payment was made to HPL was effectively seeking to bypass proper anti money laundering checks. Additionally, he states that he is aware of allegations suggesting that the £13 million was stolen from the Voula Settlement. This is also what Mr Andronikou states in his witness statement. He states that certain individuals are suing Mr Flanagan over what Mr Kubik calls the misappropriation of the £13 million. When he was cross examined, Mr Flanagan confirmed that there are proceedings brought by the Voula Settlement representatives against him and others, but he stated this was due to a misunderstanding and he considered those proceedings would be settled. Mr Flanagan did not dispute that the £13 million came from the Voula Settlement. In his fifth witness statement dated 16 January 2025 (in reply to Mr Kubik’s first witness statement), Mr Flanagan states that he was on the board of trustees of the Voula Settlement and he states, ‘The money originated from Mr Bondik’s business, which is the extraction and distribution of bentonite clay, and was transferred under our management having received a clean bill of health by the Ukrainian and Swiss authorities.’

89. No documents have been produced by Mr Flanagan in support of this statement and no details are provided as to the basis upon which the Voula Settlement provided the sum of £13 million. He provided no details as to what was the arrangement between himself, and/or one of the Wilton companies and the Voula settlement in relation to the £13million.

90. Accordingly, Mr Kubik states that HPL has an economic interest in the funds even though his investigations have not as yet been completed and as well as his outstanding concerns relating to the provenance of the Voula Settlement monies. The position of Cyan – summary

91. As already set out above, Cyan relies upon its security documentation creating charges, demonstrating its entitlement to the economic interest in the Funds. It also points to previous payments made to it by Mr Barnett under the same security documentation. Cyan accepts that it received the sums it used to pay the loan under the terms of the agreements with the Orex Companies from third parties, but denies that those third parties have an economic interest in the Funds. The late submission of an email dated 5 October 2022 by Counsel for the GM Companies

92. After all parties had made their closing submission, Ms Chaffin-Laird addressed me in relation to a document which Mr Flanagan had handed to her and which she considered, as Counsel owing duties to the court, she was obliged to bring to my attention. This was a copy of an email dated 30 June 2022 from Mr Robbie Constance of DWF solicitors addressed to Ms Clare Thomas of the FCA. The contents of the email refer to ‘the firm’s regulatory report of 31 May 2022 and states as follows, ‘Return of Members’ Funds to Hartley was completed on 5 April 2022’. Ms Chaffin-Laird made no actual submissions. It is of course extremely unsatisfactory for such a document to appear after all parties had made their closing submissions and after the evidence has effectively closed.

93. There was no explanation as to why this email had not formed part of the evidence. Ms Chaffin-Laird had been instructed shortly before the trial and what is set out herein is not a criticism of her as Counsel. I directed short submission from the other parties and in particular whether the trial should be re opened. Ms King submitted further closing submissions which also included the email placed into its context alongside other emails. None of the string of emails produced by Ms King were put in evidence by Mr Flanagan.

94. The email itself was written by DWF, solicitors, acting then on behalf of HPL. DWF currently act for both the Joint Administrators of HPL and on behalf of the Joint Administrators of Cyan and Wilton UK. At the time that the email in June 2022 was written, Mr Flanagan was a director of HPL and was copied into the email. The email predates the entry into administration of HPL which occurred on 29 July 2022. The string of emails produced by Ms King included one from the FCA seeking further evidence relating to the repayment of sums to members accounts. That email is dated the same date as the one produced by Mr Flanagan but is timed later on the same day.

95. In my judgment, the production the email does not require the trial to be reopened. Even though it was written by DWF, solicitors acting then on behalf of HPL and who continue now to act for the Joint Administrators of HPL, it relates to a period prior to HPL being placed into administration. Mr Kubik as Joint Administrator has raised issues relating to whether payment has been made and he has also questioned the payment of £13 million. Mr Flanagan produces no explanation whatsoever as to why, having had ample opportunity to exhibit this document, he elected not to do so. He produced his fifth witness statement in answer to Mr Kubik’s first witness statement which made the points I have detailed above relating to challenging the payments made to HPL. He elected not to rely upon or attach the email which he has now passed onto Ms Chaffin-Laird. As demonstrated by the string of emails submitted by Ms King, it is one email in a string of emails with an email of later the same day questioning the sums said to have been returned. Accordingly, I will not allow the email to be relied upon in these proceedings relating to the preliminary issue. It is in any even not relevant to the issue as to whether the GM Companies have established that they have the economic interest in the Funds. Conclusions on the evidence -assessment of witnesses and evidence relevant to the preliminary issue Mr Rossier and Mr Garwood

96. Both Mr Rossier and Mr Garwood gave extremely limited evidence. Neither of them were involved in the Cyan transaction. Neither of them had dealings in relation to the lenders to the Cyan transaction. At its highest, their evidence was to corroborate how secured lending transactions were structured by the Wilton group and WSLL by relying upon what occurred in earlier transactions. In my judgment, Mr Garwood’s evidence does not provide support for the GM Companies case that they had an economic interest. It is clear that Mr Garwood was not aware of the details of the Cyan transaction. Neither he or his wife were involved in that transaction. The documents he was referred to in relation to the transactions which he and/or his wife were involved in as investors takes the issue no further. None of those documents actually set out that as an investor, the Garwoods would obtain security over the ultimate borrower’s property.

97. Mr Garwood’s assertion in his witness statement as to his understanding that he and his wife were entitled to the benefit of security taken over the property that was used to secure the repayment of the loan is not substantiated by the documents. Mr Garwood refers to a conversation with Mr Robson and to his understanding. In considering his evidence before me, Mr Garwood was hazy about the details of the structures of the transactions he and his wife had entered into. He had invested because he trusted the individuals at the Wilton Group and he had previously obtained what he said were good returns on his investments. In my judgment, I do not consider that he actually gave much thought to the structure of the transactions. His interest was in the returns which were being offered and his trust in those he had dealt with before. I note that he admitted that his witness statement had been prepared for him. In my judgment Mr Garwood’s evidence does not support the GM companies’ case that Cyan acted on behalf of an undisclosed principal. I do not accept that Mr Garwood’s previous dealings support such a determination by me.

98. In my judgment, Mr Rossier’s evidence takes the GM companies’ case no further. In giving his evidence before me, he displayed a real lack of understanding and comprehension in relation to the documents which were exhibited to his witness statement. He accepted that he was not involved in the structure of the transactions and additionally he accepted that the documents he had produced did not evidence the security nominee’s position relied upon by the GM Companies or that there was an agency position or that the lender had security over the property from the ultimate borrower. As the GM Companies’ case relied effectively on the evidence of Mr Flanagan as to how these transactions were structured rather than a reliance on the relevant security documentation, Mr Fossier’s evidence provided no support at all to the GM Companies. He had, on his own admission, no knowledge as to the structure of these transactions. Mr Flanagan

99. As I have set out above, Mr Flanagan’s evidence consists of his assertions set out in his numerous witness statements as to the structure of the Cyan transaction which he stated was in line with the loan transaction operations (described by him as the loan management business) of the Wilton group. He also relied on certain documents which he asserted supported the GM companies case as set out in Mr Flanagan’s witness statements.

100. He asserts that there were five members of the Cyan loan syndicate , being HPL, Galepso and the GM companies. In my judgment, the GM companies were not the original lenders who provided funds for the Cyan transaction. The date of the first loan ( October 2020) pre dates the incorporation of GM 1001 and GM 1002. The date of both loans ( October 2020 and April 2021) predate the date of incorporation of GM 1003. The documentation relied upon by the GM companies does not support their assertion that the funding provided at the time of the Cyan transaction came from the GM Companies. The evidence shows that the funding came from Galepso and HPL as is set out in the documents relied upon by Mr Flanagan.

101. The GM companies relied upon a loan management agreement dated 5 October 2020 between WSLL and Cyan where Cyan was defined as the ‘loan manager’ and WSLL defined as the client. Mr Flanagan accepted, despite relying upon this document, that the document was incorrect in referring to Wilton UK rather than WSLL. In my judgment, there were other terms in this management agreement which had clearly, on the evidence before me, not been executed. By way of example, by its terms, it provided for the loan manager to secure each loan by way of a legal charge and thereafter the loan manager would on completion, execute a deed of assignment by way of a TR4 in favour of the client ( being WSLL). In his evidence Mr Flanagan does not deal with the terms of this agreement which effectively provide security to WSLL by way of a deed of assignment. No deeds of assignment were relied upon by the GM Companies. Moreover, what is set out in the management agreement contradicts Mr Flanagan’s evidence in that the agreement envisaged that WSLL obtained security in relation to the loans under a deed of assignment rather than the lender. What he asserts is that the structure of the transaction was one of undisclosed principal and agent as between the lenders ( HPL and Galepso and thereafter the GM Companies) and Cyan. Mr Flanagan produces no evidence of any agreement as between WSLL and the lenders. He provides no evidence relating to any how the structure of the transaction was even communicated to the potential lenders.

102. Whilst Mr Flanagan accepts in his evidence that the management agreement was not operated in accordance with its terms, he provides no evidence to support his assertion that Cyan’s role was one of a security nominee and that the loan manager was WSLL. The role of WSLL is not that set out in the management agreement.

103. Mr Flanagan relies on earlier transactions which he states support the assertion that Cyan, in its transaction, was acting as a security nominee and also that there was a principal and agent position as between Cyan and the lenders. However the documents relied upon by Mr Flanagan in relation to previous non connected transactions including WSL -High Road also contain errors. He accepted that. There is also a failure to distinguish as between a loan manager and the SPV.

104. Ultimately, in my judgment, the evidence as to the relationship as between Cyan and the lenders is one which relies entirely on the evidence of Mr Flanagan. The investment certificates do not support the asserted relationship of being principal and agent or that the lenders effectively would obtain the benefit of the security which was granted to Cyan. Those certificates also refer to Cyan as borrower which is another matter which Mr Flanagan accepts is incorrect. He accepts that the certificates should have referred to the Orex Companies as the borrower. The wording used in the investment certificates, the interest certificates and the loan redemption certificate provide, in my judgment, no support at all for the assertion made that the Cyan transaction was one where Cyan was acting as a security nominee and that that the lenders had the economic interest in the secured lending. Equally, as I have already stated and as is accepted by the GM Companies, the security documentation itself as between the Orex Companies and Cyan provided no support at all for the GM Companies’ case.

105. The interest certificates provide evidence that interest payments were made. The redemption certificates provide, at their highest that redemptions were made but in this context I note Mr Kubik’s concern relating to his ongoing investigations in relation to payments made to HPL members’ accounts.

106. Reliance on the management agreement dated October 2020 is, in my judgment, hopeless in that it is riddled with errors as admitted by Mr Flanagan. In any event, on its face, it supports a very different type of transaction.

107. In his evidence, Mr Flanagan also relied on the later management agreement dated 2022 between Cyan and the GM Companies. As the lending was made in 2020 and 2021, it is difficult to see how that management agreement was relevant or valid. It also contained errors.

108. In my judgment, Mr Flanagan’s evidence was not truthful. His reliance on the documents highlighted above which showed a different position from that one he was asserting made his evidence unreliable. When he was presented with a document which was inconsistent, his explanation was that there must have been an error at the office and that these were effectively just administrative errors. His reliance on the 2022 management agreement is another reason as why I consider he is not truthful. That document clearly post dates the Cyan lending and yet Mr Flanagan relied upon it. The earlier management agreement provided for a different scenario than thn one Mr Flanagan sought to establish.

109. As part of my assessment of Mr Flanagan, I have considered what he set out in his evidence, being that HPL provided the substantial lending in relation to the Cyan transaction. In his evidence, he also asserted that, effectively, HPL increased its lending after the initial £10 million lending by acquiring bonds form GM1001 and taking over the pending position of Galepso. Mr Flanagan set out in his evidence as to why HPL preferred bonds over the direct lending. All of this were clearly not true in that, as he admitted during cross examination, the sums taken from HPL were taken without the authority of the beneficiaries. There is a stark difference between what Mr Flanagan sets out in his written evidence and what he admitted was the position in relation to HPL lending. I reject his evidence as being untruthful and unreliable. Accordingly, I reject the GM Companies’ case to have an economic interest. I reject that the structure of the Cyan transaction was that of undisclosed principal and agent. Ulitmately as I have set out above, the GM Companies’ case depended upon the credibility of Mr Flanagan and his evidence being accepted by the court. Without needing to consider in more detail the legal principles relating to undisclosed principal and agent, I have rejected the evidence provided by Mr Flanagan, that on the facts of this case, this was the basis of the Cyan transaction. Accordingly, there is no need to consider the law further as the case fails on the facts. There is no evidence which supports that case.

110. Turning to the assertion made that the sums taken from HPL were repaid in full (which would have to include interest), I am not satisfied on the evidence before me that such payments were made and in particular were made by the GM Companies. In my judgment, as is set out by Mr Kubik, there are certain unsatisfactory aspects relating to the alleged repayment by GM 1001 to HPL. The sum of £13 million which Mr Flanagan originally asserted was a payment made by GM 1001 clearly did not originate from that company. This was accepted by Mr Flanagan in the witness box as well as in his sixth witness statement. There is no documentary evidence which actually demonstrates that the £13 million represented funds to which GM 1001 actually owned. What the evidence does show is attempts made to present this sum from having come from GM1001. That is also clear from the exchange of emails which Mr Kubik attaches to his skeleton.

111. There is no evidence as to the terms upon which the Voula Settlement provided the funding. Mr Flanagan admits that there are legal proceedings but provided no further detail save that he expected it to settle. In my judgment, there is a lack of evidence that the sum provided and alleged to have been used to repay HPL belonged to the GM Companies. No evidence has been produced which establishes the GM Companies’ entitlement to those sums before they were transferred over, it appears, to HPL members accounts. The position of HPL

112. The repayment of sums to HPL would, in my judgment, affect whether HPL is able to claim an interest in the funds. This is recognised hy Mr Kubik in his witness statement. Mr Kubik raises concerns in his witness statement which relate to the provenance of the sums attributed to GM 1001. Mr Kubik states that he is unable to state that repayment has been made to the HPL beneficiaries and he has not completed his investigations. In my judgment, despite Mr Kubik not being available to give evidence, I do not consider that little or no weight should be given to his evidence. Even if he had attended and had been cross examined, his replies would not, in my judgment, have altered the rejection of the GM Companies’ case.

113. The difficulty with the position of Mr Kubik is that he is not in a position to be able to assert positively that HPL has an economic interest in the funds. This is because he is still investigating the matters.

114. The trust claim of HPL is in any event a complicated one. Ms King’s additional skeleton sets out the claim at law, but there are facts which may well affect that analysis. Even if HPL asserts a trust claim, the funds arose from secured lending provided to third parties, being the Orex Companies. Whilst Cyan, as parent of the Wilton group would be imputed with the knowledge of the provenance of the sums taken without authority from HPL for the lending purpose, the Orex Companies may well assert to not have that knowledge. Until Mr Kubik completes his investigations, it is not possible to ascertain whether HPL can assert an economic interest in the Funds. The position of Cyan

115. Before me Cyan asserted an economic interest in the funds based upon the security documentation. Its position is, in my judgment, in direct conflict with that of HPL. Cyan is in a position to establish its claim to the economic interest and did so before me. As the GM Companies’ claim has failed, Cyan’s position is that it has the economic interest. HPL is not in a position to assert its claim to the economic interest in order to defeat the Cyan claim. Before me, Mr Shaw for Cyan accepted that position and also submitted that based on the evidence before me, it was simply not possible to determine that HPL’s claim was valid.

116. In my judgment, it is not possible on the evidence before me to determine whether HPL has the economic interest. Mr Kubik has not been able to complete his investigation’s according to his evidence. This leads to the unsatisfactory position as to whether I determine that as HPL has failed to establish its claim to an economic interest before me, its claim stands to be dismissed. That would leave Cyan succeeding on its claim to have the economic interest in the Funds. All parties should have been ready to deal with the preliminary issue which had been directed a considerable time ago, in May 2024. It is, in my judgment, no real justification for Ms King to submit that HPL was not represented before Chief ICC Judge Briggs on 21 May 2024 when the preliminary issue was directed. The order made was served on HPL and directions given relating to HPL being able to serve evidence which it did so by two witness statements of Mr Kubik. The same solicitors who act for HPL also act for Cyan who was represented at the hearing in May 2024. No application to adjourn the preliminary issue hearing was made by Mr Kubik.

117. Cyan is the entity which is prejudiced by a further delay, not only as to costs but also because Cyan is ready and able to establish its economic interest. That is part of the conflict as between HPL and Cyan. I need to weigh up the prejudice to Cyan as against the prejudice to the HPL beneficiaries in the dismissal of their claim now. In my judgment, it is not in the overriding interests of justice to dismiss the HPL beneficiaries claim to the economic interest.

118. I have no reason not to accept Mr Kubik’s evidence that he has not as yet completed his investigations. It is clear that the transactions between the Wilton Group companies and HPL are complicated. The issue of the Voula settlement and the basis upon which those sums were provided to GM 1001 or another Wilton entity are serious issues which need to be dealt with. The prejudice to HPL if I reject their ability to assert an economic interest is serious. Moreover, based on the admission made by Mr Flanagan in relation to the sums having been taken from HPL accounts without authority is a very serious issue. HPL should be allowed to complete its investigations and assert its claim under the trust principles summarised above. That will protect, in my judgment, the beneficiaries whose funds were taken from their accounts without authority. Accordingly, I will adjourn that part of the preliminary issue to be determined at a later date as between Cyan and HPL.

119. Currently the funds are in the hands of Mr Barnett as administrator of the Orex Companies. As Mr Barnett, as administrator of the Orex Companies, has no economic interest in the Funds, it seems sensible that he transfers the Funds to HPL on the terms set out below. It is unnecessary for further expenses to be incurred by him relating to this issue. Until that further hearing can take place, it seems to me that the funds should be handed over to the Joint Administrators of HPL who will hold them separately and not as part of HPL estate. In so far as a trust is established over the funds, then the funds are not part of HPL assets, but need to be dealt with under the relevant trust deeds and rules of the pension schemes. It may well be that further directions are necessary and I will hear the parties on that when this judgment is handed down. It may also be appropriate to transfer the adjourned preliminary issue to one of the Chancery Masters. I will also hear Cyan and HPL on that issue.

120. I should add that after I reserved judgement, Mr Augousti wrote a letter to the court seeking to rely further matters to the Court. I have not taken into account in this judgment the contents of his letter or any attachments thereto. They were not served on any of the other parties and there was no reason for the consideration of any further evidence after I had reserved judgment.