On 30 November, Mr Justice Foxton sitting in the Commercial Court, KBD handed down judgment in the matter of Ticehurst & Ors v Harbour Fund II LP & Ors [2022] EWHC 3053 (Comm).  Elizabeth Jones KC, instructed by Harcus Parker led Daniel Saoul KC (4 New Square), and Richard Hoyle and Lorraine Aboagye (Essex Court) on behalf of Harbour.

The judgment considered various important factors with respect to the treatment of trusts in a commercial setting, and in particular, the use of trust structures in litigation financing.  Foxton J considered the powers and obligations of funded parties under a Litigation Funding Agreement who became trustees on receipt of proceeds of the funded litigation, set against the background of relevant provisions of the Trustee Acts 1925 and 2000.

Background

Harbour provided litigation funding to the claimants in the Orb v Ruhan Litigation. The funding agreement contained a declaration of trust that any “Proceeds” would be held “as Trust property on bare trust absolutely” in favour of Harbour, Orb and Messrs Thomas & Taylor, with entitlements set out in a waterfall allowing for the first tranche of recoveries to be paid to Harbour as funder.  At para 10 of the judgment, Foxton J considered Elizabeth Jones KC’s arguments regarding the difficulties with the definition of ‘Proceeds’, and at paragraphs 36-38 held that the obligations and powers of the trustees were limited to little more than holding the Proceeds, and that the form and purpose of the litigation funding agreement meant that the extensive powers under the Trustee Act were excluded.

To read the full judgment click here.