Madison Pacific Trust Ltd v Shakoor Capital Ltd & Anor [2020] EWHC 610 (Ch) (16 March 2020)

Madison Pacific Trust Ltd v Shakoor Capital Ltd & Anor [2020] EWHC 610 (Ch) (16 March 2020)

The trustee would not be acting in breach of trust by accepting payments from PrivatBank under the arbitral awards and distributing proceeds only to Entitled UAHs, as the exclusion of other UAHs results from a legal impediment (the tribunal's findings of illegality) and not from any action or inaction of the trustee. The payments to be made under the awards constitute liabilities incurred in the enforcement of security within clause 8.1.1 of the trust deed. The trustee's duty to act in the interests of all UAHs does not preclude it from making such payments where it is legally incapable of recovering for the excluded UAHs.

Citation
[2020] EWHC 610 (Ch)
Parties
Claimant: Madison Pacific Trust Limited; First Defendant: Shakoor Capital Limited; Second Defendant: Joint-Stock Company Commercial Bank PrivatBank
Jurisdiction
England and Wales
Judgment Date
16 March 2020
Procedural Posture
Application for Directions by Trustee in Relation to Enforcement of Security and Distribution of Proceeds Under Trust Deeds / Judgment on Application for Directions
Outcome
Application granted. Directions given.
Legal Topics
Trustee Duties, Enforcement of Security, Illegality Defence, Distribution of Trust Assets, Issue Estoppel, Arbitration Awards
Trusts and Equity Banking and Finance Arbitration Trustee Duties Enforcement of Security Illegality Defence Distribution of Trust Assets Issue Estoppel +1 more

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Parties

Madison Pacific Trust Limited

Claimant

Shakoor Capital Limited

First Defendant

Joint-Stock Company Commercial Bank PrivatBank

Second Defendant

Procedural Posture

Application for Directions by Trustee in Relation to Enforcement of Security and Distribution of Proceeds Under Trust Deeds / Judgment on Application for Directions

Legal Issues

  1. 1 Whether the trustee may, consistent with its duties under the trust deeds, accept payments from PrivatBank under arbitral awards and distribute proceeds only to certain ultimate account holders (UAHs) as directed by the awards, excluding others due to findings of illegality.
  2. 2 Whether such payments fall within the liabilities or arrears provisions of the trust deed waterfall (clauses 8.1.1 and 8.1.2).
  3. 3 Whether the trustee would be in breach of trust by making such payments and whether the court should grant directions or relief from liability.

Ratio Decidendi

The trustee would not be acting in breach of trust by accepting payments from PrivatBank under the arbitral awards and distributing proceeds only to Entitled UAHs, as the exclusion of other UAHs results from a legal impediment (the tribunal's findings of illegality) and not from any action or inaction of the trustee. The payments to be made under the awards constitute liabilities incurred in the enforcement of security within clause 8.1.1 of the trust deed. The trustee's duty to act in the interests of all UAHs does not preclude it from making such payments where it is legally incapable of recovering for the excluded UAHs.

Court Disposition

Application granted. Directions given.

Orders

  • The trustee is at liberty to make payments to or at the direction of Noteholders or Entitled UAHs in accordance with the payment scheme set out in the arbitral awards.