Lee Antony Manning & Ors v 2 Four 6 Marketing Limited & Ors (Re Festicket Ltd (in Administration))

This is the hearing of the preliminary issue directed by my order dated 6 November 2023 made pursuant to an application for directions pursuant to paragraph 63 of Schedule B1 of the Insolvency Act 1986 issued by the Applicants ( the Joint Administrators of Festicket Limited, hereinafter referred to as ‘the Administrators’ ) , pursuant to my earlier order dated 7 March 2023. The issue to be resolved is essentially whether there is a trust in relation to the monies held by Festicket Ltd (‘the company’) in relation to ticket sales made by the company as agent for the Respondents under the company’s standard agreement. The precise terms of the preliminary issue are set out below. Reference to the Respondents relate to their numbering as set out in the attached schedule to the application notice.

I heard from Leading and Junior Counsel on behalf of the Administrators who argued against the creation of a trust. The 4^th, 19^th, 26^th 56^th and 62^nd Respondents were represented before me by Counsel. The 3^rd, 44^th 61^st, 75^th ( V and W) Respondents had submitted correspondence and/or witness statements. Certain Respondents had asserted that the issue relating to whether a trust existed had to be determined in accordance with German law and those Respondents are the subject of separate directions relating to expert evidence so those issues are not before me for the purposes of the application notice. The terms of the agreement between the company and the 3^rd Respondent contain an express trust provision. In those circumstances, there appears to be no need to make any declaration or directions in relation thereto.

Prior to this hearing, I heard various applications made by the Administrators, who were appointed on 12 September 2022, seeking directions as well as seeking Berkeley Applegate orders. The Respondents to the application for directions are promoters of festivals and concerts who had entered into agreements with Festicket Ltd to act as their ticket agent. Many of those Respondents asserted that the sums held by the Administrators were held on trust for them. Whilst a number of the Respondents asserted that an express trust existed of the ticket sales proceeds under the particular agreement entered into, the vast majority of the Respondents asserted that a trust of the proceeds of the ticket sales arose from the terms of the company’s standard ticket agency agreement which the majority of them had entered into. The 4^th and 19^th Respondents submitted, through their respective Counsel, that the issue relating to whether a trust had been created under the terms of the company’s standard agreement, was a matter suitable for determination by way of a preliminary issue. There are two versions of this agreement, being a pre July 2022 and a post July 2022, but there is in reality no material difference between the terms of the two agreements as I deal with later in this judgment.

After hearing representations from Counsel for the Administrators and those Counsel for the Respondents represented before me the earlier directions hearings, it appeared to me that the issue relating to a proprietary claim might be suitable for determination by way of a preliminary issue in so far as the matter could be dealt with on the basis of the written agreements rather than requiring any oral evidence or disclosure or cross examination. Accordingly, by earlier order dated 14 July 2023, I directed (paragraph 14) that by 4 pm on 20 October 2023, any Respondent wishing to claim that monies held/ receivable by the company were held on trust for its benefit should file a witness statements of fact and any legal submissions on which it intended to rely. Such evidence and/or legal submissions should make clear:-

That order was served by the Administrators upon the Respondents in accordance with the order dated 7 March 2023 which had provided detailed provisions in relation to service of the paragraph 63 application upon the Respondents as well as providing for any documents/orders thereafter to be served by uploading upon the document sharing platform which had been set up by the Administrators under earlier orders. The 62^nd Respondent was served with the paragraph 63 application in accordance with CPR part 6 and/or the Insolvency Rules. Thereafter, in accordance with the July 2023 order, documents and orders were served by being uploaded onto the platform. The paragraph 63 application joined all event promoters regardless as to whether the particular promoter had asserted a proprietary claim over the monies held by the Administrators. Non-promoters were also joined in cases where they had asserted a claim that monies held in the name of the company were held on trust for them. Ultimately before me, only those who had executed the pre July 2022 standard terms and conditions were represented and made submissions.

At the hearing on 6 November 2023, after considering the evidence and legal submissions which had been filed in accordance with paragraph 14 of the 14 July 2023 order and hearing counsel for the various Respondents and for the Administrators, I directed that the hearing of a preliminary issue was appropriate. The preliminary issue (which was drafted between counsel and thereafter considered and approved by me) is as follows :-

The Company’s pre-July 2022 standard form template “Ticket Sales Agent

The Company’s post-July 2022 standard form template “Ticket Sales Agent

The Ticket and Package Sales Agreement dated 30 March 2021 between AEG

The Sponsorship Agreement and Ticket Sales Agreement dated 2021 between

The further directions set out in the order dated 6 November 2023 provided for the Administrators to reply to the legal submissions and file any evidence. There was a direction enabling reply evidence to be filed but only if truly responsive. No further directions were given in relation to evidence as this had already been dealt with by the earlier order dated 14 July 2023. As can be noted, the preliminary issue involved consideration of the relevant documents and whether effectively those documents created a trust of the monies held by the company. None of the evidence filed in accordance with paragraph 14 of the 14 July 2023 order had sought to rely on factual evidence which would require, potentially, disclosure and factual evidence being filed by the Administrators or any consideration of the need for cross examination. Clearly these factors were extremely relevant to the decision in relation to directing a preliminary issue in this case.

By application notice dated 22 November 2023, the 62^nd Respondent applied for relief from sanctions in relation to its failure to comply with the order dated 14 July 2023 having failed to file its legal submissions and evidence as directed in that order. The evidence in support of the relief does not challenge that the relevant documents and the order dated 14 July 2023 were properly uploaded upon the document sharing platform but asserts that the 62^nd Respondent had simply failed to check the platform because it believed that the matters going on before the court related to the costs of the Administrators. This was, it is averred, a simple oversight. I pause to note that the paragraph 63 application for directions was served in accordance with normal service requirements. The evidence does not assert that this was not properly served. The evidence filed with the application notice seeks to rely upon correspondence and exchanges effectively going beyond the terms of the preliminary issue. The witness statement of Mr Grant Smith dated 20 November 2023 alongside its exhibit sought to rely upon conversations, representations and emails relating to events prior to the signing of the written agreement dated 1 January 2021. Ms Baylis’ skeleton argument confirms that this is what the 62^nd Respondent seeks to argue and rely upon where she asserts that the trust claim arises, in addition to the terms of the written agreement, from:-

The previous terms and conditions between the 62^nd Respondent and Event Genius (which was taken over by the company) were subject to an express trust which continued; and

Express promises had been made in a series of emails to hold the 62^nd Respondent’s ticket revenue on trust in a separate account. (‘the additional grounds’)

When the application was considered by me on 6 February 2024, I directed that relief from sanctions would be granted to enable the 62^nd Respondent to participate in the preliminary issue hearing in relation to its assertion that a trust was created by reason of the written agreement, being the pre July 2022 standard form agreement of the company. That enabled the 62^nd Respondent to participate in the hearing before me in the same way as the other Respondents even though it was in breach of the terms of my earlier order. However, I did not grant relief from sanctions in relation to the 62^nd Respondent being entitled to rely upon the evidence filed to argue anything beyond that as part of the preliminary issue hearing. Having read the application notice and its grounds as well as the witness statement of Mr Grant Smith, it appeared to me that the grounds raised went well beyond the terms of the preliminary issue and would require a variation of the preliminary issue as well as a further hearing. This contradicts what is set out in the 62^nd Respondent’s application notice itself which states,

Ms Bayliss, on behalf of the 62^nd Respondent, sensibly accepts in her skeleton argument that it is not possible to deal with the additional grounds without some cross examination. Her skeleton also contains a hint that further evidence would need to be filed, which I assume she means from the 62^nd Respondent. She makes no reference to disclosure or indeed of the preparation and filing by the Administrators of evidence in reply. She also makes no reference to what appears to me to be in reality an application seeking to vary the terms of the preliminary issue as approved and ordered by me. I disagree with her submission that the parties will not be prejudiced by relief from sanctions in relation to this part of her application relating to the additional grounds.

In my judgment, the parties will be prejudiced. The preliminary issue was directed and drafted on the basis of the evidence and the legal submissions which were filed in accordance with the order of July 2023. That order was served upon the 62^nd Respondent. As was clear, based on those legal submission and evidence, the preliminary issue which was ordered related to submissions being made in relation to the construction of the written agreements. I determined that it was sensible and appropriate to direct the preliminary issue. Had some of the Respondents sought to argue, as the 62^nd Respondent now seeks to do, that the court would need to consider factual evidence peculiar to certain Respondents, direct disclosure and hold effectively a trial of the issue, I doubt that the case would have been appropriate for a preliminary issue direction. This is why I directed by the July 2023 order for Respondents to file and serve both any evidence and legal submissions before any order relating to a preliminary issue was made.

In those circumstances, the 62^nd Respondent is seeking for me to reconsider the terms of the preliminary issue directed by me after all Respondents, including the 62^nd Respondent were provided with the opportunity to file and serve evidence and legal submissions. This is prejudicial to Respondents who have participated to date on the basis of the evidence and legal submissions filed. There are also the additional costs which would need to be incurred by the Administrators which may well fall to be taken out of the sums held by them which prejudices both those asserting a proprietary claim and unsecured creditors. In my judgment, the breach of the order of July 2023, whilst described as inadvertent, really has no real justification bearing in mind that service was effected in accordance with the terms of the previous orders. Equally, relief from sanctions will incur further costs by the Administrators to deal with the additional grounds as well as a further hearing. Additionally, there would need to be a variation of the terms of the preliminary issue or the direction of a new preliminary issue. These are all matters prejudicial to the Respondents.

In the circumstances, I am not prepared to grant relief from sanctions in relation to the evidence relating to the additional grounds as part of the preliminary issue which has been directed by me. No grounds for a variation of the terms of the preliminary issue have been placed before me. The acceptance by Ms Bayliss that there would need to be a further additional hearing if I allow the 62^nd Respondent’s evidence to be admitted will increase costs as well as necessitating a variation to the terms of the preliminary issue. I will hear submissions when this judgment is handed down in relation to whether it is appropriate to direct any hearing in relation to the additional grounds by way of any further preliminary issue, or whether the additional grounds will be determined at some later stage in the administration.

I have set out above the terms of the preliminary issue. I am grateful to counsel for their skeleton arguments and their submissions. In essence what needs to be determined is an issue of construction, but I will set out a very brief background somewhat repetitive of what I have already set out above.

The company was a ticket platform provider selling tickets for a variety of UK and international events (mainly music festivals) on behalf of the organisers/promoters of the events. The company also sold ‘add on’ services such as accommodation packages to end customers, being typically members of the public. The preliminary issue relates to some of the agreements as between the company and the promoters, hereinafter called the Respondents. The company’s contractual agreements differed as between different promoters, but the vast majority of them used the standard form agreements produced by the company. There are two standard form agreements, one used prior to July 2022 and the other post July 2022. Some of the Respondents used different agreements. AEG, the 3^rd Respondent had written terms which expressly create a trust of the sums held by the company. The company’s agreements using its standard forms (whether pre or post July 2022) contain no express trust provisions or an express obligation upon the company to retain the ticket sales receipts in a separate account. The preliminary issue is concerned primarily with the company’s standard form agreements and whether they created a trust of ticket sales receipts, or any part thereof.

The relationship as between the Respondents and the company appears as a principal and agent relationship. No one before me sought to argue some other type of relationship existed. The transactions with customers which were entered into with the company were effected with Stripe Payments Europe Ltd as its payment method provider pursuant to a master services agreement. The company had its contract with Stripe directly. The preliminary issue only concerns whether a trust has been created as between the company and the Respondents. There may well be other issues arising in relation to the master services agreement and Stripe, but those issues are not before me nor require any further background details in this judgment.

As is set out in the third witness statement of Mr Lee Manning (one of the Administrators) dated 22 December 2023, from his investigations since his appointment as administrator, the company did not segregate ticket sales proceeds ( which would have been received from Stripe). The company operated five accounts and sums were paid into and out of those accounts without it appears any segregation.

As already set out above, there are two versions of the Company’s standard terms and conditions, a version pre July 2022 and a post July 2022. None of the Respondents who were represented or who had sent letters to the court relating to their position, had post July 2022 agreements. The Administrators do seek a determination in relation to the post July 2022 terms, but there is little difference between the two versions. I will deal with the post July 2022 terms once I have considered the legal principles and submission of the Respondents in relation to the pre July 2022.

Mr Lewis on behalf of the 4^th Respondent divided the terms into two categories, being what he called ‘commercial terms’ which contain provisions specific to the promoter (being the Respondents) and the ‘terms and conditions’ which are in the company’s standard form. The agreement needs of course to be considered as a whole but the division made by Mr Lewis is helpful to be able to distinguish between the types of terms. The commercial terms were specific to each Respondent in relation to the commission percentage agreed and also in relation to when payments were to be made to the respective Respondent in terms of percentage and period of time. Despite these differences in relation to the times and percentages, none of the Respondents sought to argue that its particular period of time or percentage made a difference to the trust argument. The argument centred around the restrictions, it was submitted, were placed on the company in relation to what it could do with the ticket sales proceeds. Ms Bayliss did seek to argue that the lack of the ‘advance’ provisions made a difference for her client. I deal with this below. The standard terms and conditions did not change as between the various Respondents and the company.

I am grateful to counsel for the various Respondents who ensured that there was, in general, a lack of repetition in relation to the submissions made. Mr Lewis on behalf of the 4^th Respondent set out what were essentially submissions supported by the other Respondents who were represented before me. I will consider these submissions by referring to Mr Lewis but I accept and appreciate that the arguments raised were those of all the Respondents. I will also deal with submissions made by the other Respondents in so far as they sought to augment or differ to a degree from those of Mr Lewis. I will set out the legal principles before setting out the terms of the agreements relied upon by the Respondents. Despite the number of cases which the Administrators have included in their written submissions as well as referring to them in their skeleton argument and before me, it does not seem to me that the general principles relied upon by the Respondents are really disputed by the Administrators. Essentially the Administrators submit that on the terms of the agreements, the trust is not established. This is an issue for construction of the terms of the agreement. Endless citation of authorities which have different facts, different terms in the agreements and different surrounding circumstances is not really of assistance. Before setting out the terms and conditions, I will set out the legal submissions and principles.

Mr Lewis submits that the there is an implied trust in favour of the 4^th Respondent which arises by reason of (1) the agency of the company to act on behalf of the 4^th Respondent in selling tickets and (2) the commercial terms. He relies on the general principles relating to establishing the existence of an implied trust, for which he submits there is no definitive test. In Lewin on Trusts (20^th edition (8-004) the authors discuss the concept of implied trust and state,

In the House of Lords case of in Twinsectra Ltd v Yardley [2002] 2 A.C. 164 at [99], Lord Millett stated:

As part of his submissions, Mr Lewis also referred me to the agency case in the Supreme Court of Bailey v Angove’s PTY Limited [2016] UKSC 215. The case concerned two issues, being (1) in what circumstances will the law treat the authority of an agent as irrevocable and (2) whether the receipt of money at a time when the recipient knows that imminent insolvency will prevent him from performing the corresponding obligation, can give rise to liability to account as a constructive trustee.

At paragraph 19, Lord Sumption stated,

The identified issue for me is whether, on the proper interpretation of the written agreement, a trust is created. Clearly the intentions of the parties, objectively ascertained from the written agreement are relevant. It is accepted by the Respondents, that the parties’ subjective intentions are irrelevant. Again a useful passage from Twinsectra makes this point at para 71:-

There was some debate between me as to what was decided in Re Kayford Ltd [1975] WLR 279 with the Respondents relying upon what was set out by Mr Justice Megarry at page 282, being

Mr Munby submitted that the facts of Re Kayford are important. In that case, the company itself constituted itself as a trustee by its conduct in setting up a separate bank account to segregate customer deposits from the company’s own monies in order to safeguard them in the event of insolvency. Mr Munby asserts that the above quote is essentially restricted to a case such as Re Kayford where a trust was inferred by the creation of the segregated bank account even if all the relevant sums were paid into that one account rather than being separate bank accounts. The funds were held in a mixed bank account. In my judgment, Mr Munby’s reading Re Kayford is too narrow. It is clear that one of the common characteristics of an implied trust is the segregation of the relevant funds. That can be seen in the passage above relied upon by Mr Lewis from Bailey. It is accepted before me that no separate account existed in this case or that its existence was a term of the agreement. However, a failure to have such a term is not, in my judgment, fatal to the argument of the Respondents. It is one of the factors to be considered. As the Supreme Court stated in Bailey, whether the agent was at liberty to treat part of his general assets as money to which he was accountable to the principal, is another important factor.

Mr Lewis also submitted where a trustee is free to and does use trust assets for its own benefit, this, in itself, does not negate the existence of the trust. He relied upon a passage from Re Lehman Brothers International (Europe) (In Administration) [2012] 2 BCLC 151. This is a Court of Appeal case relating to whether trusts had been created in relation to complex financial instruments known as RASCALS. The terms of those instruments bear little resemblance to the agreements before me, but Mr Lewis sought to rely upon the more general statement set out at paragraph 68 :-

As is clear from the above passage, the Court of Appeal stated that whilst a trust would be unusual in a situation where the trustee is free to use the trust assets for his own benefit without accounting to the beneficiary for those dealings, that factor is not determinative to establish that there was no trust. A slight variation on this point was relied upon by Mr Lewis in his reference to a passage in Bowstead on Agency 22nd edition where it states that the agreement between the agent and the principal may permit the agent to have recourse to funds collected upon behalf of the principal to discharge obligations owed by the principal to the agent but that this does not prevent the existence of a trust of the money collected by the agent. Mr Lewis points to the commercial terms which he asserts allowed the company to have recourse to the funds collected to discharge sums owing to the company from the Respondent. I will come back to this point.

All of the parties referred to the case of Re Fleet Disposal Services Ltd [1995] BCC 605. Mr Munby was keen to emphasise his submission that this case was in some way the high watermark of decisions relating to where a court has construed that a trust exists. In my judgment, each case will depend upon the terms of the agreement and other facts peculiar to the case in question. I do not accept that in some way this case can be described as a high watermark decision relating to the existence of a trust. I found this case a very useful one which sets out the approach taken by the Judge (Mr Justice Lightman), his consideration of the various factors which existed in that case and his ultimate decision based on those factors peculiar to that case. It provides a useful reminder that each of these cases are fact specific and therefore it is difficult to rely on other cases. A court needs to approach these cases based on their own facts in seeking to construe the terms and ascertain the intention of the parties from the terms of the agreement and any relevant surrounding circumstances.

Fleet concerned an application for directions by the liquidator of the company for determination of whether the respondent company (Nortel) had a proprietary interest in assets held by the liquidator representing proceeds of sales of cars by the company as agent for Nortel. The agreement between the company and Nortel provided for the company to pay sale proceeds (less commission and agreed costs) to Nortel five days after receipt by the company. According to an addendum, all repayments were to be made on separate cheques. All proceeds of sale were paid into one account and all payments to Nortel were made out of that account despite there being no provision in the agreement itself for a separate account. The account was used for the proceeds of sale of other principals’ cars. The issue was whether effectively the company had received the proceeds of sale as trustee. Before the Judge, there was evidence about how the company operated a separate account for proceeds of cars sales and that the account existed before the parties entered into the agency agreement. The company sold cars as agent but also sold cars that it owned.

An important part of the surrounding circumstances, as noted by the Judge, was that the agency account (into which the proceeds of car sales as agent were placed ) was not a term of the agreement, but this was a selling point of the company as agent, that there was a designated separate account. The Judge then continued:-

The Judge then balanced against the finding of a trust relationship the factors which had been stressed by Counsel for the Applicant liquidator being (1) absence of express term; (2) the retention by the company of the interest in respect of the five day period; (3) the account was used as a receptacle for the proceeds of sale for all principals’ cars and not merely Nortel’s. This was a mixed account. The Judge took into account these factors. He stated that whilst the agreement did not contain an express term for a separate account, the Judge considered that this was because the company had made clear to Nortel that the separate account was in existence. The Judge did not consider whether the interest factor or the fact that there were other moneys in the account fatal to a finding of a trust relationship.

In the case before me, there are no surrounding circumstances such as the existence and operation of a separate account at the time of entry into the agreement. The case before me relies exclusively on the construction of the terms of the agency agreement (with there being some slight variations in relation to particular terms such as when sums were to be remitted to the respondents as promotors). It is clear from Fleet that no single factor in that case was given so much weight that it defeated the creation of the trust. In my judgment, Fleet provides a good example of the approach taken by the court in construing the terms of an agreement in order to determine if a trust has been created. I turn now to the specific submission in relation to the terms of the agreements.

As already stated above, the terms in relation to the pre and post July 2022 version consist of the commercial terms and the standard terms and conditions. The commercial terms (with some changes peculiar to certain Respondents) state that “the agent will be the exclusive online ticket agent on ‘all events owned, promoted and/or managed (in whole or in part) by the Promoter[Respondent ] or its Associates during the term…’ ”. This is subject to specific exemptions whereby the company is not the exclusive online ticket agent. The commercial terms allow for an advance to be made by the company to the Respondent to be used by the Respondent for the purposes of ‘creating, developing, sourcing or otherwise organising an Event pursuant to this agreement’. The commercial terms provide particular terms in relation to the advance fee payable and in particular permitting the Respondent to offset any amount owing by it to the Respondent in connection with any events. The commercial terms also provided for a series of ‘trigger points’ enabling the company to seek to recover the entirety of the outstanding advances made.

The commercial terms state that the Respondent shall pay to the company booking commission, delivery commission (if any), administration charges and transaction fees in accordance with the provisions in the agreement, in so far as applicable. The booking fee chargeable by the agent on each purchase of a ticket is 10% of the full value of the ticket and 5% of all the ancillaries, being items provided by the respondent (as defined). There are further provisions relating to a rebate which is dependent upon the number of sales. In relation to the 4^th Respondent, at a two week interval, the company will calculate the booking commission owed to it for the previous 2 week period and send to the Respondent an invoice for the relevant amount, the entirety of which the agent shall be entitled to retain.

The accounting and payment provisions differ slightly depending upon the relevant Respondent. The changes relate to the period of time for when the relevant percentages of the sums need to be remitted to the Respondent. In relation to the 4^th Respondent, those terms are as follows:-

The standard terms and conditions provide for choice of proper law (English law), the definitions of various terms, obligations placed upon the company and obligations upon the Respondents. These also deal with warranties, insurance, termination, its definition and effect, and data protection. There is also a good faith clause in the standard terms which was relied upon by all the Respondents before me as supporting their trust argument. It states as follows:-

Ms Bayliss (62^nd Respondent) and Mr Stratton (26^th and 56^th Respondents ) also relied on certain of these standard terms as part of their arguments relating it warranties and contractual liability and I will deal with these below.

There is also an entire agreement clause which states:-

The starting point for Mr Lewis was the express appointment of the company as ‘exclusive online ticket agent’ and ‘exclusive agent’ for the Respondents in the collection of ticket revenue. He submitted that the existence of an agency relationship is one of the instances in which a trust relationship can arise in respect of money collected on behalf of the principal. This is one of the issues also considered in Fleet with reference to the passages at page 609 which makes it clear that a trust relationship can arise in agency cases as much in other commercial transactions. Mr Lewis highlighted the passage at page 609 which I have set out again below, being commercial transactions, that:-

Mr Lewis relies on the following terms as follows :-

process all payments for Tickets it sells through the Ticketing Platform;

pay to the Promoter all monies due to the Promoter in respect of such sales of Tickets in accordance with the Commercial Terms;

ensure that the Promoter can access details of all Ticket sales made on the Ticketing Platform’

Agent will not add VAT to, or deduct VAT from, the Full Value Ticket Price. Accounting for and payment of any VAT due on the Promoter's Ticket sales through the Ticketing Platform of Agent is the obligation of the Promoter. Agent will not issue VAT receipts for the Full Value Ticket Price. The Promoter agrees to provide a VAT receipt to Customers who request one, if the Promoter is registered for VAT”

On the basis of the clauses identified and highlighted by Mr Lewis, his submission is that the agency relationship and its function as set out in the terms of the agreement are consistent with the creation of a trust and this demonstrates that this was the intention of the parties, objectively ascertained.

Mr Fawcett on behalf of 19^th Respondent, adopted the submissions of Mr Lewis. He directed my attention to certain passages in Re Kayford, in particular the reference to Re Nanwa Gold Mines Ltd [1955] 1 WLR 1080 where money had been sent on the promise to keep it in a separate account. In particular, Mr Fawcett relies upon the passage which states that ‘there is nothing in that case or in any other authority that I know of to suggest that this is essential’. On page 282, Megarry J concludes his discussion with the following statement, ‘Payment into a separate bank account is a useful (though by no means conclusive) indication of an intention to create a trust, but of course there is nothing to prevent the company from binding itself by a trust even if there are no effective banking arrangements’. As I have already indicated above, I do not accept that Re Kayford is to be narrowly defined as submitted by Mr Munby. I accept that an obligation to keep funds separate (or the creation of such a separate account even without such an obligation in the terms of the agreement) is not essential. However, this is one of the factors which case law makes clear is to be carefully considered in construing the agreement between the parties in order to establish whether there was an intention to create a trust. Mr Fawcett also referred me back to Bowstead and in particular paragraph 6-041 and the statement towards the end of that paragraph, ‘The present trend seems to be to approach the matter more functionally and to ask whether the trust relationship is appropriate to the commercial relationship in which the parties find themselves; whether it was appropriate that money or property should be, and whether it was held separately, or whether it was contemplated that the agent should use the money, property or proceeds of the property as part of the agent’s normal cash flow in such a way that the relationship of debtor and creditor is more appropriate’. As Mr Fawcett submitted, all the indications should be considered, including, was the company entitled to use the money itself, can the company mix it with its own sums. He submits that the replies to these questions is negative because of the accounting procedure which is set out in the commercial terms. I have set those out above. The time periods in relation to the 19^th Respondent in relation to accounting and payment monthly, being an obligation upon the company to issue a written report 7 days thereafter at the end of each month and remit at the same time, 85% of the net revenue ( as defined ). The balance of 15% is to be paid 7 days after the conclusion of the relevant event.

Mr Fawcett also referred me to the case of Sports Network Limited v Joe Calzaghe CBE [2008] EWHC 2566 (QB), where Mr Justice Coulson had to determine on an interim application whether there was a serious issue to be tried as to whether the money held from profit collected by a boxing promoter for a boxer was held on trust, or whether it was a debt.Mr Fawcett accepts of course that the Judge in this case was not deciding that a trust had been created, but he submits that the case provides, in any event, useful guidance. The circumstances relied upon by the Judge in that case are of course different from those before me. There, there was at least one bank account created for the express purpose of receiving income from the fight. After considering the evidence before him, the Judge concluded that the only proper inference that he could draw was that the separate account was created for the purposes of the fight and it was an account into which the profits collected by the Claimant would then be paid. The Judge referred to an exchange of letters which also suggested that the Defendant would be a beneficiary entitled to 80% of the money collected by the Claimant. The Judge concluded that the arrangement suggested that the monies were being collected on behalf of the Defendant and that there was a relationship of trustee and beneficiary between the parties. There were also contrary arguments before the Judge, but the Judge concluded that the defendant had a good arguable case. This case is another example of the court considering the factors before it on the evidence. I do not consider that it really takes the issue beyond the passages from other cases I have referred to above and also the general statements made in Bowstead and Lewin.

Mr Fawcett also made an alternative submission that the existence of a fiduciary relationship. He relies on the definition at 6-034 in Bowstead, being

Mr Stratton on behalf of the 26^th and 56^th Respondents also adopted the submissions already made relating to there being a trust account. He made a further argument based on the surrounding circumstances relating to the 26^th and 56^th Respondents, both being Australian registered companies. In relation to the accounting and payment provisions, the company was entitled to deduct the agreed charges (which included the booking commission) on a weekly basis and 14 days after the end of the week, the company was to issue a written report and to remit to these Respondents 90% with the balance of 10% being remitted 7 days after the relevant event. The company was the exclusive sales agent. Reliance is also placed on the company’s contractual liability ( condition 20.1), which states that the company’s liability:-

Specific reliance was placed on the fact that both Respondents were Australian companies and the events to which the agency agreements related took place in Australia with payment in relation to fees and commissions being denominated in Australian dollars. Mr Stratton submits that in so far as these Respondents are aware, the ticket sales receipts would have been placed in an Australian dollar account and therefore there is a degree of de facto separation. In my judgment, the difficulty with this last point is that it relates to what happened after the agreements were entered into. There is also no evidence to suggest that these Respondents were the only Australian based Respondents, or that these Respondents were aware prior to entry into the agreement, that they were the only Respondents who would have the receipts from tickets sales paid into one specific Australian dollar account. Mr Manning disagrees in his third witness statement with the use of the account being solely for receipt of sums on behalf of these two Respondents. The creation of a trust is to be determined objectively and relates to what has been agreed between the parties as ascertained by the agreement entered into and surrounding circumstances as at the time the agreement was entered into. In my judgment these particular issues raised by Mr Stratton form no part of the issue I have to determine. Reliance by Mr Stratton on the facts of Fleet does not assist him either. In Fleet, the agent expressly notified the principal as to the operation of a separate account and that it would be used before the agreement was entered into. The Judge held that the existence and operation of the separate account is one of the reasons that the principal entered into the agreement. In the case of these Respondents, there is no such evidence along these lines. Accordingly, this particular argument is not one which falls to be taken into account.

Ms Baylis on behalf of the 62^nd Respondent also adopted the submissions already made by the other Respondents’ counsel. She also made submissions relating to what she submitted was the different factual background pertaining to her clients in her two additional grounds which I have dealt with above. In relation to the issues arising under the preliminary issue, she highlights that there are no provisions in the agreement with the 62^nd Respondent relating to advances. She invites me to hold that this makes her client’s position stronger in that it is simpler because the sums come in and the company as agent knows what is ‘needing to go back’. She points out that as there are no advances to deal with and no clause 4, which allows the company to offset what is owed to it in relation to her advances.

She relies on the wording used in the accounting and payment terms which in this Respondent’s case enable the company to deduct and retain from the ticketing revenue the agreed charges monthly, issue a written report 14 days after each month end and remit 80% of the net revenue to the 62^nd respondent with the 20% balance being remitted 14 days after the relevant event.

Ms Baylis adopts the limitation on liability argument of Mr Stratton and also relies upon certain linguistic choices found in the terms and conditions. She refers me to the use of the word ‘retain’ in the term relating to booking commission which states that, ‘The Agent shall be entitled to charge and retain the following amount on each purchase of a Ticket….’ She refers me to the language in clause 4 in relation to the obligations upon the company. She submits that the use of the words ‘issue receipts to customers in respect of the online sales of tickets under this agreement via the ticketing platform, and to receive payment through its ticketing platform for the same on behalf of the Promoter [ the Respondent ] in accordance with clause 5’ reflects a language whereby the company is not free to do what it wishes with the money it receives. She submits that clause 4.2 is ’mildly supportive’ of the trust argument in that it states as follows :

She submits that this demonstrates the limited role of the company as agent with its responsibilities of selling the tickets via a platform but that the company was not getting involved beyond that. She also refers me to clause 5 where the sales of the tickets are to be on the Respondents’ own terms and conditions unless otherwise agreed. She relies upon the sales of tickets being on the Respondents’ ticket list prices. She also relies upon the warranties whereby it is the Respondent who undertakes and agrees that all the tickets available to the company shall contain accurate information and all shall be correctly allocated to the relevant event. She submits that this reinforces the position that the company has nothing to do with the tickets. She refers me to clause 5.2 which states that the company shall process all sales of tickets allocated on the ticketing platform and ‘shall account for such sale proceeds in accordance with the commercial terms and clause 7’.

The 44^th Respondent, represented by Capital Law, filed a witness statement of Mr Daniel Sion Law-Deeks dated 20 October 2023, a director of the 44^th Respondent. That statement refers to the agreement which the 44^th Respondent had with Ticket Arena Limited in 2019 which contained a clause that Ticket Arena would hold all ticket receipts on trust for the 44^th Respondent in a separate bank account. Mr Law-Deeks then asserts that he understood that the company had acquired Ticket Arena’s business in around 2019. He accepts that the 44^th Respondent entered into an exclusive ticket sales agent agreement with the company on 16 July 2021 on the company’s standard terms and conditions. He exhibits these and this is the pre July 2022 agreement the clauses and terms to which I have referred to above. The accounting and payment provision in this instance requires the company to issue a written report 14 days after each week and to remit 65% to the 44^th Respondent with the balance of 35% being remitted 7 days after the conclusion of the relevant event. As already noted above, the company’s agency agreement contains no express trust provision or the creation of a separate account. It also contained an entire agreement clause.

The 75V and 75W Respondents, Sand Srl and Mondo Doo filed and served a witness statement dated 17 October 2023 by Mr Russell James Beard, their solicitor. Sand Srl’s accounting and payment clauses provide for the issue of a report 7 days after every 14 day period and for 80% to be remitted with the balance of 20% being remitted dafter the relevant event. In relation to Mondo, the accounting and payment clause is identical in time periods. These are both pre July 2022 agreements. The 61^st Respondent has withdrawn its claim and no more needs to be set out in this judgment. The Third Respondent has an express trust clause in its agreement and as I mentioned during the hearing itself, there seems to be no need for any declaration in relation to the third Respondent.

As the company was placed into administration on 12 September 2022, it is unlikely that there are many post July 2022 agreements. Whilst the Administrators have not identified particular Respondents who fall under the post July 2022 agreement, I have directed that the preliminary issue be capable of dealing with the post July 2022 agreement. The Administrators submit that there are no real material differences between the pre and post July 2022 versions. The post July 2022 agreement does not contain the accounting and payment terms as part of the commercial terms but instead they appear, in a more abbreviated form at clause 3 under the subheading ‘Payments’ with the ability to insert the agreed percentages and periods. On reading the post July 2022 agreement, its terms do not appear to enable different arguments to be placed before me in relation to the post July 2022 agreement which do not exists in relation to the pre July 2022 agreement. Accordingly, the construction of the pre July 2022 agreement will apply equally to the post July 2022 agreement.

I have dealt above with some particular submissions made which I did not consider, for the reasons set out above, were really factors to be taken into account. Alongside the factors set out above, I have also considered the factual matrix. This was a commercial agency agreement between promoters and a ticket agency. The parties were of course able to negotiate the terms and conditions and this is seen from the differing retentions agreed as well as the ability of other parties, such as AEG, to insert an express trust provision into the agreement. The terms agreed are in my judgment clear and no terms are required to be implied on the basis that the terms do not make sense. None of the Respondents sought to argue that there was any ambiguity in the terms which form part of the agreement. In my judgment, the following are factors which I have taken into account (in no particular order of weight attributable to each factor): (1) there is no requirement that the ticket sales receipts were to be kept in a separate account (whether mixed with the receipts of other Respondents or not); (2) the agreement stipulated that a percentage generally around 80% was to be paid to the Respondent 14/7days after the issue of a report by the company due within either 7/14 days of the end of either 2 weeks/month during the Term detailing the deductions; (3) the agreement provided for the balance, being a sums between 20% and 5%, to be paid over after the relevant event had taken place; (4) the agreement is silent in relation to the use by the company of the sums retained either during the 21 days/month plus period or those sums retained until after the relevant event has taken place; (5) the smallest period of time with regard to those Respondents before me is 7 days to issue the report and payment 14 days thereafter; (6) the agreement is silent in relation to any entitlement to interest in relation to either the shorter period of 21 days/month plus and the much longer period relating to sums retained until after the relevant event; (7) that the period of time when the balance of 20% or less was to be paid could have lasted a considerable time, in many cases, months; (8) the agreement contained a clear provision that title in the tickets did not pass to the company as the agent; (9) the agreement contained no prohibition relating to the use by the company of the ticket receipts; (10) the agreement contained detailed provisions relating to what could be deducted from the ticket receipts and also contained detailed provisions as to when the net receipts would be paid over to the relevant Respondent; (11) the language of certain clauses such as the use of the words ‘retain’, ‘account’ and ‘deduct’ was language which might assist the trust argument; (12) the liability of the company was restricted arguably to the level of the commissions percentage; (13) the agreement contained a good faith provision in relation to the company and carrying out of its obligations; and (14) this was an agreement where it is clear that the company acted as agent and its obligations reflect that it was the Respondent who provided the relevant warranties as well as pricing etc. As set out in the case law, the court can readily infer the creation of a trust in a principal/agency relationship as in relation to any other commercial relationship. None of these factors are necessarily conclusive.

Additionally, the clauses relating to the advances and the ability to offset the sums due from receipts being held was relied upon by the relevant Respondent as being another factor in their favour, namely that the agreement specified exactly what could be deducted or offset providing support alongside their other points that the agreement set out what could be deducted and/or retained leaving the balance the subject of a trust. In my judgment this factor, argued one way or the other, really does not progress the argument for a trust. This is because in both cases, there is silence relating to the retention of the funds and how they can be used by the company. Ms Baylis submitted that the lack of advance provisions in the 62^nd Respondent’s case was a factor in favour of her construction of a trust. This again, in my judgment, does not support or indeed contradict the trust argument.

In my judgment, taking into account the factors set out above in construing the agreement, no trust is created in respect of the proceeds of ticket sales. The detailed provisions which relate to when the net ticket receipts should be remitted to the Respondents are silent relating to the use of those sums retained prior to being paid over to the Respondents. This is particularly striking when the percentage of sums which are to be retained relate to a lengthy period, namely after the relevant event. That could be a considerable period of many months bearing in mind payment was to be made after the event for which tickets were sold. Equally, the sums to be retained before having to be paid to the Respondents are not, in my judgment, short periods of time. The shortest is 21 days. These provisions need to be placed into the context of a lack of any obligation to keep the sums retained separate or even in a mixed account which separates the ticket receipts from any company monies. There is no provision relating to interest thereon and whether it needs to be accounted for. The restriction of the contractual liability does not in my judgment really take the argument much further. I agree that it appears somewhat restrictive in relation to contractual liability, but it is difficult to equate this as being because of the creation of a trust. One does not logically follow the other. Parties are after all free to agree the terms of the agreement between them and that includes any limit on their liability. Effectively, in my judgment, what the Respondents are seeking to do is to explain that the acceptance of such a limited contractual liability could only have been agreed by reason of the creation of a trust. That, in my judgment stretches too far an objective intention to create a trust.

The existence of a good faith clause really takes the matter no further. It is an obligation upon the company to act towards the Respondent conscientiously and in good faith. That does not necessarily imply in some way a trust being created of the proceeds of sale. Whilst good faith obligation appear frequently in relation to trusts, the existence of a duty to act in good faith does not create the trust of the ticket sales proceeds. The existence of the good faith clause does not, in my judgment, enable a trust to be construed when it is factored into the lack of separate account or accounts, and lack of restriction relating to the use of the proceeds of ticket sales which are capable, under the terms of the agreement, of being retained for a lengthy period of time. No Respondent sought to argue that there was a trust relating to the sums to be accounted for during the shorter period, being 21 days/month plus only, whilst accepting no trust could arise in relation to the percentage of the ticket sales receipts that were only to be remitted months after, namely when the event had taken place. In my judgment, the ability of the company to retain sums for an extremely lengthy period without any required segregation is an important factor against any trust.

I do not accept that properly read and construed, the accounting and payment provisions create a trust even if I take the other factors set out above into consideration. In my judgment, the ownership of the ticket by the Respondents does not enable them to argue a trust of the proceeds of sale when the payment and accounting provisions are read. Those provisions expressly allow significant sums to be retained by the company for long periods of time without any restriction on their use. This fails to elevate the position of the Respondents and the company to more than a debtor creditor relationship under the terms of the agreement. In so far as a comparison with Fleet is made, that case had a short 5 day period but importantly the surrounding circumstances established that a separate account was operated for the receipts. Here, there is no separate account, no restriction on the use of monies by the company and a clause which provides for the sums to be retained by the company for prolonged periods of time without any restriction on their use.

I do not consider the language used in the agreement as described by some of the Counsel and set out above, actually alters the position. Whilst the use of the words, ‘retain’, ‘account for’, ‘remit’ can be indications of an objective intention to create a trust, these do not outweigh, in my judgment, clear terms allowing the company to keep the ticket sales receipts for lengthy period of time without any restriction on where such sums were to be kept and any prohibition in their use by the company. There is no real magic in the use of ‘account for’ beyond that those words are commonly used in trust scenarios but its use is not restricted to cases of trusts rather than debtor/creditor. Mr Lewis’ reliance on the Supreme Court case of Re Lehman Brothers International ( Europe) [ 2012] does not really assist. The passage he relied upon started as follows:-

In that case, by reason of the terms of the agreement, it was clear to the Judge that the objective intention was to create a trust. Before me the terms do not make me reach that conclusion. There is nothing in the terms which make this one of those unusual cases where the agent is free to use the sums as his own but a trust is created. There is nothing in the terms to prevent the company from using the ticket sales receipts and then when it had to account and pay to the Respondent in question, it uses any funds it has to make that payment. This is a debtor/creditor relationship which arises in relation to an agency agent as much as in relation to any other scenario. Equally the limited role of the agent in relation to warranties provided and its role in selling the tickets again does not lead to a trust being created. In my judgment, that type of argument could be readily applied in all agency cases and that is clearly, from the authorities I have cited for above, not the case.

For the reasons I have set out above, the reply to the preliminary issue in relation to the pre and post July 2022 agreements is that no trust has been created of the ticket sales proceeds. I will hear the parties as to the form of order itself when this judgment is handed down.