Ocorian Trustee (UK) Limited & Anor v Babu Haridas Chandarana & Ors

This is an application by the Claimants to continue proprietary injunctions in relation to monies paid out to the Defendants in breach of trust.

The underlying arrangements which are the subject of this action and their effect are not in dispute. Thus, although the transaction documents are complex, I can summarise their effect relatively shortly.

On 27 October 2025, the Second Claimant (Cronus) entered into a series of transaction documents (the Transaction Documents) with a bridging loan lender and specialist property finance loan servicer for SPVs, Market Financial Solutions Ltd (MFS). Under the Transaction Documents, MFS had authority to cause payments to be made from a bank account held in the name of Cronus (the Loan Disbursement Account) for the specific purpose of funding the origination and acquisition of mortgage loans.

On 18 November 2025, MFS caused five payments totalling £6,370,878 to be made from the Loan Disbursement Account into the client account of a law firm designated by the Transaction Documents, Sriharans Solicitors (Sriharans). Those funds (the Cronus Funds) were to be applied for the specified purpose of originating mortgage loans, and if such purpose failed, were to be returned to the Loan Disbursement Account within a short period. Sriharans therefore held the Cronus Funds on Quistclose trust for Cronus.

The transactions for which the Cronus Funds were advanced did not proceed. The funds should therefore have been returned to the Loan Disbursement Account. They were not. Instead, on 23 December 2025, Sriharans paid the Cronus Funds directly to an MFS bridging bank account held with Lloyds Bank (the MFS Bridging Account). That was a breach of trust, and it is not disputed that MFS thereafter held the Cronus Funds on constructive trust for Cronus.

The same day (23 December 2025), MFS made payments totalling £9,070,220 (the Onward Payments) to 12 bank accounts held in the name of 15 individuals and entities, who together comprise the Defendants.

The payments were as follows. Excluding a payment of £1 to Fieldfisher LLP, a total of 14 payments totalling £9,070,220 were made from the MFS Bridging Account to the first to fifteenth Defendants comprising the following payments:

The Claimants say that £6,370,878 of those payments therefore represent the traceable proceeds of the Cronus Funds.

The payments were made around the same time as an e-mail from MFS in more or less identical terms sent to most of the Defendants on 23 December 2025 (“the 23 December Email”) as follows:

“…As part of our year-end reconciliation, we have completed our review and have decided to return your investment for now please bear with us.

The relevant arrangements are currently being processed.

We will be in touch in the New Year to discuss potential new investment opportunities once we are back after the holiday period.”

The Claimants contend that they are entitled to trace into the Onward Payments and claim those sums from the Defendants under constructive trusts.

The First Claimant (Ocorian Trustee) was the ‘Security Agent’ under the Transaction Documents and the assignee of Cronus’ rights of claim under those documents: see cl. 3.3 of the Deed of Charge and Assignment.Hence, (i) Ocorian Trustee is the primary claimant, but (ii) Cronus claims in its own capacity to the extent that the assignment is invalid for any reason.

Each of the Defendants admit that they received their respective proportions of the Onward Payments.

MFS was placed into administration on 25 February 2026. Following this, its joint administrators identified compelling evidence of fraud in respect of the affairs of MFS and the network of companies owned by its director, Mr Raja, with the result that there is a shortfall of about £1.3 billion in MFS’s bank accounts. A worldwide freezing order has been obtained by MFS’s joint administrators against Mr Raja.

Stacey J granted the Claimants an interim proprietary injunction against D1-D12 following a without notice hearing on 9 April 2026. The Claimants applied by notice dated 16 April 2026 to continue the without notice Order against D1-D12 and to add D13-15.

On 24 April 2026, following a hearing, Bryan J made an order (a) accepting undertakings from D1, D2 & D13, D5 & D14, D8, D9 & D15, D10 and D12; (b) directing that D6 & D7 transfer the payments received by them to the client account of their solicitors to be held subject to the solicitors’ undertaking; (c) continuing the injunction against D3 and D4; (d) discharging the injunction against D11; (e) providing for the service of further evidence and pleadings; and (f) making directions for this further Return Date hearing.

The Claimants now ask the Court to continue or renew the interim proprietary injunction, in order to preserve assets in which they have an arguable equitable propriety interest pending trial. These applications only involve D1 D2 D3 D9 D10 D13 and D15, the other Defendants have resolved either the injunction or the claims against them.

It is necessary at this stage to deal with the Defendants’ evidence about the loans made by them to MFS which they say were repaid on 23 December 2025 in each case.

The Defendants say that they made loans to MFS; they say their evidence shows that they received monies from MFS (i) in good faith (ii) in repayment of loans they had made to MFS (iii) they had no notice of any trust of the monies and (iv) they had no knowledge of the commercial arrangements that are said to have created a trust of the money for the Claimants.

The Defendants’ evidence was as follows.

Mr Chandarana made a series of loans to MFS for onward lending to borrowers secured against property at 15% per annum payable quarterly:

These loans were not repayable by 23 December 2025.

Mr Chandarana had not requested early repayment of his loans but he did not object to the payment.

Mrs Chandarana lent £160,000 to MFS under an agreement dated 26 August 2025. The loan was repayable on 26 August 2028 with interest at 15% per annum, compounded and paid quarterly in arrears.

On 23 December MFS paid £168,075 into the joint account held by Mr and Mrs Chandarana at HSBC. This comprised the principal £160,000 plus accrued interest of £8,075.

Like the position in relation to her husband, these loans from Mrs Chandarana were not yet repayable on 23 December 2025. Mrs Chandarana had not requested early repayment of her loan, but she also did not object to the payment when it came.

The £683,518 paid to Mr Chandarana and the £168,075 paid to Mrs Chandarana make up the £851,593 paid and identified above.

Ms Chandarana made a series of loans to MFS for onward lending to borrowers secured against property. The interest rate in each case was 15% per annum, payable quarterly.

On 23 December 2025 MFS paid £202,500 into Ms Chandarana’s bank account at Metro Bank. It comprised the two capital sums of £100,000 plus accrued interest in the sum of £2,500. This is the sum identified above.

Like her parents, Ms Chandarana had not requested early repayment of her loans, but she also did not object when the money was paid.

Mrs and Ms Thakrar lent £170,576 to MFS under a loan agreement dated 7 November 2024. The interest rate was 10% per annum, compounded and paid quarterly in arrears. The loan was repayable on 7 November 2025.

Mrs Thakrar made two further loans to MFS on 19 December 2024.

One was for £300,000 under an agreement entitled Fund Agreement dated 19 December 2024. The drafting of this agreement (see Clauses 4, 5, 6 and 8) is obscure as to when the £300,000 was repayable. Mrs Thakrar contends that on a proper construction of this agreement, the £300,000 plus accrued interest was either repayable prior to 23 December 2025 or alternatively repayable at will (ie at the will of either MFS or Mrs Thakrar) and that therefore there was a right or an obligation to repay on 23 December 2025. The Claimants dispute this and contend that there is nothing in this agreement which supports either construction. In my view the position is sufficiently unclear that this loan should be categorised with the loans where there is no right of repayment as at 23 December 2025 and the Claimants have shown a serious issue on that point.

The other loan was for £369,205 under a document entitled Loan Agreement dated 19 December 2024. The interest rate was 10% per annum, compounded and paid quarterly in arrears. This is similar in form to the loan agreement dated 7 November 2024 and may be read in the same way. The loan was repayable on 19 December 2025: see Clauses 3 and 5. There was a small error in the Loan Amount. This was stated to be £368,073, but the amount actually lent, and on which interest was paid, was £369,205.

On 23 December 2025 MFS paid £923,471 into a joint bank account Mrs and Ms Thakrar held at Lloyds Bank plc. The sum comprised (i) the principal of £170,576 plus accrued interest of £12,334 due to Mrs and Ms Thakrar on their loan and (ii) the two principal sums of £300,000 and £369,205 plus accrued interest of £71,356 due to Mrs Thakrar on her two loans.

The Claimants suggest that the money from the loan agreement dated 7 November 2024 may have been reinvested and not repaid, but there is no evidence to support this and it is denied by Mrs Thakrar

In April 2022 Ms Yadav loaned £700,000 to MFS for 36 months with interest at 10% per annum.

Under another loan agreement with a term of 21 months, she transferred £100,000 to MFS in March 2023 and another £100,000 in July 2023.

Ms Yadav exhibits emails which show her asking MFS to roll interest payments back into her loan. She received payment with interest in the sum of £1,095,514 on 23 December 2025 after receiving an email from MFS. She subsequently responded as follows on 19 January 2026:

“Hi Parth

I hope you had a good Christmas break?

Apologies for not replying earlier (I was away) but I can confirm that the investment has been received.

Can you please send me the final statement so I can prepare my SA [self-assessment]

Thanks and I look forward to hearing from you soon.”

Ms Yadav does not contend that repayment was due as at 23 December 2025.

Mr Rihan Dewan is the stepson of Mr Raja.

From March 2023 Mr Dewan says he invested his own money with MFS. He originally invested money in March 2023 then added further sums until March 2025. There is no written agreement. Mr Dewan’s investor statement as at 30 September 2025 shows a balance of £281,609. He says the arrangement expressly provided for withdrawal on 2-3 months’ notice. On 8 October 2025 he says he gave notice to withdraw, communicated to his mother and stepfather. His position is that communication to Mr Raja (as a director of MFS) through Mrs Raja is communication to MFS.

Mr Dewan received £290,142 from MFS on 23 December 2025. He says that was in accordance with the notice to withdraw he gave.

The principles applicable to the grant of interim proprietary injunctions are as follows:

Thus the Claimants say that in order to justify an injunction they need to show a serious issue to be tried on the following matters:

Matters (a) to (c) above were not in dispute for the purpose of the application. In the event, the issues between the parties were narrow, although acute:

The “serious issue to be tried” standard is equivalent to the real prospect of success test on a summary judgment application. The Claimants reminded me that on an application for an interim injunction, the Court should not attempt to resolve critical disputed questions of fact or difficult points of law on which the claim of either party may ultimately depend, particularly where the point of law turns on fine questions of fact which are in dispute or are presently obscure: Sukhoruchkin v Van Bekestein [2014] EWCA Civ 399 at [32].

When I refer below to “the Defendants” I refer to the Defendants who appeared at the hearing. D3 is in a slightly different position and I deal with him separately.

The central issue was whether the Claimants raised a serious issue to be tried in relation to being able to defeat a case of bona fide purchaser for value without notice. Lewin on Trusts 20^th ed at 44-119 states as follows:

“If trust property is wrongfully transferred to a purchaser taking with notice of the trust then, whether such notice is actual, imputed or constructive and whether or not he gave full value, and whether or not he acquired a legal estate, he is bound to the same extent and in the same manner as the person from whom he bought. The rule applies not only to trusts properly so called but also to purchasers with notice of any equitable incumbrance, e.g. a covenant or agreement affecting the property or a lien for unpaid purchase-money. But a bona fide purchaser for value of a legal estate without notice of the trust defeats the equitable interest of the beneficiaries, and so enables the purchaser and his successors in title to defend both proprietary and personal claims in relation to property transferred in breach of trust. The following requirements need to be satisfied:

(1)

there is a purchase for value;

(2)

of the legal estate in property;

(3)

in good faith;

(4)

without notice;

(5)

at the time of transfer of the legal estate.“

Characterisation of Onward Payments

The first question is whether the Onward Payments can be characterised as repayment of debts or (as the Claimants contend) unilateral, non-contractual distributions of investment capital by MFS in the context of an (unexplained) year-end ‘reconciliation’ exercise.

This turns on the terms of the 23 December 2025 email from MFS. The reference to “have decided to return your investment” makes the position clear: this purports to foreshadow a payment returning monies advanced to MFS. This is consistent with the reference to “potential new investment opportunities.” Given the borrowing arrangements summarised above, this would have been (objectively) understood by any innocent recipient of the email as sending payment by way of repayment of loans. As in each case the repayment was of the sums owed by way of both principal and interest, this was consistent with and supported such an interpretation.

In any case where repayment was contractually due, or there was a right to repay early, then notwithstanding the Quistclose trust, repayment to a person who had no notice of the trust potentially entitled them to take monies free of any trust as a bona fide purchaser without notice. However, in the majority of cases payment was not due.

Where there is no accrued payment obligation, the position is more complex. If there is no right to make early repayment, there is no obligation to accept it and thus the defendant must be treated as receiving payment as a volunteer. In such circumstances the Quistclose trust continues.

The Claimants contend that the crucial time on this analysis is the time at which the money is transferred to a defendant. Once the money has been received subject to a trust, it does not change its character and remains subject to a trust.

The Defendants dispute this analysis. They say that there is no difficulty in receiving money subject to a trust and then, prior to having notice of the trust, giving value. The key date is the date of notice.

The Claimants relied on the passage above in Lewin where (5) appears to support their proposition. But it is apparent from the subsequent passage cross-referenced (44-137) that Lewin is not addressing this point at all. The Claimants say there is no authority on this point either way and thus a serious issue has been shown.

The Defendants relied on Gray v Smith [2013] EWHC 4136 (Comm). Whilst the case concerns notice of an equitable interest in a car, and is slightly different, Cooke J said at [128-9]:

“…In the case of the general bona fide purchaser for value doctrine the question of notice arises as notice of the equitable interest in question.

On the authorities, the critical point at which it matters whether the purchaser has such notice is the time at which title passed or valuable considerable was given, whichever is later, in the case of the general bona fide purchaser for value doctrine.”

This contemplates a situation where consideration is given after the payment subject to a trust has been made. I was also referred to Cloutte v Storey [1911] 1 Ch 18 at 33 which also is analogous and consistent with the Defendants’ position.

Indeed, the key event relevant to the equitable principle is notice. So long as the relevant events which make the recipient of money a bona fide purchaser for value occur before he obtains notice, there is no logic in freezing the position at a prior date. The Claimants cited no authority for their proposition. The Claimants’ analysis is counter-intuitive, seems contrary to principle, and has the potential to produce capricious results. If the money was paid one day and accepted the next, it would be a surprising result if the bona fide purchaser without notice failed. It seems clear such a principle does not apply to real or personal property and there seems no reason why it should apply to money. I reject the Claimants’ contention.

I proceed on the basis that the key date for present purposes was when the recipients obtained notice of the trust. They all say that they had no notice until served with the without notice injunction in April 2026. Subject to the separate position of D3, the Claimants do not seek to dispute that.

The Claimants say that receipt of money other than where there is a contractual right or obligation is not good payment unless expressly accepted. They rely on PT Berlian Laju Tanker TBK v Nuse Shipping Ltd [2008] 1 CLC 967 at [67] per Christopher Clarke J:

“Payment under a contract cannot be made without the consent of the creditor. Even if payment is to be in cash, i.e. legal tender, the creditor may not necessarily accept it. If payment is made through the banking system, a bank may have authority to receive payment; but it will not be able to accept payment in discharge of the debt without the authority of the creditor: … Such authority may be given in the contract itself. But without it there is no payment. A transfer of funds to a bank account of the creditor (or a release of funds to such an account), which is not the account stipulated in the contract, is no payment. Nor is it even a valid tender of payment.”

The issue in that case was whether a payment made on terms other in accordance with the contractual provisions was a breach of contract. If there is an obligation to pay in London, payment in Manchester is not a valid payment and does not give a discharge. But this authority does not consider the question whether and when a non-contractual payment may be treated as accepted, either expressly, or simply by holding on to the money without protest. Of course, a creditor may accept a payment made other than strictly in accordance with the contractual terms. The Defendants say acceptance may be express, but the court may treat retention of the money without comment or acknowledgement as acceptance, particularly where the sum repaid is the entire sum due.

The Defendants refer to Taylor v Blakelock (1886) 32 ChD 560. In Taylor v Blakelock the position was analysed by Cotton LJ as follows at 568:

Thus by accepting the payment (whether the payment was due or not) the creditor gives up the right to sue for the debt.

In the case of Ms Yadav, the email of 19 January 2026 constitutes express acceptance.

The next question is whether acceptance can be inferred from silence in those cases where there was no express acceptance. The Defendants referred to Stour Valley Builders v Stuart, an unreported decision of the Court of Appeal dated 21 December 1992. There the court said that whether there was an accord and satisfaction by retaining the money without protest was a question of fact. The point was discussed in the context of cashing a cheque. Lloyd LJ referred to Upfield v Marshall, unreported 29 March 1976, where there was a delay of seven weeks before the plaintiff wrote to say the cheque had only been accepted on account. In Upfield the Court of Appeal, reversing the trial judge, said it was too late and the only proper conclusion was that there was accord and satisfaction.

In the present case the relevant factors are as follows:

In such circumstances in my view there was an accord and satisfaction in each case.

I take into account that the threshold for serious issue to be tried is a low one. But I do not consider the Claimants have shown a serious issue to be tried.

The Third Defendant took a point on the basis of the tracing claim. The Claimants had obtained injunctions for over £9m against the fifteen defendants for claims of £6m. There were potentially four different methods of tracing: (1) under the rule in Clayton’s case (1816) 1 Mer 572(2) pari passu (3) on a rolling basis (4) on the Claimants’ case, on a wrongdoer basis: see ED&F Man Capital Markets Ltd v Come Harvest Holdings Ltd [2022] EWHC 229 (Comm), Barlow Clowes International Ltd v Vaughan [1992] 4 All ER 22. These produce different results so far as Mr Dewan was concerned. The Claimants had sought to trace on different basis as between different Defendants. They had not elected between different tracing methods.

It was submitted that because the Claimants had not put forward a consistent and coherent basis for tracing, they had failed to establish an arguable tracing claim at all. Alternatively, they should be restricted to a proportionate basis consistent with the rolling or pari passu basis, so that only a proportion of the claim against Mr Dewan was secured.

Counsel for D3 pointed out that Mr Dewan was a private individual with, on the evidence, limited means and the hardship he would suffer if the injunction was not discharged in whole or part was a relevant consideration on balance of convenience.

D3’s written skeleton argument accepted that the question of bona fide purchaser without notice was a matter for trial in relation to D3. However, counsel submitted that notwithstanding this, if I accepted the arguments of the other Defendants on the issue of accord and satisfaction, it was open to me to take the same position in relation to D3 and reach the same conclusion.

As for the tracing remedy, the Claimants have an election to make as to which remedy to pursue. But that is an election to be made at trial. The interim injunction protects the claim at trial for a proprietary injunction. What election is made at trial depends on the factors then arising- for example if the claims against other Defendants are dismissed in advance of trial, a different election may be made. There is no principle that the total sum secured by injunction against all Defendants cannot exceed the total claim- a freezing injunction in a fraud claim for £10m against ten Defendants may well exceed £10m in total when the injunction sum against each Defendant is added together. I see no reason to require an election by the Claimants now and it would be unfair on them to do so.

D3 submits, in a note sent to me after the hearing, that it is not a question of election but a requirement to set out a coherent and consistent tracing case. Tracing even at an interim stage in different ways against different Defendants, it is submitted, is not coherent or consistent. That seems very similar to a submission that the Claimants must elect at this stage. It seems to me that the court does not require the Claimants at this stage to go beyond the exercise they have done and I reject D3’s submission.

Mr Dewan is in a different position as to notice because he is Mr Raja’s stepson. Whilst it may well be that Mr Dewan acted entirely in good faith, the close relationship raises issues not present in relation to other Defendants. The Claimants do not necessarily accept his case on lack of notice. In the light of the concession as to these being matters for trial, the Claimants fairly did not address that issue. I am not able to determine issues relevant to Mr Dewan without considering the question of lack of notice.

I note the points made as to potential hardship to Mr Dewan on balance of convenience. However, given the nature of the remedy (and the need for an injunction to protect it) and the existence of the cross-undertaking in damages, the balance of convenience favours continuation of the injunction against him.

The test of serious issue to be tried is the same as for summary judgment: see Unitel SA v Dos Santos [2025] KB 438 [122]-[131]. Ds have not formally issued a claim for summary judgment but have indicated that if successful they would seek an order that the claim against them is dismissed. I see no reason that the claim in favour of D1 D2 D9 D13 D15 and D10 should continue, in relation to whom I have held the Claimants have shown no serious issue to be tried, and dismiss the claim.

In these circumstances I am not satisfied that the Claimants have shown a serious issue for trial and save in the case of the Third Defendant (where I continue the injunction until trial or further order) I do not continue the injunction and dismiss the claim against the other Defendants who contested the applications before me.

Judgment will be given remotely, there is no attendance required. I will continue the injunction orders pending consequential submissions, which should include any submissions on the terms of the order to be made. I would expect those to be in writing and to be delivered within a short time period.

I make an order that the hearing at which judgment is handed down be adjourned with any matters consequential upon the judgment including costs, form of order and permission to appeal to be dealt with on paper.

Finally, during the afternoon session a number of visiting judges from other jurisdictions attended the hearing. I should say that the quality of the advocacy from counsel did the commercial court credit and impressed the visitors.