The High Court handed down a summary judgement for over $7m, finding that the defendant had wrongfully sold shares in breach of trust via a sham share purchase agreement (SPA).
Facts:
The claimant, DBLP Sea Cow Ltd., a company incorporated in the Seychelles, is an investment vehicle owned by Daniel Wagner, founder of the AI venture Rezolve. In May 2025, DBLP entered into an SPA with the defendant, Lars Steffensen, for the sale of 10m shares in Rezolve. Under the terms of this agreement, an initial tranche of 2.5m shares was transferred to Mr. Steffensen’s brokerage account on or around 23 May 2025. This transfer was subject to an express bare trust, which mandated that Mr. Steffensen hold the shares without any discretion to deal with them until he satisfied a payment condition of approximately $48m USD. If the payment was not made within three business days of the shares becoming tradable, then the agreement stipulated that the sale would be void and the shares must be returned.
Although the shares became tradable in June 2025, Mr. Steffensen failed to make the required payment and did not return the shares. Instead, he had secretly sold almost all of them throughout May and June 2025 while simultaneously negotiating contract variations with DBLP that extended his payment deadlines and increased the amounts due. DBLP however remained unaware of these sales until September 2025. When the dispute reached court, Mr. Steffensen attempted to rely on a different version of the agreement dated 22 May 2025, one which lacked the trust provisions and unwind clauses, claiming instead that the payment obligations had already been met.
The key issue between the parties is, therefore, which of those agreements is the true agreement governing the transfer of the 2.5m shares to Mr. Steffensen’s brokerage account.
Decision:
The High Court granted summary judgement on DBLP’s application based on a breach of trust as well as a procedural failure on the part of the defendant to provide a credible alternative narrative. The Court first established that the 16 May SPA was the only valid, governing contract. The language in Clause 2.1 was found to be “clear and comprehensive,” leaving no room for ambiguity regarding the creation of a bare trust. The Judge reasoned that, since Mr. Steffensen had admitted to signing this document and receiving the shares, he was immediately bound by its fiduciary obligations. Because he had since sold the shares without fulfilling the $48m payment condition, the Court concluded there was a “plain breach” of trust.
A significant portion of the Court’s reasoning focused on why the defendant’s secondary document was legally void. The Court applied the test from Hitch v Stone, which defines a sham as a document intended to give third parties the appearance of creating rights and obligations that differ from those actually intended by the parties. The Court relied on contemporaneous messages demonstrating that the document had in fact been “concocted” specifically to “fob off” the compliance team. The Judge noted that it was physically impossible for the document to be valid, as it was backdated to 22 May yet used a signature page that was not even created until 30 May.
The Court applied the Supreme Court’s principles from Mitchell v Al Jaber [2025] in relation to the valuation of lost shares. As Rezolve’s shares were volatile ($1.07 to $8.45 range), Mr. Steffensen became liable for the current market valuation of $7.125m, even though he had only received $5.1m from his unauthorised sales.
Implications:
In many corporate transactions, shares are transferred “subject to trust” to allow for technical tradability while securing the purchase price. This case clarifies that, even if an SPA gives a buyer possession of shares, an express “bare trust” clause creates an immediate fiduciary obligation. The buyer cannot treat the shares as their own until the “payment condition” is met. The moment Mr. Steffensen sold the shares without paying the $48m, he had committed a breach of trust. In company law, this means that the proceeds of those sales are immediately “tainted” and can be claimed by the company (DBLP) through proprietary remedies.
Documentation created solely to “fob off” or mislead a third party (in this case, the compliance team at Interactive Brokers) will be deemed a sham. A sham document cannot rely on its own “entire agreement” clause to supersede a previous valid contract. Because the document was found to be a pretence, it was “void and of no effect” between the parties, regardless of whether it had been signed.
