“40. It is convenient to distinguish – although the difference is really one of degree – between findings of primary fact and factual findings which involve evaluating and drawing inferences from such primary facts. The reasons for the reluctance of appellate courts to interfere with findings of fact made following a trial apply in both cases: indeed, the reasons for restraint are often stronger where the finding involves an evaluation of primary facts. 41. Those reasons are by no means limited to the advantage enjoyed by the trial judge in a case in which oral testimony plays a significant part of having seen and heard the witnesses give evidence. The reasons also include recognition that the judge who presides over the trial is immersed in the evidence in a way that an appeal court cannot replicate. As it was put in the majority judgment of the Supreme Court of Canada in Housen v Nikolaisen 2002 SCC 33;[2002] 2 SCR 235 , para 14 (quoted by Lord Reed JSC in McGraddie v McGraddie[2013] UKSC 58 ;[2013] 1 WLR 2477 at para 33): "appeals are telescopic in nature, focusing narrowly on particular issues as opposed to viewing the case as a whole." In elaborating this point, the Canadian Supreme Court adopted the observations of a commentator that: "The trial judge has sat through the entire case and his ultimate judgment reflects this total familiarity with the evidence. The insight gained by the trial judge who has lived with the case for several days, weeks or even months may be far deeper than that of the Court of Appeal whose view of the case is much more limited and narrow, often being shaped and distorted by the various orders or rulings being challenged." See Housen v Nikolaisen 2002 SCC 33;[2002] 2 SCR 235 , para 14 (quoted in McGraddie v McGraddie[2013] UKSC 58 ;[2013] 1 WLR 2477 at para 4). Furthermore, not every detail of the relevant evidence need or can be captured in the reasons given by the judge. As Lord Hoffmann said in Piglowska v Piglowski[1999] 1 WLR 1360 , 1372: "[The judge's] expressed findings are always surrounded by a penumbra of imprecision as to emphasis, relative weight, minor qualifications and nuance … of which time and language do not permit exact expression, but which may play an important part in the judge's overall evaluation." 42. Even where it could in principle be done, for an appellate court in a case involving a substantial body of evidence to attempt to acquire the same absorption in the detail of the case as the judge of first instance would be a disproportionate use of judicial resources and would hugely increase the length, cost and delay of litigation in return for little likely improvement in decision-making. Unlike conclusions of law, findings of fact have no status as precedent in future cases and are therefore only capable of affecting the result of the case at hand. Considerations not only of efficiency in time and cost but also of fairness dictate that the judge's conclusions on such points should generally be treated as final. In the words of White J giving the opinion of the United States Supreme Court in Anderson v City of Bessemer [1985] 470 US 564, 575 (quoted with approval by the UK Supreme Court in the McGraddie case at para 3): "… the parties to a case on appeal have already been forced to concentrate their energies and resources on persuading the trial judge that their account of the facts is the correct one; requiring them to persuade three more judges at the appellate level is requiring too much. As the court has stated in a different context, the trial on the merits should be "the 'main event' … rather than a 'tryout on the road'"…" The same point has been made using a different metaphor by Lewison LJ in Fage UK Ltd v Chobani UK Ltd[2014] EWCA Civ 5 , para 114(ii), when he said: "The trial is not a dress rehearsal. It is the first and last night of the show." 43. For these reasons the principle is firmly established that an appellate court should only interfere with a finding of fact made by the trial judge if satisfied that the conclusion is "plainly wrong": see e.g. McGraddie v McGraddie,[2013] UKSC58;[2013] 1 WLR 2477 ;Henderson v Foxworth Investments Ltd[2014] UKSC 41 ;[2014] 1 WLR 2600 . As Lord Reed explained in the latter case, what this amounts to is that it must either be possible to identify a material error in the judge's process of reasoning – such as "a material error of law, or the making of a critical finding of fact which has no basis in the evidence, or a demonstrable misunderstanding of relevant evidence, or a demonstrable failure to consider relevant evidence" (para 67); or, if there is no such identifiable error and the question is simply one of judgment as to the appropriate weight to be given to the relevant evidence, the appellate court must be satisfied that the judge's conclusion "cannot reasonably be explained or justified" (ibid). As Lord Reed also stated in the Henderson case (at para 62): "It does not matter, with whatever degree of certainty, that the appellate court considers that it would have reached a different conclusion. What matters is whether the decision under appeal is one that no reasonable judge would have reached." Another formulation of the test, which has also been approved at the highest level, is that the appellate court ought not to interfere "unless it is satisfied that the judge's conclusion lay outside the bounds within which reasonable disagreement is possible": Todd v Adams & Chope (trading as Trelawney Fishing Co)[2002] 2 Lloyd's Rep 293 , para 129 (Mance LJ) approved in Assicurazioni Generali SvA v Arab Insurance Group[2002] EWCA Civ 1642 ;[2003] 1 WLR 577 , para 17 (Clarke LJ) and by the House of Lords in Datec Electronics Holdings Ltd v UPS Ltd[2007] UKHL 23 ;[2007] 1 WLR 1325 , para 46.”
“For the Group Seven claims, the relevant trust was the trust under which Larn held its interest in the Notable client account on trust for Group Seven. For the Larn claims, the relevant trust arises from the fiduciary duty owed to Larn by Mr Nobre as a director of Larn in relation to the assets of Larn. It is established law that the principles as to dishonest assistance… apply to a breach of a fiduciary duty of that kind in the same way as they apply to a breach of trust.”
“The law has never gone so far as to give a beneficiary a remedy against a non-recipient third party in such circumstances. Within defined limits, proprietary rights, whether legal or equitable, endure against third parties who were unaware of their existence. But accessory liability is concerned with the liability of a person who has not received any property. His liability is not property-based. His only sin is that he interfered with the due performance by the trustee of the fiduciary obligations undertaken by the trustee.”
“Given, then, that in some circumstances a third party may be liable directly to a beneficiary, but given also that the liability is not so strict that there would be liability even when the third party was wholly unaware of the existence of the trust, the next step is to seek to identify the touchstone of liability. By common accord dishonesty fulfils this role.”
“Whatever may be the position in some criminal or other contexts (see, for instance, Reg. v. Ghosh[1982] QB 1053 ), in the context of the accessory liability principle acting dishonestly, or with a lack of probity, which is synonymous, means simply not acting as an honest person would in the circumstances. This is an objective standard. At first sight this may seem surprising. Honesty has a connotation of subjectivity, as distinct from the objectivity of negligence. Honesty, indeed, does have a strong subjective element in that it is a description of a type of conduct assessed in the light of what a person actually knew at the time, as distinct from what a reasonable person would have known or appreciated. Further, honesty and its counterpart dishonesty are mostly concerned with advertent conduct, not inadvertent conduct. Carelessness is not dishonesty. Thus for the most part dishonesty is to be equated with conscious impropriety. However, these subjective characteristics of honesty do not mean that individuals are free to set their own standards of honesty in particular circumstances. The standard of what constitutes honest conduct is not subjective. Honesty is not an optional scale, with higher or lower values according to the moral standards of each individual. If a person knowingly appropriates another’s property, he will not escape a finding of dishonesty simply because he sees nothing wrong in such behaviour.”
“If he departs from the trust terms he is liable unless excused by a provision in the trust instrument or relieved by the court. The analysis of the position of the accessory, such as the solicitor who carries through the transaction for him, does not lead to such a simple, clear-cut answer in every case. He is required to act honestly; but what is required of an honest person in these circumstances? An honest person knows there is doubt. What does honesty require him to do? The only answer to these questions lies with keeping in mind that honesty is an objective standard. The individual is expected to attain the standard which would be observed by an honest person placed in those circumstances. It is impossible to be more specific.”
“Acting in reckless disregard of others’ rights or possible rights can be a tell-tale sign of dishonesty. An honest person would have regard to the circumstances known to him, including the nature and importance of the proposed transaction, the nature and importance of his role, the ordinary course of business, the degree of doubt, the practicability of the trustee or the third party proceeding otherwise and the seriousness of the adverse consequences to the beneficiaries. The circumstances will dictate which one or more of the possible courses should be taken by an honest person… Ultimately, in most cases, an honest person should have little difficulty in knowing whether a proposed transaction, or his participation in it, would offend the normally accepted standards of honest conduct. Likewise, when called upon to decide whether a person was acting honestly, a court will look at all the circumstances known to the third party at the time. The court will also have regard to personal attributes of the third party, such as his experience and intelligence, and the reason why he acted as he did.”
“Drawing the threads together, their Lordships’ overall conclusion is that dishonesty is a necessary ingredient of accessory liability. It is also a sufficient ingredient. A liability in equity to make good resulting loss attaches to a person who dishonestly procures or assists in a breach of trust or fiduciary obligation. It is not necessary that, in addition, the trustee or fiduciary was acting dishonestly, although this will usually be so where the third party who is assisting him is acting dishonestly. “Knowingly” is better avoided as a defining ingredient of the principle, and in the context of this principle, the Baden[1993] 1 WLR 509 scale of knowledge is best forgotten.”
“For the reasons given by my noble and learned friend, Lord Hutton, I consider that those principles [i.e. those laid down by the Privy Council in Tan] require more than knowledge of the facts which make the conduct wrongful. They require a dishonest state of mind, that is to say, consciousness that one is transgressing ordinary standards of honest behaviour.”
“In my opinion Lord Nicholls was adopting an objective standard of dishonesty by which the defendant is expected to attain the standard which would be observed by an honest person placed in similar circumstances. Account must be taken of subjective considerations such as the defendant’s experience and intelligence and his actual state of knowledge at the relevant time. But it is not necessary that he should actually have appreciated that he was acting dishonestly; it is sufficient that he was.”
“The only subjective elements are those relating to the defendant’s knowledge, experience and attributes. The objective elements include not only the standard of honesty (which is not controversial) but also the recognition of wrongdoing. The question is whether an honest person would appreciate that what he was doing was wrong or improper, not whether the defendant himself actually appreciated this.”
“135. The question here is whether it is sufficient that the accessory should have actual knowledge of the facts which created the trust, or must he also have appreciated that they did so? It is obviously not necessary that he should know the details of the trust or the identity of the beneficiary. It is sufficient that he knows that the money is not at the free disposal of the principal. In some circumstances it may not even be necessary that his knowledge should extend this far. It may be sufficient that he knows that he is assisting in a dishonest scheme. 136. That is not this case, for in the absence of knowledge that his client is not entitled to receive it there is nothing intrinsically dishonest in a solicitor paying money to him. But I am satisfied that knowledge of the arrangements which constitute the trust is sufficient; it is not necessary that the defendant should appreciate that they do so. Of course, if they do not create a trust, then he will not be liable for having assisted in a breach of trust. But he takes the risk that they do. 137. The gravamen of the charge against the principal is not that he has broken his word, but that having been entrusted with the control of a fund with limited powers of disposal he has betrayed the confidence placed in him by disposing of the money in an unauthorised manner. The gravamen of the charge against the accessory is not that he is handling stolen property, but that he is assisting a person who has been entrusted with the control of a fund to dispose of the fund in an unauthorised manner. He should be liable if he knows of the arrangements by which that person obtained control of the money and that his authority to deal with the money was limited, and participates in a dealing with the money in a manner which he knows is unauthorised. I do not believe that the man in the street would have any doubt that such conduct was culpable.”
“22. … I do respectfully think it was unfortunate that the judge three times used the expression “shut his eyes” to “the details”, or “the problems”, or “the implications”
“10. … In summary, she said that liability for dishonest assistance requires a dishonest state of mind on the part of the person who assists in a breach of trust. Such a state of mind may consist in knowledge that the transaction is one in which he cannot honestly participate (for example, a misappropriation of other people’s money), or it may consist in suspicion combined with a conscious decision not to make enquiries which might result in knowledge: see Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd[2003] 1 AC 469 . Although a dishonest state of mind is a subjective mental state, the standard by which the law determines whether it is dishonest is objective. If by ordinary standards a defendant’s mental state would be characterised as dishonest, it is irrelevant that the defendant judges by different standards. The Court of Appeal held this to be a correct state of the law and their Lordships agree. 11. The judge found that during and after June 1987 Mr Henwood strongly suspected that the funds passing through his 50. hands were monies which Barlow Clowes had received through members of the public who thought they were subscribing to a scheme of investment in gilt-edged securities. If those suspicions were correct, no honest person could have assisted Mr Clowes and Mr Cramer to dispose of the funds for their personal use. But Mr Henwood consciously decided not to make enquires because he preferred in his own interest not to run the risk of discovering the truth. 12. Their Lordships consider that by ordinary standards such a state of mind is dishonest.”
“meant only that his knowledge of the transaction had to be such as to render his participation contrary to normally acceptable standards of honest conduct. It did not require that he should have had reflections about what those normally acceptable standards were.”
“was… intended to require consciousness of those elements of the transaction which make participation transgress ordinary standards of honest behaviour. It did not also require him to have thought about what those standards were.”
“I consider that the short answer to Mr Flenley’s submission is that the Court of Appeal in Starglade Properties Ltd v Nash [2011] 1 Lloyd’s Rep F.C. 102 has held, as part of its ratio, that the decision in Barlow Clowes, and in particular its explanation of the decision in Twinsectra, contained a correct statement of English law. I am bound [and, we would add, so is this Court] by the decision in Starglade and accordingly I will proceed on the basis that Barlow Clowes contains a correct statement of English law and that the earlier decision in Twinsectra is now to be understood in the light of the explanation of it given in Barlow Clowes.”
“There is no reason why the law should excuse those who make a mistake about what contemporary standards of honesty are, whether in the context of insurance claims, high finance, market manipulation or tax evasion. The law does not, in principle, excuse those whose standards are criminal by the benchmarks set by society, nor ought it to do so. On the contrary, it is an important, even crucial, function of the criminal law to determine what is criminal and what is not; its purpose is to set the standards of behaviour which are acceptable.”
“The answer to the court’s question is that “dishonestly”, where it appears [in theTheft Act 1968 ], is indeed intended to characterise what the defendant did, but in characterising it one must first ascertain his actual state of mind as to the facts in which he did it. It was not correct to postulate that the conventional objective test of dishonesty involves judging only the actions and not the state of knowledge or belief as to the facts in which they were performed. What is objectively judged is the standard of behaviour, given any known actual state of mind of the actor as to the facts.”
“62. Dishonesty is by no means confined to the criminal law. Civil actions may also frequently raise the question whether an action was honest or dishonest. The liability of an accessory to a breach of trust is, for example, not strict, as the liability of the trustee is, but (absent an exoneration clause) is fault-based. Negligence is not sufficient. Nothing less than dishonest assistance will suffice. Successive cases at the highest level have decided that the test of dishonesty is objective. After some hesitation in [Twinsectra], the law is settled on the objective test set out by Lord Nicholls of Birkenhead in [Tan]: see [Barlow Clowes], Abou-Rahmah v Abacha [2007] Bus LR 220 and Starglade Properties Ltd v Nash [2011] Lloyd’s Rep FC 102. The test now clearly established was explained thus in the Barlow Clowes case[2006] 1 WLR 1476 , para 10 by Lord Hoffmann, who had been a party also to the Twinsectra case: “Although a dishonest state of mind is a subjective mental state, the standard by which the law determines whether it is dishonest is objective. If by ordinary standards a defendant’s mental state would be characterised as dishonest, it is irrelevant that the defendant judges by different standards. The Court of Appeal held this to be a correct state of the law and their Lordships agree.” 63. Although the House of Lords and Privy Council were careful in these cases to confine their decisions to civil cases, there can be no logical or principled basis for the meaning of dishonesty (as distinct from the standards of proof by which it must be established) to differ according to whether it arises in a civil action or a criminal prosecution. Dishonesty is a simple, if occasionally imprecise, English word. It would be an affront to the law if its meaning differed according to the kind of proceedings in which it arose.”
“When dishonesty is in question the fact-finding tribunal must first ascertain (subjectively) the actual state of the individual’s knowledge or belief as to the facts. The reasonableness or otherwise of his belief is a matter of evidence (often in practice determinative) going to whether he held the belief, but it is not an additional requirement that his belief must be reasonable; the question is whether it is genuinely held. When once his actual state of mind as to knowledge or belief as to facts is established, the question whether his conduct was honest or dishonest is to be determined by the fact-finder by applying the (objective) standards of ordinary decent people. There is no requirement that the defendant must appreciate that what he has done is, by those standards, dishonest.”
“In my opinion, in order for there to be blind-eye knowledge, the suspicion must be firmly grounded and targeted on specific facts. The deliberate decision must be a decision to obtain confirmation of facts in whose existence the individual has good reason to believe. To allow blind-eye knowledge to be constituted by a decision not to enquire into an untargeted or speculative suspicion would be to allow negligence, albeit gross, to be the basis of a finding of privity. That, in my opinion is not warranted by section 39(5) [of theMarine Insurance Act 1906 , which provides that the insurer is not liable for any loss attributable to unseaworthiness where, with the privity of the assured, the ship is sent to sea in an unseaworthy state].”
“First, it was not necessary… that Mr Henwood should have concluded that the disposals were of monies held in trust. It was sufficient that he should have entertained a clear suspicion that this was the case. Secondly, it is quite unreal to suppose that Mr Henwood needed to know all the details to which the court referred before he had grounds to suspect that Mr Clowes and Mr Cramer were misappropriating their investors’ money. The money in Barlow Clowes was either held on trust for the investors or else belonged to the company and was subject to fiduciary duties on the part of the directors. In either case, Mr Clowes and Mr Cramer could not have been entitled to make free with it as they pleased. In Brinks Ltd v Abu-Saleh [1996] CLC 133, 151 Rimer J expressed the opinion that a person cannot be liable for dishonest assistance in a breach of trust unless he knows of the existence of the trust or at least the facts giving rise to the trust. But their Lordships do not agree. Someone can know, and can certainly suspect, that he is assisting in a misappropriation of money without knowing that the money is held on trust or what a trust means: see the Twinsectra case[2002] 2 AC 164 , para 19 (Lord Hoffmann) and para 135 (Lord Millett). And it was not necessary to know the “precise involvement” of Mr Cramer in the group’s affairs in order to suspect that neither he nor anyone else had the right to use Barlow Clowes money for speculative investments of their own.”
“Paragraph [28] in Barlow Clowes is interesting in that Lord Hoffmann refers to “a clear suspicion” of a breach of trust being sufficient. Further, he held that an accessory could suspect that he was assisting in a misappropriation of money without knowing that the money was held on trust or what a trust meant. Finally, Lord Hoffmann referred with approval to paragraph [135] in the dissenting judgment of Lord Millett in Twinsectra, which I have quoted above.”
“The difficulty for Group Seven’s case of dishonesty, in so far as it is based on there being grounds for suspicion of Mr Nobre, is that Notable, and Mr Meduri in particular, did ask questions. He took advice as to the questions he should ask. He then endeavoured to pursue those questions. The advice from Mr Choudhury of the Law Society was that he could only go so far and there would come a point when he could draw a line and form a judgment as to what he was dealing with.”
“Mr Meduri considered that he had asked appropriate questions and that Mr Nobre had provided adequate answers to those questions which entitled Mr Meduri to proceed on the basis that Mr Nobre was entitled to deal with the money as his own.”
“455. … It is not clear to me that Group Seven ever did allege that Mr Landman actually knew that the money was not owned by Larn or that Group Seven ever did put that allegation to Mr Landman in cross-examination. I confess that I am highly suspicious as to what Mr Landman might have found out from Mr Nobre which he did not share with the court in the course of his evidence. I am particularly suspicious about what he might have found out in the period from 4 to14 November 2011 when he was in very close contact with Mr Nobre and he also had contact with Mr Louanjli. I am quite sure that Mr Landman has not been frank with the court about what was happening and what was discussed in that period. However, my suspicion as to the possibilities which there might have been during that period for Mr Landman to find out about the source of the€100 million is simply not enough for me to make a finding on the balance of probabilities that Mr Landman knew that the money did not belong to Larn. 456. Group Seven does allege that Mr Landman knew that Larn was not entitled to use the money as if it were its own because of the terms of the loan agreement between AIC and Larn. I have already considered this point when addressing the position of Mr Meduri. In the end, I consider that I must make the same findings in relation to Mr Landman, and for the same reasons, as I did in relation to Mr Meduri.”
“I have carefully considered whether I am able to make the same findings in relation to Mr Landman. I have found this a difficult assessment given Mr Landman’s propensity for dishonesty. I have to ask myself whether Mr Landman’s state of mind amounted to a firmly grounded suspicion as to where the€100 million had come from and whether he deliberately decided to avoid asking questions as to the source of the money.”
“458. As to the extent of Mr Landman’s suspicion as to where the€100 million came from, there must have been times during his long association with Mr Nobre when he considered that Mr Nobre was a fake. He described him as “a con man” in August 2011. However, even before the€100 million arrived, he did not always think that Mr Nobre was a fake. This is shown by the fact that he spent [a lot of] time seeking to assist Mr Nobre with his proposed investments. He also paid, or caused to be paid, Mr Nobre’s bills to Savills and GRM. When the€100 million arrived, Mr Landman seems genuinely to have thought that he had been wrong to have doubts about Mr Nobre. Mr Landman then thought that Mr Nobre had been right all along and that he was indeed a very rich man. 459. As to whether Mr Landman deliberately refrained from asking questions about the source of the money because he did not want to know the source of the money, I must take proper account of the fact that Notable did ask a large number of questions on that topic. Notable took advice about how to go about that process and the task was carried out, principally by Mr Meduri and Ms Ciserani. I have held that Mr Meduri and Ms Ciserani believed that Notable had asked the appropriate questions and had been [given] adequate answers. As to Mr Landman, it is in his favour that it was he who proposed to Notable in the first place that it instruct solicitors to advise Notable on the steps it should take as a protection against money laundering. At that stage, it is clear that Mr Landman genuinely wanted that advice and expected Notable to follow it. Mr Landman also knew that at the end of the process, Mr Meduri and Ms Ciserani were satisfied with the outcome and that they were entitled to proceed on the basis that Mr Nobre was able to deal with the money as his own. I have considered whether the evidence supports a finding that Mr Landman sought to manipulate the process of enquiry being carried out by Mr Meduri and Ms Ciserani and what the effect of such a finding should be. I have referred earlier to interventions by Mr Landman when he suggested that Ms Ciserani should not look into something and when he was critical of Ms Ciserani after the event for, it seems, trying to be thorough. I have also considered the implications of the information which Mr Nobre gave to Vogt about AndBanc and Mr Landman’s direction to Mr Nobre not to tell Mr Meduri about that matter. Those points give me cause for concern but my overall conclusion is that Mr Landman allowed Mr Meduri and Ms Ciserani to carry out the process of enquiry which Mr Landman had started and that he was entitled to rely on their conclusion that Mr Nobre had provided adequate information as to the source of the funds. 460. Finally, on the question of blind eye knowledge, I have reflected again on the fact that I have found Mr Landman to have a propensity for dishonesty. His persistent lying at the trial was a bad example of that. Further, he consistently lied to Mr Meduri on15 November 2011 as to his alleged knowledge of the underlying transactions. His lies to Mr Meduri showed that he wanted to help Mr Nobre and, of course, he was being well paid by Mr Nobre for acting in that way. I therefore wish to consider whether these findings taken with any other relevant considerations would justify the conclusion on the balance of probabilities that Mr Landman had blind eye knowledge that the money was not beneficially owned by Larn or that Larn was not entitled to use it. In the end, I am not satisfied that I can make that finding. I am not persuaded that the fact that Mr Landman has a dishonest propensity and was dishonest in relation to the authorisation of payments justifies a finding that he was dishonest in this further respect also, when the evidence actually points the other way.”
“I have found that Mr Landman dishonestly said, time and time again, that the test as to knowledge of the underlying transaction was satisfied when he knew that it was not.”
“So accessory liability on the part of a dishonest assistant requires no more from his point of view than the actus reus of assisting by participation in the transaction, and the mens rea of dishonesty.”
“Although it is not necessary for the dishonest assistant to know all the details of the whole design, he must, I think, know in broad terms what the design is. Liability as a dishonest assistant, as the law has developed, is a secondary liability akin to the criminal liability of one who aids and abets the commission of a criminal offence. In that context, there are well developed principles for determining when an aider and abettor is to be treated as having participated in a joint enterprise. Criminal liability as an accessory depends on proof that the accessory intended, foresaw, or contemplated that an offence would or might be committed in furtherance of the joint enterprise. But it does not extend to the commission of unforeseen and uncontemplated offences which are outside the scope of the joint enterprise. The fine details of these principles need not be discussed here.”
“468. I do not think that the precise point raised in this case, based on the combination of my findings of fact, is expressly covered by any earlier authority, although the comments of Lewison J in Ultraframe might be said to be a good signpost. I am not persuaded that the analysis in the Madoff case is of direct assistance. The question in that case was completely different and I think that it would be misleading to take the remarks in that case out of the context in which they were expressed. 469. The issue I am now addressing might be said to raise a policy question. If I were to hold Mr Landman liable in the way contended for by Group Seven, he would be liable for losses that he could not have foreseen. Although he should have foreseen that he was exposing himself, and Notable, to liability for breach of the Solicitors Accounts Rules, and that would be a liability to disciplinary proceedings, it would turn out that he was liable for all the consequences of Larn’s breach of trust, when he did not know that Larn was committing a breach of trust. 470. In some areas, the law takes a strict approach to the liability for dishonesty. In the tort of deceit, the victim is entitled to recover all damage directly flowing from the tort and there is no requirement that the losses be foreseeable. It was said in Doyle v Olby (Ironmongers) Ltd[1969] 2 QB 158 at 167: “it does not lie in the mouth of the fraudulent person to say that they could not reasonably have been foreseen” and this was approved by the House of Lords in Smith New Court Ltd vScrimgeour Vickers[1997] AC 254 . However, it is one thing to say that a wrongdoer is liable for the unforeseeable consequences of that wrongdoing and another to say a wrongdoer who has committed one wrong is liable for the consequences of a different wrong, which he did not commit. 471. The question for me is whether what Mr Landman dishonestly did was to assist a breach of trust when he did not have the relevant knowledge as to there being a breach of trust. I think that I would have to extend the basis of the liability for dishonest assistance of a breach of trust to hold him liable and I am not persuaded that such an extension is justified. My conclusion is that Mr Landman is not so liable. 472. It follows that I hold Notable, Mr Landman and Mr Meduri are not liable for dishonestly assisting a breach of trust.”
“As to the£170,000 , this sum was negotiated by Mr Landman with Mr Nobre. The agreement was that Mr Nobre would make this personal payment to Mr Landman in return for his assistance in allowing Notable’s bank account to be used for Mr Nobre’s benefit. In order to disguise the fact that the payment was a personal payment to Mr Landman, he channelled the payment through Nisroy who were acting as his nominee in this respect… On the basis of these findings, I consider that the whole of the£170,000 was received by Mr Landman’s nominee and was therefore received by Mr Landman. It does not matter what Mr Landman went on to direct should be done with the money.”
“In particular, I find that Mr Landman knew facts which would have shown an honest and reasonable man that Mr Nobre was not entitled to the€100 million . I have already made detailed findings as to what was known to Mr Landman and although I have found that subjectively he thought that Mr Nobre was entitled to the money I consider that objectively an honest and reasonable man would not have reached that conclusion. Without repeating at length the facts which are of principal importance supporting this objective conclusion, I refer to the following matters in particular: (1) The information which Mr Nobre gave about himself and his alleged charitable foundations showed that much of what Mr Nobre said was pure fantasy; (2) Mr Landman never saw any evidence of actual trading or commercial investments by Mr Nobre; (3) For a man who allegedly had vast wealth, Mr Nobre was surprisingly unable to pay his bills as he went along; (4) The suggestion that Mr Nobre’s ability to stay for a long period in an expensive hotel showed that he was a wealthy man was exploded in August 2011; (5) In August 2011, following the information provided to Mrs Landman by Victoria Weir, Mr Nobre should objectively have been considered as a “con man”; (6) Mr Nobre’s explanations as to why he could not transfer his money from his other bank account were inherently suspicious: (7) Mr Nobre’s reply to Vogt, containing information about his dealings with Mr Milton and AndBanc should have rung an alarm bell that a reputable bank would not accept the money from Mr Nobre; (8) Mr Nobre’s explanations as to where the money was coming from were inconsistent; (9) The amount of€100 million which was paid into Notable’s client account was a different amount from that previously stated by Mr Nobre and came from a different source; (10) A reasonable man would have asked himself why Mr Nobre wanted Notable to do something which Notable was not allowed to do, namely, use its client account as a bank account for Mr Nobre, making the payments requested by him even where Notable was not involved in the underlying transaction or even independently aware of the underlying transaction.” (1) The information which Mr Nobre gave about himself and his alleged charitable foundations showed that much of what Mr Nobre said was pure fantasy; (2) Mr Landman never saw any evidence of actual trading or commercial investments by Mr Nobre; (3) For a man who allegedly had vast wealth, Mr Nobre was surprisingly unable to pay his bills as he went along; (4) The suggestion that Mr Nobre’s ability to stay for a long period in an expensive hotel showed that he was a wealthy man was exploded in August 2011; (5) In August 2011, following the information provided to Mrs Landman by Victoria Weir, Mr Nobre should objectively have been considered as a “con man”; (6) Mr Nobre’s explanations as to why he could not transfer his money from his other bank account were inherently suspicious: (7) Mr Nobre’s reply to Vogt, containing information about his dealings with Mr Milton and AndBanc should have rung an alarm bell that a reputable bank would not accept the money from Mr Nobre; (8) Mr Nobre’s explanations as to where the money was coming from were inconsistent; (9) The amount of€100 million which was paid into Notable’s client account was a different amount from that previously stated by Mr Nobre and came from a different source; (10) A reasonable man would have asked himself why Mr Nobre wanted Notable to do something which Notable was not allowed to do, namely, use its client account as a bank account for Mr Nobre, making the payments requested by him even where Notable was not involved in the underlying transaction or even independently aware of the underlying transaction.”
“An important factor in this assessment is that Mr Landman obtained his£170,000 in return for deliberately and dishonestly breaking the Solicitors Accounts Rules and dishonestly misleading Notable as to his involvement in, or knowledge of the transactions which led to Notable paying away some€15 million on and after15 November 2011 .”
“(1) Mr Louanjli was employed by LLB as a relationship manager; (2) Mr Louanjli had been the LLB relationship manager for Larn/Mr Nobre; (3) When Mr Louanjli made the relevant statements on3 November 2011 and sent the relevant email on14 November 2011 , he was acting or purporting to act as the representative of LLB and he was giving information or purporting to give information which emanated from LLB; (4) Mr Louanjli's statements were made, and the email was sent at the request of Larn/Nobre, and for the purpose of assisting Larn/Mr Nobre; (5) Mr Louanjli did not have the actual authority of LLB to do what he did; (6) Notable believed that Mr Louanjli was acting within his authority; (7) Notable would not have known of the limitations imposed by LLB on Mr Louanjli's authority; (8) Mr Louanjli did what he did in his own interests and he was not seeking to advance the interests of LLB; (9) Mr Louanjli was dishonest.”
“551. . . In November 2011, Mr Louanjli was pursuing his own interests and was not seeking to confer benefits on LLB. However, this finding does not mean that Mr Louanjli was on "a frolic of his own" with the result that LLB was not liable for his actions. Similarly, this finding does not mean that his actions were not closely connected with the work which Mr Louanjli was authorised to do. Nor is this case like the case of Kooragang. In this case, Mr Louanjli's position at LLB was central to the statements which he made. Notable wished to hear from Mr Louanjli because he was described to them as Larn/Nobre's relationship manager at LLB. It was important that Mr Louanjli was able to describe what LLB had done and its relationship with Larn/Nobre. Mr Louanjli's statements were expressed to be made by him as a relationship manager at LLB and not otherwise. 552. LLB also submitted that this case was unlike Lister and Mohamud. This is a commercial case and those cases were not. It was submitted that LLB did not have any relationship with the victim, Group Seven. LLB did not delegate to Mr Louanjli the performance of some task which Group Seven had asked LLB to perform. LLB said that all that had happened was that LLB's employment of Mr Louanjli had given him the opportunity to act the way he did but that was not enough to found vicarious liability for his actions: see per Lord Clyde in Lister at [45]. I do not accept the submission that the legal principle is altered on account of the fact that this is a commercial case. Dubai Aluminium was a commercial case. Further, the authorities cited say that the same legal principle applies whether the wrongdoing is in a commercial or a non-commercial context. It is true that there was no relationship between LLB and Group Seven. But the tort of dishonest assistance of a breach of trust does not involve a direct relationship between the wrongdoer and the victim. The wrongdoer is an accessory who assists someone who may have a direct relationship with the victim. The principles established by the authorities apply irrespective of the kind of wrongdoing established and those principles have been applied to a case of dishonest assistance of a breach of trust: see Dubai Aluminium. I do not consider that this was a case where Mr Louanjli's employment by LLB merely gave him an opportunity to commit the wrongdoing in the sense considered by Lord Clyde in Lister. Here, Mr Louanjli's employment with LLB as a relationship manager for Larn/Nobre allowed Mr Louanjli to pass on information about LLB's relationship with Larn/Nobre and the statements made by Mr Louanjli were expressed to be made on behalf of LLB, a matter which was important to Notable.”
“Mr Louanjli confirmed that he works for Liechtensteinische Landesbank, is based in Abu Dhabi and that the bank is based in Switzerland. He also confirmed the following: i) Mr Nobre has been the bank's client since a certain amount of time ii) They have successfully completed the KYC procedure on source of funds iii) They are aware that the funds were sent from them to Allied's [AIC’s] bank account at Bank of Valletta. Mr Louanjli agreed to provide a written confirmation of the above on the bank's letterhead and his copy passport.”
“We understand that Mr Louis is known to your bank, that you completed the KYC procedures and were fully satisfied about the source of funds. We also understand that you will send us a written confirmation of the above. Please also confirm that you are aware that the funds have been transferred from Mr Louis's account to Allied Investment Corporation Ltd at Bank of Valletta. . . ”
“Subject: LARN Dear Martin I would like to confirm That Mr. Louis Nobre is well known to the Bank and did satisfy to the KYC and due diligence that we did run during his account opening process. Hope this will Help. Please feel free to contact me if you have any queries. Best Regards, Yours sincerely Liechtensteinische Landesbank (Switzerland) Ltd. Othman Louanjli Relationship Manager”
“533. . . . There was considerable examination at the trial of the terms and conditions of Mr Louanjli's employment and of the various internal documents within LLB which imposed limitations on his behaviour or gave direction as to how Mr Louanjli should conduct himself as an employee. . . 535. There was considerable discussion as to the role of a relationship manager employed by a Swiss bank. There was expert evidence as to the typical arrangements within Swiss banks as to the giving of "references" for customers, when such references were permitted, the form they were permitted to take, the persons who were typically authorised to give them and the number of signatures required for any such reference. However, this evidence as to the typical position within Swiss banks did very little to inform me as to the apparent position as would be perceived by third parties, particularly third parties who were not principally operating in Switzerland but who, like Notable, consisted of professionals operating in the United Kingdom, although they also operated outside the United Kingdom (including Switzerland). On the facts of this case, I find that Notable did believe that Mr Louanjli as a relationship manager of LLB was authorised to give information to Notable when requested to do so by his client.”
“The scope of vicarious liability depends upon the answers to two questions. First, what sort of relationship has to exist between an individual and a defendant before the defendant can be made vicariously liable in tort for the conduct of that individual? Secondly, in what manner does the conduct of that individual have to be related to that relationship, in order for vicarious liability to be imposed on the defendant? . . . ”
“23. These three factors are inter-related. The first has been reflected historically in explanations of the vicarious liability of employers based on deemed authorisation or delegation, as for example in Turberville v Stampe (1698) 1 Ld Raym 264, 265 per Holt CJ and Bartonshill Coal Co v McGuire (1858) 3 Macq 300, [1858] UKHL 3_Macqueen_300, 306 per Lord Chelmsford LC. The second, that the tortfeasor's activity is likely to be an integral part of the business activity of the defendant, has long been regarded as a justification for the imposition of vicarious liability on employers, on the basis that, since the employee's activities are undertaken as part of the activities of the employer and for its benefit, it is appropriate that the employer should bear the cost of harm wrongfully done by the employee within the field of activities assigned to him: see, for example, Duncan v Findlater (1839) 6 Cl & Fin 894, 909-910; (1839) MacL & Rob 911, 940, [1839] UKHL MacRob_911, per Lord Brougham and Broom v Morgan[1953] 1 QB 597 , 607-608 per Denning LJ. The third factor, that the defendant, by employing the tortfeasor to carry on the activities, will have created the risk of the tort committed by the tortfeasor, is very closely related to the second: since the risk of an individual behaving negligently, or indeed committing an intentional wrong, is a fact of life, anyone who employs others to carry out activities is likely to create the risk of their behaving tortiously within the field of activities assigned to them. The essential idea is that the defendant should be liable for torts that may fairly be regarded as risks of his business activities, whether they are committed for the purpose of furthering those activities or not. This idea has been emphasised in recent times in United States and Canadian authorities, sometimes in the context of an economic analysis, but has much older roots, as I have explained. It was reaffirmed in the cases of Lister and Dubai Aluminium. In the latter case, Lord Nicholls of Birkenhead said at para 21: "The underlying legal policy is based on the recognition that carrying on a business enterprise necessarily involves risks to others. It involves the risk that others will be harmed by wrongful acts committed by the agents through whom the business is carried on. When those risks ripen into loss, it is just that the business should be responsible for compensating the person who has been wronged."” "The underlying legal policy is based on the recognition that carrying on a business enterprise necessarily involves risks to others. It involves the risk that others will be harmed by wrongful acts committed by the agents through whom the business is carried on. When those risks ripen into loss, it is just that the business should be responsible for compensating the person who has been wronged."”
“22. This policy reason dictates that liability for agents should not be strictly confined to acts done with the employer's authority. Negligence can be expected to occur from time to time. Everyone makes mistakes at times Additionally, it is a fact of life, and therefore to be expected by those who carry on businesses, that sometimes their agents may exceed the bounds of their authority or even defy express instructions. It is fair to allocate risk of losses thus arising to the businesses rather than leave those wronged with the sole remedy, of doubtful value, against the individual employee who committed the wrong. To this end, the law has given the concept of 'ordinary course of employment' an extended scope. 23. If, then, authority is not the touchstone, what is? Lord Denning MR once said that on this question the cases are baffling: see Morris v C W Martin & Sons Ltd[1966] 1 QB 716 , 724. Perhaps the best general answer is that the wrongful conduct must be so closely connected with acts the partner or employee was authorised to do that, for the purpose of the liability of the firm or the employer to third parties, the wrongful conduct may fairly and properly be regarded as done by the partner while acting in the ordinary course of the firm's business or the employee's employment. Lord Millett said as much in Lister v Hesley Hall Ltd[2002] 1 AC 215 , 245. So did Lord Steyn, at pp 223-224 and 230. McLachlin J said, in Bazley v Curry (1999) 174 DLR (4th) 45, 62: 'the policy purposes underlying the imposition of vicarious liability on employers are served only where the wrong is so connected with the employment that it can be said that the employer has introduced the risk of the wrong (and is thereby fairly and usefully charged with its management and minimization).' (Emphasis added) To the same effect is Professor Atiyah's monograph Vicarious Liability in the Law of Torts, (1967) p 171:'The master ought to be liable for all those torts which can fairly be regarded as reasonably incidental risks to the type of business he carried on'. (Emphasis added)”
“44. In the simplest terms, the court has to consider two matters. The first question is what functions or "field of activities" have been entrusted by the employer to the employee, or, in everyday language, what was the nature of his job. As has been emphasised in several cases, this question must be addressed broadly … . 45. Secondly, the court must decide whether there was sufficient connection between the position in which he was employed and his wrongful conduct to make it right for the employer to be held liable under the principle of social justice which goes back to Holt CJ. To try to measure the closeness of connection, as it were, on a scale of 1 to 10, would be a forlorn exercise and, what is more, it would miss the point. The cases in which the necessary connection has been found for Holt CJ's principle to be applied are cases in which the employee used or misused the position entrusted to him in a way which injured the third party. Lloyd v Grace, Smith & Co[1912] AC 716 , Pettersson v Royal Oak Hotel Ltd[1948] NZLR 13 and Lister v Hesley Hall Ltd were all cases in which the employee misused his position in a way which injured the claimant, and that is the reason why it was just that the employer who selected him and put him in that position should be held responsible. By contrast, in Warren v HenlysLtd any misbehaviour by the petrol pump attendant, qua petrol pump attendant, was past history by the time that he assaulted the claimant. The claimant had in the meantime left the scene, and the context in which the assault occurred was that he had returned with the police officer to pursue a complaint against the attendant. 46. Contrary to the primary submission advanced on the claimant’s behalf, I am not persuaded that there is anything wrong with the Lister approach as such. It has been affirmed many times and I do not see that the law would now be improved by a change of vocabulary. . .”
“30. I agree that it was tortuous and artificial to describe the barmaid’s conduct as a mode of performing what she was employed to do, but that does not make the result just. In a broader sense it occurred in the course of her employment. She was employed by the hotel proprietor to serve customers. She was approached in that capacity by a customer, and ordinary members of the public would surely expect the company who employed her to serve customers to have some responsibility for her conduct towards them. And it surely cannot be right that the measure of the company’s responsibility should depend on whether she was the head barmaid or an assistant. The customer would have no knowledge what were the exact limits of her responsibilities.”