Fresh 'n' Clean (Wales) Ltd v Miah & Ors

For dishonest assistance, the claimant must prove a breach of duty, but the breach itself need not be dishonest. The accessory’s dishonesty is assessed objectively by ordinary standards, in light of what the accessory actually knew, including relevant personal attributes and the reasons for acting. A different personal standard of honesty is irrelevant. Dishonesty may consist of knowledge that the transaction could not honestly be participated in, or suspicion coupled with a conscious decision not to make inquiries which would have revealed the relevant facts. The court may infer dishonesty from the surrounding transaction, the defendant’s knowledge, experience and conduct.

The claimant company, now in liquidation, claimed that its former director, Helim Miah, had breached his duties by entering into mobile telephone transactions which left the company unable to account for substantial output VAT. It alleged that Hillgate Corporation Ltd and Janail Singh had dishonestly assisted that breach.

The transactions involved rapid back-to-back sales, third-party payment instructions and substantial VAT exposure. The central issues were whether Mr Miah had breached his duties and whether Mr Singh, and through him Hillgate, had acted dishonestly.

1. The court found that Mr Miah had breached his duty to act in the company’s best interests. He should at least have ensured that sufficient sale proceeds were collected and retained to meet the company’s liabilities, including output VAT.
2. For accessory liability, a breach of duty by the principal must first be established, but that breach need not itself be dishonest. The relevant question is whether the alleged accessory acted dishonestly.
3. Applying [1995] 2 AC 378 and [2005] UKPC 37, dishonesty is judged by ordinary standards in light of the accessory’s actual knowledge at the time. The court must take account of relevant personal attributes, intelligence, experience and the reasons for the conduct. It is immaterial that the accessory applies a different personal standard.
4. Knowledge that the transaction could not honestly be participated in is sufficient. Suspicion combined with a conscious decision not to make inquiries which would have produced knowledge is also sufficient.
5. Mr Singh’s knowledge and business experience, the artificial structure and speed of the transactions, the third-party payments, the lack of meaningful information about counterparties, the VAT exposure and his dealings with Customs established dishonesty. His explanations and claimed lack of understanding were rejected. Hillgate was liable through Mr Singh.
6. Judgment was entered against Mr Miah, Hillgate and Mr Singh for £11,603,354.60, with interest at 5.6 per cent from 26 January 2005 to the date of the order. Permission to appeal was refused.

First-instance judgment. The judgment states that permission to appeal was refused.