Attorney General of Zambia v Meer Care & Desai (A Firm) & Ors

Dishonest assistance requires proof that the defendant knew facts making the assistance dishonest, or had a clear suspicion of them and deliberately chose not to inquire to avoid confirmation. Negligence, incompetence, failure to follow professional guidance, mixing client funds, or providing an improper banking service do not, without more, establish dishonesty. The claimant bears the burden of proving both the improper application and the defendant’s actual or blind-eye knowledge. A first appellate court may reassess factual findings where material errors or misdirections vitiate the trial decision. The solicitor’s conduct was serious but honest and foolish, so neither dishonest assistance nor conspiracy was established.

The Attorney General of Zambia brought civil claims concerning the misappropriation of government funds during the presidency of Dr Frederick Chiluba. The High Court held Mr Meer liable in conspiracy and dishonest assistance, and held the firm and Mr Desai liable on a vicarious basis under section 10 of the Partnership Act 1890. The orders followed the principal judgment at [2007] EWHC 952 (Ch) and the later quantification judgment at [2007] EWHC 1540 (Ch).

Mr Meer and Mr Desai appealed. The central issue was whether Mr Meer’s failure to question payments through the firm’s client account established actual or blind-eye knowledge of dishonesty, or amounted only to incompetence and negligence. The court also considered the separate payments connected with the BK conspiracy.

Appeals allowed. The orders against Mr Meer, the firm and Mr Desai were set aside, and the claims against them were dismissed.

1. Applicable test. Dishonest assistance requires actual knowledge that the relevant conduct is dishonest, or a clear suspicion of that fact deliberately ignored to avoid confirmation. Carelessness, negligence and professional incompetence do not cross the line into dishonesty. The court applied the blind-eye principle illustrated by Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd [2001] UKHL 1.
2. Burden of proof. Where liability depends on knowledge that a disbursement was improper, the claimant must prove both the impropriety and the defendant’s actual or blind-eye knowledge. The evidential burden concerning reduction of liability did not reverse that legal burden.
3. Errors below. The judge treated the conduct of an honest and competent solicitor as the relevant comparator, overlooked the possible secrecy and variety of intelligence-service payments, misdirected himself on the first receipts, and treated serious professional failings as evidence of dishonesty. The reasoning in Grupo Torras v Al-Sabah (No 5) was factually distinguishable because it concerned a highly intelligent business lawyer whose conduct could not credibly be explained as innocent.
4. Reassessment. The Court of Appeal was entitled to reassess the evidence because the trial finding was vitiated by material errors. Mr Meer had acted honestly when he agreed to the original arrangement. His later failure to question instructions, mixing of funds and breach of professional guidance were serious, but the more probable explanation was that he was honest, foolish and incompetent in recognising money laundering, rather than knowingly or blindly assisting theft.
5. BK payments and Mr Desai. The judge made no finding that Mr Meer knew or suspected that the BK payments represented government money. In any event, the evidence did not establish dishonesty. The vicarious-liability claim against Mr Desai therefore failed. The limitation and credit issues did not arise; if they had, the court would have dismissed the appeals on those points.

• Court of Appeal (Civil Division): allowed Mr Meer’s appeal, set aside the orders against Mr Meer, the firm and Mr Desai, and dismissed the claims.
• High Court (Chancery Division): Mr Justice Peter Smith found Mr Meer liable in conspiracy and dishonest assistance and imposed consequential liability on the firm and Mr Desai in [2007] EWHC 952 (Ch), followed by quantification in [2007] EWHC 1540 (Ch).