Statek Corporation v McNeill Alford & Anor

Dishonest assistance requires a dishonest state of mind, assessed against an objective standard. A defendant may be dishonest where he suspects that property is being misapplied and consciously avoids inquiries because he prefers not to discover the truth. The ordinary civil standard of proof applies; the seriousness of an allegation affects the assessment of inherent probabilities, not the standard itself.

A person who receives trust property as a de facto director or fiduciary owes fiduciary duties in relation to it. Under Limitation Act 1980, section 21(1) applies to an accessory to a fraudulent breach of trust, so no limitation period bars the claim.

Statek sought an account from David Alford for substantial payments made from Statek’s funds into accounts controlled by him between 1988 and 1995. The payments were then transferred or disbursed on the instructions of Johnston and Spillane, who had systematically misappropriated Statek’s assets.

The issues included whether Alford was a de facto director or otherwise owed fiduciary duties, whether he had dishonestly assisted the misapplications, and whether Statek’s claims were statute-barred. Mrs Alford was no longer pursued as a defendant.

1. Dishonest assistance. The court applied the principles stated in Royal Brunei Airlines v Tan [1995] 2 AC 378 and Barlow Clowes International v Eurotrust International [2006] 1 WLR 1476. Dishonesty is assessed objectively, but the defendant’s actual state of mind is relevant. Suspicion combined with a conscious decision not to inquire may satisfy the test.
2. The burden remained on Statek, but the ordinary civil standard applied. The court had to consider the inherent probability or improbability of the alleged conduct when weighing the evidence, rather than apply a heightened standard of proof. [98]-[103]
3. Alford had been treated as, and had acted as, a director of Statek. He was therefore a de facto director and owed fiduciary duties concerning Statek’s money under his control. Alternatively, he received money known to be Statek’s property as trustee and owed duties when disbursing it. [106]-[107]
4. Alford knew that the money belonged to Statek and that it was being moved through his accounts without a proper commercial explanation. He consciously failed to inquire and dishonestly assisted the transactions. [102]-[103]
5. Limitation. The court held that section 21(1) of the Limitation Act 1980 applied to an accessory to another’s fraudulent breach of trust. Accordingly, no limitation period applied. The court declined to follow Cattley v Pollard [2007] 3 WLR 317 on this issue, and did not regard Dubai Aluminium Co Ltd v Salaam [2003] 2 AC 366 as contrary authority. [108]-[126]
6. Judgment was entered for Statek for US$2,426,385.40, after excluding sums for which no claim was made. [127]-[128]