Stokors SA & Ors v IG Markets Ltd

In civil proceedings alleging accessory liability for breach of trust, the applicable dishonesty test is objective. The court determines the standard of ordinary honest behaviour; the defendant’s subjective understanding of that standard is irrelevant.

Established civil practice excludes evidence of a party’s or witness’s general character or reputation for honesty, even where dishonesty is alleged. That practice differs from the criminal approach and from disciplinary proceedings where a subjective element of dishonesty applies. General reputation evidence is also not ordinarily relevant to proving knowledge, including blind-eye knowledge.

The claimants brought proceedings in accessory liability against the defendant, alleging knowing assistance and knowing receipt arising from an alleged breach of trust by a broker. The defendant sought to amend its defence to allege insider trading by the claimants. That amendment was effectively unopposed, but the parties disputed whether the fixed trial date should be vacated or whether liability should be tried separately from quantum and the availability of equitable remedies.

The claimants also applied to strike out proposed evidence from approximately 12 witnesses concerning the general reputation for honesty of witnesses facing allegations of dishonest conduct. The issues were whether the trial should be split and whether such character evidence was admissible in civil proceedings.

1. Case management. The court’s task was to make the order that was just and convenient. The trial date had been fixed for almost a year, giving the claimants a legitimate expectation that a trial would take place in November. The risks of repeated evidence and inconsistent decisions were reduced because the defendant had pleaded no positive case concerning the claimants’ relationship with the broker. The trial date was therefore retained for the defendant’s liability, with quantum and the availability of equitable remedies to be determined later. The listing office was requested to extend the trial to the end of term.
2. Dishonesty. In accessory liability for breach of trust, the applicable test was the objective standard identified in Barlow Clowes. The court determines the ordinary standard of honest behaviour. The person’s subjective understanding of whether conduct was dishonest is irrelevant. This differed from the criminal test in R v Ghosh and the disciplinary context considered in Bryant v The Law Society.
3. Character evidence. The established civil practice, reflected in Attorney-General v Radloff and the textbooks, was that evidence of general character or reputation for honesty was inadmissible, even where relevant to an issue. The reasoning in Bryant v The Law Society depended on the disciplinary test having a subjective element and did not govern this civil claim.
4. Evidence of general reputation for honest conduct was not relevant to proving knowledge, including blind-eye or Nelsonian knowledge. The claimants’ application to strike out the character evidence was granted.

First-instance decision. No earlier appellate decision is stated in the judgment.