O'Neil v Gale

A person may aid a regulatory offence without knowing that the conduct is unlawful or that statutory authorisation is required. Liability depends on intentional assistance and knowledge of the essential facts constituting the offence. A change-of-position defence is unavailable to a recipient who is properly characterised as a wrongdoer. Where pleadings and trial submissions fairly put the defendant on notice that account use and payments are alleged to breach legislation, the court may decide the issue despite the absence of a separately pleaded detail. The court left open whether illegality automatically removes all judicial discretion in applying the defence.

The claimant sought restitution of money paid into an unlawful investment scheme operated by the defendant’s husband. The defendant had provided bank and Betfair account facilities and had made some dividend payments. The High Court held that she had aided offences under sections 19 and 23 of the Financial Services and Markets Act 2000 and could not rely on a change-of-position defence. On appeal, the defendant challenged the finding of assistance and argued that the issue had not been adequately pleaded. The wider question whether a court has discretion to allow a wrongdoer to rely on an illegal change of position was not pursued after a concession.

Appeal dismissed. Lord Justice Vos delivered the judgment with which Lord Justices Jackson and Laws agreed.

1. The mens rea for assisting a criminal offence was stated by reference to Regina v Bryce [2004] EWCA Crim 1231. The prosecution must establish an act which assisted the later offence, deliberate conduct recognised as capable of assisting, contemplation of the offence as a real or substantial risk or real possibility, and an intention to assist the principal. Assistance need not be a but-for cause, but must have a connecting link with the offence, as explained in Regina v Stringer and another [2012] QB 160.
2. An assister must know the essential matters constituting the principal offence. Knowledge that the conduct is illegal, or that the principal required authorisation under section 19 of the Financial Services and Markets Act 2000, is unnecessary.
3. The evidence established that the defendant knew of the scheme, the investments, the betting activity and the payment of dividends. She deliberately provided and continued to permit use of the accounts, and made some payments herself. The earlier purpose for which an account was opened did not prevent liability once she knew of the scheme. The definition of a collective investment scheme in section 235 supplied the relevant essential facts.
4. The pleading point failed. Although the account-use allegation was not separately pleaded in the same terms as the dividend-payment allegation, the pleadings and supplementary submissions gave the defendant sufficient notice that breaches of sections 19 and 23 were relied upon.
5. It was conceded that, if the defendant had aided the offence, she was a wrongdoer within the exclusion recognised in Lipkin Gorman v Karpnale Ltd [1991] 2 A.C. 548 and could not rely on change of position in respect of the unlawful payments. The correctness of the wider approach in Barros Mattos Junior v MacDaniels [2005] 1 WLR 247 was expressly left for another case.

• Court of Appeal (Civil Division): dismissed the appeal and upheld the findings on assistance and the change-of-position defence: [2013] EWCA Civ 1554.
• High Court of Justice, Chancery Division: Mr David Donaldson QC, sitting as a deputy judge, held that the defendant had aided offences under sections 19 and 23 of the Financial Services and Markets Act 2000 and could not rely on change of position.