Autogas (Europe) Ltd v Ochocki & Ors

Liability for dishonest assistance requires assistance in a primary breach of duty and conduct that is dishonest by the objective standards of ordinary decent people. The fact-finder must first establish the defendant’s actual knowledge or belief as to the facts; the reasonableness of that belief is evidence, not a separate requirement. Suspicious circumstances, irregular payments and the profitability of a transaction do not, without more, establish dishonesty. Bold inferences must be supported by cogent evidence, particularly where fraud is alleged. A person who innocently follows payment instructions does not become dishonest merely because the payment is made to an overseas account or to an entity other than the invoicing party.

The claimant, a company in liquidation, sought damages from three individuals involved in OCH Capital LLP for dishonest assistance in a VAT acquisition fraud. Autogas had purchased electricity without VAT and resold it with VAT, while OCH made many payments and carbon-credit transfers directly to HCX Rotterdam BV rather than to Autogas. The claimant alleged that the defendants knew of, or colluded in, the fraud.

The claim followed earlier proceedings in which findings had been made against Autogas’s directors, HCX and others. The central issue was whether any of the three defendants had dishonestly assisted the primary breaches of duty, applying the civil standard of proof.

1. Claim dismissed. The claimant failed to prove that any defendant was dishonest. The primary fraud was established, but liability for dishonest assistance required proof that the relevant assistance was given dishonestly.
2. The applicable test was objective dishonesty under Ivey v Genting Casinos (UK) Ltd [2017] UKSC 67, [2018] 3 WLR 1212. The court first had to ascertain each defendant’s actual knowledge or belief as to the facts, then apply the standards of ordinary decent people. There was no requirement that a defendant appreciate that the conduct was dishonest.
3. The court explained that concepts such as turning a blind eye and Nelsonian knowledge concerned the evaluation of conduct, rather than establishing a separate degree of knowledge. Assistance had to be more than minimal and had to enable the primary breach, but it need not inevitably cause loss.
4. The claimant’s collusion case depended materially on an allegation that OCH had received electricity at a suspiciously low price. That fact had not been pleaded and was unsupported by evidence of market prices. The profits made by OCH were consistent with legitimate trading and did not themselves establish a motive for fraud.
5. The payments to HCX and the transfers of carbon credits were capable of assisting the fraud and would have constituted causative assistance if accompanied by dishonesty. The court therefore rejected the defendants’ alternative causation argument, although that conclusion was unnecessary once dishonesty had not been proved.
6. The case against Mrs Craig was particularly weak. She was an administrator who followed traders’ payment instructions, had no substantive contact with Autogas and did not appreciate that HCX was a separate entity. Her conduct was innocent. The evidence also did not justify findings of dishonesty against Mr Ochocki or Mr Saunders.
7. The court rejected the arguments based on estoppel and abuse of process arising from the HMRC settlement. The proceedings were not barred, although the settlement was relevant evidence when assessing the inferences urged by the claimant.

First-instance proceedings in the High Court. The judgment refers to earlier Chancery Division proceedings brought by Autogas’s liquidator, in which judgment was entered against other defendants, but no citation for that decision is stated.