Group Seven Ltd & Anor v Notable Services LLP & Anor (Rev 2)

Dishonest assistance requires a court first to determine the defendant’s actual knowledge, beliefs and relevant suspicions, including any blind-eye knowledge. It must then assess that state of mind by the objective standards of ordinary decent people. There is no further requirement that the defendant appreciated that ordinary people would regard the conduct as dishonest.

Blind-eye knowledge requires a firmly grounded suspicion of specific facts and a deliberate decision not to confirm them. Suspicions falling short of that standard may nevertheless inform the objective assessment of honesty. In claims for dishonest assistance, the assistance need only be more than minimal, and loss must result from the breach of trust; common-law rules of remoteness do not impose a stricter causal requirement.

The appeals arose from a fraud in which €100 million was paid into the client account of Notable Services LLP and approximately €15 million was later paid away. Group Seven and Larn alleged that Notable and its member, Mr Landman, dishonestly assisted breaches of trust and fiduciary duty. They also alleged that Mr Louanjli, an employee of LLB, gave dishonest assurances which helped procure the use of the client account, and that LLB was vicariously liable.

Morgan J held that Mr Landman had acted dishonestly in authorising payments and was liable for unconscionable receipt of a £170,000 bribe, but was not liable for dishonest assistance. He held Mr Louanjli liable and LLB vicariously liable: [2017] EWHC 2466 (Ch). The central issues were dishonest assistance, causation, and the close connection required for vicarious liability.

1. The appeals concerning dishonest assistance were allowed. The applicable test was the two-stage test in Royal Brunei Airlines v Tan [1995] 2 AC 378, as confirmed by Ivey v Genting Casinos (UK) Ltd [2017] UKSC 67. The court must ascertain the defendant’s actual knowledge or belief as to the facts. It must then decide objectively whether, by ordinary decent standards, the conduct was dishonest. The defendant need not realise that those standards condemn it.

2. The judge had wrongly compartmentalised Mr Landman’s conduct. His negotiation and concealment of the £170,000 bribe were inseparable from procuring the receipt of the €100 million into Notable’s client account and the subsequent payments out. The unchallenged facts showed that an honest person would have recognised that Mr Nobre was not entitled to the funds. Mr Landman had, at least, blind-eye knowledge: he clearly suspected the true position and deliberately avoided confirmation because disclosure would have halted the scheme. He and Notable were therefore liable for dishonest assistance.

3. Blind-eye knowledge requires a firmly grounded and targeted suspicion, coupled with a conscious decision not to obtain confirmation. Suspicions below that threshold remain part of the defendant’s state of mind and may be material to the objective inquiry. The court expressed, without deciding the point, a provisional view that no separate legal minimum content of knowledge should be added to the unified dishonesty test.

4. The causation appeals were dismissed. Mr Louanjli’s statements materially assisted the breach by influencing Notable. The necessary causal connection is that the assistance is more than minimal and that the loss resulted from the breach of trust. There was no basis for importing stricter common-law rules of directness, remoteness or intervening cause. Notable’s payments did not break the chain of causation.

5. LLB’s vicarious-liability appeal was dismissed. Applying the close-connection test, Mr Louanjli’s role as LLB relationship manager and his purported provision of LLB information were central to the wrongdoing. His lack of actual authority and pursuit of personal gain did not put him on a frolic of his own. The connection between his employment and the dishonest statements was sufficient to make LLB liable.

• Court of Appeal (Civil Division): Allowed the appeals of Group Seven, Larn and LLB on Mr Landman’s and Notable’s liability for dishonest assistance. Dismissed the causation appeals of Mr Louanjli and LLB, and LLB’s vicarious-liability appeal: [2019] EWCA Civ 614.
• High Court (Chancery Division): Morgan J held that Mr Landman and Notable were not liable for dishonest assistance, but held Mr Louanjli liable and LLB vicariously liable: [2017] EWHC 2466 (Ch).