Natwest Markets Plc & Anor v Bilta (UK) Ltd & Ors

A seriously delayed judgment on disputed facts is not set aside merely because of the delay. However, the appellate court must scrutinise the evidence with special care. Where material contemporaneous evidence was not addressed and the delay prevents confidence that the trial judge reached the right conclusion, the judgment is unsafe and a retrial may be required.

In a loaned-employee case, vicarious liability depends on the practical relationship between each organisation, the employee and the wrongdoing. Contractual labels do not determine the issue. Dual liability may arise where the employee remains an integral part of both organisations’ businesses; a complete transfer of responsibility from the general employer will be rare.

The claimants were companies used in a carbon-credit MTIC fraud and later placed in liquidation. They alleged that two traders dishonestly assisted the fraud by continuing to trade EU Allowances through CarbonDesk, thereby facilitating the fraudsters’ breaches of duty.

Snowden J held the two defendant companies liable for dishonest assistance and fraudulent trading from 26 June to 6 July 2009. He also held that both companies were vicariously liable for the traders’ conduct. The defendants appealed. The claimants cross-appealed, seeking to extend the period of liability, and the second defendant separately challenged the finding of dual vicarious liability.

The central issues were whether the lengthy delay in delivering the first-instance judgment made its factual findings unsafe, and whether the traders remained sufficiently connected with both businesses for dual vicarious liability to arise.

1. Appeal allowed in part. The court set aside the findings of dishonest assistance and fraudulent trading and ordered a retrial before a different judge. The 19-month delay did not itself invalidate the judgment. However, it required special scrutiny of challenged factual findings. The judge had not addressed contemporaneous documents which materially corroborated aspects of the traders’ account of the CarbonDesk dinner. The court could not be satisfied that the critical findings about that dinner were right, applying Bond v Dunster Properties Ltd [2011] EWCA Civ 455.

2. The omitted material could support a materially different view of whether questions about CarbonDesk’s business model had been asked and answered. It was not for the appellate court to remake those closely connected credibility findings. A limited retrial was inappropriate because the unsafe findings went to the judge’s overall assessment of the traders’ evidence and states of mind.

3. The court did not determine the remaining factual grounds or the claimants’ principal cross-appeal. It nevertheless rejected the claimants’ alternative legal submission. Under Ivey v Genting Casinos (UK) Ltd [2017] 3 WLR 1212, dishonesty requires the defendant’s actual knowledge or belief to be identified and conduct then assessed by ordinary standards. Mere questions or concerns which a trader does not report to Compliance do not necessarily establish dishonesty. Blind-eye knowledge requires more than a mere or speculative suspicion, consistently with Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd [2003] 1 AC 469.

4. RBS SEEL’s discrete appeal was dismissed. The contractual arrangements did not transfer all responsibility for the traders to RBS. Applying the practical and structural approach in Viasystems (Tyneside) Ltd v Thermal Transfer (Northern) Ltd [2006] QB 510, the traders remained employees of, paid by and subject to overarching responsibilities of RBS SEEL, while acting for RBS in its trading business. They were sufficiently integrated into both organisations for dual vicarious liability to be just. A complete shift of liability to the borrowing organisation will be very rare.

• Court of Appeal (Civil Division) In Natwest Markets Plc & Anor v Bilta (UK) Ltd & Ors [2021] EWCA Civ 680, allowed the principal appeal, set aside the liability findings and ordered a retrial before a different judge. It dismissed the second defendant’s separate appeal on vicarious liability.

• High Court of Justice, Business and Property Courts, Chancery Division (Financial List) Snowden J held both defendants liable for dishonest assistance and fraudulent trading from 26 June to 6 July 2009, and held both vicariously liable for the traders’ misconduct.