Trafalgar Multi Asset Trading Company v James David Hadley & Anor.

An agent’s actual authority may be implied from the parties’ common intention, the agent’s express authority over the principal’s money and a consistent course of dealing. That authority is nevertheless vitiated where the agent acts dishonestly, in conflict with the principal’s interests or for personal benefit. A third party may rely on apparent authority only where the principal made a representation capable of being relied upon and the third party was not aware of the disabling conflict.

Unlawful means conspiracy requires combination, intention to injure, concerted action, unlawful means and loss. The conspirator need not know that the acts are unlawful, but must know the facts making them unlawful. A financial-services introducer may fall within the regulated activity of making arrangements with a view to investment deals, while the scope of the relevant exemptions depends on genuine independent advice and proper diligence.

The claimant company, acting through its liquidators, brought claims arising from pension investments made through an investment fund structure. It alleged that the defendants had diverted or exposed the claimant’s assets through conflicted investments, undisclosed commissions, bribery and unlawful financial-services activity.

The trial concerned investments involving Dolphin Capital, Quantum, Momentum, Shawcross, Titan and CGrowth. Earlier proceedings had established bribery liability against Mr Hadley, Mr Thwaite and PPL in relation to the CGrowth transactions. The principal issues were the authority of Mr Hadley and Mr Biggar, liability for conspiracy, fiduciary breaches, dishonest assistance, unconscionable receipt, bribery and breaches of the Financial Services and Markets Act 2000.

1. Liability and authority. The claimant established substantial claims against Mr Hadley, Mr Chapman-Clark, Mr Lloyd and Pinnacle. Mr Hadley acted in breach of fiduciary duty through undisclosed conflicts, self-dealing and receipt of bribes. His actual authority could ordinarily have been implied from the parties’ common intention, his authority over Trafalgar’s bank accounts and the course of dealing. However, under Lysaught & Co Ltd v Falk, authority exercised dishonestly or contrary to the principal’s interests was vitiated. Titan could rely on apparent authority in relation to redemption of its loan notes because the prior dealings had impliedly represented that Mr Hadley had authority; that redemption also ratified the original subscription.
2. Original conspiracy. Mr Hadley, Mr Talbot, Mr Chapman-Clark, Mr Biggar, Mr Lloyd and Pinnacle participated, to differing extents, in an unlawful means conspiracy concerning the fundraising and the Dolphin Capital, Quantum, Momentum and Shawcross transactions. The claimant proved combination, intention to injure, concerted action, unlawful means and loss. Loss was the inevitable consequence of the conspirators’ intended gains. Knowledge that the conduct was unlawful was unnecessary, but knowledge of facts rendering it unlawful was required and could be established by blind-eye knowledge.
3. Titan. The Titan investment involved Mr Hadley’s undisclosed conflict and breach of fiduciary duty. Nevertheless, Mr Jones and Titan were not liable for conspiracy, dishonest assistance or unconscionable receipt. Mr Jones honestly believed that the conflict had been disclosed and approved, and his conduct was not dishonest by the standards of ordinary decent people. Titan’s receipt was not unconscionable on that state of knowledge.
4. CGrowth. The Proactive introducer agreement created an undisclosed conflict and constituted a further bribe. PPL acted within the scope of its agency for CGrowth, making CGrowth vicariously liable. CGrowth was also liable for dishonest assistance, unconscionable receipt and a separate conspiracy concerning the bribes. The CGrowth bond contracts were void, and the claimant was entitled to restitution of £5,460,000.90, damages and equitable compensation. Mr Wright was not personally liable.
5. Financial services regulation and privilege. Section 13 of the Fraud Act 2006 removed privilege against self-incrimination in property proceedings concerning offences involving fraudulent conduct or purpose. Applying Kensington and Ablyazov, offences under sections 23 and 24 of the Financial Services and Markets Act 2000 were treated as related offences because their essential nature generally involved deception. Mr Lloyd and Pinnacle breached section 21 and article 25(2) of the RAO. Article 33 did not apply because the advice was not independent in the required sense, and section 23(3) did not assist because reasonable diligence had not been shown.
6. Remedies. The claimant was entitled to equitable compensation, damages, rescission, restitution, accounts of profits and proprietary relief as appropriate, subject to an election to prevent double recovery. Quantum and consequential matters were reserved for a further hearing.

• Court of Appeal: The earlier summary-judgment decision concerning bribery was reversed and liability was entered against Mr Hadley, Mr Thwaite and PPL: [2022] EWCA Civ 1639.
• Supreme Court: Permission to appeal was refused on 18 April 2023.
• High Court: The present trial determined the remaining liability issues and reserved consequential relief.