Executive Authority for Air Cargo and Special Flights v Prime Education Limited (in liquidation) & Ors

The court applied established principles governing inducing breach of contract, dishonest assistance and conspiracy by unlawful means. A contractual intermediary entrusted with money for a defined purpose may owe fiduciary duties alongside contractual duties, even without an express trust. Directors who knowingly procure the misuse of that money, or deliberately facilitate it, may be liable as accessories. Dishonesty requires assessment of the defendant’s actual knowledge or belief, followed by the objective standards of ordinary decent people. A post-judgment freezing order requires a real risk of unjustified dissipation, not merely dishonesty or insolvency. Indemnity costs may be ordered where a defendant pursues a dishonest and hopeless defence which takes the case outside the norm.

The claimant, a Libyan executive agency, contracted with Prime Education Limited to arrange aviation education and training. Substantial sums were transferred for course fees, accommodation and student allowances. The contractual arrangements required the money to be held and used for the claimant’s project.

Prime Education transferred much of the money to PE Turkey, a company associated with its directors, and the money was used in Turkish property investments. Prime Education was later placed into liquidation and judgment had already been entered against it for breach of contract following an appeal determined by Saini J in [2021] EWHC 206 (QB). The trial concerned the liability of Mr and Mrs Sekerci and PE Turkey for inducing breach of contract, dishonest assistance, conspiracy and quantum, together with consequential applications for freezing relief and costs.

1. Inducing breach of contract. The test in OBG Ltd v Allan was satisfied. The Sekerci defendants knew that Prime Education’s dealings with the claimant’s money breached the amended contractual arrangements, and intended those breaches in order to secure an economic advantage for Prime Education, PE Turkey and themselves.
2. Fiduciary duty. Prime Education owed the claimant fiduciary duties in relation to its money. The contractual framework identified a specific purpose and imposed protections which, although weakened by the amendment, remained consistent with duties of loyalty, good faith, avoidance of unauthorised profit and avoidance of conflicts. The absence of an express trust did not prevent fiduciary obligations arising.
3. Dishonest assistance. The transfers to PE Turkey and the investment in Turkish property assisted Prime Education’s breach of fiduciary duty and made it easier than it otherwise would have been. Applying the principles in Royal Brunei Airlines Sdn Bhd v Tan, Ivey Genting Casinos UK Ltd and Group Seven Limited v Notable Services LLP, the defendants’ actual knowledge and beliefs, including firmly grounded suspicions deliberately left uninvestigated, were assessed against the objective standards of ordinary decent people. Both defendants acted dishonestly.
4. Conspiracy. The evidence established a combination with a common intention to achieve a common end. It was unnecessary for each defendant to participate in every act. The defendants intended a result which they knew would cause loss to the claimant, inseparably linked to their own or PE Turkey’s anticipated gain.
5. The defendants were jointly and severally liable for €13,349,788.74 with interest at 2 per cent per annum from 15 March 2017, and £1,871,560 with interest at 3 per cent per annum from that date, subject to credit for £495,706.63 paid by Prime Education. Judgment was entered accordingly.
6. A post-judgment freezing order was justified because the claimant had established a real risk of unjustified dissipation. The order was limited and included mechanisms permitting dealings directed towards satisfying the judgment debt. The Sekerci defendants were ordered to pay the claimant’s trial costs on the indemnity basis. Consequential costs, including those relating to the freezing order, were payable on the standard basis.

High Court, King's Bench Division: Saini J partially allowed the claimant’s appeal from the Senior Master’s refusal of summary judgment and entered judgment against Prime Education for contractual damages in [2021] EWHC 206 (QB). The remaining claims were tried before Mrs Justice Ellenbogen in the present proceedings.