dishonesty

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Parties within a chain of transactions may face liability for dishonesty and assistance, even if they do not have actual knowledge of fraud.

By Stuart Alford QC and Yasmina Vaziri

The recent judgment in Bilta (UK) Limited (in liquidation) & ors v. NatWest Markets plc & Anor [2020] EWHC 546 (Ch) provides a timely illustration of how the concepts of dishonesty and assistance may apply in a chain of transactions in which not all parties have actual knowledge of the fraud. In the case, the defendant bank and its subsidiary were found to be vicariously liable for dishonest assistance to fiduciary breaches by the directors of the insolvent claimant companies, despite not having actual knowledge of the directors’ fraud. The directors were found liable on account of their participation in trades executed by two employee traders in a carbon credit based carousel fraud scheme.

By Stuart Alford QC, Daniel Smith and Clare Nida

The UK Supreme Court has unanimously ruled that the criminal dishonesty test in R v Ghosh is wrong and that courts should no longer follow this test. The recent decision in Ivey v Genting Casinos clarifies that the test for dishonesty in all proceedings (criminal and civil) is objective, and to be determined by reference to the standard of ordinary, decent people, without reference to whether the defendant realised that ordinary people would regard his or her conduct as dishonest.

The Facts: Ivey v Genting Casinos (UK) Ltd t/a Crockfords [2017] UKSC 67

The claimant, a professional gambler, used a technique called “edge sorting” during a game at the defendant’s casino, in which he and his associate represented to the dealer that he was superstitious, thereby persuading the dealer to turn the cards in a way which allowed the claimant to later identify those cards in later deals. The claimant won £7.7 million, but the defendant refused to pay out on the basis that the claimant was cheating.