In Group Seven v Notable Services LLP 1 the Court of Appeal considered and applied the two stage test of dishonesty set out by the Supreme Court in Ivey v Genting 2 in a claim for dishonest assistance in a breach of trust by various members of a legal disciplinary practice.
It overturned certain factual findings by the judge relating to the knowledge of one of the members of the legal disciplinary practice and held him liable for dishonest assistance in a breach of trust. The legal disciplinary practice was held to be vicariously liable for the member’s actions. The Court of Appeal also declined to hold that there was a “minimum content of the knowledge” which an accessory must have in order to be held liable for dishonest assistance.
The Fraud
In November 2011 a Swiss company Allseas Group SA was persuaded to invest in a medium term note investment opportunity following the promise of vast returns on its investment. Allseas incorporated a subsidiary company, Group Seven Ltd, for that purpose. The investment was in fact an elaborate fraud on Allseas and Group Seven.
Allseas transferred €100m to Group Seven who in turn paid those funds on to Allied Investment Corporation Ltd (AIC). AIC was a Maltese company which had been incorporated in October 2011 for the purpose of the fraud. AIC in turn purported to lend the money to Larn Ltd, a company owned and directed by one of the fraudsters Mr Nobre.
Larn directed the payment of its “loan” into the client account of Notable Services LLP, a legal disciplinary practice. Notable’s members included an accountant called Mr Landman, and two solicitors called Mr Meduri and Ms Ciserani. As part of its compliance obligations, Notable sought to verify the source of the funds. It obtained a reference of good standing of Mr Nobre from Liechtensteinische Landesbank (Switzerland) Ltd (the Bank). In fact, Mr Nobre had procured the assistance of a Mr Louanjli, a relationship manager at the Bank, who gave the false reference. Mr Louanjli received €561,860 for his role in the fraud.
Mr Nobre then gave instructions to Notable to make a series of forty payments out of its client account. Notable paid away €15m before the fraud was unravelled. One of these payments was for £170,000 to Nisroy Investment Inc, a Panamanian company. This company was owned by Mr Landman. Group Seven obtained judgment against a number of the fraudsters in 2013 and 2014 but failed to recover the entirely of its losses. Mr Nobre was convicted, amongst other things, of various counts of money laundering in November 2016 in connection with his involvement in the fraud. Following its failure to recover all of its losses from the primary fraudsters, Group Seven and Larn turned its attention to Notable and the Bank in two separate actions3.
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References
1. [2019] EWCA Civ 614. 2. [2017] UKSC 67. 3. See Group Seven and others v references to Notable. Nasir and others [2017] EWHC 2466 (Ch).
