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Court of Appeal decision in €100 million civil fraud claim

7th May 2019

Group Seven Ltd v Notable Services LLP [2019] EWCA Civ 614

The Court of Appeal has handed down judgment in a major civil fraud case concerning the theft and laundering of €100 million. In Group Seven Ltd v Notable Services LLP [2019] EWCA Civ 614, Sonia Tolaney QC and Michael Ryan, instructed by Alan Sheeley of Pinsent Masons, acted for the Swiss Bank LLB Verwaltung AG in its successful appeal against the law firm Notable Services LLP and its member Mr Martin Landman, establishing the respondents’ liability in dishonest assistance.

At an 8-week trial in the Chancery Division, the Bank established that Mr Landman had dishonestly breached the Solicitors Accounts Rules by providing banking services through Notable’s client account to the fraudster Mr Louis Nobre which enabled the €100 million to be laundered. In return, Mr Landman was paid a bribe of £170,000 by Mr Nobre. Despite this, the trial Judge (Morgan J) held that Mr Landman did not have the requisite knowledge to be liable for dishonest assistance because, so the Judge found, Mr Landman did not know or have blind eye knowledge that the €100 million was not at the free disposal of Mr Nobre.

In the Court of Appeal, the Bank successfully overturned this finding. The Court of Appeal unanimously held that Mr Landman and Notable were liable in dishonest assistance and thus liable to make a contribution to the Bank in respect of its liability to the claimants. The Court held:  

“Mr Landman is condemned by his own actions, which speak for themselves. Had he been acting honestly, he would not have negotiated the £170,000 bribe… nor would he have taken steps to conceal it from his colleagues.’

“Mr Landman must have had blind-eye knowledge that the €100m was not beneficially owned by [the fraudster’s company], and that the money was not at [its] free disposal.

“The judge’s undisputed primary findings create an irresistible inference that Mr Landman clearly suspected (if indeed he did not actually know) that the money was not [the company’s], and that he consciously decided to refrain from taking any step to confirm the true state of affairs for fear of what he might discover.”

The Court of Appeal’s decision is a rare instance of the Court overturning a Judge’s findings of fact. The decision also illustrates the application of the law of dishonest assistance following the Supreme Court’s re-statement of principle in Ivey v Genting Casinos [2018] AC 391, and the law relating to blind-eye knowledge as set out in Manifest Shipping v Uni-Polaris [2003] 1 AC 469.

In addition to the dishonest assistance appeal, the Court also considered the law of vicarious liability in confirming the Judge’s decision to hold the Bank vicariously liable for the dishonest conduct of its employee who was also implicated in the fraud. The decision demonstrates the width of application of vicarious liability, even in the commercial context.

Further, the Court also considered the application of the principles of causation in dishonest assistance claims, confirming the two-stage test requiring (1) conduct which in fact assists a breach of trust (Baden v Société Générale [1994] 1 WLR 509) and (2) that the loss sought to be recovered in fact resulted from the breach of trust (Grupo Torras SA v Al-Sabah [2001] Lloyds Rep Bank 36).

The Judgment can be accessed here.

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