Fountain Court Chambers

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Court of Appeal review law of dishonest assistance post-Ivey and find Bank vicariously liable for bank manager’s dishonest assistance

The Court of Appeal has clarified the law of dishonest assistance and applied the modern law of vicarious liability against a bank for the fraud of one of its employees in an important decision handed down on 11 April 2019Jeff Chapman QC, Simon Atrill and Simon Paul (all of Fountain Court) were instructed by Mishcon de Reya LLP partners, Mike Stubbs and Victoria Pigott on behalf of the Claimants.

Following a four-day hearing in February 2019, the Court of Appeal the Court of Appeal (Peter Jackson, Henderson and Asplin LJJ) handed down the judgment of the Court on 11 April 2019 in Group Seven & Ors v Notable Services LLP & Ors [2019] EWCA Civ 614.   The Court disposed of three joined appeals arising from the judgment of Morgan J (Group Seven v Nasir [2017] EWHC 2466 (Ch).  All three appeals were resolved in favour of the Claimants.

These appeals mark the latest chapter in longstanding litigation arising from a €100m fraud.  In 2014, Jeff Chapman QC and Simon Atrill obtained judgment for the Claimants following a 30 day trial before Peter Smith J (upholding that judgment before the Court of Appeal). In 2017, Morgan J (after a 35 day trial) handed down judgment for the Claimants against various defendants alleged to have assisted in laundering the proceeds of the fraud, including Mr Louanjli, a banker, who was held to be liable in dishonest assistance, conspiracy and unconscionable receipt, his employer, Liechtensteinische Landesbank, who was held to be vicariously liable for Mr Louanjli’s dishonest assistance, and an accountant, Mr Landman, who was held to be liable in unconscionable receipt.

The Court of Appeal has now dismissed Mr Louanjli’s and Liechtensteinische Landesbank’s appeals on causation and vicarious liability grounds and allowed the Claimants’ appeal (and that of the Bank) against Morgan J’s finding that Mr Landman and his employer Notable Services LLP were not liable in dishonest assistance.

The judgment represents the first consideration by the Court of Appeal of the test for dishonesty in dishonest assistance since the Supreme Court’s judgment in Ivey v Genting [2017] UKSC 67, as well as consideration of the circumstances in which a bank can be vicariously liable for a dishonest reference given by one of its employees.