Fraudulent Trading

How you might look steer clear of fraudulent trading and dishonest assistance

How you might steer clear of fraudulent trading and dishonest assistance

Someone seeking to discover how you might steer clear of allegations of fraudulent trading and dishonest assistance might fancy (and then again of course they might not), having a trawl through this massive judgment, running to 579 paragraphs that Mr Justice Snowdon served up for us in Bilta (UK) Ltd & Ors v Natwest Markets Plc & Anor [2020] EWHC 546 (Ch) that has finally landed, almost 20 months after the relevant hearings.

Mr Justice Snowdon notably acknowledged the delay when he paid tribute to those preparing the case and apologised:

In view of the length of the judgment such a delay appears understandable. But was it worth the wait for the applicants? Well, they appear to have been in part successful.

It was notable that oral evidence was extensive and the judge appears to have asked a few questions as well in view of the transcripts reproduced in the judgment.

Let’s get right down to the bare bones of some of the key points that sprouted about fraudulent trading and dishonest assistance allegations.

Dishonest Assistance Concept

For dishonest assistance it was said that you need dishonesty, assistance and breach trust or fiduciary duty.

Fraudulent Trading

For fraudulent trading it was said you need to show subjective intent to defraud or reckless indifference.

Fraudulent trading can extend to outsiders ie. not merely the management of the company whose trading was undertaken to defraud.

Vicarious Liability

Anyone with a keen appetite for the points on vicarious liability at large go to paragraph 193 for around 10 paragraphs on it.

Dishonesty

For dishonesty it was said that ” Honesty is a basic moral quality which is expected of all members of society. It involves being truthful about important matters and respecting the property rights of others … Acting dishonestly means simply not acting as an honest person would in the circumstances”

The test of dishonesty was said to be objective and that the “assister” might not know all the relevant facts.

The burden of proof was held to be with the claimant at a civil standard ie. balance of probability.

Relief:

Disclaimer: The comments in this post are not legal advice and ought not be relied upon as such. No liability is accepted by the author for any reliance placed upon the same. You should seek independent legal advice to consider the discrete facts of your scenario.

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