Analyzing Accessory Liability In Civil Law

Introduction

Accessory liability a person is liable if he participates in doing wrong to another. In civil and criminal law, a person is liable if he participates in doing wrong to another. According to Paul Davies, the requirement that the defendant must be dishonest in order to invoke accessory liability is not appropriate in civil cases. He argues that the concept of accessory liability is not usual in the civil law. This concept is applied uniformly in criminal law, but no so in private law.

This essay will critically analyse Davies’ argument in order to explore the appropriateness of defendant’s knowledge instead of the need to establish dishonesty to determine whether there is accessory liability. This essay will discuss tests suitable to accessory liability in civil law. It will discuss elements in respect to determining whether the accessory liability concept is consistent with private law. In that regard, this essay will examine case law principles around the elements of dishonesty, including intention, foresight with intent to assist, common design, and knowledge. It will discuss case laws such as Royal Brunei that provides for objective test of accessory liability, Powell that provides about foresight of the conduct of the principal offender; Shepherd UK that dealt with the element of common design, and the landmark case of Ivey that provides for the subjective test of dishonesty’ applicable in both the both civil and criminal proceedings.

Accessory liability and applicability to civil law

In civil and criminal law, a person is liable if he participates in doing wrong to another. This liability is often described as “accessory”, “secondary”, or “derivative” as it is condition upon a wrong committed by the principal wrongdoer. In criminal law, this liability principle is uniformly applied across all the crime, but such uniform application cannot be found in private law. But there is the doctrine of “joint tortfeasance” in private law that deals with participatory liability. Equity, however, defines an accessory as being the person who “induces, procures or assists with a breach of trust or fiduciary obligations”. Equity relies on dishonesty to curtail liability and tort relies on “common design” to that effect. The defendant’s participation in the wrong is more than minimal to be held liable, and that their act must be with a mental element. This calls for a balance approach to determine both the level of participation and the mental element.

The principal question relates to accessory liability and what mental elements need to be established for the purpose of determination of accessory liability. Paul Davies argues that requiring the defendant to be dishonest for the accessory liability to arise, is not appropriate in civil cases. Davies acknowledges that the setting of the mental element in such cases is a complicated affair requiring a balance between the interest of the claimant and the defendant, because mental element set “too high, and the claimant’s rights are inadequately protected; too low, and the defendant’s freedom of action is unduly compromised.” Therefore, what is needed is setting an adequate standard of mental element that is able to secure the interest of the claimant and does not put the defendant at too much disadvantage. In other words, what is needed is a balanced approach, for which the requirement of ‘dishonesty’ may not be truly satisfactory. This is the argument presented by Davies, based on which he proposes that it is preferable “for the law to focus on the defendant’s knowledge: if the defendant actually knew of the primary wrong, or consciously turned a blind eye to what he or she knew in order to avoid such knowledge, then accessory liability might lie.” Similar observation regarding applicability of criminal law principle to civil law is made in Twinsectra Ltd v Yardley. So, it is necessary to critically analyse the argument put forth by Davies in order to explore whether it is more appropriate that instead of requiring establishment of dishonesty, defendant’s knowledge be used to determine whether accessory liability arises in the given case. Continue your exploration of Analysis of the Lotus Case with our related content.

The judgment of the Privy Council in Royal Brunei Airlines SdnBhd v Tan is a landmark decision on the area of accessory liability. The case itself concerned breach of trust and dishonest assistance. The defendant was the managing director and main shareholder of the company (Borneo Leisure Travel) appointed by the claimant for booking passenger and cargo flights on its behalf. Borneo Leisure Travel diverted the money paid by the claimant into its current account and used it for its own business, failed to pay on behalf of the claimant on time, and went insolvent. The claimant filed an action for recovery of the money from the defendant. The Privy Council held in favour of the claimant. Lord Nicholls wrote in the judgment that what decided the liability of the defendant in the case was the dishonest state of mind, further holding that the test for being liable in assisting breach of trust is an objective one, which must depend on dishonesty state of mind. An important point made in this case was that if the assistance is dishonest then the state of mind of the trustee (in this case, Borneo Leisure Travel) will be irrelevant. The defendant must have knowledge of the existence of a trust obligation in order to be liable as an accessory to the breach of the trust. The defendant shall not be held liable for dishonest assistance in the breach of trust if he does not know of the existence of that trust or at least the facts that give rise to the trust. In Williams v Central Bank of Nigeria, the appellant sought to make the defendant bank liable for fraud committed by its customer. The court while dealing with the issue of whether a party liable only as a dishonest assistant was a trustee held that trustee definition under the Limitation Act 1980, s21 did not apply to someone deemed a trustee for either acting as a dishonest assistant or knowing the recipient within a fraudulent scheme. They could only be treated as constructive trustees.

The doctrine of accessory liabilities became clearer in the case of R v Powell; R v English. Defendants will be liable as accessories if they foresaw what the principal offender might do. This principle was based on the reasoning in R v Chan Wing-Siu, which termed the principle of joint enterprise as parasitic accessory liability and further held foresight is sufficient intent. This principle needed a reformative approach where the basis for the parasitic accessory liability must be moral culpability, which is further determined by subjective mental state of the defendant. However, they will escape liability if they moved outside the scope of the joint crime venture.

However, R v Jogee overruled these principles and held that it is wrong to equate “foresight with intent to assist, as a matter of law; the correct approach is to treat it as evidence of intent”. There should have been a focus on knowledge of the relevant facts instead that rendered the act of the principle criminal. Jogee abolished liability in respect to “joint criminal enterprise” replacing it with ordinary principles of aiding and abetting. In the civil law sphere, the problem with accessory liability principle is that there is no uniform doctrine in civil law, which reiterates Davies view that it is an unusual concept in civil law. A person can be liable as an accessory in equity for his dishonest assistance in breach of trust, but the problem is that there is no tortuous liability for dishonest assistance. In tort however, a person will be only liable when the person is a joint tortfeasor if he acted pursuant to a common design, as seen in Shepherd UK v Fish & Fish Limited. There is thus a divergence between the civil and criminal approach to accessory liabilities. However, such divergence cannot be assimilated in case overreaching principles for accessory liability in civil law is mainly defined by referring to criminal concept of complicity. This is also reflected by Davies. Seeking a form of consistency between criminal and civil law in this respect creates an assumption that the criminal law principle is correct. This cannot hold true to all instances of accessory liabilities, which is not confined to civil wrongs that could be criminal offences as well. Davies states that reasons should be stated for the difference between civil and criminal laws. Paradigm cases of civil and criminal laws are different, and their underlying rationales are also different. However, both the laws are arguably restrictive. Stevens argues that the civil law and criminal law should be distinct. There are inchoate crimes, but no inchoate torts. The only act of the principal wrongdoer is attributed to the accessory in civil law, unlike that in criminal law. Civil liability may be imposed despite the absence of any primary wrongdoer is not convincing. Criminal liability can be imposed upon accessory in case the principal offender has special defence. The mode of participation differs, for instance authorisation is sufficient to make accessory liable, but not so under criminal law.

In respect to determining whether the accessory liability concept is consistent with private law, the concept of “knowing assistance” in tort would be considered consistent with the application of accessory liability in contractual and equitable spheres. But, the problem lies in the fact that there is a difficulty in differentiating between inducement and assistance, which would make the law difficult to recognise assistance. It is argued that there was no clarity about why the accessory liability to a breach of a fiduciary duty should turn on mala fides of the fiduciary. For example, in cases where the accessory instigated nor merely assisted the breach of fiduciary duty, the accessory was held liable despite the fact that the fiduciary violated his duty obligations innocently. Reconciling between inducement and assistance in this regard is not practicable or justifiable. It would be difficult for the court to differentiate between instances of inducement and that of assistance. It may however be reasonable to treat some differences in culpability between the two. Further, drawing an analogy between assisting principle in fiduciary duties and tort commission is not without problems. The reason is that that liability and dishonest assistance present an accessorial nature. So, the contractual obligation or the fiduciary obligation is not legitimately attributing to the accessory. For instance, a contracting party can only commit breach of a contract. Likewise, a fiduciary can only commit breach of fiduciary duty. This is unlike in tort where it can be committed by anybody, which makes tort different in which the tortuous act of the principal can be attributed to the assister, who can then be held liable. In contract, an assister helping the principal in breaching the contract cannot be held liable. In case of unjust enrichment, the liability of the equitable recipient should not be displaced by the strict liability claim. Based on doctrinal and policy grounds, the equitable fault-based liability test may arguably best reconcile the competing claims of beneficiary of a fiduciary relationship or a trust and also the third party recipient of a trust property.

The recent case of Shepherd UK v Fish & Fish Limited, reiterated the principles of accessory liability for joint tortfeasors by presenting the doctrine of “common design”. In this case, Fish & Fish Limited, a Malta based fish farm operator was transporting live Bluefin tuna in the Mediterranean Sea. Some divers from the vessel "STEVE IRWIN" entered the sea and cut the cages containing the Bluefin tuna, which led to the escape of the tuna. Fish & Fish Limited sued Sea Shepherd UK (SSUK), Sea Shepherd Conservation Society (SSCS) and Mr Paul Watson for the value of the tuna. The vessel was arrested in Scotland as security for the proceedings. Fish and Fish allegedly held SSUK liable as it was the owner and Mr. Watson was a director in SSUK, and his role, as stated by the sole employee of SSUK, was to set up stalls at English music festivals and to arrange volunteer training event. On the issue whether SSUK was liable for the acts of the divers Lord Toulson held that a defendant will be jointly liable for any tortious acts of the principal in case he acts in a way that furthers the commission of those acts by the principal to a level greater than de minimis, and he does so pursuant to a common design to do or to secure doing of the acts that constitute the tortuous acts. There is apportionment of tortuous liability and it does not matter if the defendant’s contribution is relatively unimportant once it is shown that the acts are more than trivial or de minimis. Lord Neuberger observed that accessories liabilities are fact sensitive and that the test is not to over analyse the fact or to establish the necessary amount of connection between the defendant and the tortuous act. Based on these ruling, claims against the defendants were dismissed. Lord Neuberger presented three conditions to be fulfilled before the defendant is held. Firstly, the prosecution must prove that he assisted commission of the act by the primary tortfeasor. Secondly, such assistance is in pursuant to a common design between him and the primary tortfeasor that the act be committed. Thirdly, the act constitutes tort against the claimant. Beatson LJ, in this case, presents two possibilities behind the concern that tort law may not follow equity in respect to assistance liability. Firstly, tort law does not have the traditional role of equity in respect to protecting trusts and beneficiaries of fiduciaries relations. Secondly, there is a problem of balancing between two arguments, one is the having actual knowledge of intent to commit the tort is the only requirement to establish liability, and the other is lesser forms of knowledge suffices. This inherent problem to find the stable state will cause similar difficulties if assistance liability is accepted in tort.

In Ivey v Genting Casinos [2017] UKSC 67, the Supreme Court formulated a new test to determine the element of ‘dishonesty’ applicable in both the both civil and criminal proceedings.

It removes the requirement of dishonesty and held that the first thing to do is to subjectively ascertain “the actual state of the individual's knowledge or belief as to the facts.” Further, the “reasonableness or otherwise of his belief may evidence whether he held the belief, but it is not an additional requirement that his belief must be reasonable; the question is whether it is genuinely held.” After determining and establishing that, it must be determined “whether his conduct was dishonest by applying the objective standards of ordinary decent people. It is not necessary for the individual to appreciate that what he has done is, by those standards, dishonest.” This test considers the facts as known to the defendant, his or her personal attributes, intelligence, experience, and the reason why they acted as they did. All these elements are subjective. Whether they genuinely held the belief is evident from the reasonableness or otherwise of their belief. There is clear dishonestly of they knew that they were being asked to take on a transaction in which they could not honestly participate. Liability cannot be avoided if he was suspicious because of a conscious decision not to make any enquiries. The Ivey case overruled R v Ghosh case, which had been the test for determining dishonesty. According to this case, dishonesty was held to be state of mind and not a course of conduct. The test under Theft Act 1968, s15 was subjective and also objective. It has to be objectively determined whether the defendant’s conduct was dishonest as per the standard of reasonable and honest person. If it was, it has to be further subjectively determined whether he realised what he was doing was dishonest by those reasonable standards. The last sentence of the test laid down in Ivey “...not necessary for the individual to appreciate that what he has done is, by those standards, dishonest” overruled Ghosh.

Conclusion

The Supreme Court test in Ivey may be subject to future test in order to determine whether it could effectively achieve the balanced approach, as stated by Davies. If otherwise the balanced approach could not be attained, it is evident to the fact that the uniform application of accessory liability principle in criminal cases cannot be done so in civil law. In such case, there has to be a reformist approach that would be able to formulate a balance principle applicable in all spheres of civil law to secure the interest of the claimant and does not put the defendant at too much disadvantage.

It is true that determining the mental element is complicated affair that requires the balanced approach. The complexity of determining the accessory liability could be seen in the court rulings moving from Royal Brunei, which provided an objective test to determine the dishonesty state of mind, and the knowledge of the existence of a trust obligation; to Shepherd UK, which provided for a joint tortfeasor pursuant to a common design principle, and to most relevant Ivey case, which removes the requirement of requirement of dishonesty, and provides for determining state of knowledge or reasonable belief applicable in both the both civil and criminal proceedings.

The observation made in SSUK case has signs of remaining relevant and applicable in future case. The principle of apportionment of tortuous liability and the fact that accessories liability is fact sensitive all the more reflect Lord Neuberger’s statement that the test is not to over analyse the fact or to establish the necessary amount of connection between the defendant and the tortuous act. This seems to have reflected in the subjective test laid down in Ivey case. The arguments and case principles discussed so far seems to have shaped the way of the court towards a more coherent approach in respect to the mental element in accessory liability area

Bibliography

Books

Davies P, Accessory Liability (Hart Publishing 2015)

Sparkes P, Property and Trust Law in England and Wales (Kluwer Law International BV 2019)

Sliedregt EV, ‘Joint Criminal Confusion: Exploring the merits and demerits of joint enterprise liability’ in Beatrice Krebs (ed.), ccessorial Liability After Jogee (Hart Publishing 2019)

Journals

Dietrich J and Pauline Ridge, ‘Receipt of What: Questions concerning Third Party Recipient Liability in Equity and Unjust Enrichment’ (2007) 31 Melb. UL Rev. 47.

Lee J, ‘Reforming Parasitic Accessory Liability in English Law’ (2016) 7 King's Student L. Rev. 52.

Nolan R, ‘From Knowing Assistance to Dishonest Facilitation’ (1995) 54(3) The Cambridge Law Journal 505-507.