Grosvenor Property Developers Limited (in liquidation) v Partner Law Limited

Facts

Grosvenor Property Developers Limited (GPDL), now in liquidation and acting through its joint liquidators, raised money from investors to buy a former hotel building in Bristol and convert it into student accommodation. It went into liquidation before it acquired the building. Some £7m had been fraudulently misappropriated by its sole de jure director, Mr England, and its de facto director, Mr Varma. It was not disputed that £2,399,000 to which GPDL was beneficially entitled, or the traceable proceeds of that money, passed through the client account of Portner Law Limited, an incorporated firm of solicitors. The money was used in three transactions: the aborted purchase of a flat in Green Street, the purchase, refinancing and sale of a flat in Hallam Street, and a £2m loan by Dare to Invest Limited. The partner who handled these transactions, Mr Broughton, acted for Mr Varma's son and for companies controlled by the Varmas. He carried out few anti-money laundering checks, breached the Firm's own policies and gave untrue information to lenders. The Firm accepted that it would be vicariously liable, and that Mr Broughton's acts would amount to dishonest assistance, if he had been dishonest. Dishonesty was therefore the only issue at trial. Saira Salimi, sitting as a Deputy High Court Judge, found that he had been dishonest on a 'blind eye' basis. The Firm appealed on the ground that she had taken the wrong approach to dishonesty.