Barlow Clowes International Ltd & Anor v Eurotrust International Ltd & Ors (Isle of Man)  UKPC 37 (10 October 2005)
Privy Council Appeal No. 38 of 2004
(1) Barlow Clowes International Ltd. (in liquidation)
(2) Nigel James Hamilton and
(3) Michael Anthony Jordon Appellants
(1) Eurotrust International Limited
(2) Peter Stephen William Henwood and
(3) Andrew George Sebastian Respondents
THE COURT OF APPEAL OF THE
ISLE OF MAN
(STAFF OF GOVERNMENT DIVISION)
JUDGMENT OF THE LORDS OF THE JUDICIAL
COMMITTEE OF THE PRIVY COUNCIL,
Delivered the 10th October 2005
Present at the hearing:-
Lord Nicholls of Birkenhead
Lord Walker of Gestingthorpe
[Delivered by Lord Hoffmann]
"exaggerated notion of dutiful service to clients, which produced a warped moral approach that it was not improper to treat carrying out clients' instructions as being all important. Mr Henwood may well have thought this to be an honest attitude, but, if so, he was wrong."
"35. There is, in my opinion, a further consideration which supports the view that for liability as an accessory to arise the defendant must himself appreciate that what he was doing was dishonest by the standards of honest and reasonable men. A finding by a judge that a defendant has been dishonest is a grave finding, and it is particularly grave against a professional man, such as a solicitor. Notwithstanding that the issue arises in equity law and not in a criminal context, I think that it would be less than just for the law to permit a finding that a defendant had been 'dishonest' in assisting in a breach of trust where he knew of the facts which created the trust and its breach but had not been aware that what he was doing would be regarded by honest men as being dishonest.
"36. … I consider that the courts should continue to apply that test and that your Lordships should state that dishonesty requires knowledge by the defendant that what he was doing would be regarded as dishonest by honest people, although he should not escape a finding of dishonesty because he sets his own standards of honesty and does not regard as dishonest what he knows would offend the normally accepted standards of honest conduct."
"solid grounds for suspicion, which he consciously ignored, that the disposals in which Mr Henwood participated involved dealings with misappropriated funds."
"it did come home to Mr Henwood during this period that there must be some real possibility that the monies which Mr Cramer was putting through ITC, emanating as he knew from Barlow Clowes, could well be gilt investors' money."
"This is quite obviously a lie, and it is so desperate a lie, that I ask myself why he should resort to it. It could be that when he learned about the nature of Barlow Clowes' business he was not prompted to be suspicious, and he is now lying out of fear that this would not be believed – or it could be that he did become suspicious and he is lying in such an extreme way because he does not think that merely denying that he drew suspicious conclusions is a credible position. This could only be because he himself would not think it potentially credible. Given that there is some evidence that Mr Henwood was, indeed, beginning to question the source of Mr Cramer's supposed wealth, I find that the latter is the more likely explanation. I think Mr Henwood lied about actually gaining knowledge of Barlow Clowes' business at this time precisely because such knowledge caused him to ask himself questions which he now realizes are damning."
"The evidential basis for [the finding of suspicions which were consciously ignored] therefore wholly stems from the Acting Deemster's legitimate disbelief of much of Mr Henwood's oral testimony coupled with the inferences she draws from it. These are that he knew the money came from members of the Barlow Clowes group and because he knew the money came from this source and the general nature of the group's business he must, as a matter of objective assessment, also have appreciated that the disposals were of money which had been misappropriated in breach of trust."
"knew anything about, for example, the actual conduct of the businesses of members of the Barlow Clowes group, the contractual arrangements made with investors, the mechanisms for management of funds under the group's control, the investment and distribution policies and the precise involvement of Mr Cramer in the group's affairs."