Bilta (UK) Ltd & Ors v Natwest Markets Plc & Anor

Bilta (UK) Ltd & Ors v Natwest Markets Plc & Anor

The Defendants (RBS and RBS SEEL) are liable for dishonest assistance and knowing participation in fraudulent trading from 26 June 2009 to 6 July 2009 (inclusive) because their traders, by that time, had clear suspicions that their trading with CarbonDesk was connected to VAT fraud, deliberately chose not to inquire further or report their suspicions, and continued trading for profit. Their conduct met the objective standard of dishonesty, and both Defendants are vicariously liable for the traders' acts. The claims in relation to earlier trading and trading with GW Deals are dismissed.

Parties
Claimant: Bilta (UK) Limited (in liquidation) and others; First Defendant: NatWest Markets plc (formerly The Royal Bank of Scotland plc); Second Defendant: Mercuria Energy Europe Trading Limited (formerly RBS Sempra Energy Europe Limited)
Jurisdiction
England and Wales
Judgment Date
10 March 2020
Procedural Posture
Civil (commercial/fraud) / Final High Court Judgment After Full Trial
Outcome
Claim allowed in part; Defendants jointly and severally liable for dishonest assistance and knowing participation in fraudulent trading from 26 June 2009 to 6 July 2009 (inclusive); remainder of claims dismissed.
Legal Topics
Dishonest Assistance, Knowing Participation in Fraudulent Trading, Vicarious Liability, Attribution of Knowledge, MTIC VAT Fraud, Remedies for Breach of Fiduciary Duty
Commercial Law Equity and Trusts Insolvency Law Dishonest Assistance Knowing Participation in Fraudulent Trading Vicarious Liability Attribution of Knowledge MTIC VAT Fraud +1 more

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Parties

Bilta (UK) Limited (in liquidation) and others

Claimant

NatWest Markets plc (formerly The Royal Bank of Scotland plc)

First Defendant

Mercuria Energy Europe Trading Limited (formerly RBS Sempra Energy Europe Limited)

Second Defendant

Procedural Posture

Civil (commercial/fraud) / Final High Court Judgment After Full Trial

Legal Issues

  1. 1 Whether the Defendants (RBS and RBS SEEL) dishonestly assisted breaches of fiduciary duty by directors of the Claimant companies in connection with MTIC VAT fraud via carbon credit trading
  2. 2 Whether the Defendants knowingly participated in fraudulent trading under section 213 of the Insolvency Act 1986
  3. 3 Whether the Defendants are vicariously liable for the acts of their traders

Ratio Decidendi

The Defendants (RBS and RBS SEEL) are liable for dishonest assistance and knowing participation in fraudulent trading from 26 June 2009 to 6 July 2009 (inclusive) because their traders, by that time, had clear suspicions that their trading with CarbonDesk was connected to VAT fraud, deliberately chose not to inquire further or report their suspicions, and continued trading for profit. Their conduct met the objective standard of dishonesty, and both Defendants are vicariously liable for the traders' acts. The claims in relation to earlier trading and trading with GW Deals are dismissed.

Court Disposition

Claim allowed in part; Defendants jointly and severally liable for dishonest assistance and knowing participation in fraudulent trading from 26 June 2009 to 6 July 2009 (inclusive); remainder of claims dismissed.

Orders

  • Defendants to pay equitable compensation and/or contribution under section 213 Insolvency Act 1986 for losses arising from admitted or proven transaction chains involving trading with CarbonDesk from 26 June 2009 to 6 July 2009, quantum to be agreed or determined at further hearing.
  • Claims in relation to trading with GW Deals and trading prior to 26 June 2009 dismissed.