Lloyd's Maritime and Commercial Law Quarterly
Accessory liability at common law and in equity—“The redundancy of knowing assistance” revisited
Simon Baughen*
Victims of fraud will frequently need to seek recovery from parties other than the rogue itself. At common law recovery against secondary parties will be determined by the principles relating to joint tortfeasors and their extension to the contractual sphere in
Lumley v.
Gye. In equity recovery against secondary parties will fall under the action for dishonest assistance. There have been frequent calls for the development of a unitary theory of accessory liability. This paper will argue that these three means of civil recovery against secondary parties all achieve the same end, of making such parties jointly and severally liable with the principal wrongdoer for losses sustained by that party’s breach. However, the participation links between the secondary party and the principal wrongdoer that lead to this result differ according to the nature of the right that has been violated. This paper will also show that there is a critical distinction between the direct imposition of joint and several liability, in tort, and its indirect imposition by means of a separate, “secondary” action under both
Lumley v.
Gye and dishonest assistance. This distinction has significant consequences for the ultimate recovery that is available to the victims of fraud when they seek to hold the employer of the secondary wrongdoer vicariously liable in respect of that party’s liability. This has led to a difference in outcome in like situations. This difference is justified by no good reason of policy and is ripe for judicial reconsideration.
1. INTRODUCTION
In 1994, in “The Redundancy of Knowing Assistance”, Sir Leonard Hoffmann, as he then was, called for the abolition of the equitable liability imposed on those who knowingly assist in a breach of trust.1
Lord Hoffmann (as he now is) argued that the existence of concurrent actions at common law and in equity was an embarrassing relic of the old division between law and equity. If liability was to be imposed on a party who had knowingly assisted in an innocent breach of trust, “that liability should be consistent with, and indeed based on, principles of wider application, not merely to breach of trust but to wrongs in general”.2
He concluded3
that: