Legal Village

Dishonesty by lots of other names

Posted 11/10/2007 by Robert Hunter

If you know the terms of a contract and deliberately persuade someone else to break it, you can be held liable for the tort of inducing a breach of contract.  On the other hand, if you knew of a trust or fiduciary duty and deliberately assisted someone to break it, you can, following Brunei Airlines v Tan , be held liable only if you acted dishonestly. 

The problem is, some words like “intelligence”, “sensitivity” and, of course, "dishonesty" are a bit of a pain to define.  True, there are some things that everyone would regard as dishonest.  Theft and deceit are good examples.  But the label "dishonest" is much harder to apply than we like to think it is.  Presumably that is why, just as Eskimos reputedly have 40 names for “snow”, we have so many names for things that might or might not amount to dishonesty: "sharp", "underhand", "outrageous", "disingenuous", "close to the wind", “disreputable”, "questionable", "dubious" and so on.  Because the term "dishonesty" is too blurred at the edges for a court to use as it stands, we have to invent a legal definition of it.  But that isn’t the end of the problem:  define "dishonesty" too narrowly and deserving victims leave court penniless; define it too widely and reputation and careers are ruined needlessly.

Two or arguably three reversals of view by the House of Lords and Privy Council suggest that the balance might be impossible to strike.  It is time to reconsider whether we should revert to the previous wording of “knowing assistance” in a breach of trust or fiduciary duty that was in use before Brunei Airlines v Tan.  It might not have been perfect, but arguably it was better.
Robert Hunter

On the evening of 24 October Allen & Overy is holding a debate "This house believes that 'dishonesty' is a poor criterion by which to determine the civil liability of financial institutions."
Proposing the motion will be Robert Hunter and Robert Bright QC and opposing the motion will be  Neil Calver QC and Barbara Dohmann QC.  If you would like to attend click here for an invite.