Facts
- The case involved a bribery scheme relating to chartering contracts for oil tankers.
- Novoship (UK) Ltd alleged that Mr. Mikhaylyuk, a director of an intermediary company, assisted in breaches of fiduciary duty by aiding employees who accepted bribes to secure favorable contracts.
- The dispute concerned whether Mr. Mikhaylyuk knowingly assisted in these breaches and whether his actions caused Novoship’s losses.
- Substantial payments made to Mr. Mikhaylyuk’s company were scrutinized as potentially indicative of dishonest involvement.
- The factual matrix involved complex commercial transactions and multiple possible causes for the losses claimed by Novoship.
Issues
- Whether Mr. Mikhaylyuk’s actions constituted dishonest assistance in the breach of fiduciary duties concerning bribery.
- Whether Mr. Mikhaylyuk’s assistance was the direct cause of losses suffered by Novoship (UK) Ltd.
Decision
- The Court of Appeal applied the objective test for dishonesty, as set out in Royal Brunei Airlines Sdn Bhd v Tan.
- The court concluded that Mr. Mikhaylyuk had assisted the breach of fiduciary duty, but Novoship failed to demonstrate his actions were the primary cause of their losses.
- The judgment emphasized that liability for dishonest assistance requires both proof of dishonesty and a direct causal link to the claimant's loss.
Legal Principles
- Dishonest assistance is an equitable doctrine imposing liability on third parties who knowingly assist breaches of fiduciary duty.
- The test for dishonesty is objective, assessed according to the standards of ordinary honest people rather than the defendant’s subjective view.
- Causation is essential for liability: the claimant must prove that the defendant’s dishonest assistance caused the loss claimed.
- The evidentiary standard is stringent, particularly in commercial contexts where multiple factors may contribute to loss.
Conclusion
The decision in Novoship (UK) Ltd v Mikhaylyuk demonstrates that liability for dishonest assistance in breach of fiduciary duty, particularly in bribery and corruption cases, requires clear evidence of both objective dishonesty and that the assistance directly caused the claimant’s loss.