PROVING THINGS 126: FAILURE TO PROVE DISHONESTY
The judgment in Autogas (Europe) Ltd v Ochocki & Ors  EWHC 2345 (Ch) highlights the difficulties for a claimant who has to prove fraud as an essential element of their claim. The judgment also emphasises the needs to plead allegations of fraud and dishonesty in some detail. The court will not infer dishonesty from matters that are not pleaded. Further the claimant adduced no evidence that the price being paid for goods was such as to render the contract unreasonable or suspicious.
The claimant brought an action against the defendants alleging that they were involved in a vat fraud, whereby gas was sold on to other parties whilst avoiding VAT. The claimant’s claim was that the defendant had provided “dishonest assistance”.
THE LEGAL TEST
HH Judge Keyser (sitting as a High Court Judge) first considered the test required in relation to dishonest assistance.
A person will be liable as an accessory on the ground of dishonest assistance if he has “lent assistance to the commission of a primary breach of trust, or in some other breach of duty by a person in a fiduciary relationship with the claimant”: Snell’s Equity (33rd edition) at 30-078. The relationship between a de iure or de facto director and his company is a sufficient fiduciary relationship. The primary breach of duty need not be breach of a fiduciary duty; what matters is that the fiduciary owed a duty and broke it. If a director misappropriates or assists in the misappropriation of his company’s assets, there is a sufficient primary breach.
It is a question of fact whether the defendant assisted the breach of the fiduciary’s duty. “The assistance must be more than of minimal importance, and must enable the breach by the trustee to be committed, but there is no requirement that what is done by the defendant inevitably has the consequence that a loss is suffered”: Lewin on Trusts (19th edition) at 40-032.
The assistance must be given dishonestly. The test for dishonesty is objective, in the sense explained by Lord Hughes JSC in Ivey v Genting Casinos (UK) Limited  UKSC 67,  3 WLR 1212, at :
“When dishonesty is in question the fact-finding tribunal must first ascertain (subjectively) the actual state of the individual’s knowledge or belief as to the facts. The reasonableness or otherwise of his belief is a matter of evidence (often in practice determinative) going to whether he held the belief, but it is not an additional requirement that his belief must be reasonable; the question is whether it is genuinely held. When once his actual state of mind as to knowledge or belief as to facts is established, the question whether his conduct was honest or dishonest is to be determined by the fact-finder by applying the (objective) standards of ordinary decent people. There is no requirement that the defendant must appreciate that what he has done is, by those standards, dishonest.”
If one keeps clearly in mind both that the test for accessory liability is dishonest assistance (not “knowing” assistance) and that the test for dishonesty is as set out by Lord Hughes, problems concerning defining requisite degrees of knowledge evaporate, or ought to do so. The exercise is simply to establish the defendant’s state of mind in respect of knowledge and belief and then to ask whether, on the basis of that state of mind, the defendant’s conduct was honest or dishonest. Questions of “turning a blind eye” or of “Nelsonian knowledge” are then put in their proper place. Thus, in Royal Brunei Airlines v Tan  2 AC 378, Lord Nicholls of Birkenhead said at 389:
“In most situations there is little difficulty in identifying how an honest person would behave. Honest people do not intentionally deceive others to their detriment. Honest people do not knowingly take others’ property. Unless there is a very good and compelling reason, an honest person does not participate in a transaction if he knows it involves a misapplication of trust assets to the detriment of the beneficiaries. Nor does an honest person in such a case deliberately close his eyes and ears, or deliberately not ask questions, lest he learn something he would rather not know, and then proceed regardless.”
This really has nothing to do with what counts as sufficient knowledge. Rather it has to do with what is and what is not dishonest conduct.
An allegation of dishonesty, as with any allegation of fraud, must be clearly pleaded and proved. It is not necessary to plead dishonesty expressly; however, if it is not expressly pleaded, the court is not entitled to make a finding of fraud unless the primary facts pleaded are inconsistent with anything other than dishonesty. If dishonesty is pleaded expressly, it is for the trial judge to decide whether it has been proved on the evidence. Similarly, if the claimant has pleaded primary facts that are consistent only with dishonesty, it is for the trial judge to decide whether those facts have been proved. See Three Rivers District Council v Bank of England  UKHL 16,  2 AC 1, per Lord Hope of Craighead at -. In JSC Bank of Moscow v Kekhman  EWHC 3073 (Comm), at , Flaux J rejected a submission that it was necessary that the facts pleaded as particulars of fraud or dishonesty be inconsistent with any innocent explanation, and he continued, with reference to the Three Rivers case:
“The claimant does not have to plead primary facts which are only consistent with dishonesty. The correct test is whether or not, on the basis of the primary facts pleaded, an inference of dishonesty is more likely than one of innocence or negligence. As Lord Millett put it, there must be some fact ‘which tilts the balance and justifies an inference of dishonesty’. At the interlocutory stage, when the court is considering whether the plea of fraud is a proper one or whether to strike it out, the court is not concerned with whether the evidence at trial will or will not establish fraud but only with whether facts are pleaded which would justify the plea of fraud. If the plea is justified, then the case must go forward to trial and assessment of whether the evidence justifies the inference is a matter for the trial judge. This is made absolutely clear in the passage from Lord Hope’s speech at - which I quoted above.”
The reference to Lord Millett’s speech in Three Rivers is to , where he said:
“At trial the court will not normally allow proof of primary facts which have not been pleaded, and will not do so in a case of fraud. It is not open to the court to infer dishonesty from facts which have not been pleaded, or from facts which have been pleaded but are consistent with honesty. There must be some fact which tilts the balance and justifies an inference of dishonesty, and this fact must be both pleaded and proved.”
The standard of proof in a claim based on dishonest assistance is the civil standard, namely proof on the balance of probabilities. However, where a serious allegation, such as fraud or dishonesty, is made, the court may require more cogent evidence than in the case of a minor allegation before finding the allegation proved. In Re H (Minors)  AC 563, Lord Nicholls of Birkenhead said:
“The balance of probability standard means that a court is satisfied an event occurred if the court considers that, on the evidence, the occurrence of the event was more likely than not. When assessing the probabilities the court will have in mind the factor, to whatever extent is appropriate in the particular case, that the more serious the allegation the less likely it is that the event occurred and hence, the stronger should be the evidence before the court concludes that the allegation is established on the balance of probability. Fraud is usually less likely than negligence. … Built into the preponderance of probability standard is a generous degree of flexibility in respect of the seriousness of the allegation.
Although the result is much the same, this does not mean that where a serious allegation is in issue, the standard of proof required is higher. It means only that the inherent probability or improbability of an event is itself a matter to be taken into account when weighing the probabilities and deciding whether, on balance, the event occurred. The more improbable the event, the stronger must be the evidence that it did occur before, on the balance of probability, its occurrence will be established.”
THE FINDINGS OF FACT
A part of the claimant’s case as to dishonesty was not, in fact, pleaded.
- The case put at trial was, as it seems to me, substantially in accordance with the pleaded case, subject to two matters. First, Mr Pickering proposed that a number of facts in evidence were best to be explained by an inference that the defendants had received an approach by way of an invitation to participate in shady dealing; see below. Second, and more importantly, Mr Pickering put it to the defendants and submitted in closing that the price at which OCH was able to buy electricity from Autogas was such as to make it clear that Autogas was not trading legitimately. That is a primary fact, from which an inference of dishonesty is sought to be drawn, and is not pleaded. Although these two matters are to be distinguished, in that one of them is an explanatory inference and the other an alleged primary fact, they are not entirely separable; the inferred approach is said to have been to the effect that a supply of very cheap electricity would become available. I return to this point below.
THE JUDGE’S CONCLUSION: NO DISHONESTY BY THE DEFENDANTS
The judge concluded that there was no dishonesty on the part of the defendants.
Discussion and Conclusions
- Although the case advanced by the claimant is not without force, I have come to the conclusion that it is to be rejected, on the ground that the claimant has not discharged the burden of proving that the defendants or any of them were dishonest. For reasons that I shall explain later, however, I would not have acceded to submissions made on behalf of the defendants that the claim ought to fail because of a lack of sufficient causal nexus, or because of estoppel, or because it is an abuse of process.
- Ultimately, the reason that the claim fails is simply that, having considered all the evidence and the points made in respect of it, I am not satisfied that any defendant was dishonest in the sense explained above. Perhaps there is nothing more to be said: in a case of this sort, the reasons for forming a particular view of the issue of dishonesty on the totality of the evidence are not necessarily capable of being set out fully (cf. the remarks of Lord Hoffmann in Biogen Inc v Medeva plc  UKHL 18 at ). However, in the paragraphs that follow I shall set out some important matters in my consideration of the evidence. (No special significance attaches to the order in which the points are mentioned.)
- First, I should say something about the Deed of Settlement.
142.1 At the beginning of the trial, Mr Bridge raised the possibility that the Deed of Settlement presented an absolute bar to the present claim, either because it gave rise to an estoppel or because it rendered these proceedings an abuse of process. He did not pursue that argument in his closing submissions, but Mr Ochocki did. I reject the submission. As for estoppel, this claim is brought by Autogas on the basis that it has suffered financial losses for which the defendants are liable as accessories. Autogas was not a party to the Deed of Settlement and has not given up any right of action. Clause 1(i) is inconsistent with a belief on the part of HMRC in October 2015—well after the present proceedings had been commenced—that OCH knew or should have known that the transactions with Autogas were or were likely to be connected with a VAT fraud; if OCH had or should have had such knowledge, it would have been disqualified from reclaiming the input VAT in respect of the relevant transactions: cf. Kittel v Belgium; Belgium v Recolta Recycling SPRL (joined cases C-439/04 and C-440/04) (ECJ)  STC 1537; Mobilix Ltd v Revenue and Customs Commissioners EWCA Civ 517,  STC 1436, esp. per Moses LJ at . Clauses 1 and 2 prevent HMRC from asserting that OCH had or ought to have had knowledge that the transactions with Autogas were or were likely to be connected with a VAT fraud and from bringing a Kittel-type claim against OCH to recover input VAT as having been wrongly reclaimed. They also, in my view, would prevent HMRC from proving for such VAT in OCH’s winding up. But nothing in the Deed of Settlement prevents Autogas suing the defendants to recover its own losses or HMRC proving in Autogas’s liquidation to recover moneys undoubtedly owed by Autogas. As for abuse of process, Mr Ochocki’s submission rests on the wider application of the principles enunciated in Johnson v Gore Wood & Co  UKHL 65,  AC 1, as discussed by the Court of Appeal in Aldi Stores v WSP Group plc  EWCA Civ 1260,  1 WLR 748, in circumstances where the defendants were not joined into the Earlier Proceedings. Applying a broad merits test, I would have held that Mr Ochocki had not discharged the burden of showing that the present proceedings were an abuse of process. It is entirely likely that during the currency of the Earlier Proceedings the liquidator was insufficiently confident on the basis of the available evidence of the merits of a claim against the present defendants, and Mr Ochocki has not shown that the present proceedings can be said in any way to be oppressive of him. See in particular the summary of principles given by Clarke LJ in Dexter v Vlieland-Boddy EWCA Civ 14 and cited with approval by the Court of Appeal in the Aldi Stores case at .
142.2 It is a different question whether any weight should be attached to the Deed of Settlement. Mr Pickering submitted that I should attach no weight to it: HMRC’s reasons for entering into the Deed, and the nature of the investigations and enquiries it carried out before doing so, are not in evidence, and findings of fact in these proceedings are a matter for the court and not for HMRC. The points are well made; even so, I do not think it right entirely to disregard the Deed of Settlement. HMRC were the petitioning creditors in Autogas’s liquidation and it was on their application that the provisional liquidator was appointed. In an affidavit sworn on 17 June 2010 in support of that application, Mr Peter Sawyer, an officer of HMRC, stated that HMRC did not currently intend to commence proceedings against OCH, as it did not have “at present” sufficient evidence to justify “accessory” proceedings against OCH or its controllers, “but this is a matter which will need to be kept under review as more evidence is gathered.” The reassessment that led HMRC to petition for OCH’s winding up more than four years later related to the disallowance of the reclaimed input VAT in connection with the trading with Autogas. HMRC had clearly formed the view that it had justification for disallowing that input tax, but it subsequently committed itself to a position that is inconsistent with that taken by Autogas’s liquidator in the present case. Mr Pickering is right to say that HMRC’s reasons for entering the Deed of Settlement and the nature and quality of its investigations and enquiries are not known. However, I see no reason why, when considering whether it is right to draw the inferences of dishonesty urged upon me by the liquidator in respect of a VAT fraud, I should simply disregard the fact that HMRC itself has, after considering the matter, committed itself to a position inconsistent with an assertion of dishonesty on the part of those with control of OCH.
- Second, there is no adverse evidence concerning the prior character of any of the defendants. This does not prove that they did not act dishonestly, but it is relevant when considering the cogency of the evidence that may reasonably be required before finding the burden of proof to have been discharged in respect of any of them in respect of the serious allegation made against them. Particularly worthy of note, I think, is that Mr Saunders has had a long and successful business career that has not, so far as the evidence shows, involved anything disreputable or dishonest. Mr Ochocki’s career as a broker has not extended as long, but he too is not suggested to have been involved previously in dishonest or disreputable conduct.
- Third, my general impression of the defendants as they gave evidence at trial, in the case of Mr Ochocki at some length, did not incline me to view any of them as dishonest. Of course, matters of the subjective impression created by a witness’s demeanour and manner cannot bear very great weight; they are of limited reliability as gauges of truthfulness. Nevertheless, it is impossible to disregard them entirely when weighing up other, more objective, evidence and deciding what inferences are to be drawn. One difficulty, which must be considered also with respect to particular pieces of evidence, is that the defendants were giving evidence about matters that happened some eight years previously. The degree of accuracy of recall to be expected of a witness in those circumstances is naturally limited; this must be borne in mind when considering difficulties in responding to questions or inconsistencies among defendants. As for the individual defendants, Mrs Craig came across at trial as a perfectly straightforward woman, not in the least evasive or apparently deceitful. Much the same can be said about her father, Mr Saunders, though he was more forceful in attacking the case being put to him, which he described in uncomplimentary terms. He appeared as a robust and no-nonsense sort of man, which is what his business experience would lead one to expect. Unless driven to do so by compelling evidence of a more objective nature, I should not think it at all likely that Mr Saunders would allow his business to become involved in anything fraudulent. An assessment of Mr Ochocki is more difficult, for the unfortunate reason that he was, I am sorry to say, a most annoying witness, whose hesitant and self-involved manner of speaking, particularly when giving evidence but to a lesser degree also when asking questions, made him at times very difficult to listen to. However, it was clear that he was very anxious during the trial; I bear in mind also that he conducted the trial himself. Taken in the round, I should be inclined to see his demeanour and manner as the result of anxiety rather than dishonesty or evasiveness.
- Fourth, no convincing motive for dishonesty has been shown. I accept that motive is not a necessary element for liability. But a claimant who cannot show motive may for that reason have greater difficulty in discharging the burden of proving dishonesty. It could perhaps be said that Mrs Craig required no greater motive for her conduct than obedience to her father’s orders. The case is harder with Mr Saunders and Mr Ochocki. They are not said to have participated or expected to participate in the proceeds of the fraud. Their motive is said to be profit: the large amounts of money made by OCH from the trades and shared between its members in the shares 80% to Mr Saunders and 20% to Mr Ochocki. The difficulty with that contention is that profit from legitimate trade is not itself a motive for dishonesty; the profit motive would explain dishonesty if either the trade, though itself legitimate, were only available to those who engaged in some form of ancillary dishonesty or the trade were illegitimate. Neither alternative has been demonstrated by the claimant. This point is closely connected with the next.
- Fifth, the claimant’s case as advanced at trial seems to me to labour under serious difficulties, as I shall try to explaiN
146.1 In broad terms, there are two ways in which the defen.ndants (for present purposes, I need not distinguish among them) might have acted dishonestly as accessories. I may call them, purely for convenience, “contingent dishonesty” and “collusive dishonesty”. A case based on contingent dishonesty would be quite simple: the defendants intended to engage in legitimate trade; there was nothing amiss in OCH’s purchase and sales transactions; there was no collusion with the primary fraudsters; however, the requests to make payments to a third party overseas, coupled perhaps with suspicious features about Autogas, alerted them to the possibility that Autogas was not trading legitimately and that the diversion of payments to HCX was a vehicle of wrongdoing; but in the interests of maintaining a very profitable business they suppressed their suspicions and did as they were asked. The dishonesty is “contingent” because the assistance was given independently of the primary fraud and had not been pre-arranged.
146.2 The case advanced by the claimant at trial was not one of contingent dishonesty but rather one of collusive dishonesty: although the defendants did not directly participate in the primary fraud, in the sense that they did not receive any of Autogas’s assets and may not even fully have known the details of the fraud, OCH’s trade was from the outset based on knowledge that a fraud was taking place and that their cooperation was required for it to work; they “were aware of the MTIC fraud and were participants in the same” (see paragraph 130 above); thus OCH refrained from trading as agent for TGS or taking active steps to seek a supplier, because someone on the inside of the primary fraud told one or more of the defendants to await an approach from a supplier that would supply electricity at uncommercially low prices on a “no questions asked” basis: “the defendants were offered the opportunity to take part in trading at an artificially and suspiciously beneficial rate which was obviously not viable on any commercially normal basis”, a situation analogous to that of “being offered in a pub car park a supply of laptops or smartphones at a suspiciously low ‘fallen off the back of a lorry’ price” (claimant’s closing submissions, paragraph 3).
146.3 This way of putting the case involves an allegation of active collusion in the fraud, not merely the turning of a blind eye to a dawning realisation that one’s trading partner is engaged in a fraud. Although conspiracy was pleaded, no particulars of any conspiratorial communications were provided, and there is no direct evidence of any such communications, whether in the form of emails or other documents or of witness evidence, although Mr Hunt is liquidator not only of Autogas but also of TGS, which has been mentioned as the likely source of the posited approach to Mr Ochocki. The case in this regard rests purely on inference. The question is whether the inference is sound or, as Mr Saunders described it during his cross-examination, “speculative and made-up nonsense”.
146.4 The way the case was put at trial smuggles in an assertion of a primary fact that was not pleaded, namely that the price at which OCH was able to buy electricity from Autogas was suspiciously and uncommercially cheap. This goes further than saying that OCH’s motive for trading with Autogas was that the trade was highly profitable. OCH’s trade in electricity and carbon credits between 12 March and 11 June 2010 produced a profit of €496,980. That level of profit is certainly a motive for trade. But it is not a motive for fraud, unless those profits were unavailable elsewhere in the energy market if trade were conducted at market rates. Therefore, it is a central plank of this way of putting the case that OCH bought electricity at prices so low as to be indicative of fraud. However, there is no evidence from which I could properly conclude that OCH was buying electricity at anything other than the market price when each trade occurred, let alone at a price so far below market price as to be indicative of fraud. No evidence concerning market prices was adduced at trial. I cannot infer from the level of its profits that OCH was buying electricity at suspiciously low prices.
146.5 In closing oral submissions, Mr Pickering addressed this difficulty by submitting that the important question was not whether the price at which OCH bought electricity was in fact lower than a commercial price but rather the state of the defendants’ knowledge; the circumstances showed clearly, he said, that the transactions were not normal commercial transactions. As an illustration, he referred to the tenth trade, which involved a series of consecutive sales of 24,000 MW of electricity on 28 April 2010: TGS sold to HCX for €1,023,600; HCX sold to Autogas for €998,400, thereby incurring an immediate loss of €25,200; Autogas sold to OCH for €999,600 plus VAT, thereby making a profit of €1,200; OCH sold to Gazprom for €1,005,600 plus VAT, thereby making a profit of €6,000; the price at which Gazprom bought was lower than the price at which TGS sold at the start of the chain. This example is typical, in that HCX consistently sold to Autogas at a price lower than it had paid to TGS, thus revealing the lack of legitimate commercial motive on the part of the primary fraudsters. However, this does not show anything about guilty knowledge on the part of those at OCH. The claimant has not shown that the defendants or anyone at OCH knew of the prices at which the trades further up the chain proceeded; indeed, in his closing submissions Mr Pickering made clear that it was “not necessarily being suggested” that they had knowledge of the details or even of the general pattern of the trades further up the chain. Mr Pickering did, however, expressly suggest that the defendants “knew that the deal being offered to them was suspiciously good: the sort of deal which could not be offered in a normal commercial context: the sort of deal which realistically could only be offered where some sort of scam was going on.” It is not easy to see the basis of this supposed knowledge, and Mr Pickering never explained it to my satisfaction. If the defendants did not know the details or even the general pattern of the trades further up the chain, knowledge of the suspicious nature of the price being offered to OCH can only be inferred from the suspiciously low price itself. As to that, there is no evidence. It might, perhaps, be suggested that the fact (not, so far as the evidence shows, known to OCH) that TGS was selling electricity at a price higher than OCH was selling indicates that OCH must have been buying at a suspiciously low price. However, I am not prepared to draw that inference: first, I have no evidence as to the market, although I know of no reason why relevant evidence could not have been adduced; second, there is a clear possibility, which Mr Hunt said in evidence he considered a probability, that TGS was involved in the primary fraud, and I cannot discount the further possibility that TGS was manipulating the price at which it sold to HCX, whether in order to, in effect, launder some part of the proceeds of the fraud through an apparently legitimate transaction at the first stage of the chain or for some other reason.
146.6 In these circumstances, I cannot accept that the price at which OCH bought electricity from Autogas was either indicative of collusion by anyone at OCH in the primary fraud or such as to give rise to any suspicion on the part of the defendants. Therefore, the particular way in which the case was advanced at trial must fail.
146.7 It does not follow from this that the claimant’s case on collusive dishonesty falls away entirely. It would still be possible to infer that, from about late 2009, the defendants became implicated in the fraud and an integral part of it because, having been told by one of the primary fraudsters to expect an approach from a supplier of electricity and to make payments as requested on a “no questions asked” basis, they were a necessary component in the execution of the fraud. The claimant says that an inference along these lines is required both because it alone makes proper sense of the way events unfolded, in particular from 10 March 2010, and because it was necessary for the primary fraudsters to be assured that those operating OCH would be “onside” and would facilitate the fraud by making the payments to an overseas account and not reporting the matter to the authorities. However, although this way of putting the matter requires to be taken seriously, it suffers from a twofold weakness in respect of the motive for and the necessity of OCH’s involvement. As for motive, the supposed attraction to the defendants of becoming involved in the fraud was the opportunity of obtaining electricity at a “fallen off the back of a lorry” price. Once that explanation falls away, what is left is the motive to make a profit that, so far as I know, could be made legitimately without any fraud. As for necessity, the contention that OCH’s collusion was necessary for the execution of the fraud is unconvincing, if and insofar as it rests on what seems to me to be the unwarranted assumption that the ability of the primary fraudsters to abstract Autogas’s assets was dependent on payments overseas by third parties. The essence of this unsophisticated fraud simply involved abstracting Autogas’s assets and making them disappear, with the result that it had nothing with which to pay its VAT liability. But that did not have to depend on payments overseas; the same could have been achieved by Autogas transferring its assets overseas or simply dissipating or disposing of them; such things are common enough. In short, the one necessary feature of the fraud was that electricity should be bought without incurring a VAT liability but sold on terms that did attract a large amount of VAT. Beyond that, as Mr Saunders pointed out more than once during his cross-examination, determined fraudsters did not require anybody else’s help to put Autogas’s assets beyond reach.
146.8 There remains some merit in Mr Pickering’s submission that, as a matter of fact, the primary fraudsters proceeded by asking OCH to make third-party payments overseas, which would create a risk that a counterparty trading in good faith would be concerned at the request to make payments into the overseas account of a third party and would report their concerns to the authorities; and that, accordingly, the primary fraudsters must have been confident that this risk would not materialise, in that those at OCH were “on-side”. I have had regard to this argument, but it is quite speculative and presupposes a significant level of concern as to the awareness of a counterparty that was new to the energy trade. Further, this line of argument is hardly plausible unless Mr Langridge too was implicated in the fraud. Just such an allegation was indeed made by Mr Pickering in his closing submissions, although of course Mr Langridge has never been a party to these proceedings.
- Sixth, the case against Mrs Craig is weak and I have no hesitation in dismissing it.
147.1 What the case comes to is that, although Mr Ochocki and Mr Saunders made the decisions, she had to be complicit in the dishonesty, because she alone made the cash payments and did so to an overseas account in the name of a third party, contrary both to the EFET Agreement and to the terms of the invoices; this was irregular, as well as potentially risky for OCH, as would have been obvious to anyone but especially to someone who had previously worked in a bank; and it is to be inferred that she made the payments because she was willing to acquiesce in instructions to pay as she was told and not ask questions.
147.2 None of this shows adequate grounds for inferring dishonesty. Mrs Craig was a bookkeeper and office administrator. She had no professional qualifications or special expertise in accountancy or finance. She had no involvement in OCH’s business. She had no substantive contact with Autogas. There is no reason to think that she knew anything about Autogas or HCX or their businesses or had any reason to suppose, far less did suppose, that Autogas was interposed into a chain of transactions as a vehicle of fraud. Her evidence, which I accept, was that she made payments as instructed by Mr Ochocki or other traders, provided only that payment had already been received from OCH’s customer; she did not see anything suspicious in changes of the bank accounts or in payments to accounts in a different name. Mrs Craig said that she could not remember what she had thought about the different names in 2010—she might have thought HCX was a trading name or a subsidiary—but she did not give it much thought. That was credible evidence, and I note that Mrs Craig’s email of 21 April 2010 (paragraph 64 above) treated the Netherlands’ bank account as Autogas’s. There is no evidence that Mrs Craig knew anything about MTIC or VAT Acquisition Frauds; she knew in late April 2010 that Mr Smallbone wanted to speak to her father to discuss mis-trading and fraud, but I cannot infer that she knew of any indicia of relevant frauds. Even if (for the sake of argument) it were to be assumed that Mr Ochocki and Mr Saunders were acting dishonestly, there is in my view no sufficient basis for inferring that, in making payments in the manner directed by Mr Ochocki or her father, Mrs Craig was doing anything other than innocently following instructions.
147.3 Indeed, I would go further: I am persuaded that Mrs Craig was not dishonest.
147.4 This conclusion does not of itself show that Mr Ochocki and Mr Saunders were not dishonest. But it does suggest the need for caution. The suggestion was made during the trial that the claimant had joined Mrs Craig as a defendant in order to place pressure on her father, Mr Saunders. I do not accept that. I think that the decision to join Mrs Craig was made in good faith, but that it was the result of a process of inferential reasoning to the effect that, if there were any rotten apple at OCH, Mrs Craig as the person who made the payments must be a rotten apple. The lesson, I think, is that one should be cautious about drawing bold inferences from meagre evidence.
- Seventh, the absence of direct evidence of collusion in fraud counts significantly against the liquidator’s case against Mr Ochocki and Mr Saunders. Many emails have been put in evidence and the liquidator has at least had the opportunity to investigate TGS, of which also he is liquidator. As I see it, the closest the emails come to showing anything that might perhaps be argued to result from collusion between the defendants is Mr Saunders’ email of 30 December 2009 (paragraph 30 above), and the closest to indicating collusion with a third party is Mr Shah’s email of 14 April 2010 (paragraph 60 above). Neither of these seems, on its terms, to me suggestive of participation in fraud. It must be borne in mind that, as the claimant rightly contends, the cases against Mr Ochocki and Mr Saunders are closely connected, because it is not plausible that either by himself could have done what was necessary to ensure assistance in the fraud. And as for Mr Shah and Gazprom, the furthest that the liquidator’s case goes is that it is possible that they were implicated in the fraud; he has not firmly asserted that they were.
- Eighth, I have not found the matters relied on as being suggestive of fraud or dishonesty to be very compelling. I do not propose to comment on every piece of evidence; the following will suffice.t business than with calculations about the risk of his falsehoods being exposed.