Firm appeals finding that partner dishonestly assisted misappropriation of £2.4m

A partner who was described as ‘actively dishonest’ in a High Court judgment has appealed against the judge’s findings, arguing they were wrong in law.

Last year, London firm Portner Law Limited was also found to be vicariously liable for the actions of Daniel Broughton who, the judgment said, showed a ‘complete disregard for his professional obligations’ to check the source of funds assisted the misappropriation of £2,399,000.

Broughton, admitted in 2006 and a partner at Portner Law, worked on a number of London property transactions for Sanjiv Varma and his son. Grosvenor Property Developers, established to convert a former hotel in Bristol into student accommodation, raised funds from investors but went into liquidation without taking any steps to acquire or convert the building. Its sole statutory director, Jonathan England and its de facto director, Sanjiv Varma, have since been found liable in other proceedings for the misappropriation of approximately £7m. Varma has also been found in contempt of court and has left the country.

Broughton and the firm denied dishonestly assisting in breaches of duty by Varma and England resulting in loss to Grosvenor Properties.

The firm appealed against the findings that it was liable in dishonest assistance.

In written submissions, Vikram Sachdeva KC, for Portner Law, said: ‘The judge plainly erred in the legal test she applied; she erred in failing to make the factual findings necessary to a finding of dishonesty; and she failed to recognise that the evidence was not capable of supporting a finding of dishonesty.’

In oral submissions before Lord Justice Phillips, Lord Justice Nugee, and Lady Justice Falk, Sachdeva said: ‘My client…is fighting for its reputation and Mr Broughton’s career hangs by a thread. Without exaggeration, he is likely to be struck off the solicitor’s roll if this judgment stands.

‘This judgment seriously deviates from the settled general law and if it stands, there is a real risk that dishonest assistance transforms into negligent assistance, effectively greatly expanding the duties that solicitors owe to the world. That cannot be right.’

Sachdeva told the court he was ‘not here to try and justify the numerous errors that Mr Broughton has committed’ adding that there were a ‘number of very significant errors were committed and we do not shy away from that but there is a great difference between that negligence and a cogent case for dishonesty’.

‘The judge did not resolve that important question, as I say, as to the level of knowledge of Mr Broughton in relation to money laundering requirements at the time’.

Rory Brown KC, for Grosvenor Property Developers Limited, said the judge had ‘considered the submissions that were made to her on motive, she had that in mind, and she weighed it when she was considering all the evidence in the case’.

‘There are findings in the judgment of conscious impropriety. It was suggested…and we have real trouble with this submission, that there was a general finding that he was lax in his cutting of corners, ticking off AML boxes on the front of files when he had not actually undertaken any checks, that sort of thing, that is consistent, as well as being consistent with dishonesty, with reckless disregard.’

He added: ‘She had lots of evidence of dishonesty across those transactions and so the conclusion that Mr Broughton did dishonestly assist was not a surprising one for the judge to reach after hearing him and seeing him give evidence over the course of three days…two-and-a-half days.

‘The way the appeal is being put is unfair to the judge.’

In written submissions, Brown added that the judge’s ‘self-directions were impeccable’ adding: ‘what the [firm] must show is that the judge’s conclusion was rationally insupportable. In this case, that is an impossible task. There was ample proof of dishonesty.

‘On the defendant’s own case, Mr Broughton knew the steps he needed to take in the situations he found himself in and repeatedly did not take them. Leading counsel for the defendant (rightly) accepted at the trial that reckless disregard for another’s possible rights can be strong evidence of dishonesty.

‘The judge stated the test correctly. She applied it correctly to the facts.’

Judgment was reserved.