Innocent partners in fraud repaid liability, Lords rule

JUDGMENT: firm given complete indemnity for $10 million

Innocent partners entangled in fraud are more likely to have their liability repaid, lawyers said this week following a key House of Lords judgment in Dubai Aluminium Company Limited v H M Salaam and Others.

The case arose from a $50 million fraud on Dubai in the 1980s.

Dubai pursued London firm Amhurst Brown Colombotti, accusing Anthony Amhurst - then senior partner, and now a consultant - of dishonesty in relation to advice he provided.

He denies this allegation.

The issue has never been tried and there has never been a court finding of dishonesty.

The firm settled the claim for $10 million, and then pursued the two men who received the $50 million.

But the two men argued that the partners had not been vicariously liable for Mr Amhurst's advice - and so should not have paid the money.

The court assumed Mr Amhurst was dishonest for the purposes of the Civil Liability (Contribution) Act 1978 to decide whether his partners were vicariously liable.

The Lords held that the partners were vicariously liable because the acts alleged against Mr Amhurst were such that made it reasonable to expect he was carrying them out in the ordinary course of business.

It was held that a complete indemnity should be paid to Amhurst Brown for the $10 million.

Jes Salt of the Solicitors Indemnity Fund, acting for the firm, said: 'The House of Lords has decided that an apportionment of liability should take account of whether a party remains in receipt of the proceeds of fraud.

This is good news for innocent partners whose firms are found liable in cases such as this.'

Jeremy Fleming