We use cookies to customise content for your subscription and for analytics.
If you continue to browse the International Law Office website, we will assume you are happy to receive all of our cookies. For further information please read our Cookie Policy.
We would like to ensure that you are still receiving content that you find useful – please confirm that you would like to continue to receive ILO newsletters.
22 January 2019
Dishonesty – facts of the claim
Can expert evidence be adduced to determine the standard of honesty?
Comment
Dishonesty in relation to financial market practices should be determined against an objective standard; expert evidence as to market practices cannot be adduced to decide the issue.
Dishonesty – facts of the claim
In the early 2000s, the claimant professional footballers made a number of investments based on the advice of financial advisers Formation Asset Management. Unknown to the claimants at the time of investment, the claimants' agents would receive a share of the commission to be paid to Formation Asset Management.
The claimants brought proceedings against Formation Asset Management, its parent company and several independent agents on the basis that they had not been made aware of the commission arrangements and that the parties' involvement amounted to unlawful conduct (Carr v Formation Group Plc).(1)
Their claims included:
In response to the claimants' dishonesty plea, at a case management conference three of the defendants applied for permission to adduce expert evidence:
Can expert evidence be adduced to determine the standard of honesty?
This case reinforces the courts' desire after Ivey to remain the guardians of honest behaviour in relation to financial market practices; the objective standards of dishonesty are to be set by the courts rather than the market. Parties must therefore rely on contemporaneous documents when trying to prove claims for dishonest assistance, as the court will not permit them to adduce expert evidence of wider market practice.
For further information on this topic please contact Parham Kouchikali or Steven Rajavinothan at RPC by telephone (+44 20 3060 6000) or email (parham.kouchikali@rpc.co.uk or steven.rajavinothan@rpc.co.uk). The RPC website can be accessed at www.rpc.co.uk.
Endnotes
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.