Dishonest Assistance: Solicitor Liability for Breach of Trust and Fiduciary Duty

October 10, 2025

Grosvenor Property Developers Ltd (in liquidation) v Portner Law Ltd [2025] EWHC 2362 (Ch) – Dishonest Assistance: Solicitor Liability for Breach of Trust and Fiduciary Duty

Introduction

Solicitors occupy a position of trust at the centre of countless financial and property transactions. With that trust comes a duty to act with integrity, diligence, and vigilance, particularly when handling client money or trust assets. The law is unequivocal: when a solicitor assists in a breach of trust or fiduciary duty, and does so dishonestly, the consequences are grave.

Dishonest assistance is not a technical doctrine. It is a fundamental mechanism designed to protect clients, beneficiaries, and the integrity of the legal profession. Understanding how the courts define and apply dishonesty is therefore essential for every solicitor seeking to avoid personal and professional exposure.

The Legal Framework

Dishonest assistance arises when a solicitor, or any third party, helps a trustee or fiduciary commit a breach of trust or fiduciary duty, and does so dishonestly. The courts have developed a clear, objective framework for assessing such conduct.

The leading authority remains Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378 (PC), in which the Privy Council held that the test for dishonesty is objective. The question is not what the defendant personally believed, but whether the conduct would be considered dishonest by ordinary decent people.

The House of Lords in Twinsectra Ltd v Yardley [2002] UKHL 12, [2002] 2 AC 164 considered a similar scenario involving a solicitor who released funds in breach of an undertaking. The court found that he was not dishonest because he genuinely misunderstood his obligations. However, Twinsectra appeared to introduce a mixed subjective and objective test, requiring both dishonesty by ordinary standards and awareness that the conduct was dishonest.

That approach was later rejected in Barlow Clowes International Ltd v Eurotrust International Ltd [2006] 1 WLR 1476 (PC), where the Privy Council confirmed that dishonesty is to be judged solely by objective standards. What the defendant knew or believed is relevant only to establishing the factual context.

The Supreme Court in Ivey v Genting Casinos (UK) Ltd [2017] UKSC 67, [2018] AC 391 endorsed this objective test, holding that a defendant’s personal views about honesty are irrelevant. The decision in Ivey has since been treated as authoritative across both civil and criminal cases.

For solicitors, this means that what they knew and believed about a transaction will form part of the background, but the ultimate standard is always that of the reasonable, honest solicitor. Recklessness alone is not sufficient to prove dishonesty, but it may be strong evidence of it. In Clydesdale Bank Plc v Workman [2016] EWCA Civ 73, [2016] P.N.L.R. 18, the Court of Appeal held that while recklessness differs from dishonesty, it can support an inference of dishonesty when combined with other facts.

Blind-Eye Knowledge and the Modern Approach

A particularly important development in this area is the concept of “blind-eye” knowledge. The Court of Appeal in Group Seven Ltd v Nasir [2019] EWCA Civ 614, [2020] Ch 129 explained that a solicitor who suspects wrongdoing but deliberately avoids confirming it can be found to have acted dishonestly.

The court outlined a two-stage analysis:

1. Determine what the solicitor actually knew or believed, including any suspicions.
2. Assess whether, in light of those facts, the conduct was objectively dishonest by the standards of ordinary, honest people.

This approach builds upon earlier authorities such as Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd (The Star Sea) [2001] UKHL 1, refining the meaning of “blind-eye” knowledge within the equitable doctrine of dishonest assistance.

Factual Background

Grosvenor Property Developers Ltd (in liquidation) v Portner Law Ltd [2025] EWHC 2362 (Ch). The case was heard by Deputy High Court Judge Saira Salimi and concerned a claim that a firm of solicitors, Portner Law Ltd, had dishonestly assisted in the misapplication of a property development company’s funds.

The claimant company (Grosvenor Property Developers Ltd, now in liquidation) alleged that its former directors, Jonathan England (the sole registered director) and Sanjiv Varma (a de facto director and Mr England’s father-in-law), fraudulently misappropriated roughly £7 million of investors’ money, causing the company’s collapse. In earlier proceedings, both Mr Varma and Mr England were found liable for that misappropriation (Mr Varma was also held in contempt of court and reportedly fled the country to avoid imprisonment). In the present case, the claimant sought to hold the defendant law firm liable for dishonest assistance in that wrongdoing, on the basis that a senior partner at the firm facilitated several transactions through the firm’s client account that dissipated a portion of the misappropriated funds.

Grosvenor Property Developers Ltd (“Grosvenor”) had been formed to acquire and convert a hotel building in Bristol into student accommodation, funded by private investors. Instead of fulfilling that project, the company went into liquidation after its funds were diverted by its principals. Mr England was the sole official director of Grosvenor, while Mr Varma (his father-in-law) acted as the de facto director controlling its affairs. Between them, they misappropriated approximately £7 million of the company’s money, leaving the project unrealised.

Portner Law Ltd is a firm of solicitors in London. The events of the case arose from Portner Law’s engagement by Mr Varma (and his son, Siddhant Varma) in 2017–2018 to handle a series of London property transactions. Mr Daniel Broughton, a partner at Portner Law with long experience in conveyancing, was the solicitor responsible for these matters. The firm’s involvement became significant because some of Grosvenor’s stolen funds (through Mr Varma’s dealings) were routed into and through Portner Law’s client account in the course of those transactions.

It was undisputed that a total of £2,399,000 belonging beneficially to Grosvenor (or its traceable proceeds) passed through Portner Law’s client account in three sets of transactions:

• Hallam Street transaction: The purchase of a London property (Flat 54, 49 Hallam Street, W1) in the name of Mr Varma’s son, Siddhant Varma, using funds provided by Mr Varma, followed by a later transfer of that property and its resale.
• Green Street transaction: An attempted purchase of Flat 1, 9 Green Street, W1, in which the £30,000 deposit was paid from Casa Investments Ltd, a company controlled by Jonathan England, the claimant’s statutory director.
• Charles Street loan: A £2 million loan made by Dare to Invest Ltd (a company owned and directed by Siddhant Varma) to finance part of a purchase of 33 Charles Street, W1. This loan was funded with money Mr Varma transferred to his son; those funds were paid into Portner’s client account before being lent out.

Mr Broughton and Portner Law were acting for the Varma family and their associated companies in these transactions. The claimant’s case was that Mr Broughton knew or suspected that the money involved belonged to Grosvenor (and was being misused) and that his conduct in handling the transactions amounted to dishonest assistance in the directors’ breach of fiduciary duty. Notably, the underlying factual chronology of payments and steps taken was largely not in dispute at trial; the bank transfers, dates and documents were agreed. The crucial question was Mr Broughton’s state of mind and whether his actions were honest or dishonest in facilitating the movement of Grosvenor’s funds.

From the outset, Portner Law accepted certain key points: it accepted vicarious liability for Mr Broughton’s actions as his employer, and it conceded that if Mr Broughton was found to have acted with a dishonest state of mind, then the firm’s involvement in the transactions would indeed satisfy the elements of dishonest assistance in the directors’ breach of duty. However, the firm denied that Mr Broughton had been dishonest. The defence maintained that Mr Broughton’s failures (if any) were the result of negligence or oversight, not conscious wrongdoing.

In the alternative, the defendant argued that even if liability was established, the claimant had not given proper credit for funds already recovered in the liquidation, raising an issue of potential double recovery (i.e. the claimant should not recover more than its overall loss).

High Court’s Findings of Fact and Law

After considering the evidence and submissions, Deputy Judge Salimi made detailed findings about Mr Broughton’s conduct and credibility. The court’s conclusions were unflattering: it found a pattern of serious failings on Mr Broughton’s part which, taken together, were incompatible with him having acted as an honest solicitor would. The key factual findings included the following:

• Role and experience: Mr Broughton was a senior partner at the firm and even served as the firm’s deputy Anti-Money Laundering officer. He had spent his career handling property transactions. Given this background, the judge noted that he was well aware (or ought to have been) of standard solicitor practices and money-laundering safeguards. This made the repeated lapses in this case more striking, as they came from someone expected to know better.
• Failure to follow anti-money-laundering (AML) requirements: The court found that Mr Broughton repeatedly failed to perform the mandatory AML checks and client due diligence that the law firm’s own policies and Law Society guidance required for these transactions. For example, when opening the files for the Varma transactions, he did carry out basic ID verification of the Varmas themselves, but he did not ascertain the source of the funds being used. Throughout the Hallam Street, Green Street and Charles Street matters, he ignored or only perfunctorily addressed the AML red flags. The judge noted he ticked boxes stating that checks had been done when in fact essential checks were omitted. Notably, he allowed Dare to Invest Ltd (Siddhant Varma’s company) to deposit £2 million into the client account before any specific legal transaction had been identified for that money, effectively holding a large sum in escrow without purpose – something an honest solicitor would question. He did not inquire why those funds couldn’t simply remain in a bank until needed.
• Accepting funds from dubious sources: On several occasions, the money that went into the Portner Law client account came from sources unconnected to the named client. For instance, some payments came from a company called Casa Investments Ltd, which was controlled by Mr Jonathan England (the director of the claimant company and not Mr Broughton’s client in the property deals). Despite no clear link between that company and the transaction at hand, Mr Broughton treated funds from “Casa” and other Varma-controlled entities as if they were part of the family’s interchangeable finances. He did not ask for any written authority or documentation to show that Siddhant Varma was entitled to use Casa Investments’ money, nor did he investigate why Casa was paying for Siddhant’s property deal. An honest solicitor, said the court, would have at least paused and obtained an explanation (and likely a formal confirmation from the true owner of the funds) before proceeding. Mr Broughton’s readiness to accept third-party funds without inquiry was a strong indicator of “blind-eye” conduct.
• No adequate proof of source of wealth/funds: The judge found that Mr Broughton failed to obtain proper documentary evidence of where the money was coming from in these transactions. For example, when asked by an estate agent in the Green Street deal to provide proof of funds for “Mr Varma,” Mr Broughton obtained a bank statement from the Ras Al-Khaimah (RAK) Bank purportedly showing over £8 million in cash, which Mr Varma had provided to him. Mr Broughton confirmed he had received the statement but, following Mr Varma’s instructions, did not actually forward it as proof of funds. The court noted that this same statement (or an extremely similar one) had apparently been used in a different transaction about six months earlier under another client’s name – a fact which should have alarmed any attentive solicitor. Moreover, the statement showed only a large balance and was not backed by transaction histories or explanations of how those funds were obtained. Mr Broughton took the document at face value and did no independent verification, contrary to good practice. On another occasion, he accepted a large payment into the client account and only afterwards asked for a bank statement; when the statement was provided, it showed only an account balance with no transaction activity, yet Mr Broughton filed it without further question. The court found that he accepted facile assurances (e.g. that funds were “family money” or from an inheritance) without evidence. These were not momentary oversights but consistent behaviour over multiple transactions.
• Making false or misleading statements: Perhaps the clearest instance of actual dishonesty was Mr Broughton’s communications with a mortgage lender in the Hallam Street purchase. The lender required confirmation that the borrower (Siddhant Varma) was funding the purchase himself (no undisclosed third-party financing). Mr Broughton certified to the lender that no one else was contributing funds, despite knowing that Mr Varma’s company was providing a substantial part of the money. Additionally, he signed a solicitor’s certificate stating that Portner Law had acted for the borrower for a certain period, when in fact that was untrue (the firm had not been involved for as long as stated). The judge found these misrepresentations to be deliberate: an honest solicitor would never knowingly give false information to a lender. Mr Broughton’s willingness to do so indicated that he was consciously choosing to facilitate the transaction even if it meant deceiving third parties, which is inconsistent with innocent mistake.
• Failure to cooperate with liquidators / continuing the pattern: After Grosvenor collapsed, its liquidators wrote to Portner Law in April and May 2019 raising concerns that some money passing through the firm’s account belonged to the insolvent company. Shortly thereafter, the court issued a freezing order against Mr Varma, which was served on the firm on 30 July 2019. The judge found that Mr Broughton did not fully cooperate with the liquidators’ inquiries. He sent a brief initial response (essentially a holding reply with minimal information) and then largely stonewalled further communications. Notwithstanding the serious allegations and the freezing injunction in place, Mr Broughton went on to transfer out funds from the client account to another firm, Singhania & Co, without ensuring that the liquidators’ claims to those funds were resolved, doing so shortly before that order was served on Portner Law. Approximately £71,400 of those funds had already been paid to Dare to Invest Ltd in January 2019 as part of an earlier transaction, and was not included in this transfer. He had asked Mr Varma for an explanation about the funds (after the freezing order was in place), but when Mr Varma’s answers were not forthcoming, Mr Broughton still proceeded to disburse the money at Mr Varma’s direction. This showed, in the court’s view, a continuing indifference to whether the funds were tainted. Even when explicitly put on notice of a potential fraud, Mr Broughton persisted in the same behaviour, exhibiting insufficient inquiry and unquestioning execution of client instructions.
• Mr Broughton’s credibility: The judge had the advantage of hearing Mr Broughton give oral evidence at trial (as well as testimony from one of the liquidators, Mr Atkinson). She found that Mr Broughton was clear and coherent in his testimony, and she rejected any suggestion that he was a foolish or incapable lawyer. In fact, Mr Broughton admitted in hindsight that he had not adhered to all of his professional obligations. His own explanation for his failures was that he had been extremely busy and under pressure at the time; he described himself as having been “sloppy” and conceded that he “cut corners” in his practice. He also stated that he habitually did not write up detailed attendance notes and that he sometimes ticked compliance checkboxes without actually performing the checks, especially during that stressful period. While these admissions were candid, they did not assist his defence; to the contrary, they reinforced the claimant’s case that he knew what the proper standards were and yet repeatedly breached them. The judge found it “simply not credible” that an experienced solicitor would again and again overlook such basic requirements if he were truly trying to be honest. The frequency and similarity of Mr Broughton’s lapses (across multiple transactions over many months) suggested a pattern of intentional disregard, rather than isolated blunders.
• No specific suspicion required: Addressing the defence argument about lack of subjective suspicion, the judge rejected the notion that Mr Broughton needed to have had a specific suspicion of a particular fraud in order to be found dishonest. It is enough that he was aware of facts that would have caused any honest solicitor to ask further questions, and that he deliberately chose not to pursue those inquiries. Here, the red flags (large unexplained third-party payments, false lender statements, funds held without a transaction, etc.) would have alarmed an honest solicitor that something was “not quite right” (indeed Mr Broughton himself acknowledged in one 2017 email, upon being asked to front a short-term funding arrangement for Mr Varma, “Blimey, who knows, but [this] makes me think something is not quite right!”). Thus, even if he did not know the exact scheme Mr Varma and Mr England were perpetrating, Mr Broughton suspected impropriety at some level and chose to look the other way, which satisfies the test for blind-eye dishonesty. An honest solicitor, by contrast, would have halted or at least frozen the transactions until fully satisfied the funds were legitimate.
• No exonerating context: The court found no extenuating circumstances to excuse Mr Broughton’s conduct. The defence had suggested that changes in the law or lack of motive might indicate a lesser culpability, but the judge was not persuaded. The 2013 Law Society guidance (based on the pre-2017 regulations) was in force throughout, warning solicitors not to let their client accounts be used as a banking facility and to always know the source of funds. Mr Broughton was aware of these principles (he did not claim ignorance of them). Moreover, even if he didn’t profit beyond normal fees, dishonesty in this context does not require a motive of personal gain. The judge noted that motive is legally irrelevant to dishonesty – one can act dishonestly out of loyalty to a client or out of inertia, not only for greed. In Mr Broughton’s case, it appeared he was willing to “not look too closely” at clients’ finances, perhaps to keep transactions moving or keep a valuable client happy. That pattern, however, amounted to knowingly closing his eyes to the risk of facilitating a fraud. The court unequivocally held that an experienced solicitor cannot be “honest” by simply adopting a see-no-evil approach to every transaction; professional obligations are such that wilful blindness is itself dishonest when it enables wrongdoing.

Having weighed all these factors, Judge Salimi concluded that Mr Broughton acted dishonestly throughout his dealings with the Varmas in relation to Grosvenor’s funds. His conduct involved not only passive failures to inquire but also active misrepresentations (as with the Hallam Street lender), demonstrating conscious impropriety. Consequently, Portner Law Ltd, being vicariously liable for its partner’s actions, was liable for dishonest assistance in the breach of fiduciary duty that Mr Varma and Mr England committed against the company. In the judge’s words, the claimant’s case was “made out” the firm, through Mr Broughton, “dishonestly assisted in a misappropriation of the Claimant’s funds.”

Conclusion: Liability and Quantum

Liability – Dishonest Assistance and Vicarious Liability: The High Court’s decision firmly held Portner Law to account for Mr Broughton’s dishonesty. This judgment is a clear affirmation that a solicitor who turns a blind eye to glaring signs of client wrongdoing can be found to have acted dishonestly and thus made their firm liable for accessory liability in the client’s breach of trust. Portner Law was found vicariously liable as Mr Broughton’s employer, a point the firm had conceded in principle and which the court confirmed upon finding that the dishonest assistance was established. The result is that Portner Law is liable to compensate the claimant for the losses flowing from the dishonest assistance (essentially the £2.399 million that passed through its accounts, subject to credits for any amounts already recovered).

Need advice on a potential professional negligence claim? Call us on 0151 541 2040 or 0203 846 2862, email info@carruthers-law.co.uk, or contact us online for a confidential, no-obligation consultation.

Disclaimer: This article is provided for general information purposes only and does not constitute legal advice. Carruthers Law accepts no responsibility for any reliance placed on the contents. This article may include material from court judgments and contains public sector information licensed under the Open Justice Licence v1.0.