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Dubai Aluminium Co. V. Salaam Notes

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DUBAI ALUMINIUM CO. V. SALAAM FACTS These proceedings arise out of an elaborate fraud by which the plaintiff, Dubai Aluminium Co Ltd, was induced to pay out US$50m between September 1987 and March 1993 under a bogus consultancy agreement with Marc Rich & Co AG. The proceeds were shared out among the principal participants in the fraud under several equally bogus sub-agreements. Mr Hany Mohamed Salaam and His Excellency Mahdi Mohamed Al Tajir were found by the trial judge, Rix J, to have been dishonest participants in the scheme, together with Dubai Aluminium's chief executive, Mr Ian Livingstone. Claim against Amhurst Firm: Mr Salaam was a client of two successive firms of solicitors, Amhurst Brown Martin & Nicholson and Amhurst Brown Colombotti. Nothing turns on the distinction between these two firms, and it will be convenient to refer to them simply as "the Amhurst firm". Mr Salaam's affairs were dealt with mainly by Mr Amhurst, the senior partner in the Amhurst firm. Dubai Aluminium claimed that Mr Amhurst dishonestly assisted in the fraud. He did not benefit from the fraud, apart from comparatively modest amounts paid to his firm by way of fees. In addition to suing Mr Amhurst Dubai Aluminium sued the Amhurst firm, on the basis that the firm was vicariously liable in respect of some of Mr Amhurst's activities. It has always been common ground that Mr Amhurst's partners were personally innocent of any dishonesty. At various stages in the course of the trial all the defendants settled with Dubai Aluminium on agreeing to make substantial payments. The claims against Mr Amhurst and the Amhurst firm were settled on payment by the Amhurst firm of $10m. These settlements left outstanding and unresolved contribution claims brought by some of the defendants against each other and against third parties. So the contribution claims had to be decided by the judge, Rix J. The effect of the judge's decision was that the Amhurst firm, in respect of its payment of $10m, received contribution amounting to a full indemnity from Mr Salaam and Mr Al Tajir. More precisely, Rix J gave judgment in favour of the Amhurst firm for $7,781,093 jointly and severally against Mr Salaam and Mr Al Tajir, and in the further amount of $2,651,253 against Mr Salaam. HOLDING LORD NICHOLLS Nature of the claim

The contribution claim made by the Amhurst firm in respect of its payment of $10m to Dubai Aluminium is based on the Civil Liability (Contribution) Act 1978. Section 1(1) of this Act ("the Contribution Act") provides that any person "liable" in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage. On the judge's findings Mr Salaam and Mr Al Tajir were liable in respect of Dubai Aluminium's loss. That is clear. In order to found a contribution claim the Amhurst firm had to show it, too, was "liable" in respect of the loss suffered by Dubai Aluminium. The Amhurst firm claimed it satisfied this prerequisite because, pursuant to section 10 of the Partnership Act 1890, it was liable for Mr Amhurst's alleged wrongdoing. The validity of Amhurst's claim for contribution depended on whether it could establish that it was "liable" along with the defendants for the damages in respect of which contribution was being sought. Two arguments were made to establish that Amhurst Firm was not "liable" in respect of such damage: (1) First it was argued that liability for a breach of fiduciary duty did not fall within the purview of the Contribution Act (2) Secondly, it was argued that Amhurst firm was not liable since the acts of Mr. Amhurst in this case fell outside the scope of authority conferred on him by the Amhurst firm. Both these arguments were rejected by the Court. On the second issue, the Court held as follows: "On this assumed factual basis, I consider the firm is liable for Mr Amhurst's dishonest assistance in the fraudulent scheme, the assistance taking the form of drafting the necessary agreements. Drafting agreements of this nature for a proper purpose would be within the ordinary course of the firm's business. Drafting these particular agreements is to be regarded as an act done within the ordinary course of the firm's business even though they were drafted for a dishonest purpose. These acts were so closely connected with the acts Mr Amhurst was authorised to do that for the purpose of the liability of the Amhurst firm they may fairly and properly be regarded as done by him while acting in the ordinary course of the firm's business." Personal honesty of the partners is irrelevant in a vicarious liability claim The first was that the partners in the Amhurst firm, as distinct from Mr Amhurst himself, were personally innocent of any wrongdoing. This personal innocence of dishonesty was to be contrasted with the dishonesty of Mr Salaam and Mr Al Tajir. I prefer the conclusion of Evans LJ. On the approach of Rix J an employer is in a better position, vis-a-vis co-defendants, than the employee for whose wrong the employer is vicariously liable. A co-

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