Hornby was dissolved, and Lifestyle claimed an account of profits from the Ahmeds. The judge apportioned 10 per cent of their salaries over the period and a loan made by Hornby to Mr Ahmed as profits for which they must account.

Both parties appealed. The Court of Appeal upheld the decision except in respect of the loan to Mr Ahmed. Both parties then appealed to the Supreme Court.

Counsel for the Ahmeds contended that directors acting in good faith and within the scope of their statutory duties could not be liable for acts of Hornby. Their conduct fell within the rule in Said v Butt[1], a servant acting in good faith within his authority causing a breach of his master’s contract with a third person is not liable to the third person.

Lifestyle argued, relying on dicta of Lord Justice Slade in C Evans & Sons Ltd v Spritebrand Ltd[2] that where liability is strict, there is no need for the claimant to prove knowledge or intent by the accessories. For example, a director who instructs an employee to trespass on another’s land would escape liability while the employee would be liable despite both being unaware that they were trespassing.

The Supreme Court unanimously rejected both approaches. The Ahmed’s contention would create the injustice of a shop assistant being jointly and severally liable for the Company’s actions while the director escaped liability, while the Lifestyle approach would make both liable despite the accessory having no knowledge of the wrong.

The Court instead created a new test for accessory liability, which is that;

a person who causes another person to do a wrongful act will only be jointly liable as an accessory for the wrong done if they have knowledge of the essential facts which make the act done wrongful.

This will provide definitive authority for practitioners concerned with accessory liability.

[1] [1920] 3 KB 497

[2] [1985] 1 WLR 317