Equity and Trusts Law



Can one claim a proprietary interest in cases involving bribes received by a Fiduciary?


The landmark case of FHR European Ventures v Cedar Capital Partners [2014] UKSC 45 had to do with a secret commission acquired in relation to the sale of the Monte Carlo Grand Hotel .

FHR was involved in the acquisition of share capital of the hotel while Cedar acted as an agent in respect of the purchase, therefore owing fiduciary duties to the claimant. The facts indicate that Cedar entered into an agreement with the vendors of the hotel which involve the receipt of 10Million Euros upon completion of the sale.

The issue on appeal was  whether property that was neither orginally an an asset of the principal nor the exploitation of an opportunity properly belonging to the principal could be the subject of a proprietary remedy in relation to the 10 Million.

Lord Neuberger, delivering the judgment of the Supreme Court of UK, affirmed the approach adopted by Lord Templemann in the case of AG for HK v Reid [1994] 1AC 324 heard in the Privy Council, stating that:

 “the notion that the rule should not apply to a bribe or secret commission received by an agent because it could not have been received by, or on behalf of , the principal seems unattractive. The whole reason that the agent should not have accepted the bribe or commission is that it put him in conflict with his duty to his principal”

Thus Lord Neuberger was restating the equitable principle  in an unequivocal way that a bribe or secret commission accepted by an agent is held on trust for his principal.