Proprietary consequences of TP Liability

FHR European Ventures LLP v Cedar Capital Partners LLC

Bribes and secret commissions received in breach of fiduciary duty are held on constructive trust for the principal — not merely subject to a personal liability to account. Overruled Sinclair Investments and resolved the longstanding tension with A-G for Hong Kong v Reid. The proprietary constructive trust follows automatically from the receipt of a bribe or secret commission by a fiduciary.

A-G for Hong Kong v Reid

Privy Council held that a bribe received by a fiduciary is held on constructive trust from the moment of receipt. The fiduciary cannot retain any property acquired through the bribe. Confirmed in English law by FHR.

Lister & Co v Stubbs

Court of Appeal held that a bribe received by an employee gave rise only to a personal obligation to account, not a proprietary constructive trust. Expressly overruled by FHR European Ventures.

Sinclair Investments (UK) Ltd v Versailles Trade Finance Ltd

Court of Appeal under Lord Neuberger followed Lister v Stubbs in preference to Reid, holding that no proprietary remedy arose over a bribe. Also overruled by FHR. Relevant to show the pre-FHR confusion and the significance of the Supreme Court's resolution.