261:
to the Crown for the amount of that bribe. So much is admitted. But if the bribe consists of property which increases in value or if a cash bribe is invested advantageously, the false fiduciary will receive a benefit from his breach of duty unless he is accountable not only for the original amount or value of the bribe but also for the increased value of the property representing the bribe. As soon as the bribe was received it should have been paid or transferred instanter to the person who suffered from the breach of duty. Equity considers as done that which ought to have been done. As soon as the bribe was received, whether in cash or in kind, the false fiduciary held the bribe on a constructive trust for the person injured. Two objections have been raised to this analysis. First it is said that if the fiduciary is in equity a debtor to the person injured, he cannot also be a trustee of the bribe. But there is no reason why equity should not provide two remedies, so long as they do not result in double recovery. If the property representing the bribe exceeds the original bribe in value, the fiduciary cannot retain the benefit of the increase in value which he obtained solely as a result of his breach of duty. Secondly, it is said that if the false fiduciary holds property representing the bribe in trust for the person injured, and if the false fiduciary is or becomes insolvent, the unsecured creditors of the false fiduciary will be deprived of their right to share in the proceeds of that property. But the unsecured creditors cannot be in a better position than their debtor. The authorities show that property acquired by a trustee innocently but in breach of trust and the property from time to time representing the same belong in equity to the
318:'is that of debtor and creditor; it is not that of trustee and cestui que trust. We are asked to hold that it is - which would involve consequences which, I confess, startle me. One consequence, of course, would be that, if Stubbs were to become bankrupt, this property acquired by him with the money paid to him by Messrs. Varley would be withdrawn from the mass of his creditors and be handed over bodily to Lister & Co. Can that be right? Another consequence would be that, if the appellants are right, Lister & Co. could compel Stubbs to account to them, not only for the money with interest, but for all the profits which he might have made by embarking in trade with it. Can that be right?'
165:
32:
287:
freehold properties and investments. His masters, the firm Lister & Co., sought and failed to obtain an interlocutory injunction restraining Stubbs from disposing of these assets pending the trial of the *336 action in which they sought, inter alia, £5,541 and damages. In the Court of Appeal the first judgment was given by
346:
that the bribe and the property from time to time representing the bribe are held on a constructive trust for the person injured. A fiduciary remains personally liable for the amount of the bribe if, in the event, the value of the property then recovered by the injured person proved to be less than that amount.
260:
The false fiduciary who received the bribe in breach of duty must pay and account for the bribe to the person to whom that duty was owed. In the present case, as soon as the first respondent received a bribe in breach of the duties he owed to the
Government of Hong Kong, he became a debtor in equity
242:
Deputy Crown
Prosecutor and then acting director of Public Prosecutions, so in a fiduciary relationship with the Hong Kong government. He took bribes to obstruct prosecution of some criminals, and used the money to buy land in New Zealand. Some was kept by Mr Reid and his wife, Mrs Judith Margaret
345:
is not consistent with the principles that a fiduciary must not be allowed to benefit from his own breach of duty, that the fiduciary should account for the bribe as soon as he receives it and that equity regards as done that which ought to be done. From these principles it would appear to follow
251:
The Privy
Council advised the bribe money received by Reid, and the land acquired after, was held on constructive trust for the Hong Kong government. This meant that the land bought by Reid and his wife was held on trust, and had to be given over to the Hong Kong government. This was held to be
286:
In that case the plaintiffs, Lister & Co., employed the defendant, Stubbs, as their servant to purchase goods for the firm. Stubbs, on behalf of the firm, bought goods from Varley & Co. and received from Varley & Co. bribes amounting to £5,541. The bribes were invested by Stubbs in
401:
Reid served a four-year prison sentence for the criminal charges relating to the bribes, after which he was deported to his native New
Zealand. Although he was barred from practising as a lawyer, he set up a legal consultancy in 2013 which provoked anger in both New Zealand and Hong Kong.
329:
and then becomes bankrupt, the moneys together with any profit which has accrued from the investment are withdrawn from the unsecured creditors as soon as the mistake is discovered. A fortiori if a trustee commits a crime by accepting a bribe which he ought to pay over to his
842:
267:
and not to the trustee personally whether he is solvent or insolvent. Property acquired by a trustee as a result of a criminal breach of trust and the property from time to time representing the same must also belong in equity to his
309:
said, at p. 12, that the bribe could not be said to be the money of the plaintiffs. He seemed to be reluctant to grant an interlocutory judgment which would provide security for a debt before that debt had been established.
252:
necessary to ensure that people in positions of trust could in no way profit from their wrongdoing. If the property was badly invested, the fiduciary in breach would still be under a duty to make good the shortfall.
322:
For the reasons which have already been advanced their
Lordships would respectfully answer both these questions in the affirmative. If a trustee mistakenly invests moneys which he ought to pay over to his
367:
385:
218:
314:
said, at p. 15, that the relationship between the plaintiffs, Lister & Co., as masters and the defendant, Stubbs, as servant who had betrayed his trust and received a bribe:
205:, where it was held that bribe money accepted by a person in a position of trust, can be traced into any property bought and is held on constructive trust for the beneficiary.
431:
672:
765:
837:
686:
528:
424:
379:
declined to rely on this particular case from the Privy
Council as precedent and instead preferred the original English legal position set out in
202:
42:
277:
It has always been assumed and asserted that the law on the subject of bribes was definitively settled by the decision of the Court of Appeal in
376:
213:
700:
417:
793:
740:
118:
832:
827:
336:, the bribe and any profit made therefrom should be withdrawn from the unsecured creditors as soon as the crime is discovered.
474:
194:
173:
644:
658:
598:
126:
293:
164:
770:
556:
209:
341:
279:
243:
Reid, some conveyed to Reid's solicitor. The Hong Kong government argued the land was held on trust for them.
177:
798:
235:
122:
62:
The
Attorney General for Hong Kong v (1) Charles Warwick Reid and Judith Margaret Reid and (2) Marc Molloy
542:
502:
208:
After a period of legal uncertainty, this case was finally and unquestionably accepted and adopted into
130:
288:
462:
31:
711:
488:
736:
612:
354:
134:
332:
325:
263:
584:
514:
448:
546:
478:
372:
648:
634:
492:
99:
570:
383:(1890) LR 45 Ch D 1. However the Court of Appeal judgement was partially overturned by
253:
518:
452:
821:
390:
223:
690:
662:
588:
574:
560:
532:
190:
630:
616:
602:
103:
169:
311:
298:
766:"Fury as corrupt ex-Hong Kong prosecutor Warwick Reid sets up new legal firm"
409:
350:
306:
239:
198:
302:
843:
Judicial
Committee of the Privy Council cases on appeal from New Zealand
163:
794:"Disgraced lawyer Warwick Reid's role as advocate causes outrage"
413:
297:, 5 Ex.D. 319 . He was powerfully supported by the judgment of
186:
The
Attorney General for Hong Kong v Reid (New Zealand) (UKPC)
368:
Sinclair
Investments (UK) Ltd v Versailles Trade Finance Ltd
272:
and not to the trustee whether he is solvent or insolvent.
53:
The Attorney General for Hong Kong v Charles Warwick Reid
386:
FHR European Ventures LLP v Cedar Capital Partners LLC
219:
FHR European Ventures LLP v Cedar Capital Partners LLC
140:
114:
109:
95:
81:
73:
48:
38:
20:
238:was a New Zealand citizen who was employed as a
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258:
674:Chase Manhattan Bank v Israel-British Bank Ltd
425:
8:
733:Student Companion, Equity - Trusts and Wills
301:and by the equally powerful concurrence of
432:
418:
410:
30:
21:The Attorney General for Hong Kong v Reid
17:
723:
687:Westdeutsche Landesbank v Islington LBC
529:T Choithram International SA v Pagarani
203:Judicial Committee of the Privy Council
43:Judicial Committee of the Privy Council
291:who had been party to the decision in
627:Attorney General for Hong Kong v Reid
7:
256:delivered the advice of the Board.
701:Constructive trusts in English law
14:
353:, Lord Lowry, Lord Lloyd and Sir
838:1993 in United Kingdom case law
475:Banner Homes plc v Luff Dev Ltd
735:(2nd ed.). Butterworths.
210:domestic English jurisprudence
201:case heard and decided by the
174:Court of Appeal of New Zealand
1:
645:Sinclair Ltd v Versailles Ltd
104:Full transcript on bailii.org
100:Full transcript on bailii.org
659:FHR LLP v Cedar Capital LLC
373:[2011] EWCA Civ 347
859:
599:Reading v Attorney-General
294:Metropolitan Bank v Heiron
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683:
669:
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641:
623:
609:
595:
581:
567:
553:
539:
525:
511:
499:
485:
471:
459:
445:
440:Constructive trusts cases
168:The case originated from
145:
29:
771:South China Morning Post
731:Irving, Rebecca (1999).
557:Lloyds Bank plc v Rosset
381:Lister & Co v Stubbs
342:Lister & Co v Stubbs
280:Lister & Co v Stubbs
833:1993 in New Zealand law
828:English trusts case law
799:The New Zealand Herald
391:[2014] UKSC 45
348:
320:
224:[2014] UKSC 45
181:
172:as an appeal from the
123:Lord Goff of Chieveley
503:Bannister v Bannister
191:[1993] UKPC 2
167:
135:Sir Thomas Eichelbaum
131:Lord Lloyd of Berwick
236:Charles Warwick Reid
149:Constructive trustee
543:Fry v Densham-Smith
283:(1890) 45 Ch.D. 1.
802:. 19 February 2013
774:. 15 February 2013
712:English trusts law
489:Pennington v Waine
182:
707:
706:
613:Boardman v Phipps
397:Subsequent events
355:Thomas Eichelbaum
162:
161:
850:
812:
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762:
756:
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747:
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434:
427:
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339:The decision in
333:cestui que trust
326:cestui que trust
270:cestui que trust
264:cestui que trust
214:UK Supreme Court
110:Court membership
34:
18:
858:
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515:Binions v Evans
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449:Hussey v Palmer
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377:Court of Appeal
363:
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152:breach of trust
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77:1 November 1993
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22:
12:
11:
5:
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571:Stack v Dowden
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463:Lake v Bayliss
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119:Lord Templeman
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50:
49:Full case name
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36:
35:
27:
26:
13:
10:
9:
6:
4:
3:
2:
855:
844:
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826:
825:
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801:
800:
795:
789:
786:
773:
772:
767:
761:
758:
755:1 AC 324, 331
752:
749:
744:
742:0-408-71557-X
738:
734:
727:
724:
717:
713:
710:
709:
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559:
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547:EWCA Civ 1410
545:
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530:
524:
520:
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516:
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479:EWCA Civ 3016
477:
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64:(New Zealand)
55:(New Zealand)
51:
47:
44:
41:
37:
33:
28:
23:(New Zealand)
19:
16:
804:. Retrieved
797:
788:
776:. Retrieved
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685:
671:
657:
649:EWCA Civ 347
643:
626:
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611:
597:
583:
569:
555:
541:
527:
513:
506:2 All ER 133
501:
493:EWCA Civ 227
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361:Significance
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197:-originated
185:
184:
183:
52:
15:
357:concurred.
289:Cotton L.J.
195:New Zealand
170:New Zealand
96:Transcripts
91:1 All ER 1)
89:( 1 AC 324,
68:( UKPC 36)
822:Categories
806:17 October
778:17 October
718:References
519:EWCA Civ 6
466:1 WLR 1073
453:EWCA Civ 1
312:Lindley LJ
299:Lindley LJ
178:Wellington
127:Lord Lowry
351:Lord Goff
307:Cotton LJ
240:Hong Kong
199:trust law
82:Citations
59:( UKPC 2)
406:See also
303:Bowen LJ
141:Keywords
691:UKHL 12
663:UKSC 45
635:UKPC 36
589:UKSC 53
575:UKHL 17
561:UKHL 14
533:UKPC 46
212:by the
155:bribery
87:UKPC 36
85:UKPC 2,
74:Decided
739:
678:Ch 105
631:UKPC 2
617:UKHL 2
603:UKHL 1
193:was a
66:(UKPC)
57:(UKPC)
25:(UKPC)
389:
371:
230:Facts
222:
189:
39:Court
808:2017
780:2017
737:ISBN
699:see
375:the
305:and
247:Held
365:In
234:Mr
216:in
824::
796:.
768:.
633:,
393:.
226:.
176:,
810:.
782:.
745:.
433:e
426:t
419:v
180:.
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