From:                                                       Matthew Hoyle <MHoyle@oeclaw.co.uk>

Sent:                                                         Tuesday 25 November 2025 10:04

To:                                                            Alexander Georgiou; Sandy Steel

Cc:                                                             lucas.cloveralcolea@monash.edu; James Lee; obligations

Subject:                                                   RE: Fiduciaries, Remedies and the Supreme Court (Encore, Encore)

 

The thrust of the analysis in Akers v Samba is that a beneficiary retains rights against the trustee even if the trust property has been dealt with such as to destroy any equitable interest in respect of it. Perhaps it begs the question to ask what ‘loss’ has been suffered if the trustee has a continuing duty to account for the trust property notwithstanding the loss of any underling assets from the fund.

 

Also, evergreen critique but how does this ‘immediate loss’ analysis work in an ongoing trust with multiple, potentially discretionary beneficiaries? Surely it must mean that the trust fund has suffered a loss?

 

As such I don’t think the comparison with conversion is usually a helpful one in those circumstances, because the nature of the breach of duty and the rights of the right holder(s) are very different.

 

On the other hand, I do think Sandy is right that the subsequent loss/destruction of stolen property is no defence at all, unless it would have been lost/destroyed anyway. If it would have been lost/destroyed anyway then you should be limited to general damages in respect of the initial conversion.

 

A more interesting example is a museum which has a piece of art. It is stolen by A, but is then stolen from him by agents of B. We can establish beyond doubt that B’s agents would have stolen it from the museum had it not been stolen by A first. I don’t think A can resist a claim by the museum to the value of the property. But can A resist a claim for special losses, e.g. from the ticket revenues for the next few months (which would never have been made anyway due to B’s intended theft)? Would the outcome be different if instead of being stolen by B’s agent, the property is lawfully seized (either from the museum or from A) as being cultural property of another country?

 

M

 

Matthew Hoyle

Barrister

One Essex Court

 

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From: Alexander Georgiou <alexander.georgiou@all-souls.ox.ac.uk>
Sent: 25 November 2025 09:44
To: Sandy Steel <sandy.steel@wadham.ox.ac.uk>
Cc: lucas.cloveralcolea@monash.edu; James Lee <james.lee@kcl.ac.uk>; obligations <obligations@uwo.ca>
Subject: Re: Fiduciaries, Remedies and the Supreme Court (Encore, Encore)

 

I think that is an interesting point, and I hear echoes of the ‘direct loss’ analysis which ones sees (at common law) in e.g. Coles v Hetherton and Burdis v Livsey at [101] of Mitchell: ‘Where a trustee or fiduciary has misappropriate trust property… the benficiary suffers an immediate loss of value’. Query though whether it makes all that much sense to speak of this as a kind of ‘loss’. I am not sure I’m convinced (in either context). That would elevate the date at which one asks the question ‘has a loss been suffered?’ into a substantive part of what it means to suffer a loss, which would I think be a non-standard use of language outside law.

 

Yours,

Alex

 

On 25 Nov 2025, at 09:13, Sandy Steel <sandy.steel@wadham.ox.ac.uk> wrote:

 

On the painting hypotheticals, wouldn’t the results be the same if the defendant was not a trustee? I suspect so and therefore there is convergence between the common law and equity here, albeit perhaps not a complete one.

 

If, inspired by recent events at the Louvre, I head into the Tate and take home a Turner, and there’s a fire at home which destroys the painting, presumably I’d be liable in conversion for the loss 

 

(assuming that there would have been no fire at the Tate which would have destroyed the painting anyway - although there are parts of Kuwait Airways which might lead one to think this assumption is unnecessary)

 

Fowler v Hollins LR 7 QB 616, 639: 'persons deal with the property in chattels or exercise acts of ownership over them at their peril’

 

Perhaps there’s more doubt when the fire is started by a deliberate malefactor who is not me, someone acting for me, or someone I have a duty to control.

 

Same rule in German law: §848 BGB: "A person who is obliged to return a thing of which they have deprived another person by tort is also responsible for the chance loss, for a chance impossibility of surrender arising for another reason or for chance deterioration of the thing, unless such loss, other impossibility of surrender or deterioration would have occurred even without the deprivation.”

 

Quite separately there is a general rule - not concerned with intervening causation, but the prior question of whether a breach is a cause of a loss - roughly that a person in breach of duty to C cannot rely upon their own hypothetical further breach of duty to C to argue that C has suffered no counterfactual loss. That deals with the hypothetical in which D argues that D would have later breached rendering the shares worthless. The rationale of that rule is that C has a right against D that D complies not only with the duty breached, but all of D’s duties to C - so the counterfactual supposes that D did indeed comply with all of D’s duties to C.

 

Best

Sandy

 

From: lucas.cloveralcolea@monash.edu <lucas.cloveralcolea@monash.edu>
Date: Tuesday, 25 November 2025 at 03:25
To: James Lee <james.lee@kcl.ac.uk>, 'obligations' <obligations@uwo.ca>
Subject: RE: Fiduciaries, Remedies and the Supreme Court (Encore, Encore)

It’s really quite an interesting case! I suppose it will now have to be read alongside AIB.  It seems to suggest, at least in parts, that the bringing together of equitable compensation and common law damages might have stopped. Admittedly the Court does say “It is unnecessary to decide why the common law and equity appear to start from opposite ends of a possible spectrum of time for assessing loss or value (between breach and trial dates), when both are pursuing broadly the same compensatory objective. It may be that the explanation given by Street J in In re Dawson, adopted in Libertarian by Ribeiro PJ, namely that unlike the common law, equity is not concerned with issues of remoteness, foreseeability and mitigation, comes nearest to a satisfying explanation. But a firm conclusion about the reasons for that divergence of approach between common law and equity is for another day.” (para 97)

 

However, throughout it does seem to emphasise what we could call the policy or purpose of fiduciary law, i.e., that “A fiduciary, as steward of his principals property or affairs, to whom he owes a duty of loyalty, has the responsibility to account for and explain what has happened in relation to them” (111) and sets out some of the differences, for example as regards intervening causes, changes in value and so on. Perhaps most interesting in that regard is para 95, which explains that where property “If events occur diminishing the value of the property which are extraneous to the relationship between beneficiary and trustee (or between company and director) and which would have had the same effect if the property had remained in the hands of the trust fund or the company, there is no sound justification for holding the trustee or director responsible for that loss of value. On the other hand, where the fall in value of the property is caused by misconduct by the trustee or director there may be justification for holding the trustee or fiduciary responsible for it.”

 

The example given by the Court, where a trustee claims beneficial ownership of a painting hanging in a gallery, but this causes no loss as the gallery burns down and thus the loss would have been suffered in any event, versus a situation where the trustee takes the painting home, breaching their duties, and is destroyed by fire, so the trustee is liable, has, in my mind, obvious parallels with the discussion of Lord Eldon in Caffrey v Darby where he discusses the case of property destroyed by lightning or fire where it was ‘got in’ by the trustees due to their negligence. The facts of Al Jaber themselves also give a good example, in that an argument seemed to be run that the misappropriated shares would have been worthless even if the fiduciary had complied with their duties, because they would have, in any event, made them worthless due to a later breach. As the Court noted this, in effect, would have amounted to an argument that “if he had not destroyed the value to the Company of the 891K shares in 2016 he would in any event have succeeded in destroying that value a year later by the 2017 Asset and Liability Transfer, or at least have reaped the same benefit to himself, as the ultimate beneficial owner of the MBI Group. Using the analogy of the painting held on trust, he would actually have lit the fire which destroyed it.” (para 122)

 

I think this leans towards an equitable sort of intervening causes doctrine, or at least differs from the common law one, but I can’t really say anymore about that.

 

A final point is that the Court, perhaps unsurprisingly, again defends the Target and AIB but for approach, referring to 19th century cases, and noting that “Neither In re Brogden nor Carruthers were cases about a misappropriation of trust money by the defendant trustee. Rather, they were about breaches of trust consisting of failure to take steps to prevent foreseeable loss to the trust fund. But they both imposed a burden on the defendant, in effect to disprove an apparent connection between breach and loss, in the context of a ‘but for’ and therefore counterfactual analysis. In short, they required the defendant to prove that, even if there had been no breach of trust, the same loss would have been incurred. It is noteworthy that the courts in both those cases acknowledged that a ‘but for’ counterfactual analysis was an appropriate way of assessing loss, a century before Target and AIB. Thus it cannot be said that the principle as to the burden of proof which they laid down was overtaken by the requirement to carry out a counterfactual analysis in either of those much more recent cases.” (para 105)

 

Of course, it might be fair to say that it leans towards an equity focused, or Lord Reed approach, as opposed to a common law focused, or Lord Toulson approach, but I appreciate that’s probably highly contestable.

 

Please no more fiduciary/equity cases before next year, as I’m not sure we can keep up ☹

 

All the best,

Lucas

 

Lucas Clover Alcolea

Lecturer

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From: James Lee <james.lee@kcl.ac.uk>
Sent: Tuesday, 25 November 2025 1:45 AM
To: obligations <obligations@uwo.ca>
Subject: Fiduciaries, Remedies and the Supreme Court (Encore, Encore)

 

Dear Colleagues,

 

Fans of the UK Supreme Court’s current Fiduciary Era will be interested to see yet another decision this year on liabilities in equity, in Mitchell v Al Jaber [2025] UKSC 43 https://www.supremecourt.uk/cases/judgments/uksc-2024-0075. There is material from a range of jurisdictions considered by the Justices. The Court upholds the finding that the defendant Sheikh, who had intermeddled with the property of the company despite not having authority to enter into transactions on its behalf, was an ad hoc fiduciary. The treatment of this point is of note because it follows so soon after Hopcraft, the car finance decision from earlier this year, which seemed to narrow the scope for ad hoc fiduciary relationships. The Court also concludes that it is possible for the act that generates the duty in such cases also to amount to a breach of the duty. There is then lengthy discussion about how to calculate loss in such cases, with the date of assessment, counterfactuals, chains of causation and intervening & supervening causes all examined. The Sheikh’s argument that the loss to the company was zero (for various reasons) was rejected by the Supreme Court.

 

Best wishes,

James

 

--

James Lee

Professor of English Law 

The Dickson Poon School of Law

Somerset House East Wing

King's College London

Strand

London WC2R 2LS

 

 

My Inaugural Lecture, ‘Pure Imagination: Stories, Institutions and Law Reform’, will be held at 6pm on Monday 17th November, at King’s College London. https://www.kcl.ac.uk/events/inaugural-lecture-with-professor-james-lee

 

 

Are you a student? Can I help?

 

My feedback, advice and support hours in the autumn term are as follows:

 

Tuesdays, 4-5pm in SW 1.12, and

 

Wednesdays 10-11am in SW 1.12

 

Otherwise, please just get in touch and we can find another mutually convenient time to meet, whether in my office (SW 1.12) or on Teams.

 

 

 

 

 

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