From: Matthew Hoyle
<MHoyle@oeclaw.co.uk>
Sent: Wednesday 23 July 2025
10:13
To: obligations
Subject: Dishonest assistance in
the UKSC
Dear all,
The UKSC
this morning handed down its decision in Hotel Portfolio II v Stevens
[2025] UKSC 28.
https://supremecourt.uk/uploads/uksc_2023_0142_judgment_fa1545553c.pdf
The key
point was that Stevens (not our own Rob Stevens, fortunately) had dishonestly
assisted another defendant, Ruhan, in paying away monies Ruhan held on
constructive trust (as it was obtained by virtue of his fiduciary position visa
vi the claimant). In essence, Stevens argued that he would in effect be made to
account for Ruhan's gain, by way of compensation for a proprietary right the
claimant only had to 'lose' very temporarily, because of Ruhan's earlier gain.
The gain and the 'loss' only arose from what was effectively the same
(wrongful) transaction.
Foxton J
found for the claimant and ordered Stevens pay compensation for the amount paid
away. This was overturned in the Court of Appeal, who in effect accepted that
the two 'wrongs' were so closely linked they could not be separated out, and
that when one looked at the 'totality' of Ruhan's scheme, the claimant had
suffered no loss for which it should be compensated ([2023] EWCA Civ 1120 at
[67]).
By
majority, the UKSC overturned the CA and restored Foxton J's order. Lord
Briggs identified his key principles at [100]. Essentially, his view is that
there was a trust in the claimant s favour, and ordinarily any dishonestly
assisting a breach of that trust is liable for the loss caused. The fact that
the trust arose because of an earlier 'breach' (my scare quotes) is irrelevant.
Lord
Burrows dissents, essentially on the basis of the 'compensatory principle' (at
[130]):
'Where the principal wrongdoer has committed a
breach of fiduciary duty both by making the profits and dissipating them, an
assister who assists either from the start (as on the facts of this case) or
only with the dissipation cannot be held liable for loss attributable just to
the dissipation because the principal wrongdoer's single wrongful scheme has
produced no overall loss to the victim of the wrongdoing'
I think the
result is right, but the difficulty is being generated by thinking that the
trust arises because of a wrong, rather than being an incident of a fiduciary
status - i.e. that profits made from one's position as fiduciary are properly
profits for one's principal. Once one sees that, it seems obvious that someone
who dishonestly assists in paying that money away, depriving the principal of
what is rightfully theirs, should be liable to compensate for that loss.
Best,
Matthew
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