Restitution
front page

What's new?

Archive front page

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2007

2006

2008

2009

Members,

Until now there has been no English authority on the question whether a dishonest assistant may be liable to disgorge profits obtained through corruption of the plaintiff's agent. Toulson J has now given a positive answer to this question in Fyffes Group Ltd v Templeman (QBD, 22 May 2000), following the High Court of Australia in Warman International Ltd v Dwyer (1995) 182 CLR 544.

This was a simple bribery case. Fyffes, a banana company, entered a contract with Seatrade, a shipping company, for shipment of its bananas from Central America to Europe. This contract was negotiated for Fyffes by its employee Templeman. Unknown to Fyffes, Templeman had requested a bribe from Seatrade which Seatrade had secretly paid. Of course, on the authority of Mahesan both Templeman and Seatrade were liable to pay the value of the bribe as money had and received. Toulson J also found that had Templeman been acting in Fyffe's interests the shipping contract would have been more favourable to Fyffes in a number of ways, the value of which exceeded the amount of the bribe. Seatrade was therefore liable to pay the total loss as damages in tort or equitable compensation for dishonest assistance. (Toulson J said the same principles apply in assessing either form of compensation.)

Toulson J then went on to consider whether Seatrade was liable to account to Fyffe for the profit it had made by its wrong. In the circumstances Seatrade's profit was coextensive with Fyffe's loss, but this may not always be so, and Toulson J canvassed the issue at some length. Seatrade argued (1) that restitutionary relief would only lie against a third party participant in a breach of fiduciary duty who had received the principal's property, and (2) that disgorgement of profits would be inappropriate as a dishonest assistant, in contrast with a bribed agent, does not owe the principal a duty not to make secret profits. Toulson J accepted the contrary argument that:

". . . although the dishonest intruder owes no personal obligation of loyalty to the injured party, it is unconscionable for him dishonestly to suborn the loyalty of the agent and equally unconscionable for him to keep benefits which he has obtained by dishonestly abusing to his own advantage the position of the agent whose duty was to his principal."

Steven Elliott