It was alleged by the plaintiffs that their foreman had received secret commissions which he had invested in land and other investments. They sought interlocutory relief to prevent him dealing with the land and requiring him to bring the other investments into court.
Held: The injunction was refused because the money was not that of the plaintiffs so as to make the defendant a trustee, but was money to which the plaintiffs would be entitled to claim in the action, i.e. ‘a debt due from the Defendant to the Plaintiffs in consequence of the corrupt bargain which he entered into’ but (a) the money which he had received under that bargain could not be treated as being money of the Plaintiffs ‘before any judgment or decree in the action had been made’ The court will not grant an injunction to restrain a defendant from parting with his assets so that they may be preserved in case the plaintiff’s claim succeeds. A claim relating to the acceptance of bribes was not within a proprietary claim.
Lindley LJ discussed the relation between the employer and employee who was accused of betraying his trust in taking a bribe, saying the relationship: ‘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if Stubbs were to become bankrupt, this property acquired by him with the money paid to him by Messrs Varley would be withdrawn from the mass of his creditors and be handed over bodily to Lister and Co. Can that be right?
Another consequence would be that, if the Appellants are right, Lister and 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? ‘
Cotton LJ, Lindley LJ
(1890) 45 Ch D 1
England and Wales
Cited by:
Cited – Ultraframe (UK) Ltd v Fielding and others ChD 27-Jul-2005
The parties had engaged in a bitter 95 day trial in which allegations of forgery, theft, false accounting, blackmail and arson. A company owning patents and other rights had become insolvent, and the real concern was the destination and ownership of . .
Wrongly decided – Attorney General for Hong Kong v Reid and Others PC 24-Nov-1993
Principalhas proprietary interest in Trust assets
Bribes were taken by an employee, a crown prosecutor in Hong Kong, in a fraud on his employer. He then invested the proceeds in the purchase of property in New Zealand. The property had increased in value. The employer sought repayment of the bribes . .
Cited – Islamic Republic of Pakistan v Zardari and others ComC 6-Oct-2006
The claimant alleged that the defendants had funded the purchase of various properties by secret and unlawful commissions taken by them whilst in power in Pakistan. They sought to recover the proceeds. They now sought permission to serve proceedings . .
Cited – A J Bekhor and Co Ltd v Bilton CA 6-Feb-1981
The plaintiff had applied for disclosure of assets under the Rules of the Supreme Court in support of a Mareva freezing order. The rules were held not to provide any such power: disclosure of assets could not be obtained as part of discovery as the . .
Cited – FHR European Ventures Llp and Others v Cedar Capital Partners Llc SC 16-Jul-2014
Approprietary remedy against Fraudulent Agent
The Court was asked whether a bribe or secret commission received by an agent is held by the agent on trust for his principal, or whether the principal merely has a claim for equitable compensation in a sum equal to the value of the bribe or . .
Lists of cited by and citing cases may be incomplete.
Updated: 07 August 2021; Ref: scu.230342
