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SAM NEAMAN SUCCESSFUL IN HIGH COURT FIDUCIARY DUTY/CONSTRUCTIVE TRUST CLAIM

In Faichney & Anr v Vantis HR Ltd & Ors [2018] EWHC 565 (Ch) Littleton’s Sam Neaman, with 4 Stone Buildings’ Jonathan Brettler, has obtained judgment for their client, Aquila Advisory Ltd (the Part 20 Claimant), in a High Court fiduciary duty/constructive trust claim. The case is of particular interest for the way in which the judge applied the law of illegality and the doctrine of ex turpi causa to breach of fiduciary duty claims in light of the recent Supreme Court cases of Bilta v Nazir [2016] AC 1 and Patel v Mirza [2017] AC 417.

Relying on another recent Supreme Court case, FHR European Ventures LLP v Mankourious [2015] AC 250, Aquila sought a Declaration of proprietary rights in respect of properties and other assets bought with £4.55 million of money obtained by former directors of a company in breach of their fiduciary duties (in this case the wrongful diversion of corporate property/corporate opportunity).

To make matters more complex, the directors were convicted of fraud (cheating the revenue) and confiscation orders had been made against them. The CPS, intervening in the proceedings, argued (inter alia for public policy reasons) that the confiscation orders should take priority over any proprietary rights established by Aquila, if necessary by the Court using its discretion to refuse to make a Declaration in respect of any proprietary interest it found that Aquila had.

The Judge (Mann J) held that the £4.55 million assets were indeed held on constructive trust for Aquila, and there was nothing in the provisions of POCA relied upon by the CPS, or in public policy, which should result in Aquila’s proprietary rights being overridden in favour of the Crown, or to cause him to exercise his discretion to refuse a Declaration in respect of those proprietary interests.

Jonathan and Sam were instructed by James Canning, partner at Beers LLP.
Posted: 05.04.2018 at 10:00
Tags:  Cases  Commercial Law
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