## Facts

- FHR European Ventures LLP engaged Cedar Capital Partners LLC as its agent for the purchase of a hotel in Monte Carlo.
- Cedar Capital received a €10 million commission from the vendor in connection with the transaction, which was not disclosed to FHR.
- Upon discovery, FHR claimed that this payment constituted a bribe or secret commission owed to them under a constructive trust.
- The High Court found Cedar Capital had breached its fiduciary duty but declined a constructive trust remedy, allowing only a personal claim for equitable compensation.
- The Court of Appeal upheld that view, leading FHR to appeal to the Supreme Court.

## Issues

1. Whether a bribe or secret commission received by an agent in breach of fiduciary duty is held on constructive trust for the principal, or only gives rise to a personal claim for equitable compensation.
2. Whether existing conflicting authorities in English law on proprietary versus personal remedies should be resolved.

## Decision

- The Supreme Court unanimously allowed FHR's appeal.
- Held that the €10 million commission received by Cedar Capital was held on constructive trust for FHR.
- The Court expressly rejected the position that only a personal claim arises in such circumstances.
- Overruled Lister & Co v Stubbs (1890) as inconsistent with the imposition of a constructive trust over bribes and secret commissions.
- Endorsed the Privy Council's stance in Attorney General for Hong Kong v Reid (1994) that bribes are held on constructive trust for principals.

## Legal Principles

- Fiduciary relationships require the utmost loyalty, good faith, and avoidance of conflicts of interest.
- A constructive trust is imposed to prevent unjust enrichment where a fiduciary profits from a breach of duty.
- A bribe or secret commission constitutes a breach of fiduciary duty and is held on constructive trust for the principal.
- Principals have a proprietary claim to bribes or secret commissions received by agents, not merely a personal claim.
- The proprietary remedy offers greater protection—particularly in insolvency—than a personal remedy.
- The imposition of a constructive trust serves a deterrent function, reinforcing fiduciary obligations.

## Conclusion

The Supreme Court resolved longstanding uncertainty in English law by holding that bribes or secret commissions taken by an agent in breach of fiduciary duty are held on constructive trust for the principal, granting proprietary remedies and strengthening enforcement of fiduciary obligations in commercial contexts.

FHR European Ventures LLP v Cedar Capital Partners LLC [2014] UKSC 45