Reading v Attorney-General

A servant or public officer must account to the employer or Crown for money obtained through the use or abuse of the position held. Liability arises where the position, authority, uniform, facilities or property supplied by the employer is the real cause of the gain. It is immaterial that the conduct fell outside the proper course of employment, was criminal, or caused the employer no loss.

A separate fiduciary relationship is not an additional requirement. The wrongdoer cannot rely upon the illegality of the conduct as a defence to the employer’s claim.

An Army sergeant received substantial payments for escorting lorries through Cairo while wearing his uniform. His military appearance and status enabled the lorries to pass without inspection. Money representing the payments was seized on behalf of the Crown.

The sergeant presented a petition of right seeking recovery of the money as money had and received. The Crown alleged that the money represented bribes for which he was accountable and alternatively claimed a set-off. Denning J held that the Crown could retain the money, and the Court of Appeal dismissed the sergeant’s appeal.

The central issue before the House was whether the Crown could recover profits obtained through the use or abuse of military status, although the conduct was unauthorised and criminal and caused the Crown no loss.

1. Appeal dismissed unanimously. Lord Porter delivered the leading speech, in which the Lord Chancellor concurred. Lord Normand, Lord Oaksey and Lord Radcliffe also concluded that the decision of the Court of Appeal should stand.

2. Per Lord Porter, an official position which enables its holder to earn money through its use gives the employer a right to receive the money. That principle applies even where the money was earned by a criminal act. The appellant’s military status and uniform were the real cause of his obtaining the payments, rather than merely furnishing an incidental opportunity.

3. Per Lord Porter, it was unnecessary that the money should have been received in the proper course of employment. A servant who receives money by reason of the employment while acting in dereliction of duty remains accountable. The servant cannot rely upon his own wrong as a defence. The employer’s claim does not affirm the criminal conduct and does not affect any claim which a third party may have to the money.

4. Per Lord Porter, a distinct fiduciary relationship was not an additional condition of recovery. Such a relationship could provide another ground of liability. In this context, however, the expression was sufficiently broad to include a servant whose employment conferred the authority used to obtain the gain. Nor was proof of loss, prejudice or lost profit required. The receipt and possession of the money were decisive.

5. Per Lord Normand, a member of the armed forces owes the Crown a duty as fully fiduciary as the duty owed by a servant or agent. Profits and advantages obtained through the use or abuse of military status are therefore for the Crown’s benefit. The appellant could not invoke his criminal conduct as a defence. Lord Normand reserved his position on whether an action at law for money had and received would independently have succeeded.

6. Per Lord Oaksey, a promise to account for profits obtained through the use of the employer’s business, property or position may be implied when the employment or agency begins. The principle did not entitle the Crown to claim property known to have been stolen. Trivial private use might also fall within the de minimis principle. Those qualifications did not assist the appellant because his rank and uniform were the real cause of the payments.

1. House of Lords: The appeal was dismissed unanimously, affirming the order of the Court of Appeal.

2. Court of Appeal: On 19 May 1949, the court affirmed Denning J’s judgment and dismissed the suppliant’s appeal with costs. No citation is stated in the judgment.

3. High Court: Denning J held that the Crown was entitled to retain the money because it had a valid counterclaim against the suppliant. No citation is stated in the judgment.