Dyson Technology Ltd & Ors v Curtis & Anor

A recipient of misapplied fiduciary property is liable in knowing receipt where the recipient’s state of knowledge makes retention of the benefit unconscionable. Dishonesty is not an essential ingredient. Knowledge may be inferred where the recipient wilfully shuts their eyes to the obvious or recklessly fails to make enquiries that an honest and reasonable person would make.

Bribes or secret commissions received by a fiduciary belong in equity to the principal and may support a proprietary claim, including where the fiduciary directs payment to a third party. For dishonest assistance, the relevant standard is the ordinary standard of honest behaviour. The defendant need not know the precise legal character of the underlying breach.

Four companies claimed against an employee and his wife. The employee had failed to serve a defence and was deemed to admit the allegations against him. The claims concerned bribes and other payments connected with Portuguese and Far Eastern tooling suppliers, breach of contractual and fiduciary duties, knowing receipt, proprietary remedies and interest.

The wife denied knowledge of wrongdoing and said that she believed payments into businesses operated in her name represented lawful consultancy income. The court considered whether she was liable in knowing receipt, the sums involved, the availability of personal and proprietary remedies, and, following amendment, dishonest assistance.

1. Fiduciary breaches. The employee was a senior employee in a fiduciary relationship with the claimants. Secret commissions and benefits received through supplier transactions belonged to the employer and their receipt breached contractual and fiduciary duties. The evidence established liability for the Far Eastern overpayments and the Lismolde monies.
2. Knowing receipt. Applying BCCI v Akindele [2001] Ch 437, the question was whether the wife’s state of knowledge made it unconscionable for her to retain the benefit. Dishonesty was not a prerequisite. The court treated her as having actual knowledge because she knowingly participated in false instructions to the accountant, accepted anomalous invoicing practices, made dishonest expense claims, failed to make obvious enquiries, and understood enough about her husband’s work and suppliers to appreciate the circumstances.
3. Sums and remedies. The wife was a knowing recipient of £615,903.55 of Lismolde payments and £883,942 of unexplained receipts, after allowing £150,000 attributable to a lottery gift. The total was £1,499,845.55. The claimants established personal liability and were entitled to pursue a proprietary claim. Tracing was directed on a cherry-picking basis, with the precise procedure to be determined after further submissions.
4. Proprietary character of bribes. Following Attorney-General for Hong Kong v Reid [1994] 1 AC 324, a fiduciary receiving a bribe holds it on constructive trust. The same applied where the fiduciary directed payment to another person. The fact that a company received payments did not prevent the claim where it was used as a device or façade.
5. Dishonest assistance. The wife also assisted in the misapplication of the Lismolde and Far Eastern monies. The applicable standard was objective dishonesty assessed against the ordinary standard of honest behaviour. It was unnecessary for her to know the precise breach, know that the money was held on trust, or understand the concept of a trust.
6. Interest. Compound interest was awarded on the restitutionary sums under the principles in Sempra Metals Ltd v IRC (2007) 3 WLR 354. Simple interest was appropriate for the £4.7 million claim for losses caused by Far Eastern overpayments, which was a claim for damages or equitable compensation.