Stupples v Stupples & Co (High Wycombe) Ltd

A fiduciary agent may forfeit contractual remuneration for breach of the fiduciary duties of loyalty and good faith without proof of a further mental element of dishonesty or fraud. The relevant question is whether the conduct constitutes a breach of those specifically fiduciary duties, rather than merely a contractual breach. Secret profits and direct conflicts of interest ordinarily justify forfeiture, even without proof of loss. A limited exception may arise where the breach concerns a harmless and collateral matter. Where transactions are separable, remuneration relating to untainted transactions may remain payable.

The claimant, a former partner and consultant to the defendant company, claimed unpaid consultancy and success fees. The defendant alleged that he had sought a secret personal fee from a client and had encouraged that client to terminate the company’s instructions and transfer the work to a company controlled by him.

The claimant remained the defendant’s agent in relation to the client’s project. The principal issues were whether his conduct breached fiduciary duties, whether such breaches required dishonesty to be pleaded and proved before remuneration could be forfeited, and the extent of any repayment obligation.

1. Fiduciary breach and forfeiture. The court distinguished breaches of ordinary contractual duties from breaches of the fiduciary duties of loyalty and good faith. The equitable remedy of disentitlement to remuneration is available for the latter without proof of loss and without proof of dishonesty beyond the conduct necessary to establish the fiduciary breach. The language of dishonesty in the older authorities describes the breach of loyalty, not an additional subjective requirement.
2. Secret profit and conflict. The claimant’s attempt to obtain a separate personal fee from the client was a secret profit. His preparation of documents encouraging the client to terminate the defendant’s retainer and appoint his own company placed his interests directly against those of his principal and was a serious breach of fiduciary duty. It was immaterial that the client ultimately did not terminate the defendant’s instructions.
3. Harmless collaterality and severability. The authorities recognise a limited exception for a breach concerning a purely incidental matter that could not realistically affect the agent’s performance of the main duty. Separately identifiable transactions may also be treated separately. The claimant therefore retained his entitlement to the fee relating to the untainted Anglo Chesham matter, subject to disclosure of the actual fee received.
4. Repayment. The claim for further fees relating to the Hypnos transactions failed, and the counterclaim for repayment of success fees already paid in relation to those transactions succeeded. Repayment of general monthly consultancy fees and success fees relating to other clients was refused because they were not specifically attributable to the tainted transactions.
5. Disclosure. There was no free-standing fiduciary duty requiring an agent to disclose his own wrongdoing merely because he occupied a fiduciary position. The defendant’s wider request for an account of dealings with other clients was refused as unsupported by evidence and oppressive.

First-instance decision of the High Court (Chancery Division). The claim for Hypnos-related fees was dismissed, repayment of Hypnos-related success fees was ordered, and the claimant retained entitlement to the severable Anglo Chesham fee.