Attorney-General for Hong Kong v Reid
| A-G for Hong Kong v Reid | |
|---|---|
 |
|
| Court | Judicial Committee of the Privy Council |
| Full case name | The Attorney General for Hong Kong v Charles Warwick Reid and Judith Margaret Reid and Marc Molloy |
| Decided | 1 November 1993 |
| Citation(s) | [1993] UKPC 36, [1994] 1 AC 324 |
| Transcript(s) | Full transcript on bailii.org |
| Court membership | |
| Judge(s) sitting | Lord Templeton, Lord Goff of Chieveley, Lord Lowry, Lord Lloyd of Berwick, Sir Thomas Eichelbaum |
| Keywords | |
| Constructive trustee, breach of trust, bribery | |
Attorney‐General for Hong Kong v Reid [1993] UKPC 36 is a British and New Zealand trust law case, where it was held that bribe money accepted by a person in a position of trust, can be traced into any property bought and is held on constructive trust for the beneficiary.
After a period of uncertainty, the ruling in the case was reinforced by the United Kingdom Supreme Court in FHR European Ventures LLP v Cedar Capital Partners LLC [2014] UKSC 45.
Mr Charles Warwick Reid was a New Zealand national and the Hong Kong Deputy Crown Prosecutor and then Acting Director of Public Prosecutions, so in a fiduciary relationship with the Hong Kong government. He took bribes to obstruct prosecution of some criminals, and used the money to buy land in New Zealand. Some was kept by Mr Reid and his wife, Mrs Judith Margaret Reid, some conveyed to Reid’s solicitor. The Hong Kong government argued the land was held on trust for them.
The Privy Council advised the bribe money received by Reid, and the land acquired after, was held on constructive trust for the Hong Kong government. This meant that the land bought by Reid and his wife was held on trust, and had to be given over to the Hong Kong government. This was held to be necessary to ensure that people in positions of trust could in no way profit from their wrongdoing. If the property was badly invested, the fiduciary in breach would still be under a duty to make good the shortfall. Lord Templeman delivered the advice of the Board.
[...]
It has always been assumed and asserted that the law on the subject of bribes was definitively settled by the decision of the Court of Appeal in Lister & Co v Stubbs (1890) 45 Ch.D. 1.
In that case the plaintiffs, Lister & Co., employed the defendant, Stubbs, as their servant to purchase goods for the firm. Stubbs, on behalf of the firm, bought goods from Varley & Co. and received from Varley & Co. bribes amounting to £5,541. The bribes were invested by Stubbs in freehold properties and investments. His masters, the firm Lister & Co., sought and failed to obtain an interlocutory injunction restraining Stubbs from disposing of these assets pending the trial of the *336 action in which they sought, inter alia, £5,541 and damages. In the Court of Appeal the first judgment was given by Cotton L.J. who had been party to the decision in Metropolitan Bank v Heiron, 5 Ex.D. 319 . He was powerfully supported by the judgment of Lindley LJ and by the equally powerful concurrence of Bowen LJ and Cotton LJ said, at p. 12, that the bribe could not be said to be the money of the plaintiffs. He seemed to be reluctant to grant an interlocutory judgment which would provide security for a debt before that debt had been established. Lindley LJ said, at p. 15, that the relationship between the plaintiffs, Lister & Co., as masters and the defendant, Stubbs, as servant who had betrayed his trust and received a bribe:
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