FHR European Ventures LLP v Cedar Capital Partners LLC
| FHR LLP v Cedar Capital LLC | |
|---|---|
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| Court | Supreme Court of the United Kingdom |
| Full case name | FHR European Ventures LLP & Ors v Cedar Capital Partners LLC |
| Argued | 17–19 June 2014 |
| Decided | 16 July 2014 |
| Neutral Citation | [2014] UKSC 45 |
| Case history | |
| Prior action(s) | On appeal from FHR European Ventures LLP v Mankarious & Ors [2013] EWCA Civ 17 (29 January 2013), setting aside FHR European Ventures LLP & Ors v Mankarious & Ors [2011] EWHC 2308 (Ch) (5 September 2011) |
| Holding | |
| A bribe or secret commission accepted by an agent is held on trust for his principal. | |
| Case opinions | |
| Majority | Lord Neuberger, for a unanimous Court |
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This case overturned a previous ruling
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| Sinclair Investments (UK) Ltd v Versailles Trade Finance Ltd [2011] | |
| Area of Law | |
FHR European Ventures LLP v Cedar Capital Partners LLC [2014] UKSC 45 is a landmark decision of the United Kingdom Supreme Court which holds that a bribe or secret commission accepted by an agent is held on trust for his principal. In so ruling, the Court overruled Sinclair Investments (UK) Ltd v Versailles Trade Finance Ltd (a decision of the Court of Appeal of England and Wales) in favour of Attorney General for Hong Kong v Reid, a ruling from the Judicial Committee of the Privy Council.
Cedar Capital Partners LLC ("Cedar" or "the defendants") provided consultancy services to the hotel industry. Cedar agreed to act as the agent of FHR European Ventures LLP ("the Purchaser" or "FHR" or "the claimants") in negotiations for purchase of share capital in Monte Carlo Grand Hotel SAM from Monte Carlo Grand Hotel Ltd ("the Vendor" or "Monte Carlo").
The Purchaser argued that Cedar owed a fiduciary duty. In breach of that fiduciary duty, Cedar had made a secret commission. The Purchaser argued that this secret commission was now held on constructive trust.
Simon J ruled in favour of the claimants, concluding that he should:
In the latter ruling, he held that he was bound by the precedents in Sinclair and Cadogan. He stated:
15. I am satisfied on the basis of the Sinclair case that, unless either (a) the sum of €10 million was or had been beneficially the property of the Claimants or (b) Cedar acquired the money by taking advantage of an opportunity which was properly that of the Claimants, the Claimants are not entitled currently to the declaration they seek.
Accordingly, he issued the following declaration:
It is declared that the Second Defendant, having failed to obtain the fully informed consent of any of the Claimants to the commission payment made to it by Monte Carlo Grand Hotel Limited ('MCGH') of the sum of €10 million in respect of the sale by MCGH of a long leasehold interest in the Hotel in December 2004 to the First Claimant, is liable to account for that sum to the Claimants (to each of which it owed fiduciary duties) following its receipt by the Second Defendant on or about 7 January 2005.
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