{"id":5876,"date":"2025-11-15T17:34:23","date_gmt":"2025-11-15T09:34:23","guid":{"rendered":"https:\/\/yhalaw.com.my\/?p=5876"},"modified":"2025-11-15T17:34:35","modified_gmt":"2025-11-15T09:34:35","slug":"breach-of-fiduciary-duty-uk-supreme-court-shuts-down-what-if-defence-in-fiduciary-breach-no-profit-means-no-excuse","status":"publish","type":"post","link":"https:\/\/yhalaw.com.my\/my\/breach-of-fiduciary-duty-uk-supreme-court-shuts-down-what-if-defence-in-fiduciary-breach-no-profit-means-no-excuse\/","title":{"rendered":"BREACH OF FIDUCIARY DUTY – UK SUPREME COURT SHUTS DOWN \u2018WHAT IF\u2019 DEFENCE IN FIDUCIARY BREACH: NO PROFIT MEANS NO EXCUSE"},"content":{"rendered":"\n

1. Summary and Facts<\/strong><\/h3>\n\n\n\n

In Rukhadze & Ors v Recovery Partners GP Ltd and Anor [2025] 1 Lloyd\u2019s Rep 329, the appellants were former fiduciaries (directors\/partners) of SCPI and Revoker LLP, firms involved in complex international asset recovery services following the death of a Georgian billionaire. After a fallout, the appellants resigned and formed their own entity, Hunnewell, to secure the same contract with the deceased\u2019s family, using confidential knowledge gained during their fiduciary tenure.<\/p>\n\n\n\n

The respondents, successors to SCPI, sued for an account of profits, claiming the appellants breached fiduciary duties by exploiting a business opportunity belonging to SCPI and Revoker. The High Court awarded USD 134 million (after a 25% equitable allowance), which was upheld by the Court of Appeal. The appellants appealed to the Supreme Court, arguing that liability should only arise if a \u201cbut for\u201d test of causation was satisfied \u2013 i.e., the profits would not have been made but for the breach.<\/p>\n\n\n\n

2. Legal Issues<\/strong><\/h3>\n\n\n\n

\u2022 Whether the strict equitable \u201cno profit\u201d rule for fiduciaries should be replaced or qualified by a common law \u201cbut for\u201d causation test.
\u2022 Whether fiduciaries can escape liability by arguing they would have made the profit even without breaching their duties.
\u2022 The correct interpretation and scope of the fiduciary duty to account for profits, and the relevance of counterfactual scenarios (e.g., whether informed consent would have been given).<\/p>\n\n\n\n

3. Court\u2019s Findings<\/strong><\/h3>\n\n\n\n

\u2022 The UK Supreme Court dismissed the appeal and reaffirmed the strict application of the fiduciary profit rule.
\u2022 The duty to account for profits is a standalone equitable duty, not just a remedy for another breach. It arises once profits are made from or through the fiduciary position, even without dishonest intent.<\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

In Rukhadze & Ors v Recovery Partners GP Ltd and Anor [2025] 1 Lloyd\u2019s Rep 329, the UK Supreme Court reaffirmed the uncompromising \u201cno profit\u201d rule for fiduciaries. The Court held that a fiduciary who profits from their position must account for those gains – regardless of good faith, intent, or hypothetical outcomes. The appellants\u2019 argument that they would have earned the profit even without a breach was firmly rejected. The decision emphasises that loyalty, not speculation, is the standard, and reaffirms equity\u2019s strict stance on conflicts of interest.<\/p>\n","protected":false},"author":1,"featured_media":5878,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1570],"tags":[],"class_list":["post-5876","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-company-law"],"_links":{"self":[{"href":"https:\/\/yhalaw.com.my\/my\/wp-json\/wp\/v2\/posts\/5876"}],"collection":[{"href":"https:\/\/yhalaw.com.my\/my\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/yhalaw.com.my\/my\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/yhalaw.com.my\/my\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/yhalaw.com.my\/my\/wp-json\/wp\/v2\/comments?post=5876"}],"version-history":[{"count":1,"href":"https:\/\/yhalaw.com.my\/my\/wp-json\/wp\/v2\/posts\/5876\/revisions"}],"predecessor-version":[{"id":5879,"href":"https:\/\/yhalaw.com.my\/my\/wp-json\/wp\/v2\/posts\/5876\/revisions\/5879"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/yhalaw.com.my\/my\/wp-json\/wp\/v2\/media\/5878"}],"wp:attachment":[{"href":"https:\/\/yhalaw.com.my\/my\/wp-json\/wp\/v2\/media?parent=5876"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/yhalaw.com.my\/my\/wp-json\/wp\/v2\/categories?post=5876"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/yhalaw.com.my\/my\/wp-json\/wp\/v2\/tags?post=5876"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}