(ii) Determining the Remedy Which is Awarded

Once the defendant has been found liable for dishonestly assisting or inducing a breach of trust or fiduciary duty it is then necessary to determine the appropriate remedy which should be awarded.^[1] Traditionally the accessory is said to be liable to account as a constructive trustee. But this recognition of a constructive trust is not consistent with the normal notion of a constructive trust which only applies where the defendant is in receipt of identifiable property in which the claimant has an equitable proprietary interest.^[2] Where the defendant has simply been an accessory to the breach of trust or breach of fiduciary duty he or she will not necessarily have received any property which can be the subject of a constructive trust.^[3]

This formula of liability as a constructive trustee has now been convincingly rejected as fictional and unnecessary.^[4] The use of the constructive trust and constructive trusteeship is of no significance in these claims. As Millett LJ said in Paragon Finance pic v DB Thakerar and Co:^[5] ‘[T]he expressions “constructive trust” and “constructive trustee” are misleading for there is no trust and usually no possibility of a proprietary remedy; they are nothing more than a formula for equitable relief.’ Where the defendant accessory is held liable, the appropriate remedy is personal; there are no proprietary connotations at all.

Although the typical remedy will be to compensate the claimant for loss suffered as a result of the breach of trust or fiduciary duty,^[6] in Novoship (UK) Ltd v Mikhaylyuk^[7] the Court of Appeal recognized that it was possible to award the remedy of an account of profits where the defendant had profited from dishonestly assisting a breach of fiduciary duty. This remedy was justified on the ground that the dishonest assister is liable to account as if he was a trustee, so is liable to account for any profits made as a result of the assistance. But the court also emphasized that the dishonest assister is not a fiduciary, and this has implications for the assessment of the remedy. In particular, unlike where a fiduciary is liable to account for all profits made which fall within the scope of the duty of loyalty,^[8] the dishonest assister is only liable to account for those profits which were directly causally connected to the assistance. The appropriate test of causation is not that of ‘but for’ cause, but rather whether the cause was a real or effective cause of the profits. On the facts of the case, the defendant had assisted the fiduciary in breaching his fiduciary duty by negotiating shipping charters when he knew that the fiduciary had paid bribes. The assister had profited from these shipping charters but, since these profits had arisen from an unexpected change in the market, this was held to be insufficiently connected to the assistance to be caused by it. Further, the court held that, even where the profits were directly caused by the assistance, the award of an account of profits was not automatic, and the remedy would be withheld if it was considered to be disproportionate in the light of the form and extent of the wrongdoing.^[9] These are two significant restrictions on the award of a gain-based remedy for dishonest assistance.

The recognition that gain-based remedies are available where the defendant has assisted a breach of trust or fiduciary duty is consistent with the assister being treated as a wrongdoer who should not profit from their wrong. It follows, for example, that the briber who has paid a bribe to the fiduciary may be liable for dishonestly assisting a breach of fiduciary duty, although double recovery is not permitted and the principal can only recover the amount of the bribe and any additional loss he or she can prove, however he or she chooses to frame the action and even if he or she sues both the fiduciary and the briber.^[10] Even though the accessory’s liability depends on the commission of a wrong committed by the fiduciary, it does not follow that the accessory is liable to account for the profits made by the fiduciary; rather, the accessory is only liable to account for those profits which he or she made from the dishonest assistance, in other words from the accessory’s own wrongdoing. This was recognized by Lewison J in Ultraframe (UK) Ltd v Fieldingg^[11] on the basis that the liability of the accessory is personal and is not punitive. So, for example, in Fyffes Group Ltd v Templeman,³²² the defendant who had bribed an employee to breach his fiduciary duty might have been liable for the profits that had been made as a result of the principal entering into a transaction with the defendant. On the facts, however, a disgorgement remedy was not awarded because the claimant would still have entered the contract had the defendant not bribed the employee, so that the profits that the defendant made were not caused by the bribery, but were simply ordinary profits that would have been earned regardless of the dishonest assistance.

• [1] Elliott and Mitchell, ‘Remedies for Dishonest Assistance’.
• [2] Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669, 705 (Lord Browne-Wilkinson).
• [3] If the defendant has received property he or she may be liable for unconscionable receipt. See p 645,below.
• [4] Paragon Finance plc v DB Thakerar and Co [1999] 1 All ER 400, 408 (Millett LJ). See also Williams vCentral Bank of Nigeria [2014] UKSC 10, [2014] AC 1189.
• [5] [1999] 1 All ER 400, 408; Dubai Aluminium Co Ltd v Salaam [2002] UKHL 4448, [2003] 2 AC 366, 404(Lord Millett).
• [6] Twinsectra Ltd v Yardley [2002] UKHL 12, [2002] 2 AC 164, [107] (Lord Millett).
• [7] [2014] EWCA Civ 908, [2015] 2 WLR 526. See P Davies, ‘Gain-Based Remedies for DishonestAssistance’ (2015) 131 LQR 173.
• [8] See p 504, above.
• [9] Novoship (UK) Ltd v Mikhaylyuk [2014] EWCA Civ 908, [2015] 2 WLR 526, [119] (Longmore LJ).
• [10] Mahesan v Malaysia Government Officers’ Co-operative Housing Society Ltd [1979] AC 374, 382-3; ArabMonetary Fund v Hashim (No 9) [1993] 1 Lloyd’s Rep 543; Petrotrade Inc v Smith [2000] 1 Lloyd’s Rep 486;Fyffes Group Ltd v Templeman [2000] 2 Lloyd’s Rep 643.
• [11] [2005] EWHC 1638 (Ch), [2006] FSR 16, [1600]. 322 [2000] 2 Lloyd’s Rep 643.