Attorney General for Hong Kong v Reid
| Jurisdiction | UK Non-devolved |
| Judgment Date | 1993 |
| Year | 1993 |
| Date | 1993 |
| Court | Privy Council |
Trusts - Constructive trust - Bribe - Payment of bribes to Crown servant - Use of money to purchase property - Whether property held on constructive trust for Crown
While he was a Crown servant in Hong Kong the first respondent in breach of his fiduciary duty to the Crown accepted bribes with which it was alleged that he purchased two properties in New Zealand which were conveyed to him and his wife, the second respondent, and a third which was conveyed to his solicitor, the third respondent. The first respondent pleaded guilty in Hong Kong to offences under the Prevention of Bribery Ordinance and was sentenced to eight years' imprisonment and ordered to pay the Crown H.K.$12.4m., the value of his assets which could only have been derived from bribes. The Attorney-General for Hong Kong lodged in New Zealand caveats against the titles to the properties. He applied to the High Court of New Zealand to renew the caveats, but the judge refused, holding that the Crown had no equitable interest in the properties. The Court of Appeal of New Zealand, applying an English Court of Appeal decision without considering its merits, dismissed the Attorney-General's appeal.
On the Attorney-General's appeal to the Judicial Committee: —
Held, allowing the appeal, (1) that a gift accepted by a person in a fiduciary position as an incentive for his breach of duty constituted a bribe and, although in law it belonged to the fiduciary, in equity he not only became a debtor for the amount of the bribe to the person to whom the duty was owed but he also held the bribe and any property acquired therewith on constructive trust for that person; that if the value of the property representing the bribe depreciated the fiduciary had to pay to the injured person the difference between that value and the initial amount of the bribe, and if the property increased in value the fiduciary was not entitled to retain the excess since equity would not allow him to make any profit from his breach of duty; and that, to the extent that they represented bribes received by the first respondent, the New Zealand properties were held in trust for the Crown, and the Crown had an equitable interest therein (post, pp. 1146B, E–F, G–H, 1147B–C, 1153D, H).
(2) That the Court of Appeal of New Zealand was not bound by a decision of the English Court of Appeal but was entitled to review it on its merits and to refuse to follow it if it was considered to be wrong (post, p. 1153E–F).
The following cases are referred to in the judgment of their Lordships:
Attorney-General v. Goddard (
Caerphilly Colliery Co., In re (Pearson's Case) (
Canadian Oil Works Corporation, In re (Hay's Case) (
Fawcett v. Whitehouse (
Hart v. O'Connor [
Islamic Republic of Iran Shipping Lines v. Denby [
Keech v. Sandford (
Lister & Co. v. Stubbs (
Metropolitan Bank v. Heiron (
Morvah Consols Tin Mining Co., In re (McKay's Case) (
Phipps v. Boardman [
Powell & Thomas v. Evan Jones & Co. [
Reading v. Attorney-General [
Regal (Hastings) Ltd. v. Gulliver (Note) [
Sugden v. Crossland (
Sumitomo Bank Ltd. v. Kartika Ratna Thahir [
Tai Hing Cotton Mill Ltd. v. Liu Chong Hing Bank Ltd. [
Tyrrell v. Bank of London (
The following additional cases were cited in argument:
Ardlethan Options Ltd. v. Easdown (
Attorney-General's Reference (No. 1 of 1985) [
Daly v. Sydney Stock Exchange Ltd. (
de Lasala v. de Lasala [
Eden v. Ridsdales Railway Lamp and Lighting Co. Ltd. (
Mahesan s/o Thambiah v. Malaysia Government Officers' Co-operative Housing Society Ltd. [
Nant-y-glo and Blaina Ironworks Co. v. Grave (
Napier and Ettrick (Lord) v. Hunter [
North Australian Territory Co., In re (Archer's Case) [
Police v. Leaming [
Reading v. The King [
S.C.F. Finance Co. Ltd. v. Masri [
Wilsons and Furness-Leyland Line Ltd. v. British and Continental Shipping Co. Ltd. (
Appeal (No. 44 of 1992) with leave of the Court of Appeal of New Zealand by the Attorney-General for Hong Kong, suing for and on behalf of the Government of Hong Kong, from the judgment of the Court of Appeal of New Zealand [
The facts are stated in the judgment of their Lordships.
David Oliver Q.C. and Stephen Kos (of the New Zealand Bar) for the Attorney-General.
Antony White for the second respondent.
The first and third respondents did not appear and were not represented.
1 November. The judgment of their Lordships was delivered by Lord Templeman.
The first respondent Mr. Reid, a solicitor and New Zealand national, joined the legal service of the Government of Hong Kong and became successively Crown Counsel, Deputy Crown Prosecutor and ultimately Acting Director of Public Prosecutions. In the course of his career the first respondent, in breach of the fiduciary duty which he owed as a servant of the Crown, accepted bribes as an inducement to him to exploit his official position by obstructing the prosecution of certain criminals. The first respondent was arrested, pleaded guilty to offences under the Prevention of Bribery Ordinance and was sentenced on 6 July 1990 to eight years' imprisonment and ordered to pay the Crown the sum of H.K.$12.4m., equivalent to N.Z.$2.5m., being the value of assets then controlled by the first respondent which could only have been derived from bribes. No part of the sum of H.K.$12.4m. has been paid by the first respondent.
Among the first respondent's assets are three freehold properties in New Zealand. The trial judge's finding that the Attorney-General for Hong Kong had established an arguable case that each of the three properties was acquired with moneys received by the first respondent as bribes has not been challenged. Two of the freehold properties were conveyed to the first respondent and his wife and one to the first respondent's solicitor, Mr. Molloy. The acquisition costs attributable to the three New Zealand properties amounted to some N.Z.$540,000 and the three properties appear to have increased in value. The total value of assets in New Zealand thought to be derived from bribes exceeds N.Z.$2.4m.
In the courts of New Zealand the first and second respondents argued that part of the costs of the three New Zealand properties might not be derived from bribes. If so, the courts have ample means of discovering by means of accounts and inquiries the amount (if any) of innocent money invested in the properties and the proportion of the present value of the properties attributable to innocent money. It was also argued that the second respondent might have a beneficial interest in the properties.
This also could be investigated in due course but it does not appear that either the second respondent or the third respondent was a bona fide purchaser of a legal estate without notice. For present purposes this appeal proceeds on the assumption that the freehold New Zealand properties were purchased with bribes received by the first respondent and are held in trust for the first respondent subject to the claims of the Crown in these proceedings.
A bribe is a gift accepted by a fiduciary as an inducement to him to betray his trust. A secret benefit, which may or may not constitute a bribe, is a benefit which the fiduciary derives from trust property or obtains from knowledge which he acquires in the course of acting as a fiduciary. A fiduciary is not always accountable for a secret benefit but he is undoubtedly accountable for a secret benefit which consists of a bribe. In addition a person...
Get this document and AI-powered insights with a free trial of vLex and Vincent AI
Get Started for FreeStart Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial
-
Anthony John Wright and Geoffrey Paul Rowley (Liquidators of BHS Group Ltd, SHB Realisations Ltd, Davenbush Ltd and Lowland Homes Ltd (All (in Liquidation)) v Dominic Joseph Andrew Chappell
...for equitable compensation. As Lord Templeman said giving the decision of the Privy Council in Attorney General for Hong Kong v Reid [1994] 1 AC 324, 330H, “bribery is an evil practice which threatens the foundations of any civilised society”. Secret commissions are also objectionable as th......
- Board of Trustees of the Sabah Foundation and Others, The v Datuk Syed Kechik bin Syed Mohamed and Another
-
FHR European Ventures LLP and Others v Mankarious and Others
...(1880) 5 Ex D 319 and Lister & Co v Stubbs (1890) 45 Ch D 1 or, on the other hand, the decision of the Privy Council in A-G for Hong Kong v Reid [1994] 1 AC 324. Mr Miles QC for Sinclair submitted that Metropolitan Bank v Heiron and Lister & Co v Stubbs were wrong and that this cour......
-
FHR European Ventures LLP v Mankarious
...that was an obiter observation, and it gets no support from the other members of the committee. 28 More recently, in 1993, in Attorney General for Hong Kong v Reid, the Privy Council concluded that bribes received by a corrupt policeman were held on trust for his principal, and so they coul......
-
Who Owns A Bribe?
...for equitable compensation. As Lord Templeman said giving the decision of the Privy Council in Attorney General for Hong Kong v Reid [1994] 1 AC 324, 330H, '[b]ribery is an evil practice which threatens the foundations of any civilised society'. Secret commissions are also objectionable as ......
-
Bribery And Corruption Reform: Proposed Modern UK Laws Target Companies And LLPS
...and implementation of compliance programmes, both in Europe and the United States. Footnotes 1.Att. Gen. 4 Hong Kong v. Reid [1994] 1 AC 324 330-1, per Lord Templeman. 2.Daraydan Holdings Ltd v. Solland International Ltd [2005] Ch 119 at paragraph 1, per Collins J. 3.OECD Working Group on B......
-
Recognising Your Limits: The Treatment Of Segregated Portfolio Companies In Onshore Liquidations
...suggesting that a property transfer in one jurisdiction can be the subject of a constructive trust in another (AG for Hong Kong v Reid [1994] 1 AC 324). However, looked at more closely, similar problems seem to arise. Other cases of cross-border constructive trusts usually arise as a result......
-
Who Owns A Bribe? UK Supreme Court Follows Where Jersey Leads
...for equitable compensation. As Lord Templeman said giving the decision of the Privy Council in Attorney General for Hong Kong v Reid [1994] 1 AC 324, 330H, "[b]ribery is an evil practice which threatens the foundations of any civilised society". Secret commissions are also objectionable as ......
-
'The receipt of what?': Questions concerning third party recipient liability in equity and unjust enrichment.
...for example, where a company director having authority to dispose of the company's assets, misappropriates those assets. (107) [1994] 1 AC 324. (108) Other theorists would argue that the principal has not consented to it (and that there is thus an unjust factor of ignorance or powerlessness......
-
UNAUTHORISED FIDUCIARY GAINS AND THE CONSTRUCTIVE TRUST
...trust was imposed, see Sumitomo Bank Ltd v Thahir Kartika Ratna[1992] 3 SLR(R) 638 at [241] and Attorney-General for Hong Kong v Reid[1994] 1 AC 324 at 338. See also Peter Millett, “Bribes and Secret Commissions Again”(2012) 71 Camb LJ 583 at 608–610. 18 For an excellent survey and analysis......
-
SELF-DEALING AND NO-PROFIT RULES: COMPANIES ACT 2016
...(Routledge, 9th Ed, 2016) ch 12. 166 [2014] 4 All ER 79. 167 (1890) 45 Ch D 1. Not followed in Attorney-General (Hong Kong) v Reid [1994] 1 AC 324; Grimaldi v Chameleon Mining NL (No 2) 87 ACSR 260 at [576]–[584]; and Sumitomo Bank Ltd v Thahir Kartika Ratna [1992] 3 SLR(R) 638 (affirmed on......
-
English Influences on the Historical Development of Fiduciary Duties in Scottish Law
...45 Ch D 1. After this entry was written the Privy Council reached the opposite conclusion in Attorney-General for Hong Kong v Reid [1994] 1 AC 324. The most important recent decision is that of the Court of Appeal in Sinclair Investments (UK) Ltd v Versailles Trade Finance Ltd [2011] EWCA C......