Bribes and Constructive Trusts: A‐G of Hong Kong v Reid
| Author | Thomas Allen |
| Date | 01 January 1995 |
| Published date | 01 January 1995 |
| DOI | http://doi.org/10.1111/j.1468-2230.1995.tb01996.x |
CASES
Bribes and Constructive
A-G
of
Hong
Kong
v
Thomas
Allen"
Trusts:
Reid
Suppose a dishonest fudiciary accepts a bribe to compromise the interests of the
beneficiary
of
the duty. Clearly, the beneficiary has been wronged and may hold
the fiduciary personally liable. But does the fiduciary hold the bribe and the
investments in a constructive trust for the beneficiary? To many writers, general
principles of equity say that this question should be answered affirmatively.'
However, the Court
of
Appeal answered it negatively in Lister v Stubbs2 and,
until recently, its decision was accepted as law.3 This pattern was finally broken
last year. In Attorney General
of
Hong
Kong
v Reid,4 the Privy Council, in a
judgment given by Lord Templeman, allowed an appeal from the New Zealand
Court of Appeal5 and effectively overturned Lister v Stubbs.
This note therefore examines Lord Templeman's judgment in Reid and
compares it to that in Lister v Stubbs. It approves of the decision in Reid, to the
extent that the courts are now able to impose a constructive trust over bribes.
However, it disapproves of the Privy Council's failure to give due regard to the
impact that
a
constructive trust could have on the legitimate interests of creditors.
The
facts
of
Reid
Mr Reid joined the legal service of the Hong Kong Government as a Crown
Counsel. He was promoted several times and served as the director of the
commercial crime unit. Reid was corrupt: he accepted bribes and was eventually
convicted under the Prevention of Bribery Ordinance of Hong Kong of being in
control of money and property disproportionate to his official emoluments. The
total funds and property which he was unable to explain as having come from
legitimate sources amounted to over HK$10 million. He was sentenced to eight
years' imprisonment and was ordered to pay the Crown HK$12.4 million, being
the value of his assets derived from the bribes.
In addition to bringing the criminal proceedings, Hong Kong also brought a civil
action to recover the bribes from Reid. It claimed that he held the bribes and any
substituted property on constructive trust. Further to this claim, it sought to
*Lecturer in Law, University
of
Newcastle Upon Tyne.
1
See eg Underhill and Hayton,
Law Relating
to
Trusts and Trustees
(London: Butterworths,
14th
ed,
1987),
at
305;
Oakley,
Constructive Trusts
(London: Sweet
&
Maxwell,
2nd
ed,
1987),
at
56;
Goff
and Jones,
The Law bf Restimtion
(London: Sweet
&
Maxwell,
4th
ed,
1993),
at
669.
(1890) 45
Ch
D
1. 2
3
See eg
Powell
&
Thomas
v
Evans Jones
&
Co
[
19051 1
KB
1
1
;
Attorney-General
v
Goddard
[
19291 98
LJKB
743;
Islamic Republic
of
Iran Shipping Lines
v
Denby
[1987] 1
Lloyd's Rep
367;
Attorney-
General's Reference
(No
I
of
1985)
[1986]
QB
491;
Daly
v
Sydney Stock Exchange Ltd
(1986) 160
CLR
371.
[1992] 2
NZLR
385
(CA).
4 [1993] 3
WLR
1143.
5
0
The Modem Law Review Limited
1995
(MLR
%:I,
January). Published by Blackwell Publishers,
I08
Cowley Road,
Oxford
OX4
1JF and
238
Main
Street,
Cambridge, MA
02142,
USA.
87
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