FHR EUROPEAN VENTURES LLP AND OTHERS V MANKARIOUS AND OTHERS

[2013] EWCA Civ 17, Court of Appeal, The Chancellor, Lord Justice Pill and Lord Justice Lewison, 29 January 2012

Agency - Secret commission earned by agent - Whether principal entitled to proprietary or personal remedy - Constructive trust

Cedar Holdings, operated by the defendant, advised the claimant, Investor Group, in relation to the purchase of the Monte Carlo Grand Hotel from MCGHSAM. Cedar entered into an agreement with MCGHSAM under which Cedar was to receive a fee of €10 million from MCGHSAM for securing a purchaser for the hotel. Cedar did not notify Investor Group of that agreement. Cedar received its commission when the hotel was sold to Investor Group in December 2004 for €211.5 million. It was found by the trial judge that Cedar had acted wrongfully in obtaining this secret commission. The sole question was whether Investment Group was entitled to a proprietary remedy against Cedar (in which case the proceeds could be traced into assets purchased with the proceeds) or whether Investment Group was only entitled to the personal remedy of an account in equity.