Lloyd's Maritime and Commercial Law Quarterly
PERSONAL RESTITUTION IN EQUITY
Islamic Republic of Iran Shipping Lines v. Denby
Hard upon Professor Goode’s Mary Oliver Memorial Lecture,1
Islamic Republic of Iran Shipping Lines v. Denby,2 a decision of Leggatt, J., touched one of his principal themes, namely the rightness or wrongness of Lister & Co. v. Stubbs,3 a case nowadays of gathering importance. Denby is best approached through Lister.
Lister and its critics
The plaintiffs in Lister were silk spinners, and the defendant was their foreman dyer. His duties included the buying in of supplies. Over a 10-year period, during which he was employed at around £500 p.a., he regularly took secret commissions from one of Lister’s suppliers. With that money, roughly £5,500 in all, he bought land in Yorkshire and other investments. There was not the least doubt that the plaintiffs were entitled to a personal claim for the sums received by him, but they wanted to go further. In the main action they wanted to follow the money into its proceeds and to have transferred to them the assets which he still held. What is reported is their motion for an interlocutory injunction to restrain him from dealing with the property and for an order requiring him to bring any remaining cash into court. Stirling, J., refused their motion, and the Court of Appeal upheld him. The ground of the decision was that, even though he did owe them the amount of his secret commissions, the debtor-creditor relationship was the end of it: from the standpoint of the law of property, the money was his, not theirs.
This decision, approved and followed by the Court of Appeal in Powell and Thomas v. Evan Jones & Co.,4 has stood for almost a century. But it has come in for severe criticism, although, as we shall see and significantly in view of his great authority, not from Professor Goode. For example, in a recent survey of restitution in Canada by J. R. M. Gautreau, Q.C., Lister was numbered among errors attributable to the unprincipled development of that subject:
As might be expected in an area of law that developed piecemeal and without the benefit of conceptual analyses, there are aberrations. For example … a claim against a fiduciary for the return of a secret profit or bribe cannot result in the imposition of a secret5 trust as the law now stands. In Lister & Co. v. Stubbs, where an employee obtained secret commissions, the English Court of Appeal held that the relationship was one of debtor and creditor and the plaintiff could get no accounting. It has been pointed out that a person who takes bribes
1. R. M. Goode, “Ownership and Obligation in Commercial Transactions” (1987) 103 L.Q.R. 443, esp. 441–445.
3. (1890) 45 Ch.D. 1 (Cotton, Lindley and Bowen, L.JJ.).
4. [1905] 1 K.B. 11, 19 (per Collins, M.R.), 22 (per Stirling, L.J.), 23 (per Mathew, L.J.).
5. The word “secret” would appear to be an inadvertent repetition from the previous line, perhaps in place of “constructive”.
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