Hui Chun Ping v Hui Kau Mo

The proper characterisation of bribes, secret commissions and other unauthorised gains (“unauthorised gains”) has long presented conceptual difficulties. In FHR European Ventures LLP v Cedar Capital Partners LLC,1 a seven-member bench of the UK Supreme Court, considering conflicting authorities, held that unauthorised gains accepted by a fiduciary were held on trust for his principal, thereby enabling the principal to assert a proprietary claim over them. However, in Hui Chun Ping v Hui Kau Mo,2 the Hong Kong Court of Final Appeal (“HKCFA”) seemingly arrived at an opposite conclusion, holding that a claim for unauthorised gains from a fiduciary by the principal was not a claim “to recover from the trustee trust property” for the purpose of limitation. This note contends that Hui Chun Ping may have overlooked the implications of FHR and warrants reconsideration.

The matter arose from a somewhat stale claim. In 2004, a developer sought to undertake a construction project in the People’s Republic of China and required assistance with the approval process. The defendant recommended the plaintiff for the job and negotiated the terms of engagement on the plaintiff’s behalf with the developer. Originally, the plaintiff was to be remunerated by cash payment and a stake in the profits of the venture, referred to as the “dry shares”. While the defendant persuaded the plaintiff to take further cash payment in lieu of the dry shares, he secretly acquired dry shares for himself. In November 2012, the plaintiff became aware of the defendant’s acquisition. In November 2018, the plaintiff commenced proceedings against the defendant at the Hong Kong Court of First Instance. Nevertheless, it was only in April 2021 that the plaintiff sought to amend his pleadings to introduce a constructive trust claim over the dry shares based on a breach of fiduciary duty.