Spring Law, acting on behalf of Hotel Portfolio II UK Ltd (in liquidation) (HPII), secured a significant victory before the United Kingdom Supreme Court in the case of Stevens v Hotel Portfolio II UK Ltd [2025] UKSC 28. The judgment clarifies and affirms key principles of equity, dishonest assistance, and constructive trusts in the context of fiduciary breaches and the dissipation of trust assets.
The Supreme Court, in a majority opinion (4:1) delivered by Lord Briggs (with Lords Reed, Hamblen, and Richards concurring), reinstated the trial judge’s finding that the Respondent, Mr Stevens, was liable to compensate HPII for his dishonest assistance in the making of secret profits, being circa £102 million, and in the subsequent dissipation of the same.
The case revolved around the making of secret profits from the sale of three London hotels owned by HPII. Those profits were received by the First Defendant, Mr Ruhan, in breach of his fiduciary duties and were, as determined by the Supreme Court, immediately held on an institutional constructive trust for HPII. Mr Stevens was found to have dishonestly assisted both in the making of the profits and, crucially, in their subsequent dissipation by which they were rendered unrecoverable.
At first instance, Mr Justice Foxton sitting in the High Court ordered Mr Stevens to pay equitable compensation to HPII which, in this case, happened to equate to the full value of the profits made and dissipated. However, the Court of Appeal reversed this finding, holding that no loss was suffered by HPII because the profits had not been “earned” by the company in the first place and thus, viewing the matter in the round, HPII had therefore not suffered any loss. The Supreme Court rejected that reasoning in emphatic terms, holding that once the constructive trust arose, the profits automatically became the property of HPII, and their dissipation caused a compensable loss.
As referenced by Lord Briggs, Mr James Pickering KC, counsel for HPII, asserted that denying compensation in such circumstances “would appear to be contrary to any ordinary notion of justice, equity or common sense” [para/8]. The Supreme Court went on to firmly reject arguments seeking to aggregate the making and loss of the profits into a single scheme to avoid liability, and reaffirmed that a dishonest assistant cannot escape liability merely because the trust property originated from an earlier breach of duty.
This landmark decision confirms the liability of dishonest assistants in relation to losses caused by breaches of constructive trusts and clarifies the limitations of the equitable set-off principle in such contexts. It will have wide-ranging implications for proprietary rights, constructive trusts and fiduciary law, especially in insolvency and commercial fraud scenarios.
James Russell and Callum Knight of Spring Law, ably assisted by James Pickering KC and Sam Hodge of Enterprise Chambers, are proud to have represented HPII throughout these proceedings and to have contributed to a ruling that strengthens the available remedies against dishonest assistants in equity.
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