Murad & Anor v Al-Saraj & Anor

Murad & Anor v Al-Saraj & Anor

A fiduciary who makes a profit in breach of duty must account for all profits made from the transaction, not merely those attributable to the breach, unless and until actual, informed consent is given by the beneficiary. The fact that the beneficiary would have entered into the transaction on different terms if fully informed is irrelevant to the scope of the account. The secret commission must be accounted for as a profit unless it is determined that the proper claimant is the company, Danescroft. The appeal is dismissed and the cross-appeal allowed to the extent of remitting the issue of the proper claimant for the commission to the trial judge.

Parties
Claimants/respondents: Aysha and Layla Mohammed Murad; Defendants/appellants: Westwood Business Inc and Mr Hashim Ibrahim Khahil Al-Saraj
Jurisdiction
England and Wales
Judgment Date
29 July 2005
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Appeal From High Court
Outcome
Appeal dismissed; cross-appeal allowed in part; issue of proper claimant for commission remitted to trial judge.
Legal Topics
Breach of Fiduciary Duty, Account of Profits, Fraudulent Misrepresentation, Secret Commission, Remedies in Equity
Equity Fiduciary Law Contract Law Breach of Fiduciary Duty Account of Profits Fraudulent Misrepresentation Secret Commission Remedies in Equity

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Parties

Aysha and Layla Mohammed Murad

Claimants/respondents

Westwood Business Inc and Mr Hashim Ibrahim Khahil Al-Saraj

Defendants/appellants

Procedural Posture

Civil Appeal / Court of Appeal Judgment on Appeal From High Court

Legal Issues

  1. 1 Whether a fiduciary who makes a profit in breach of duty must account for all profits or only those attributable to the breach
  2. 2 Whether the finding that the claimants would have entered the transaction on different terms affects the scope of the account
  3. 3 Whether a secret commission should be deducted as an expense or accounted for as a profit

Ratio Decidendi

A fiduciary who makes a profit in breach of duty must account for all profits made from the transaction, not merely those attributable to the breach, unless and until actual, informed consent is given by the beneficiary. The fact that the beneficiary would have entered into the transaction on different terms if fully informed is irrelevant to the scope of the account. The secret commission must be accounted for as a profit unless it is determined that the proper claimant is the company, Danescroft. The appeal is dismissed and the cross-appeal allowed to the extent of remitting the issue of the proper claimant for the commission to the trial judge.

Court Disposition

Appeal dismissed; cross-appeal allowed in part; issue of proper claimant for commission remitted to trial judge.

Orders

  • Appeal dismissed.
  • Cross-appeal allowed to the extent of remitting to the trial judge the question whether the claim to recover the £369,000 commission is vested in Danescroft or the Murads.