Rukhadze and others v Recovery Partners GP Ltd and another

Rukhadze and others v Recovery Partners GP Ltd and another

The Supreme Court held that the strict equitable rule requiring fiduciaries to account for profits made from their position remains good law. The 'but for' causation test does not apply to the account of profits remedy for breach of fiduciary duty. Hypothetical scenarios about whether the fiduciary could have made the profit lawfully or with the principal's consent are irrelevant. The deterrent and prophylactic purposes of the rule justify its continued application. The appeal was dismissed.

Parties
Appellants: Irakli Rukhadze and others; Respondents: Recovery Partners GP Ltd and another
Jurisdiction
England and Wales
Judgment Date
19 March 2025
Procedural Posture
Appeal / Supreme Court Judgment
Outcome
Appeal dismissed
Legal Topics
Fiduciary Duties, Account of Profits, Constructive Trust, Directors' Duties, Remedies for Breach of Fiduciary Duty
Equity Company Law Trusts Fiduciary Duties Account of Profits Constructive Trust Directors' Duties Remedies for Breach of Fiduciary Duty

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 4 Authorities cited 17 Party arguments 2 Amounts and remedies 3
Sign in to unlock

Parties

Irakli Rukhadze and others

Appellants

Recovery Partners GP Ltd and another

Respondents

Procedural Posture

Appeal / Supreme Court Judgment

Legal Issues

  1. 1 Whether the 'but for' causation test should be applied to the account of profits remedy for breach of fiduciary duty
  2. 2 Whether the Supreme Court should depart from the strict equitable rule requiring fiduciaries to account for profits made from their position, regardless of hypothetical consent or alternative lawful means

Ratio Decidendi

The Supreme Court held that the strict equitable rule requiring fiduciaries to account for profits made from their position remains good law. The 'but for' causation test does not apply to the account of profits remedy for breach of fiduciary duty. Hypothetical scenarios about whether the fiduciary could have made the profit lawfully or with the principal's consent are irrelevant. The deterrent and prophylactic purposes of the rule justify its continued application. The appeal was dismissed.

Court Disposition

Appeal dismissed

Orders

  • The appeal is dismissed.
  • The appellants are to account for the profits as determined by the lower courts, subject to the equitable allowance already granted.