Crown Prosecution Service v Aquila Advisory Ltd

Crown Prosecution Service v Aquila Advisory Ltd

The Supreme Court held that the fraud of VTL’s former directors cannot be attributed to VTL to bar its proprietary claim by the defence of illegality. The constructive trust over the secret profits arose automatically upon receipt by the directors in breach of fiduciary duty. POCA does not override such proprietary rights unless its specific provisions are used, which the CPS did not do. Declaratory relief was properly granted.

Parties
Appellant: Crown Prosecution Service; Respondent: Aquila Advisory Ltd
Jurisdiction
England and Wales
Judgment Date
03 November 2021
Procedural Posture
Civil Appeal / Supreme Court Judgment
Outcome
appeal dismissed
Legal Topics
Constructive Trusts, Fiduciary Duties, Illegality Defence, Attribution of Directors' Acts, Proceeds of Crime, Confiscation Orders
Equity Criminal Law Company Law Constructive Trusts Fiduciary Duties Illegality Defence Attribution of Directors' Acts Proceeds of Crime +1 more

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Parties

Crown Prosecution Service

Appellant

Aquila Advisory Ltd

Respondent

Procedural Posture

Civil Appeal / Supreme Court Judgment

Legal Issues

  1. 1 Whether the fraud of directors should be attributed to the company to bar its proprietary claim by the defence of illegality
  2. 2 Whether the regime under the Proceeds of Crime Act 2002 (POCA) precludes the company’s proprietary claim
  3. 3 Whether declaratory relief was properly granted

Ratio Decidendi

The Supreme Court held that the fraud of VTL’s former directors cannot be attributed to VTL to bar its proprietary claim by the defence of illegality. The constructive trust over the secret profits arose automatically upon receipt by the directors in breach of fiduciary duty. POCA does not override such proprietary rights unless its specific provisions are used, which the CPS did not do. Declaratory relief was properly granted.

Court Disposition

appeal dismissed

Orders

  • The appeal by the Crown Prosecution Service is dismissed.
  • The declaration that the moneys totalling £4.55m were held on constructive trust for VTL (and thus Aquila) stands.