FHR European Ventures LLP v Mankarious & Ors

FHR European Ventures LLP v Mankarious & Ors

The commission received by Cedar was held on constructive trust for the Investor Group because Cedar, as their agent, diverted an opportunity to acquire the hotel at a lower price and failed to disclose its commission arrangement with the seller; this breach of fiduciary duty falls within the 'opportunity' category,...

Source-derived case information.

Parties
Appellant: FHR European Ventures LLP; Appellant: Kingdom Hotels International; Appellant: Kingdom 5-KR-176, Ltd; Appellant: Fairmont Hotels and Resorts Inc; Appellant: Fairmont Dubai Holdings Dubai (Bermuda) Ltd; Appellant: Bank of Scotland PLC; Appellant: Uberior Ventures Ltd; Respondent: Ramsey Neil Mankarious; Respondent: Cedar Capital Partners LLC; Respondent: Cedar Capital Partners Ltd
Jurisdiction
England and Wales
Judgment Date
29 January 2013
Procedural Posture
Civil Appeal / Court of Appeal Judgment
Outcome
Appeal allowed
Legal Topics
Constructive Trusts, Secret Commissions, Remedies for Breach of Fiduciary Duty, Proprietary Vs Personal Remedies
Equity Fiduciary Law Trusts Constructive Trusts Secret Commissions Remedies for Breach of Fiduciary Duty Proprietary Vs Personal Remedies

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Parties

FHR European Ventures LLP

Appellant

Kingdom Hotels International

Appellant

Kingdom 5-KR-176, Ltd

Appellant

Fairmont Hotels and Resorts Inc

Appellant

Fairmont Dubai Holdings Dubai (Bermuda) Ltd

Appellant

Bank of Scotland PLC

Appellant

Uberior Ventures Ltd

Appellant

Ramsey Neil Mankarious

Respondent

Cedar Capital Partners LLC

Respondent

Cedar Capital Partners Ltd

Respondent

Procedural Posture

Civil Appeal / Court of Appeal Judgment

Legal Issues

  1. 1 Is the remedy for a secret commission received by an agent in breach of fiduciary duty proprietary or personal?
  2. 2 Does the principal acquire a proprietary interest in the commission paid to the agent?
  3. 3 Does the agent's breach fall within the 'opportunity' category for constructive trusts?

Ratio Decidendi

The commission received by Cedar was held on constructive trust for the Investor Group because Cedar, as their agent, diverted an opportunity to acquire the hotel at a lower price and failed to disclose its commission arrangement with the seller; this breach of fiduciary duty falls within the 'opportunity' category, entitling the Investor Group to a proprietary remedy.

Court Disposition

Appeal allowed

Orders

  • The commission received by Cedar is held on constructive trust for the Investor Group.
  • The Investor Group is entitled to a proprietary remedy over the commission.