CPS v Aquila Advisory Ltd [2021] UKSC 49

Two directors of Vantis Tax Ltd exploited their positions to acquire and resell rights connected with tax-relief schemes, dishonestly making about £4.55 million. The company itself received none of those profits. Aquila Advisory later acquired Vantis's proprietary claims and obtained declarations that the directors held the profits on constructive trust under the rule against unauthorised fiduciary gains. The Crown Prosecution Service had secured confiscation orders following the directors' convictions and argued that their criminal conduct should be attributed to Vantis. If the company were treated as participating in the illegality, its equitable claim would fail and the confiscation regime would take priority over Aquila's proprietary rights.

Should the directors' criminal conduct be attributed to Vantis so as to defeat its constructive-trust claim to their unauthorised profits and give the confiscation orders priority?

The Supreme Court unanimously dismissed the CPS appeal. The directors had acquired the profits by exploiting opportunities belonging to Vantis and therefore held them on constructive trust for the company under FHR European Ventures LLP v Cedar Capital Partners LLC. Their wrongdoing was not attributed to Vantis for the purpose of denying that claim. The fiduciary rule is designed to protect a company from disloyal directors; attribution would undermine that purpose and benefit the wrongdoers' personal creditors. The Proceeds of Crime Act 2002 did not give confiscation orders proprietary priority over assets beneficially owned by someone else. Aquila, as assignee of Vantis's rights, could therefore assert the company's prior beneficial ownership.

Profits obtained by directors through breach of fiduciary duty are held on constructive trust for the company. Their wrongdoing is not attributed to the company where attribution would defeat the protective purpose of the fiduciary duty, and confiscation legislation does not displace an existing third-party proprietary interest without clear provision.

Aquila applies the context-sensitive attribution approach associated with Bilta (UK) Ltd v Nazir and reinforces the proprietary remedy recognised in FHR European Ventures. It shows why a company can be the victim of its directing officers' conduct for one legal purpose even though their acts may be attributed to it in another context. The proprietary character of the claim matters on insolvency and against competing enforcement rights. The case does not immunise companies from all consequences of directors' crimes; attribution depends on the rule and purpose in issue.