I’m always interested in what people who are not totally devoted to a particular area of law think about certain cases. At the moment I’m working on the issue of proprietary remedies over bribes taken in breach of fiduciary duty. I’m going to put two scenarios to you (derived from the cases) and ask you what you’d do if you were the judge in that case. I don’t care if you’re not a lawyer – in fact I’d love to hear your thoughts.
Scenario One (derived from Attorney-General for Hong Kong v Reid  1 AC 324)
R is a Crown Prosecutor for the Hong Kong government, and, among other things, he’s employed to prosecute corrupt criminal organisations. Instead of doing so, R accepts large bribes from said criminal organisations to desist from prosecuting them. He uses the bribes to purchase properties in New Zealand, which he places in his own name, and also in the names of his wife and his solicitor. R is caught, gaoled and ordered to pay the government HK$12.4m. R does not pay the Hong Kong government, but the Hong Kong government becomes aware of the properties. The Hong Kong government wants to stop R from selling the properties, and claim the properties for itself, but in order to do so, it has to establish that it has some kind of “ownership” over the bribes, which it then follows through into the properties. R and R’s wife and the solicitor attempt to resist the action.
Would you award the Hong Kong government a property right over the bribe? Why or why not?
Scenario Two (derived from Sinclair Investments (UK) Ltd v Versailles Trade Finance Limited  EWCA Civ 347)
Some investors invest in a fantastic investment scheme. No matter what happens to the market, the investors keep getting excellent returns on their investments, and the investment scheme is described in glowing terms in financial and investor media. The scheme is doing so well that a public company which is related to the investment company has a massive increase in the value of its shares. The same person is director of both companies. He sells his shares in the public company for a profit of £28.69m, and uses them to buy a property in Kensington and to pay off bank loans. Unfortunately, everyone has forgotten the cardinal rule of investment, which is: if it sounds too good to be true, it is. The investment scheme is a ‘Ponzi scheme’ and the ‘dividends’ the investors are receiving are in fact investment funds from later investors. Eventually the scheme collapses. The director is declared insolvent and gaoled. The investors have lost their money. They try to say that the profit from the sale of the shares in the public company should belong to them, because it is ultimately derived from the director’s fraud against them. If they succeed in establishing a property right over the bribe, they remove the profit from the pool of assets available for distribution to other unsecured creditors. The other creditors, secured and unsecured, resist the action.
Would you award the investors a property right over the bribe? Why or why not?