Stevens v Hotel Portfolio II UK Ltd – The Supreme Court Broadens Equitable Compensation for Dishonest Assistance

1. Introduction

Stevens v Hotel Portfolio II UK Ltd & Anor ([2025] UKSC 28) is a landmark decision of the United Kingdom Supreme Court that clarifies – and significantly widens – the scope of equitable compensation available against parties who dishonestly assist a breach of fiduciary duty. The judgment addresses a long-running doctrinal puzzle: whether a dishonest assister can be required to indemnify a claimant for losses flowing from the dissipation of trust property when the fiduciary’s overall scheme has not left the beneficiary worse off in pure economic terms.

Hotel Portfolio II UK Ltd (“HPII”) sold several London hotels to a company secretly controlled by its own director, Andrew Ruhan, and the respondent, Anthony Stevens. Although the hotels were sold at full market value, Ruhan earned £102.26 million by reselling them; those proceeds were later dissipated with Stevens’ help. The Supreme Court had to decide whether Stevens’ dishonest assistance in both the acquisition and the dissipation of the proceeds could attract a compensatory rather than a purely disgorgement-based remedy, notwithstanding that HPII itself had not been deprived of any economic value from the initial sale.

2. Summary of the Judgment

By a 3-2 majority (Lords Hodge, Kitchin and Lady Rose; Lord Burrows and Lord Sales dissenting), the Court allowed HPII’s appeal and held that:

A dishonest assister may be ordered to pay equitable compensation where his assistance has causally contributed to the dissipation or non-recovery of profits held on constructive trust, even if the original breach of fiduciary duty caused no direct loss.
The claimant’s previous election to claim an account of profits against the fiduciary does not bar a compensatory claim against the assister; the two remedies protect different interests (disgorgement from the fiduciary; indemnification for trust-property loss from the assister) and are therefore not inconsistent.
The measure of compensation is assessed on a “but for” basis: the dishonest assister must put the claimant in the position it would have been in had the trust property not been dissipated, subject to the usual equitable doctrines of causation and remoteness.
An assister’s liability is still several, not joint: he is responsible for the loss he helped to occasion, capped at the value of the dissipated trust property.

Lord Burrows’ powerful dissent argued the contrary: that no compensatory claim lies because the beneficiary never suffered an underlying loss; allowing such a claim would covertly turn an assister into a joint account-holder of the fiduciary’s profits, contradicting earlier authority.

3. Analysis

3.1 Precedents Cited and Their Influence

Target Holdings Ltd v Redferns [1996] AC 421 – confirmed that equitable compensation is compensatory, not merely a matter of taking accounts. The majority used Target as a springboard for focusing on causal loss once trust property is misapplied.
AIB Group (UK) plc v Mark Redler & Co [2015] AC 1503 – refined Target and endorsed a “but for” causation test in equity. The majority transposed that causation test to the dishonest assistance context.
Royal Brunei Airlines v Tan [1995] 2 AC 378; Barlow Clowes v Eurotrust [2006] 1 WLR 1476 – delineated the mental element of dishonest assistance. The Supreme Court reiterated that once dishonesty is proven, equitable relief must be “effective and proportionate”.
Ultraframe v Fielding [2007] WTLR 835 and Novoship v Mikhaylyuk [2015] QB 499 – authority that an assister is not liable to account for the fiduciary’s entire profits. The majority distinguished (not overruled) these cases, noting they concerned disgorgement, not compensation for dissipated trust assets.
Byers v Saudi National Bank [2024] AC 1191 – restated joint and several liability principles for dishonest assistance. The majority relied on Byers to justify imposing compensation without first suing the fiduciary.

3.2 The Court’s Legal Reasoning

The majority’s ratio can be distilled into four logical steps:

Existence of a proprietary base: Profits obtained in breach of fiduciary duty are held on institutional constructive trust for the beneficiary (FHR European Ventures [2015] AC 250).
Breach of trust through dissipation: When those profits are dissipated, a separate breach of trust occurs. The loss is measured by the value of the dissipated assets.
Accessory liability follows the principal breach: A dishonest assister who participates in that dissipation is jointly and severally liable for the consequential loss, consistent with accessory liability in torts and equity.
No “overall-loss” defence: The law’s aim is to protect trust property. It is irrelevant that the beneficiary’s “bottom line” was unchanged by the original transaction; the loss lies in the extinguishment of an equitable proprietary interest. Equitable compensation therefore fills the gap left by the impossibility of tracing or recovering the profits.

On the election point, the majority held that seeking an account of profits against the fiduciary and compensation against the assister are not inconsistent: the fiduciary’s restitutionary liability and the assister’s compensatory liability protect distinct entitlements and do not give rise to double recovery because any sums paid are subject to equitable set-off.

3.3 Potential Impact of the Decision

Broader exposure for accessories. Banks, professional advisers and other facilitators who move or conceal misappropriated assets may now face substantial compensatory claims even where the underlying value-shifting transaction was at arm’s length.
Enhanced remedies for beneficiaries. Claimants can pair a disgorgement remedy against the fiduciary with a compensation claim against the assister, overcoming the practical problem of fiduciaries dissipating or becoming insolvent.
Refinement of “loss” in equity. The judgment recognizes proprietary depletion as a compensable loss, even absent economic loss – aligning English law more closely with Canadian and Australian developments.
Litigation strategy. Pleadings will likely place greater emphasis on distinct phases of wrongdoing (creation vs. dissipation) to attach liability to accessories.
Risk management. Corporate groups and nominees will need robust compliance systems; professional indemnity insurers may reassess exposure where dishonest assistance is alleged.

4. Complex Concepts Simplified

Constructive Trust: A trust imposed by law, without any express agreement, when someone wrongfully acquires or retains property that in fairness belongs to another. It gives the beneficiary a proprietary interest.
Account of Profits: A disgorgement remedy requiring a wrongdoer to hand over gains improperly earned, regardless of the claimant’s actual loss.
Equitable Compensation: A loss-based money award in equity, assessed on “but for” causation, aimed at putting the claimant in the position it ought to have been in.
Dishonest Assistance: Accessory liability where a third party helps a fiduciary commit a breach, knowing their assistance is dishonest according to the objective standards set in Twinsectra and Barlow Clowes.
Election of Remedies: A claimant cannot recover twice for the same wrong; where remedies are inconsistent, the claimant must choose (“elect”) before judgment is satisfied. The Court has now said disgorgement from the fiduciary and compensation from the assister are not inconsistent.

5. Conclusion

Stevens v Hotel Portfolio II UK Ltd reshapes the remedial landscape of equity by recognising that loss of a proprietary interest itself constitutes a compensable harm against a dishonest assister, even where the beneficiary suffered no immediate financial detriment from the underlying transaction. The decision harmonises accessory liability with modern principles of equitable compensation and closes a loophole that previously allowed dishonest assistants to escape substantive liability once their own profits were modest. Going forward, parties who facilitate breaches of fiduciary duty will face heightened financial risk, and courts will possess a more flexible toolkit to achieve practical justice in complex fraud scenarios.