Profit received by a trustee or other fiduciary resulting from breach of trust or fiduciary duty is held by the fiduciary in a true trust for the benefit of the beneficiary or principal, the UK Supreme Court (UKSC) has decided (Stevens v Hotel Portfolio II, 2025 UKSC 28).

The fiduciary's dishonest assister, who in this case had breached the 'no profit' and 'no conflict' rule, also holds their share of the profit on trust for the beneficiaries, the UKSC ruled. The judgment is consistent with the same court's recent finding on constructive trusts in Recovery Partners v Rukhadze (2025 UKSC 10).

The Stevens case involved a pair of businessmen who concocted a secret scheme to buy commercial property and sell it for a profit. One of them, Ruhan, a director of property company Hotel Portfolio II (HPII), set up a separate company fronted by his partner, Stevens. This company bought hotels from HPII for fair market value and sold them on, making a profit of GBP102 million. Most of this went to Ruhan, with Stevens getting a modest commission. Unfortunately, the two men then went on to lose all this money on irrecoverably bad investments.

HPII subsequently went into voluntary liquidation. Its liquidators discovered Ruhan and Stevens' secret activities. They considered that the pair's actions had created a constructive trust in HPII's favour, even though HPII itself could not have made the profit. They claimed an order for account of Ruhan and Stevens' profits, as well as equitable compensation for loss against Ruhan for breach of trust in dissipating the profits and against Stevens for having dishonestly assisted him.