Mr Justice Chan PJ: 1. I agree with the judgment of Mr Justice Ribeiro PJ and the judgment of Lord Millett NPJ. Mr Justice Ribeiro PJ: 2. This appeal involves a claim against the defendant, Mr Thomas Hall, for breach of fiduciary duty. Mr Justice Stone held[1] and the Court of Appeal confirmed[2] that the defendant was guilty of such breaches and each Court ordered him to make an interim payment and to render an account of the property with which he had been entrusted. Leave to appeal was granted by the Court of Appeal[3] and the defendant now seeks to overturn the conclusion that he was the plaintiff’s fiduciary. By a cross-appeal, the plaintiff seeks to vary the remedies granted below. A. The facts 3. The main protagonists were (the now deceased) Mr Alan Woods and the defendant. Mr Woods was an astute and wealthy international investor and a highly successful professional gambler. The defendant was a Hong Kong based businessman. Mr Woods initially regarded the defendant as a friend and trusted business associate and it was the defendant who introduced to Mr Woods the idea of acquiring a substantial interest in an English company called The Sporting Exchange Limited (“TSE”) which operated an online betting website called “Betfair”. TSE was not publicly listed at the time of the relevant transactions but later obtained a listing on the London Stock Exchange. A.1 Acquisition of the second tranche of TSE shares 4. Towards the end of 2002, the parties embarked on a project with the aim of acquiring 10% of TSE’s shares using money put up by Mr Woods. In December 2002, they acquired 125,000 TSE shares (which became 1,250,000 shares in 2003 after a 10:1 split) which were then held by a company called Growthline Limited[4] (“the first tranche”). The present proceedings focus upon the parties’ attempts to make additional acquisitions during 2003. 5. Three of Mr Woods’s companies were involved in those attempts. They were the plaintiff, Libertarian Investments Limited, Assanzon Development Corporation (“Assanzon”) and Momentum Limited (“Momentum”). The plaintiff and Assanzon were wholly-owned by Mr Woods. Initially, the plaintiff held 90.63% of the shares in Momentum, with 8.03% held by Mental Refreshment Limited, a company owned by Mr Paul Longmuir, and 1.34% held by InChina Limited, a company owned by the defendant and Mr Christopher Parker. However, by July 2004, the plaintiff had become the sole owner of Momentum. 6. The defendant had contacts within TSE and was placed in charge of the further acquisition. It was agreed that a general tender would be made to shareholders in TSE to purchase the requisite number of their shares. The defendant used his company, Axdale Overseas Corporation (“Axdale”), as the vehicle for making the tender. Funds originating from Mr Woods via Assanzon would be used to pay for such shares and the shares successfully acquired would be held by Momentum for its beneficial owners (principally the plaintiff). The tender exercise was due to take place in May 2003 and, on 13 May 2003, at the defendant’s request, Mr Woods caused Assanzon to transfer €50 million (then equivalent to £35,790,980.67) to a trust account set up by the defendant with a firm of solicitors called Berwin Leighton Paisner (“BLP”). 7. Mr Woods had asked the defendant to arrange for the remittance to be referenced “for Momentum Limited/Assanzon” and believed that the funds would be held in a BLP client account in the name of either of those companies, but the defendant in fact designated the account as one created for his own company, Axdale, as the client (“the BLP trust account”). The defendant concealed this fact from Mr Woods, sending him what purported to be a BLP statement dated 21 May 2003, indicating that the funds were being held for Momentum as BLP’s client. 8. The May tender failed. No TSE shares were acquired and part of the funds provided by Mr Woods were returned. During the period with which we are concerned, the defendant periodically transferred various sums in and out of the BLP trust account without Mr Woods’ knowledge or authority. Many of the outward transfers were made to a Swiss account held in Axdale’s name (“the Axdale Swiss account”). 9. A further TSE tender exercise was to be held in November and December 2003 and, in order to fund a fresh attempt to increase Momentum’s holdings with the 10% target in view, the defendant called for additional funds. Mr Woods consequently remitted a total of £5,949,994.00 to the BLP trust account on 11 September 2003. 10. On 9 October 2003, the defendant entered a bid in Axdale’s name for TSE shares at the price of £2.71. This resulted in the acquisition of 5,598,918 TSE shares (“the second tranche”). However, Mr Woods did not know that the second tranche shares had been bought for £2.71. The defendant told him that they were purchased for £3.10 per share, at a total cost of £17,356,645.00, and Momentum was charged that amount for the shares. The defendant therefore made a secret profit exceeding £2 million in acquiring the second tranche. When this was discovered by Mr Woods after his relationship with the defendant had soured, he sued the defendant in the Hong Kong courts, it being furthermore alleged that a secret profit had also been made by the defendant in acquiring the first tranche.[5] 11. That action was eventually settled with the parties mutually acknowledging in a Deed of Settlement dated 28 November 2007 that of the second tranche, 5,074,112 shares had been acquired beneficially for the plaintiff; 449,806 shares beneficially for Mental Refreshment and 75,000 shares beneficially for InChina Limited. Of the £2,154,328.00 paid by the defendant to settle the action, the plaintiff calculates that £1,978,903.68 was attributable to itself. 12. The second tranche represented 5.71% of TSE’s issued capital. When acquiring the same, Momentum gave to TSE an undertaking dated 14 January 2004 stating, inter alia, that save with the prior written consent of TSE’s board, Momentum would not acquire more than 6.5% of TSE’s share capital. The acquiring parties evidently thought that the first tranche purchased by Growthline (which, if added to the second tranche would amount to 6.998% of TSE’s share capital) did not contravene the undertaking which permitted Momentum itself to hold up to 6.5%. The parties also evidently did not consider the undertaking a constraint on their pursuit of further TSE shares. A.2 Purported acquisition of the third tranche of 1,777,700 shares 13. In January 2004, the defendant announced that he had successfully acquired an additional 1,777,700 TSE shares (“the third tranche”). He sent a note to Mr Woods stating: “Davies - Samos and Caledonian Information. 1,777,700 shares in Samos and Caledonian Holding Co’s are held by Momentum Limited by way of Davies Family Settlement. Copy of relevant info to be forwarded to Alan to complete file”. 14. TSE’s share register then showed that Samos Investments Limited and Caledonian Heritable Investments Limited (together referred to as “Samos and Caledonian”) were the registered owners of 1,777,700 TSE shares. 15. The defendant then sent to Mr Woods a document headed “BLP and Tarlo Lyons Consolidated General Ledger” which included an entry dated 19 January 2004 purporting to show that £5,546,424.00 had been paid for 1,777,700 TSE shares at £3.11 per share. 16. There followed a document headed “Summary Overview as at 5/6/04” which purported to show that a total of 8,626,618 TSE shares had been acquired, with 5,598,918 shares (the second tranche) held by Momentum, 1,250,000 shares (the first tranche) held by Growthline and 1,777,700 shares (the purported third tranche) allegedly purchased at £3.11 per share plus stamp duty, held by “Samos/Caledonian (via Davies Settlement/Growthline)”. It also recorded that 7,867,166 of those shares were due to the plaintiff. The defendant informed Mr Woods that TSE had issued 98,306,017 shares with some 9,804,273 options outstanding, reporting that therefore “you hold 8.78% of [TSE] and if all share options are exercised, you will hold 7.98%”. Given the Momentum undertaking, the defendant calculated that it was still open to Momentum to acquire a further 1,428,250 shares before the 6.5% limit would be reached. This information was repeated in an e-mail from the defendant to Mr Woods dated 7 June 2004. 17. A spreadsheet sent by the defendant to Mr Woods as an attachment to an e-mail dated 10 June 2004 similarly reported that the plaintiff held 5,074,122 TSE shares acquired at £3.10 per share and 1,777,700 shares acquired at £3.11 per share. 18. The relationship between Mr Woods and the defendant broke down progressively from about 2005. Thereafter, Mr Woods had great difficulty getting any further information or documents regarding the third tranche of shares. He asked Mr Tim Levene, previously an officer of TSE, to intercede with the defendant on his behalf. At meetings held in November 2005 and February 2006, the defendant told Mr Levene that the 1,777,700 shares were held for the plaintiff in a Channel Islands trust known as the “Hall of Fame Trust” which the defendant had established, an asset of such trust being a company called Hoflim Limited which was beneficially entitled to the shares which (because of the Momentum undertaking) continued to be held by Samos and Caledonian as the registered owners. However, he produced no documents relating to that alleged arrangement. 19. It had become urgent for Mr Woods to obtain control of the 1,777,700 shares because he wished to take advantage of a general open cash offer made by a Japanese company called Softbank Corporation (“Softbank”) to purchase TSE shares at the price of £13.2005 per share, that offer remaining open for acceptance until 31 March 2006. However, he failed to obtain the relevant documents from the defendant. The Softbank offer was oversubscribed, resulting in Softbank purchasing 42% of the shares offered. The plaintiff contends that the defendant has caused the trust estate loss by depriving it of the benefit of Softbank’s offer. If it had been possible to offer the entire parcel of 1,777,700 shares to Softbank, the plaintiff argues that 746,634 shares (42%) would have been taken up, yielding proceeds of £9,855,942.10. 20. The defendant’s unauthorized dealings with the funds remitted to the BLP trust account only came to light when a copy of BLP’s Axdale ledger was obtained on 30 July 2006. It showed, among other things, that he had transferred a total of £13,646,718.18 to the Axdale Swiss account on various dates in May 2003, October 2003 and April 2004. Additionally, two outward transfers of £158,000 and £600,000 were made in August 2003, to unknown destinations. Various repayments had been made from time to time. 21. One entry showed that on 14 October 2003, the defendant had transferred £5,463,508.46 from the BLP trust account to the Axdale Swiss account, the defendant later claiming that the money was used to purchase the third tranche of shares via “a nominee appointed by the beneficial owners of the shares” identified as one “Michael Schultz”. B. The findings regarding the third tranche 22. Stone J expressed some uncertainty as to whether the third tranche had in fact been acquired by the defendant. There was evidence (derived from without prejudice negotiations to which I shall return) from his solicitors suggesting that the defendant had indeed acquired 1,777,700 shares and sold 414,700 of them to Softbank, realising £5,474,247.35 and leaving a balance of 1,355,300 TSE shares. However, the Judge stated: “I presently have no idea of the veracity/accuracy of this latter number”.[6] But when it came to the Orders made against the defendant, Stone J fastened on the £5,474,247.35 amount as having admittedly been received by the defendant (but not accounted for to the plaintiff) and ordered that sum to be paid to the plaintiff as an interim payment. Fok JA (writing for the Court of Appeal) concluded that there was “no specific finding in the Judgment that the 1,777,700 TSE shares were acquired for the benefit of the plaintiff” and that the question was unresolved.[7] 23. It appears that Stone J may have thought that the question whether the 1,777,700 shares had actually been bought and then sold in part to Softbank was a matter that could be held over for later investigation as part of the account which he had ordered to be taken. If so, I do not think that was the right approach. The question was an important issue in the case which had been dealt with in the evidence and in the parties’ submissions. It was incumbent on the Judge to make a finding on the available evidence. 24. However, other aspects of Stone J’s judgment tend to suggest that he had actually made a finding that the 1,777,700 shares had not been acquired. His Lordship referred to the defendant’s messages referred to above as “falsified and misleading reports as to what was happening”.[8] He noted that the defendant had claimed that such shares had been acquired from Samos and Caledonian,[9] accepting Mr Levene’s evidence that the defendant had told him that because of the Momentum undertaking, Samos and Caledonian remained the registered shareholders holding the shares subject to a trust which the defendant had set up, ultimately for the benefit of the plaintiff.[10] 25. Stone J appears to have rejected the defendant’s story. He adopted the findings made by Fung J in interlocutory proceedings that Samos and Caledonian had not dealt with the defendant or with “Michael Schultz”; that they did not make any agreement with the defendant in relation to their 1,777,700 shares and that they did not execute any declaration of trust regarding those shares.[11] It follows that the Judge must have rejected the defendant’s evidence about having purchased the third tranche shares from those companies. 26. Indeed, Stone J noted that the defendant had blatantly changed his story and proceeded to testify that the 1,777,700 shares had in fact not been acquired, blaming Samos and Caledonian for not completing the intended transaction even though they had received payment in full: “Initially he had reported to the plaintiff that he had set up the trust company/structure to hold the beneficial entitlements to the TSE Trust Shares, but this position subsequently moved to the allegation that, after receipt of payment in full, Samos and Caledonian were not prepared to complete the transaction and that, as a consequence, no beneficial ownership of the tranche of 1,777,700 shares was acquired for the plaintiff.”[12] 27. It was in this context that the Judge concluded that the defendant had woven such an elaborate tissue of lies that he “could not keep track of his own lies”, as Mr Barry Barlow SC, counsel for the plaintiff, had submitted.[13] The Judge accepted the plaintiff’s evidence “virtually in its entirety”,[14] but he described the defendant’s evidence as “wholly far-fetched and unbelievable”;[15] concluding that he “did not tell the truth to this court ... [but] evaded and dissembled”.[16] 28. It therefore seems likely that Stone J adopted the £5,474,247.35 amount for the interim payment ordered, not because he had found that it was a sum actually realised from a sale to Softbank, but because the defendant could hardly object to its use as an interim figure since he had himself put that amount forward as a sum realised but not accounted for. 29. There is now no uncertainty over that issue. At the hearing before this Court, both Mr Barlow SC and Mr Colin Wright (appearing for the defendant) accepted that the purported third tranche of 1,777,700 shares had never been acquired by the defendant and therefore that no part of any such shares had been sold to Softbank. 30. On that basis, the crucial findings of the Courts below may be taken to be as follows: (a) Mr Woods and his companies entrusted to the defendant the funds comprising the €50 million (equivalent to £35,790,980.67) and the £5,949,994.00 paid into the BLP trust account for the express and sole purpose of purchasing TSE shares on behalf of Mr Woods and the plaintiff, the aim being to acquire 10% of TSE’s share capital. (b) The shares purchased would be transferred to Momentum to be held by Momentum beneficially principally for the plaintiff. (c) Unknown to Mr Woods or the plaintiff, the defendant designated the BLP trust account as Axdale’s client account while falsely informing them that it was a client account in Momentum’s name. The defendant also transferred substantial sums in and out of the BLP trust account without their knowledge or authority. (d) One outward transfer, made on 14 October 2003 to the Axdale Swiss account, was in the sum of £5,463,508.46 which the defendant claimed had been effected for the purpose of acquiring the third tranche of 1,777,700 shares. (e) The defendant claimed that he had successfully bought those shares from their registered shareholders, Samos and Caledonian. In a series of communications to Mr Woods, he confirmed that the 1,777,700 shares were held through a trust structure for the plaintiff’s benefit. (f) Those claims were false. The defendant had not bought the 1,777,700 shares. Therefore his statement that the sum of £5,463,508.46 withdrawn from the BLP trust account on 14 October 2003 had been used to buy those shares was false and no explanation has been given as to how that money was used. C. The “without prejudice” debate 31. Before resuming the main line of argument, I ought to deal with the “without prejudice” issue. The admissibility of a statement made by the defendant’s solicitors in the course of without prejudice negotiations to settle the secret profits action was hotly contested. It involved the admission (mentioned above) that the defendant had acquired 1,777,700 shares and sold 414,700 of them to Softbank, yielding proceeds of £5,474,247.35, and that 1,355,300 of the unsold third tranche shares remained with him. The Court of Appeal had differed from Stone J as to its admissibility. 32. Since it is now accepted that no such acquisition or sale had ever occurred, there is no question of the statement being relied on as a factual admission. The without prejudice debate is therefore no longer relevant. 33. However, I note in passing that the plaintiff had argued that the statement was exceptionally admissible even if made “without prejudice” because it constituted the perpetration of a fraud on the plaintiff or at least an attempt to conceal the defendant’s fraudulent conduct. That argument was rejected by Fok JA on the footing that the authorities relied on by Mr Barlow established a fraud exception to claims for legal professional privilege, but that those authorities were inapplicable to correspondence undertaken pursuant to a bona fide attempt to settle a dispute.[17] It is presently unnecessary to enter into the debate, but it may be helpful to point out that there are well-established exceptions to treating documents marked “without prejudice” as inadmissible. Robert Walker LJ in Unilever PLC v Proctor and Gamble Co,[18] pointed out that they include an exception identified in the following terms: “Apart from any concluded contract or estoppel, one party may be allowed to give evidence of what the other said or wrote in without prejudice negotiations if the exclusion of the evidence would act as a cloak for perjury, blackmail or other ‘unambiguous impropriety’ (the expression used by Hoffmann LJ in Foster v Friedland, 10 November 1992, CAT 1052).” 34. The Unilever decision was approved by the House of Lords in Ofulue v Bossert.[19] Had the issue remained alive, the plaintiff’s position on admissibility would have been quite properly arguable. D. The findings on fiduciary liability 35. Both Courts below found that the defendant was in breach of fiduciary obligations owed to the plaintiff. D.1 Stone J’s findings 36. Stone J found that Mr Woods had caused Assanzon to transfer the funds in question to the BLP trust account for and on behalf of the plaintiff; that those funds belonged to the plaintiff; and that they were under the control of the defendant through his control of Axdale.[20] His Lordship found that the defendant betrayed the obvious trust reposed in him by using those funds for his own purposes.[21] Stone J stated: “...when one party trusts and remits to a business associate funds for the specific purpose of buying certain shares (in this case the ‘third tranche’ of 1,777,700 TSE shares), which funds, unknown to the remitting party, are promptly deposited in a solicitor’s trust account not in the name of the donor but in the name of the associate’s own company, and thereafter, together with other funds, wrongfully and dishonestly are abstracted into the associate’s Swiss bank account held in the name of that associate’s own company, once again entirely without notice to, and absent the consent of the remitting party, in my view it does not represent a huge juridical leap ... to find, as I do, that the actions of such associate amount to breach of trust and/or fiduciary duty.”[22] 37. The breaches of fiduciary duty involved the failure to apply the funds for their designated purpose of acquiring TSE shares and, instead, misappropriation of such funds for the defendant’s own purposes: “...Mr Hall has admitted in evidence that the funds concerned were not used for any purposes of the plaintiff/Mr Woods, let alone the agreed designated purpose, which was the acquisition of TSE shares; to the contrary, I find that Mr Hall wrongfully abstracted and used these funds for his own entirely unauthorized purposes, absent the knowledge and consent of the plaintiff/Mr Woods.”[23] D.2 The Court of Appeal’s findings 38. Fok JA expressed the same view: “...on the Judge’s findings, it is clear that the defendant undertook to act for the plaintiff to acquire shares of TSE in circumstances giving rise to a relationship of trust and confidence. Here, the defendant plainly owed fiduciary duties to the plaintiff to use the BLP funds, over which he had control since BLP looked to him for instructions for the disposition of those funds, for the purpose of acquiring shares in TSE and for that purpose only. As such, he owed fiduciary duties to, and was therefore in the position of a fiduciary as regards, the plaintiff.”[24] 39. Fok JA agreed with the Judge’s finding of breach: “...instead of using the funds in the BLP account for the purposes of the plaintiff and, specifically, for the agreed purpose of acquiring TSE shares, the defendant wrongfully abstracted and used those funds for his own entirely unauthorised purposes, absent the knowledge and consent of the plaintiff.”[25] He noted additionally that the trial Judge had found breaches involving misappropriation of funds through five unauthorized payments.[26] E. The Orders made below and those now sought by the parties E.1 Stone J’s Orders 40. In its pleadings, the plaintiff sought an Order that the defendant account for the trust property and in the alternative, an Order of “equitable damages or restitution of at least £21,424,503.00 to restore the plaintiff to the position it would have been in had the defendant honoured his trust obligations”. In his closing submissions at the trial, Mr Barlow made it clear that he did not wish “to continue with the account taking process” and that his client was seeking “an adjudication on the basis of the materials presently before the court” leading to a monetary award on the wilful default basis, that is, an award to compensate the trust estate for loss caused to it by the defendant wilfully failing to carry out the duties for which he had been entrusted with the relevant funds. 41. Stone J acknowledged that his findings would justify an award on the wilful default basis and summarized the plaintiff’s case for equitable compensation as follows: “... the plea at prayer (5) of equitable damages or restitution of at least £21,424,503 – ... as I understand it, is based on the premise that Mr Hall is liable to compensate the plaintiff by providing restitution for Mr Hall’s inability to restore the trust by paying the value of that which the plaintiff would have received but for the defendant’s default; this sum apparently is comprised of the £9,855,942.11 which should have been generated from the sale of TSE shares to Softbank, plus the sum of £11,568,560 that should have accrued from the sale of the apparently remaining 1,031,066 TSE shares, even with a 15% discount to the Softbank price ‑ which latter percentage derives from Mr McClellan’s evidence wherein Mr Hall, through his solicitors, had stated that he was negotiating with the registered shareholders of the remaining TSE Trust Shares for them to purchase those shares at a discount of 10 to 15% of the price paid by Softbank Corporation, namely £11.88 or £11.22 per TSE share.”[27] 42. However, Stone J felt that evidential deficiencies prevented the granting of such relief. He found that the defendant had undoubtedly “misappropriated trust property in breach of his obligations qua trustee/fiduciary” but observed that “even now the court ... does not know the full story of how much money went where, when, and indeed, precisely how many TSE shares now actually remain to be reclaimed by the plaintiff”.[28] This reflects the Judge’s ambivalent attitude towards the question whether the third tranche shares had in fact been acquired and on-sold to Softbank as discussed above.[29] 43. Stone J added that: “... [he did not] have any idea, for example, of whether and at what price Softbank indeed would have bought the remaining TSE Trust shares at the discount now claimed, and/or if the entire amount of the 1,777,700 shares had been offered to Softbank (which it appears in fact they were not), how many shares eventually could have been sold in light of the evidence, which is undisputed, that the Softbank purchase offer was over-subscribed.”[30] 44. The Judge acceded to Mr Wright’s submission that there had to be a full investigation which could be pursued by requiring the defendant to provide “a formal account” and that it would be unfair to “skip this step”: “... the [defendant][31] must now render a true and accurate account, which upon the taking of such account may include an order that the trust be restored to the position it would have been in absent the defendant’s dishonest and wilful breaches of trust.”[32] 45. Since, as previously noted, the Judge thought it beyond doubt that the defendant had misappropriated funds in breach of trust, he ordered an interim payment in the sum of £5,474,247.35[33] while ordering an account to be taken in the following terms: “(ii) That pursuant to the provisions of Order 43, RHC, the defendant do render to the plaintiff a true and proper account upon a wilful default basis for the trust property, and in particular for the plaintiff’s funds as transferred on the instructions of the defendant from the BLP trust account and/or the beneficial entitlements to the 1,777,700 TSE Trust Shares (or such TSE shares as may remain) as purchased with the plaintiff’s funds and/or all property now representing the trust property, including any dividends which have accrued on the TSE Trust Shares and/or other profits which have accrued upon the trust property; (iii) That if and in so far as monies be found to be due to the plaintiff from the defendant consequent upon the taking of such account, that credit be given for the repayment (if such payment has been effected) of the aforesaid sum of £5,474,247.35, together with interest accruing thereon; ...” E.2 The Court of Appeal’s Orders 46. The Court of Appeal was also persuaded that the evidential position was insufficiently developed to permit an immediate award of equitable compensation on the basis sought. Its view was influenced by two conclusions Fok JA had reached in relation to Stone J’s judgment. The first, as noted above,[34] was that Stone J had not made a specific finding as to whether the 1,777,700 shares had been acquired. The second, also previously noted,[35] was that Stone J had erred in treating as admissible a statement made in the course of without prejudice communications. Fok JA put it thus: “... the Judge simply did not make the necessary findings of fact that would enable the plaintiff to recover equitable compensation in the amount of £21,424,503 as sought. It has yet to be determined if in fact the defendant did actually acquire the 1,777,700 TSE shares for the plaintiff. And if so, how many of those shares were sold either to Softbank or to any other party and for how much. In any event, as is clear from the plaintiff’s skeleton submissions in support of the cross-appeal, the only material on which the plaintiff can rely in order to advance its claim for this sum is derived from the without prejudice communications which should not have been admitted in evidence.”[36] 47. The Court of Appeal varied the Judge’s Order for an interim payment since the £5,474,247.35 figure had been derived from a without prejudice communication considered inadmissible. It substituted the sum of £4,823,768.51. That was the sum put forward by Mr Wright as the amount admittedly due from the defendant to the plaintiff as an “overpayment” received. E.3 The Orders now sought by the parties 48. In its printed case, the defendant seeks (i) to set aside of the Orders of the Courts below; (ii) the return of the interim payment; (iii) payment of interest by the plaintiff “at 2% over the Bank of England Base Rate compounded with quarterly rests” from the date of receipt of the interim payment; and (iv) costs. 49. However, before this Court, the defendant has been far less ambitious. Mr Wright’s principal argument is that the defendant is only liable for a debt representing overpayment by the plaintiff to the defendant in the sum of £4,823,768.51. That is the amount of the interim payment ordered by the Court of Appeal, and since it has already been paid, the defendant’s case is that there is no valid claim for any further relief. 50. The plaintiff, on the other hand, seeks an immediate monetary award by way of equitable compensation on a wilful default basis (giving credit for the £4,823,768.51 amount received). Mr Barlow points to the defendant’s intransigently obstructive attitude in relation to its discovery and other obligations at the interlocutory stages, requiring recourse to “unless orders” and even to an application for leave to commit for contempt. He submits that the Orders requiring a fresh round of litigation before a Master or single judge for an account or further inquiries would involve a disastrous waste of the Court’s and the parties’ time and effort and run up wholly unproductive costs. 51. The case advanced below had been for equitable compensation in the sum of £21,424,503.00, but at the hearing this was reduced to £14,183,851.72 (giving credit for the £4,823,768.51 received) on a basis to which I shall return. The plaintiff submits that evidence to support the granting of such relief is already before the Court. F. The applicable principles 52. I turn to the equitable principles relevant to the present appeal in the context of the defendant’s argument that the relationship was purely commercial and not fiduciary and of the plaintiff’s argument that there should have been an immediate award of equitable compensation. In the citations which follow, I have, where possible, omitted references to authority contained in the passages cited. F.1 Fiduciary relationships 53. Certain relationships have traditionally been accepted as fiduciary in nature, namely, the relationships between trustee and beneficiary, agent and principal, solicitor and client, employee and employer, director and company, and between partners.[37] 54. However, even within such a relationship, the specific obligation breached may not be fiduciary in nature. As Brennan CJ put it in Breen v Williams:[38] “It is erroneous to regard the duty owed by a fiduciary to his beneficiary as attaching to every aspect of the fiduciary’s conduct, however irrelevant that conduct may be to the agency or relationship that is the source of fiduciary duty.” 55. And in Bristol and West Building Society v Mothew,[39] Millett LJ (as Lord Millett then was) endorsed the following comment of Ipp J: “It is essential to bear in mind that the existence of a fiduciary relationship does not mean that every duty owed by a fiduciary to the beneficiary is a fiduciary duty. In particular, a trustee's duty to exercise reasonable care, though equitable, is not specifically a fiduciary duty...”[40] 56. The converse is also true. Although the parties’ relationship may be generally non-fiduciary, particular obligations may import fiduciary duties and equitable remedies. 57. Thus, in the Hospital Products case, Mason J noted that in cases where a comprehensive fiduciary relationship does not exist: “...it does not exclude the existence of a more limited fiduciary relationship for it is well settled that a person may be a fiduciary in some activities but not in others.”[41] 58. Similarly, Blanchard J, in the New Zealand Supreme Court stated: “It is well settled that, even in a commercial relationship of a generally non-fiduciary kind, there may be aspects which engage fiduciary obligations of loyalty. That is because in the nature of that particular aspect of the relationship one party is entitled to rely upon the other, not just for adherence to contractual arrangements between them, but also for loyal performance of some function which the latter has either agreed to perform for the other or for both or has, perhaps less formally, even by conduct, assumed.”[42] 59. Hence, as Tipping J pointed out in BNZ v NZ Guardian Trust Co Ltd,[43] the important focus is on the nature of the obligation in question: “Historically the law has tended to place emphasis on the classification of the relationship giving rise to the obligation. But more recently, for certain purposes at least, there has been a shift of emphasis from the classification to the nature of the obligation, or duty, as it is usually called. Thus the nature of the duty which has been breached can often be more important, when considering issues of causation and remoteness, than the particular classification or historical source of that duty.” F.2 Obligations importing fiduciary duties 60. The authorities show that a person attracts fiduciary duties where he undertakes an obligation to act in the interests of another. As Mason J expressed it in Hospital Products: “[An] entitlement to act in one’s own interests is not an answer to the existence of a fiduciary relationship, if there be an obligation to act in the interests of another. It is that obligation which is the foundation of the fiduciary relationship, even if it be subject to qualifications including the qualification that in some respects the fiduciary is entitled to act by reference to his own interests.”[44] 61. Similarly, in Breen v Williams,[45] Gummow J stated: “Fiduciary obligations arise (albeit perhaps not exclusively) in various situations where it may be seen that one person is under an obligation to act in the interests of another.” 62. And in the Canadian Supreme Court, McLachlin J put it thus: “The essence of a fiduciary relationship ... is that one party exercises power on behalf of another and pledges himself or herself to act in the best interests of the other.”[46] 63. There are obviously many ways and many different contexts in which one may assume an obligation to act in another person’s interests, as Mason J pointed out: “The categories of fiduciary relationships are infinitely varied and the duties of the fiduciary vary with the circumstances which generate the relationship. Fiduciary relationships range from the trustee to the errand boy, the celebrated example given by Fletcher Moulton LJ in his judgment in Re Coomber [1911] 1 Ch 723, in which, after referring to the danger of trusting to verbal formulae, he pointed out ... that the nature of the curial intervention which is justifiable will vary from case to case.”[47] 64. Brennan CJ helpfully suggested that fiduciary duties arise in two broad, overlapping situations: “Fiduciary duties arise from either of two sources, which may be distinguished one from the other but which frequently overlap. One source is agency; the other is a relationship of ascendancy or influence by one party over another, or dependence or trust on the part of that other.”[48] 65. An obvious example of the “agency” type of situation giving rise to fiduciary duties involves the case where a person receives money or other property for and on behalf of or as trustee of another person.[49] 66. That fiduciary duties may also arise out of a relationship of ascendancy was acknowledged by the Canadian Supreme Court in Galambos v Perez,where Cromwell J described such relationships as “power-dependency relationships” involving a need for “the protection of one party against abuse of power by another”.[50] 67. It is in the context of such “ascendancy” cases that the courts have identified as an essential feature of the fiduciary relationship, an obligation on the fiduciary to exercise discretionary powers in the interests of another, highlighting the vulnerability of that other person to any potential abuse of such powers. 68. In Hospital Products,one of the questions was whether the relationship between distributor and supplier was such a “power-dependency” relationship and it was in that context that Mason J stated: “The critical feature of these relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense. The relationship between the parties is therefore one which gives the fiduciary a special opportunity to exercise the power or discretion to the detriment of that other person who is accordingly vulnerable to abuse by the fiduciary of his position. The expressions ‘for’, ‘on behalf of’ and ‘in the interests of’ signify that the fiduciary acts in a ‘representative’ character in the exercise of his responsibility, to adopt an expression used by the Court of Appeal. It is partly because the fiduciary's exercise of the power or discretion can adversely affect the interests of the person to whom the duty is owed and because the latter is at the mercy of the former that the fiduciary comes under a duty to exercise his power or discretion in the interests of the person to whom it is owed...”[51] 69. In Breen v Williams,[52] the Australian High Court considered a doctor/patient relationship one of ascendancy giving rise to fiduciary duties relating to some, but not all, aspects of the relationship. F.3 Purely commercial relationships distinguished 70. Mr Wright sought to place great weight on the distinction between commercial and fiduciary relationships. However, it is plain that fiduciary duties may well arise as aspects of a commercial relationship. Moreover, it is clear that legal and equitable rights and remedies are capable of co-existence, even in a single transaction.[53] There are nonetheless many cases where, after scrutiny by the court, no fiduciary element is found to arise and no basis exists for equity to intervene in what is a purely commercial relationship. 71. In such commercial relationships, the parties deal with each other as principals and at arm’s length, each looking after his own interests. Disputes between such parties usually only give rise to common law causes of action and remedies. Any part played by equity tends to be in its auxiliary jurisdiction in support of the common law. 72. The distinction between commercial and fiduciary relationships, and its reflection in the different remedies available (to which I shall return), were explained by McLachlin J in her dissenting but influential judgment in Canson Enterprises Ltd v Boughton & Co:[54] “The basis of the fiduciary obligation and the rationale for equitable compensation are distinct from the tort of negligence and contract. In negligence and contract the parties are taken to be independent and equal actors, concerned primarily with their own self-interest. Consequently the law seeks a balance between enforcing obligations by awarding compensation and preserving optimum freedom for those involved in the relationship in question, communal or otherwise. The essence of a fiduciary relationship, by contrast, is that one party pledges herself to act in the best interest of the other. The fiduciary relationship has trust, not self-interest, at its core, and when breach occurs, the balance favours the person wronged. The freedom of the fiduciary is diminished by the nature of the obligation he or she has undertaken — an obligation which ‘betokens loyalty, good faith and avoidance of a conflict of duty and self-interest’: Canadian Aero Service Ltd v O’Malley, [1974] S.C.R. 592 at 606, 40 DLR (3d) 371, 11 CPR (2d) 206. In short, equity is concerned, not only to compensate the plaintiff, but to enforce the trust which is at its heart.” F.4 The fiduciary duty breached and causation 73. Where a party is found to have undertaken an obligation to act in another person’s interest, it is necessary to determine what precisely the fiduciary duty owed consists of. As pointed out by Mason J: “... it is now acknowledged generally that the scope of the fiduciary duty must be moulded according to the nature of the relationship and the facts of the case ... The often-repeated statement that the rule in Keech v Sandford ... applies to fiduciaries generally tends to obscure the variable nature of the duties which they owe. The rigorous standards appropriate to a trustee will not apply to a fiduciary who is permitted by contract to pursue his own interests in some respects.”[55] 74. The basic obligation of the fiduciary to act in the interests of another may find expression in various ways, depending on the circumstances: He may be said to be under a duty to act in good faith; not to make a profit out of his trust; not to place himself in a position where his duty and his interest may conflict; or not to act for his own benefit or the benefit of a third person without the informed consent of his principal.[56] 75. Where a fiduciary has committed a breach of some such fiduciary duty, it may be important to ascertain what impact that breach has had on any relevant trust property. As Tipping J pointed out, it is possible to distinguish three categories of breach with particular reference to their impact on the trust estate: “Breaches of duty by trustees and other fiduciaries may broadly be of three different kinds. First, there are breaches leading directly to damage to or loss of the trust property; second, there are breaches involving an element of infidelity or disloyalty which engage the conscience of the fiduciary; third, there are breaches involving a lack of appropriate skill or care. It is implicit in this analysis that breaches of the second kind do not involve loss or damage to the trust property, and breaches of the third kind involve neither loss to the trust property, nor infidelity or disloyalty.”[57] 76. It is of course true that in every case, there must be shown to be “some causal connection between the breach of trust and the loss to the trust estate for which compensation is recoverable, viz the fact that the loss would not have occurred but for the breach...”[58] However, the authorities show that the rules on causation are of varying strictness depending on the type of duty and breach in question. 77. Tipping J’s third category of breaches involving a lack of appropriate skill or care is not relevant on the facts of the present case. However, it may be noted that the fiduciary relationship in such cases merely provides a setting for a duty which is indistinguishable from a common law duty of care. Albeit arising in a fiduciary context, the common law rules as to causation, foreseeability and remoteness generally apply to such claims. 78. On the other hand, in cases within Tipping J’s first category, involving loss caused by the fiduciary to trust property, strict rules on causation apply. These are rules borrowed from those developed in relation to traditional trusts, requiring the trustee to restore to the trust fund what he has caused it to lose as a result of his breach of trust. In Target Holdings Ltd v Redferns,[59] Lord Browne-Wilkinson explained the traditional rule as follows: “In such a case the basic rule is that a trustee in breach of trust must restore or pay to the trust estate either the assets which have been lost to the estate by reason of the breach or compensation for such loss. ... If specific restitution of the trust property is not possible, then the liability of the trustee is to pay sufficient compensation to the trust estate to put it back to what it would have been had the breach not been committed. ... Even if the immediate cause of the loss is the dishonesty or failure of a third party, the trustee is liable to make good that loss to the trust estate if, but for the breach, such loss would not have occurred ...Thus the common law rules of remoteness of damage and causation do not apply.” 79. Tipping J held that a breach of fiduciary duty in his first category is to be equated with such a breach of trust and treated with equal strictness. Causation is established on a “but for” basis without the constraints of the common law causation rules on remoteness and foreseeability: “In the first kind of case the allegation is that a breach of duty by a trustee has directly caused loss of or damage to the trust property. The relief sought by the beneficiary is usually in such circumstances of a restitutionary kind. The trustee is asked to restore the trust estate, either in specie or by value. The policy of the law in these circumstances is generally to hold the trustee responsible if, but for the breach, the loss or damage would not have occurred. This approach is designed to encourage trustees to observe to the full their duties in relation to the trust property by imposing upon them a stringent concept of causation. Questions of foreseeability and remoteness do not come into such an assessment.”[60] 80. As McLachlin J in Canson Enterprises explained,[61] this approach is tied to the responsibility assumed by the fiduciary to act in the interests of another: “The requirement that the loss must result from the breach of the relevant equitable duty does not negate the fact that ‘causality’ in the legal sense as limited by foreseeability at the time of breach does not apply in equity. ... Thus while the loss must flow from the breach of fiduciary duty, it need not be reasonably foreseeable at the time of the breach .... The considerations applicable in this respect to breach of fiduciary duty are more analogous to deceit than negligence in breach of contract. Just as ‘it does not lie in the mouth of the fraudulent person to say that [the losses] could not reasonably have been foreseen’ (Doyle v Olby (Ironmongers) Ltd, [1969] 2 QB 158, [1969] 2 All ER 119 at 222 (CA)), so it does not lie in the mouth of a fiduciary who has assumed the special responsibility of trust to say the loss could not reasonably have been foreseen. This is sound policy. ... In the case of a breach of fiduciary duty, as in deceit, we do not have to look to the consequences to judge the reasonableness of the actions. A breach of fiduciary duty is a wrong in itself, regardless of whether a loss can be foreseen. Moreover, the high duty assumed and the difficulty of detecting such breaches make it fair and practical to adopt a measure of compensation calculated to ensure that fiduciaries are kept ‘up to their duty.’” 81. McLachlin J also concluded that in principle, there is only a limited duty to mitigate in cases falling within the first category: “In negligence and contract the law limits the actions of the parties who are expected to pursue their own best interest. Each is expected to continue to look after their own interests after a breach or tort, and so a duty of mitigation is imposed. In contrast, the hallmark of fiduciary relationship is that the fiduciary, at least within a certain scope, is expected to pursue the best interest of the client. It may not be fair to allow the fiduciary to complain when the client fails forthwith to shoulder the fiduciary’s burden. This approach to mitigation accords with the basic rule of equitable compensation that the injured party will be reimbursed for all losses flowing directly from the breach. When the plaintiff, after due notice and opportunity, fails to take the most obvious steps to alleviate his or her losses, then we may rightly say that the plaintiff has been ‘the author of his own misfortune.’ At this point the plaintiff's failure to mitigate may become so egregious that it is no longer sensible to say that the losses which followed were caused by the fiduciary's breach. But until that point mitigation will not be required.”[62] 82. The common law rules on foreseeability and remoteness are also inapplicable in relation to Tipping J’s second category: “... the trustee or other fiduciary has committed a breach of duty which involves an element of infidelity or disloyalty engaging the fiduciary's conscience - what might be called a true breach of fiduciary duty. ... in such a case once the plaintiff has shown a loss arising out of a transaction to which the breach was material, the plaintiff is entitled to recover unless the defendant fiduciary, upon whom is the onus, shows that the loss or damage would have occurred in any event, ie without any breach on the fiduciary’s part. Questions of foreseeability and remoteness do not arise in this kind of case either. Policy dictates that fiduciaries be allowed only a narrow escape route from liability based on proof that the loss or damage would have occurred even if there had been no breach.”[63] 83. The foregoing discussion involves loss caused to the trust estate. The breach may of course result in no loss to the trust estate but in the fiduciary making a profit. The present case has not been conducted on that basis and it suffices to note that equity will not allow such a fiduciary to retain such profit but will require him to account for it, imposing a constructive trust.[64] Since the jurisdiction is not punitive, the fiduciary will not be made to account for more than he actually received as a result of his breach.[65] F.5 The remedy of equitable compensation 84. In the present appeal, the plaintiff’s case is that the defendant caused loss to the trust fund as a result of his breach and the controversy between the parties relates solely to the remedy of equitable compensation sought by the plaintiff. 85. In Nocton v Lord Ashburton, Viscount Haldane LC noted that it was established that in cases of actual fraud, the Courts of Chancery, in both their concurrent and exclusive jurisdiction, could order the defendant “to make restitution, or to compensate the plaintiff by putting him in as good a position pecuniarily as that in which he was before the injury”.[66] He held that this applied equally in cases of equitable fraud, including breaches of fiduciary duty. Thus, taking the example of a solicitor who had misused his fiduciary position, his Lordship stated: “It did not matter that the client would have had a remedy in damages for breach of contract. Courts of Equity had jurisdiction to direct accounts to be taken, and in proper cases to order the solicitor to replace property improperly acquired from the client, or to make compensation if he had lost it by acting in breach of a duty which arose out of his confidential relationship to the man who had trusted him.”[67] 86. As Gummow J pointed out, Viscount Haldane LC’s judgment shows that: “Where the breach of duty produces not a gain to the fiduciary but a loss to the party to whom the fiduciary duty was owed... there is an obligation to account for the loss by provision of equitable compensation.”[68] 87. Equitable compensation rests on the premise that the basic duty of a trustee or fiduciary who has misappropriated assets or otherwise caused loss or damage to the trust estate in breach of his duty is to restore the lost property to the trust (together with an account of profits if applicable). Where restoration in specie is not possible, the Court may order equitable compensation in place of restoration.[69] As Lord Browne-Wilkinson stated: “If specific restitution of the trust property is not possible, then the liability of the trustee is to pay sufficient compensation to the trust estate to put it back to what it would have been had the breach not been committed...”[70] 88. Thus, where a company was entitled to have certain shares restored to it by a director who had received the shares in breach of fiduciary duty, the Court did not consider restoration of the shares in specie an adequate or just remedy where their value, previously £80 per share, had dropped to £1 per share. The director was ordered instead to pay the company £80 per share with interest from the time he received them.[71] 89. Where the breach consists of a wilful failure by the fiduciary to carry out his fiduciary duty, his omission causing loss to the trust estate, he is liable to account on a wilful default basis. This is explained by the editors of Snell’s Equity as follows: “The trustee is required to restore the financial position of the trust fund to what it would have been if the trustee had not been guilty of wilful default. The effect is that the trustee must pay fresh money into the account. The trustee’s liability is essentially to compensate the trust for the consequential losses that follow from the trustee’s breach.”[72] 90. As we have seen,[73] in pursuing the restorative objective of equitable compensation, the common law rules requiring the loss to be foreseeable and not too remote do not apply. The Court is therefore entitled to assess compensation “with the full benefit of hindsight”.[74] 91. Consequently, the loss is assessed at the time of judgment and the Court is entitled to take into account any post-breach changes affecting the value of the lost trust property. McLachlin J, following Wilson J,[75] cited with approval the following passage from the judgment of Street J in Re Dawson; Union Fidelity Trustee Co v Perpetual Trustee Co:[76] “... in a claim against a defaulting trustee ... his obligation has always been regarded as tantamount to an obligation to effect restitution in specie; such an obligation must necessarily be measured in the light of market fluctuations since the breach of trust; and in my view it must also necessarily be affected, where relevant, by currency fluctuations since the breach.” 92. It must however be kept in mind, as McLachlin J pointed out: “While foreseeability of loss does not enter into the calculation of compensation for breach of fiduciary duty, liability is not unlimited. Just as restitution in specie is limited to the property under the trustee's control, so equitable compensation must be limited to loss flowing from the trustee's acts in relation to the interest he undertook to protect. Thus Davidson[77] states ‘it is imperative to ascertain the loss resulting from breach of the relevant equitable duty’....” 93. Where the plaintiff provides evidence of loss flowing from the relevant breach of duty, the onus lies on a defaulting fiduciary to disprove the apparent causal connection between the breach of duty and the loss (or particular aspects of the loss) apparently flowing therefrom. 94. Tipping J so held in BNZ v NZ Guardian Trust Co Ltd.[78]Similarly, when in Maruha Corporation and Muruha (NZ) Ltd v Amaltal Corporation Ltd,[79] a defaulting fiduciary sought an offset against the compensation payable for its default, the Court required it to show that the proposed offset “was an incontrovertible benefit to the person to whom the fiduciary duty was owed” emphasising “that it is for the defaulting fiduciary to establish that such a benefit has been gained.”[80] 95. Another instance is found in the judgment of Mason J in Hospital Products,[81] when dealing with a defaulting fiduciary who has “so mixed an indeterminate profit with his own property as to render the identification of the gain impossible”. In such a situation, “... the whole will be treated as trust property, except so far as he may be able to distinguish what is his own”.[82] His Honour also suggested that in a case where a fraudulent fiduciary acquired a profit through a combination of trust property and his own property or efforts, “It may well be that equity in such circumstances will not seek to apportion the gain”.[83] 96. McLachlin J helpfully provided the following summary of the rules relating to equitable compensation: “In summary, compensation is an equitable monetary remedy which is available when the equitable remedies of restitution and account are not appropriate. By analogy with restitution, it attempts to restore to the plaintiff what has been lost as a result of the breach, ie, the plaintiff's lost opportunity. The plaintiff's actual loss as a consequence of the breach is to be assessed with the full benefit of hindsight. Foreseeability is not a concern in assessing compensation, but it is essential that the losses made good are only those which, on a common sense view of causation, were caused by the breach. The plaintiff will not be required to mitigate, as the term is used in law, but losses resulting from clearly unreasonable behaviour on the part of the plaintiff will be adjudged to flow from that behaviour, and not from the breach. Where the trustee's breach permits the wrongful or negligent acts of third parties, thus establishing a direct link between the breach and the loss, the resulting loss will be recoverable. Where there is no such link, the loss must be recovered from the third parties.”[84] F.6 Account and election 97. Before leaving this discussion of the applicable principles, an incidental issue ought to be disposed of. As part of its cross-appeal, one of the plaintiff’s grounds of appeal involves the complaint that the Courts below had erred in law by overriding the plaintiff’s election in favour of an immediate assessment of equitable compensation, compelling it instead to pursue separate proceedings involving the taking of an account. 98. It falls to be considered later in this judgment whether a direction that an account be taken is necessary or justified. However, for the reasons given by Lord Millett NPJ in his judgment which I have had the benefit of reading in draft, the aforesaid ground of appeal proceeds on the mistaken premise that an order for the taking of an account and an award of equitable compensation are inconsistent remedies requiring and entitling the plaintiff to make an election between the two. 99. As Lord Millett NPJ points out, they are not mutually inconsistent. In a case like the present, where the account is aimed at ascertaining the true position between the fiduciary and the beneficiary, “... it can be regarded as no more than a procedure ancillary to the ascertainment of other rights”.[85] In some cases, they may cumulatively be invoked, seeking first an account and then substantive relief. In other cases, an account may be considered unnecessary and the Court may directly award equitable compensation. It follows that no question of election arises and that ground of appeal requires no further discussion. G. The defendant’s appeal G.1 The defendant’s arguments 100. Mr Wright seeks to argue that the intended acquisition of the third tranche shares involved merely a loan by Mr Woods and his companies to the defendant and Axdale, creating a debt but no fiduciary duty. He submits that Mr Woods’ transfer of the €50 million (equivalent to £35,790,980.67) and the additional £5,949,994.00 to the BLP trust account were by way of loan, enabling Axdale to purchase TSE shares for its own account and then to re-sell the same to Momentum who would hold them for the benefit of the plaintiff. He argues that once the money was credited to the BLP trust account, it became part of Axdale’s general property, with Mr Woods and the plaintiff retaining no beneficial interest. He argues that in law, Axdale was entitled thereafter to apply the money as it saw fit. 101. Mr Wright submits that it was therefore a purely commercial relationship and if the plaintiff considers the arrangement in any way unsatisfactory, it only has itself to blame for failing adequately to protect itself contractually. The defendant accepts that, as he puts it, Mr Woods and his companies “overpaid” Axdale who consequently owed them £4,823,768.51, a sum recoverable at common law as a debt and which, being the amount of the interim payment ordered by the Court of Appeal to be paid to the plaintiff, is a debt which the defendant has already discharged upon compliance with that order. G.2 Not a loan 102. In my view, the suggestion that the transfer of the funds was by way of loan is hopelessly at odds with the evidence and contrary to the concurrent findings of the Courts below. 103. The facts set out in Section A of this judgment make the “loan” suggestion wholly untenable. Far from Mr Woods permitting the transferred funds to form part of the defendant’s general assets, he stipulated that they should be held in a separate client account maintained by BLP “for Momentum Limited/Assanzon”. In contravention of those instructions, the defendant designated the account as an Axdale account and fraudulently reported to Mr Woods that a Momentum account had been created, producing statements purportedly from BLP apparently showing the account to be held in the name of Momentum as their client. Axdale was never permitted to use the money to buy TSE shares for its own account and then to re-sell them to Momentum. This was implicitly acknowledged by the defendant when he paid up £2,154,328.00 in settlement of the claims against him for secret profits made by Axdale in charging Momentum more than he had actually paid for the first and second tranches of shares. The defendant, himself an agent, used Axdale as his vehicle for obtaining the shares. Axdale did not deal with Momentum as principal at arm’s length. 104. The defendant was clearly acting as agent for Mr Woods and his companies in relation to the purported acquisition of the third tranche shares. In the communications set out above, the defendant falsely reported to Mr Woods that the 1,777,700 shares had been acquired on his behalf. The defendant said “you hold 8.78% of [TSE] and if all share options are exercised, you will hold 7.98%”. He gave a similar account to Mr Levene. 105. The Courts below concurrently found[86] that Mr Woods and his companies had entrusted to the defendant funds comprising the sums of €50 million (equivalent to £35,790,980.67) and £5,949,994.00 paid into the BLP trust account for the express and sole purpose of purchasing TSE shares on behalf of Mr Woods and the plaintiff, the aim being to acquire 10% of TSE’s share capital. As the Appeal Committee noted in Chinachem Charitable Foundation Ltd v Chan Chun Chuen,[87]the Court will not embark on a review of such concurrent findings unless a basis is shown for thinking that there has been a miscarriage of justice or a material violation of some principle of law or procedure, in other words, unless there is good reason to believe that the review will lead to reversal of the findings in question. The defendant has not even begun to show such a basis. G.3 Fiduciary obligations 106. On the basis of the crucial findings summarised in Section B, the conclusions reached by Stone J and the Court of Appeal[88] that the defendant was in breach of his fiduciary duties owed to the plaintiff are unassailable. 107. In taking charge of the funds entrusted to him and agreeing to undertake the intended acquisitions, the defendant became trustee of the funds to apply them for the aforesaid purpose and undertook fiduciary obligations to act in the interests of the beneficial owners of Momentum (principally the plaintiff) in the acquisition. As the plaintiff initially held 90.63% and from 2004, held 100%, of the shares in Momentum, I shall for brevity refer simply to the plaintiff and omit reference to the minority interests. 108. Mr Wright submits that there could not be a fiduciary or trust relationship because his client and Mr Woods had never mutually intended to enter into a trust relationship. But the absence of a subjective intention to create a trust is irrelevant in a case like the present. As Lord Millett pointed out in Twinsectra Ltd v Yardley: “A settlor must, of course, possess the necessary intention to create a trust, but his subjective intentions are irrelevant. If he enters into arrangements which have the effect of creating a trust, it is not necessary that he should appreciate that they do so; it is sufficient that he intends to enter into them.”[89] The parties clearly agreed that the money was to be used exclusively for the aforesaid purpose and no other. 109. Mr Wright also seeks to argue that there could not have been a fiduciary relationship because the defendant did not exercise any discretionary powers. He relies on Hospital Products where Mason J stated: “The critical feature of these relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense.”[90] 110. That argument is unsound. As pointed out above,[91] Mason J’s statement must be taken in its context, which was a discussion of the relationship between a distributor and its supplier, where the powers and discretions conferred on the distributor arguably created vulnerabilities in the supplier, possibly placing the distributor in what Brennan CJ referred to as an “ascendancy” situation. As we have seen, discretionary powers do not feature in many fiduciary relationships. In the present case, the crucial fact is that the defendant was entrusted with funds for the specific purpose of acquiring TSE shares as agent for Momentum and the plaintiff (and Momentum’s other beneficial owners). He was trustee of the money and a fiduciary in managing the acquisition. 111. The defendant therefore came under a duty when pursuing the share acquisition to act in good faith; not make a profit out of his trust; not to place himself in a position where his duty and his interest might conflict; and not to act for his own benefit without the informed consent of his principal. G.4 Breach of his fiduciary obligations 112. He plainly breached some or all of those fiduciary duties. On 14 October 2003, the defendant caused £5,463,508.46 to be transferred out of the BLP trust account to the Axdale Swiss account claiming that the money was used to purchase the third tranche shares.[92] He now admits that those shares were never purchased, having repeatedly lied to Mr Woods in reporting that he had duly bought 1,777,700 shares from Samos and Caledonian at the price of £3.11 per share. As we have seen, in without prejudice negotiations, he went further and, through his solicitors, claimed to have sold 414,700 of those shares to Softbank, realising £5,474,247.35 and leaving a balance of 1,355,300 TSE shares.[93] All of this was false and the defendant has given no explanation of what actually became of £5,463,508.46 extracted from the trust fund on 14 October 2003. Concurrent findings were made that he had used those funds for his own entirely unauthorized purposes.[94] 113. The defendant therefore wilfully defaulted in the performance of his fiduciary obligation to acquire the third tranche shares on behalf of the plaintiff, having fraudulently extracted £5,463,508.46 from the trust fund. 114. The defendant seeks to argue that there was no breach or that the consequential loss allegedly suffered by the trust fund would have occurred even without a breach because, as Mr Wright sought to submit, it was impossible to acquire 1,777,700 TSE shares so that there was no way for the defendant to perform his aforesaid obligation. 115. That argument is put two ways. First, it is suggested that by reason of the Momentum undertaking, the board of TSE would have vetoed the acquisition of such a block of shares. There are concurrent findings rejecting that proposition as a matter of fact.[95] Mr Wright provides no basis for reviewing those findings. 116. Secondly, Mr Wright seeks to argue that, “there is no evidence that it would have been possible to acquire any additional shares”. As we have seen, where there is (as in the present case) evidence of a breach of fiduciary duty causing loss, equity places the onus on a defaulting fiduciary to prove that such loss would have occurred in any event even if no breach had occurred. It is therefore not good enough for the defendant to say there was no evidence that the shares could be bought: it is up to him to show that no purchase was possible. He had consistently and convincingly represented to Mr Woods that he had successfully acquired the relevant parcel of shares. Indeed, the evidence indicates that the availability of sellers was a function of the price offered, so that the suggestion that no shares could have been obtained is implausible. 117. In any event, this version of the impossibility argument was neither pleaded, nor supported by evidence nor put in cross-examination to the plaintiff’s witnesses, including Mr Levene who might have been well-placed to answer questions about the availability of such shares. In such circumstances, the Court should decline to entertain this impossibility argument. 118. It follows that the defendant’s appeal must be dismissed. I turn next to the question of relief which is the subject-matter of the plaintiff’s cross-appeal. H. The plaintiff’s cross-appeal as to the remedy 119. The relief granted by the Courts below and the Orders now sought by the plaintiff have been discussed.[96] The issue for the Court is whether, as the plaintiff contends, it should now make an immediate award of equitable compensation against the defendant on a wilful default basis (giving credit for the £4,823,768.51 amount received); or whether the Courts below were right to order the taking of an account by a Master or Judge, with the plaintiff having for now to content itself with the interim payment. This raises three questions: (i) Is the remedy of equitable compensation available in the present case? (ii) If so, what is the proper measure of such compensation? (iii) Can the Court (and should it) make an immediate monetary award on the basis of the materials presently available? H.1 Is equitable compensation available? 120. The applicable principles have been set out.[97] In the present case, the defendant’s breach of duty has clearly caused loss to the trust estate both because he extracted £5,463,508.46 for his own unauthorised purposes; and because of his wilful default in the purchase of the 1,777,700 third tranche shares. 121. As we have seen, the Court approaches the causal connection between the breach and loss with “the full benefit of hindsight” at the time of judgment and is therefore able to take into account the fact that if there had been no wilful default, the 1,777,700 shares would have been acquired; that the plaintiff would have been able to offer the entire parcel to Softbank; and that some 746,634 (42%) shares would have been taken up at the offer price of £13.2005 per share, yielding proceeds of £9,855,942.10. The Court is also able to take account of any available evidence as to the value at which the balance of the hypothetical parcel of 1,777,700 shares could have been realised. 122. It follows that ordering the defendant merely to restore to the trust fund the £5,463,508.46 extracted on 14 October 2003 would not adequately reflect the loss suffered by the trust estate. The appropriate Order is for the defendant to pay equitable compensation on a wilful default basis with a view to placing the trust estate in the position which it would have occupied if he had duly performed his duty of acquiring the third tranche shares on the plaintiff’s behalf. H.2 What is the proper measure of equitable compensation? 123. The exercise of quantifying loss on a wilful default basis necessarily hypothetical. In undertaking that exercise, the Court is assisted by techniques developed by the courts of equity, reflecting the stern view taken of defaulting fiduciaries. Thus, as Lord Millett writing extra-judicially[98] points out, a fiduciary is precluded from setting up a case inconsistent with the obligations of his fiduciary position.[99] His Lordship was dealing with fiduciaries who had taken bribes and gave the example of Fawcett v Whitehouse[100] in which a defendant, negotiating a lease for an intended partnership, received £12,000 as a bribe from the intending lessors. Sir John Leach V-C stated of that defendant: “... he was bound to obtain the best terms possible for the intended partnership ... and all he did obtain will be considered as if he had done his duty and had actually received the £12,000 for the new partnership, as upon every equitable principle he was bound to.” 124. That approach should be adopted in the present case. The defendant was bound as a fiduciary, to use the funds entrusted to him to acquire the third tranche shares as agent for the plaintiff. Having withdrawn £5,463,508.46 on 14 October 2003 allegedly for that purpose and having claimed on 19 January 2004 that it was used to acquire 1,777,700 TSE shares at £3.11 per share for the total cost of £5,546,424.00, he is now precluded from setting up a case inconsistent with his having carried out his obligation. In computing equitable compensation, the Court is entitled to treat him as if he had indeed purchased 1,777,700 shares at a total cost of £5,546,424.00, as he had claimed. 125. This means that the Court notionally treats the transfer of £5,463,508.46 out of the BLP trust account on 14 October 2003 as if it had been authorised and the trust fund as notionally having acquired 1,777,700 TSE shares at £3.11 per share in January 2004. 126. Next, taking account of the subsequent Softbank offer, the Court assumes (as the evidence plainly justifies) that the plaintiff would have put up the whole parcel of 1,777,700 shares for sale to Softbank at the offer price and that 746,634 (42%)[101] of those shares would have been taken up by Softbank, yielding £9,855,942.10 for the trust. The fund’s deprivation of those proceeds constitutes the first element of equitable compensation properly claimable. 127. What realisable value should the Court attribute to the hypothetical balance of 1,031,066 TSE for the purposes of equitable compensation? As we have seen,[102] at the trial, the plaintiff invited Stone J to value those shares at the sum of £11,568,560.00 and to order payment thereof as the amount : “... that should have accrued from the sale of the apparently remaining 1,031,066 TSE shares, even with a 15% discount to the Softbank price ‑ which latter percentage derives from Mr McClellan’s evidence wherein Mr Hall, through his solicitors, had stated that he was negotiating with the registered shareholders of the remaining TSE Trust Shares for them to purchase those shares at a discount of 10 to 15% of the price paid by Softbank Corporation, namely £11.88 or £11.22 per TSE share.”[103] 128. His Lordship declined to make such an order, no doubt influenced, as we seen,[104] by his uncertainty as to “precisely how many TSE shares now actually remain to be reclaimed by the plaintiff”.[105] The Court of Appeal noted that uncertainty, observing that Stone J had made “no specific finding in the Judgment that the 1,777,700 TSE shares were acquired for the benefit of the plaintiff”. Moreover, the Court of Appeal had also ruled that evidence deriving from without prejudice negotiations – which would presumably include the evidence of Mr McClelland (the plaintiff’s solicitor) referred to by Stone J – was inadmissible. 129. Such uncertainty no longer exists as it is now accepted by both parties that no third tranche shares were ever purchased. However, even if Mr McClelland’s evidence were to be relied on, it only relates to negotiations rather than a price achieved on a sale. At the hearing, Mr Barlow was asked what sort of evidence of a realisable price for TSE shares one might expect to have been produced if Stone J had directed an inquiry into that question at the trial. In response, the plaintiff tendered an affidavit made by Mr Barlow’s instructing solicitor, Mr David John Hoare, stating that TSE had been publicly listed under the name “Betfair” on 22 October 2010 and that on the date on which Stone J’s judgment was delivered (25 February 2011), the closing price of the share was £8.84 (with a closing price on 7 October 2013 of £9.71). This information is a matter of public record, available from the London Stock Exchange. On that basis, Mr Barlow invited the Court to assess equitable compensation in relation to the balance of 1,031,066 TSE shares in the sum of £9,114,623.44 (£8.84 x 1,031,066). H.3 Should an immediate award be made? 130. In the light of the abovementioned developments in this Court, I do not consider it necessary or desirable for an overall accounting exercise on the lines ordered by Stone J and confirmed by the Court of Appeal to be undertaken. 131. The exercise is unnecessary because the parties have each put forward their own account of the funds paid into, withdrawn from and repaid to the BLP trust account. The differences between them can now readily be identified and dealt with on principle. 132. Thus, proceeding on the basis that his client was not a fiduciary, but that he had been “overpaid” by Mr Woods and the plaintiff, Mr Wright provided the Court with the following table: Summary of Funds Received and Returned By Axdale Overseas Corporation 133. Mr Wright's schedule therefore shows a deficiency of £4,823,768.51 which, as previously discussed,[106] he submits is a debt which the plaintiff has already repaid. 134. There is no dispute as to the figures shown in the Table for the funds received, funds returned and stamp duty. The plaintiff, however, submits that the following adjustments are required, namely: (a) that the sums for “BLP fees” should be taken out since such fees are undocumented and likely to be attributable at least in part to other services provided by BLP to the defendant; (b) that the sum of £547,715.51 representing interest credited to the BLP trust account as shown in the BLP Ledger, should be treated as part of the trust fund to be accounted for; (c) that instead of taking the sum of £2,154,328.00 as the amount repaid to the fund as a result of the Momentum settlement, the sum of £1,978,903.68 should be used since that reflects the plaintiff’s share of the settlement, leaving out the share of the minority interests; and, (d) that, for the purposes of calculating equitable compensation, the defendant should be credited with having properly applied £5,546,424.00 towards purchase of 1,777,700 shares (and debiting the fund in the like amount). 135. In my view, those adjustments are all justified with the consequence that only a small deficiency in the sum of £37,054.69 remains unaccounted for. Questions about unauthorised extractions and repayments have therefore effectively fallen away, with the focus now being upon the correct award for equitable compensation on the wilful default basis. 136. In the preceding discussion,[107] I have concluded that the Court should hold that the first element of such award should be in the sum of £9,855,942.10. The outstanding question is whether the Court should accept the evidence tendered and award equitable compensation based on the traded price of £8.84 per share, producing a loss in respect of the hypothetical balance of 1,031,066 TSE shares in the sum of £9,114,623.44. 137. Plainly, gaps exist in the evidence concerning use of the £8.84 figure as the realisable price of the hypothetical balance. However, it would plainly now be very difficult to find a better basis for valuing such shares. It is almost 10 years since the defendant reported that he had acquired the third tranche shares and some seven and a half years since the Softbank offer closed. Three years ago the company became a publicly listed company with a new and changing set of shareholders. Attempts to ascertain what some potential buyer would have been prepared to pay for the hypothetical shares at this remove in time, especially given the changed status of the company would almost certainly involve no more than guesswork. Having sent false reports to his principals, the defendant concealed his wrongdoing and lulled them into a false sense of security in respect of the third tranche shares over several years. If his principals had realised that they were being lied to, they would not have left the acquisition and subsequent sale to Softbank, or any future sales of TSE shares in the defendant’s hands. After his wrongdoing came to light, the defendant has consistently been obstructive in making discovery and providing relevant information. He was wholly disbelieved by the trial judge. With such a history, I can well understand why the plaintiff views with dismay the prospect of further proceedings for accounts and inquiries. 138. The evidential difficulties now faced by the Court form part of the consequences flowing from the defendant’s original wrongdoing as a defaulting fiduciary. In such circumstances, the Court adopts a robust approach. This was explained by Handley JA in the New South Wales Court of Appeal in Houghton v Immer,[108] where equitable compensation was awarded in a case involving equitable fraud (but not a breach of fiduciary duty), as follows: “The defendants are entitled to a set-off for the actual cost of the improvements, but there was no evidence of this cost. The accounting issue would normally be referred to a Master but the trial was not conducted on this basis. The defendants would have great difficulty in such an enquiry, since no attempt appears to have been made to keep separate records of the cost of constructing the improvements on the common property. ... At this stage the Court should only remit the matter to a Master as a last resort, if no other course is fairly open. The defendants, having improved common property without lawful authority, and attempted to effect a fraud on the minority, are wrongdoers, and their failure to keep and produce proper accounts of their actual expenditure on the common property has made it difficult to assess the compensation due to the plaintiff. Compare Armory v Delamirie (1722) 1 Stra 505. ... In my judgment the Court should assess the compensation in a robust manner, relying on the presumption against wrongdoers, the onus of proof, and resolving doubtful questions against the party ‘whose actions have made an accurate determination so problematic’. See WP Investments Pty Ltd v Howard Chia Investments Pty Ltd (1990) 24 NSWLR 499 at 508.” 139. Adopting that approach, in my view, the Court ought to make an immediate award, calculating the loss to the trust fund in connection with the hypothetical balance of 1,031,066 shares using the traded price of £8.84 per share and robustly assuming that the listed shares traded are essentially the same as the TSE shares which the defendant should have purchased on behalf of those beneficially entitled. £8.84 is a figure significantly lower than the over-subscribed price of £13.2005 offered by Softbank and also significantly lower than the price of £11.22 proposed but not accepted below. Conclusion 140. I would accordingly allow the plaintiff’s appeal and make an immediate award of equitable compensation in the total sum of £18,970,565.54 (£9,855,942.10 + £9,114,623.44). I would add to that sum, the amount of the deficiency of £37,054.69 in the BLP trust account, taking the total amount of the award to £19,007,620.23. Giving credit for the £4,823,768.51 already paid, I would Order the defendant within 21 days from the date of this judgment to pay to the plaintiff the sum of £14,183,851.72 together with interest at the rate of 2% over the Bank of England base rate from the date of the Writ until the date of this judgment and thereafter at the Hong Kong judgment rate. 141. The interest payable as aforesaid is simple interest. On the footing that equitable compensation is to be awarded on the basis explained above, there is no longer any ground for ordering compound interest. In Westdeutsche Bank v Islington LBC,[109] Lord Browne-Wilkinson explained that compound interest is normally only ordered where the award is in lieu of an account of profits improperly made by the trustee. His Lordship cited Lord Hatherley LC in Burdick v Garrick,[110] who stated: “... the court does not proceed against an accounting party by way of punishing him for making use of the plaintiff's money by directing rests, or payment of compound interest, but proceeds upon this principle, either that he has made, or has put himself into such a position as that he is to be presumed to have made, 5 per cent, or compound interest, as the case may be.” 142. Thus, compound interest may be appropriate where the trustee or fiduciary has misappropriated funds which the Court assumes would have been used by him to earn profits and, instead of ordering an account of those profits, orders him to pay compound interest on the sum extracted. Where the fiduciary is ordered to pay equitable compensation on the basis of gains which the Court finds would have accrued to the trust estate if he had duly performed his fiduciary duty, it would be double-counting and punitive to order the amount of equitable compensation to carry compound interest. 143. In summary, I would make the following Orders, namely:- (a) That the defendant’s appeal be dismissed; (b) That the plaintiff’s appeal be allowed and the Orders of the Judge and the Court of Appeal be set aside and, that in place thereof, that within 21 days from the date of this judgment, the defendant do pay to the plaintiff the sum of £14,183,851.72 together with simple interest thereon at the rate of 2% over the Bank of England base rate from the date of the Writ until the date of this judgment and thereafter at the Hong Kong judgment rate; (c) That by way of Order nisi, the defendant do pay the plaintiff’s costs here and below, certified fit for two counsel throughout; and, (d) That any submissions as to costs should be made in writing and lodged within 14 days of the date of this judgment, in default of such submissions, the Order nisi do stand as absolute without further order. Mr Justice Litton NPJ: The Primary Focus of the Case 144. As the trial judge Stone J observed (§99) the “primary focus” of this case is the third tranche of 1,777,700 TSE shares: shares which the defendant claimed to have bought for Mr Woods for £5,546,424 towards the end of 2003, using money remitted by Mr Woods for that purpose. The Facts 145. From the very beginning, the defendant held the money on Mr Wood’s behalf and was accountable to him for its use. The only purpose for which the money was authorized to be used was the purchase of the “third tranche” of TSE shares. 146. The defendant wove such a web of obscurity round the use of the money that the trial judge had great difficulty to separate fact from fiction. 147. The defendant at first said that the shares which he had bought for Mr Woods were registered in the names of Samos Investments Ltd and Caledonian Heritable Investments Ltd, but held in trust for him through a “Hall of Fame Trust” registered in the Channel Islands which the defendant had allegedly established for the purpose, with a company called Hoflim Limited interposed as nominee for Samos and Caledonian. He persisted in this elaborate lie for some time, and resisted all attempts by Mr Woods for clarification. At trial, many years later (September 2010), he changed his story and asserted in the witness box that Samos and Caledonian were not prepared after all to “complete the transaction and that, as a consequence, no beneficial ownership of the tranche of 1,777,700 shares was acquired for the plaintiff” (§110 of Stone J’s judgment). This led the judge to adopt Mr Barlow SC’s trenchant remark that the defendant had woven such a tissue of lies that he “could not keep track of his own lies”. 148. The evidence adduced at trial established this inescapable fact: the defendant had misappropriated large sums belonging to Mr Woods, held in the account of the London solicitors: Berwin Leighton Paisner (BLP). At §99 the judge said that, given the “overwhelming merit of the plaintiff’s case”, he was surprised that the parties had not settled the issues arising out of the third tranche in “like manner” as the settlement of the dispute stemming from the “second tranche”. 149. By late 2005 Mr Woods decided that he had to “get to grips” with Mr Hall concerning the third tranche (§46 Stone J’s judgment). Things came to a head in early 2006 when a Japanese corporation called Softbank made a general offer to the TSE shareholders to purchase their shares. The defendant claimed that, in consequence of this, 414,700 shares were sold, yielding £5,474,247.35, for which Stone J ordered interim payment (reduced by the Court of Appeal to £4,823,768.51 for reasons not relevant to this judgment). 150. It seems also to have been an established fact that Softbank’s offer had in fact been scaled back to 42% of TSE’s total shareholdings, at £13.2005 per share. Hence, if the defendant had acted properly, a total of 746,634 would have been sold, yielding £9,855,942.10, leaving a balance of 1,031,066 shares. The Substantial Issue 151. It is patently obvious, on the judge’s findings, affirmed by the Court of Appeal, that the defendant had committed gross breaches of trust. He had misappropriated funds to his own use: funds entrusted to him for a specific purpose. The only substantial issue on appeal is the appropriate remedy. Equitable Relief 152. In its pleaded case, the plaintiff claimed a sum of £21,424,503 in equitable compensation comprising the following: (a) the £9,855,942 referred to in para 150 above, and (b) a further sum of £11,568,560 which should have accrued from the sale of the remaining 1,031,066 shares. This sum was arrived at in this way. Mr McClellan, a solicitor acting for the plaintiff, was told by the defendant that he had been negotiating with the registered shareholders of TSE for them to purchase those remaining shares at a discount of 10 to 15% of the price paid by Softbank, namely £11.88 or £11.22 per share. The figure of £11,568,560 was computed from the lesser sum. Restitution 153. This approach to equitable relief treats the defendant as if he had carried out his fiduciary duties and had purchased the 1,777,700 shares at £3.11 per share as he claimed all along he had, and to compute the plaintiff’s loss on that basis. 154. The juridical foundation for this approach to equitable compensation is what Lord Haldane LC in Nocton v Ashburton [1914] AC 932 at 946 called “the old bill in Chancery to enforce compensation for breach of fiduciary obligation.” The essence of the remedy is restitution: To put the trust estate back as far as possible as if the breach had not occurred. This is explained by James and Baggallay LJJ in Ex parte Adamson [1878] 8 Ch D 807 at 819 in this way: “The Court of Chancery never entertained a suit for damages occasioned by fraudulent conduct or for breach of trust. The suit was always for an equitable debt or liability in the nature of debt. It was a suit for the restitution of the actual money or thing, or value of the thing, of which the cheated party had been cheated” (emphasis added) 155. Stone J in effect went some way down this route when he gave interim judgment for £5,474,247.35 (see para 149 above) being the value of the 414,700 shares supposedly sold to Softbank. This was to take the defendant’s assertion at face value: that he had sold those 414,700 shares out of the “third tranche” which he had previously bought, yielding that sum which the defendant had never paid over to the plaintiff. 156. The next step in the computation is more problematic, though still based upon facts as found by the judge. The judge accepted the evidence that there was a general offer by Softbank to the TSE shareholders in March 2006, and that the offer had been scaled back to 42% of the total shareholdings, at £13.2005 per share. As to this the judge said: “… if the sale of the entire parcel of 1,777,700 shares had been attempted (which it appears it was not), a total of 746,634 of such shares would have been realized at the offer price, thereby yielding proceeds of £9,855,942.10.” (§50) Nothing in the evidence suggests that the plaintiff would not have authorized the placing of the entire third tranche to Softbank at the offer price. The sum representing the value of the shares would then not have been the figure in para 155 above, but the higher figure of £9,855,942.10, by way of equitable compensation. 157. What remains is the balance of 1,031,066 which would have remained in the defendant’s hands. 158. How is the value of this balance of 1,031,066 shares to be computed: shares of which the cheated party had been cheated, adopting the language in Ex parte Adamson (supra)? 159. As to this, there is no easy answer. The figure of £11,568,560 appearing in the plaintiff’s statement of claim is based upon nothing more than surmise: what the defendant had indicated that the other shareholders might have been willing to pay (as opposed to what Softbank had actually paid for TSE shares in March 2006). But justice demands that the plaintiff be compensated nevertheless, for he had plainly suffered considerable loss. I would accordingly adopt this approach: The court aims to do practical justice, not perfect justice. In computing equitable compensation, the broad circumstances of the case, and its history, must be taken into account. The plaintiff embarked on its journey to seek justice in our courts back in 2006. From day one the defendant was an accounting party. Yet he baulked the plaintiff at every turn. In the words of the judge he “bobbed and weaved”, “evaded and dissembled” (§113); he was obstructive in making discovery and deceptive in giving information; contempt proceedings to bring him to account had ended in failure. The events giving rise to this action go back ten years. No inquiry by a Master, sometime in the future, can hope to arrive at a fair figure, better than what this Court can achieve today. Such an inquiry will doubtless face more obfuscation and delay. To do justice, these proceedings must finally be brought to an end. Now. Evidence of Value 160. Before us, evidence was tendered that at the date of Stone J’s judgment, TSE’s shares, then publicly listed under the name of Betfair, was traded at about £8.84 per share. This is a matter of public record. If this might properly be regarded as the value to be placed on the remaining 1,031,066 shares, that would yield a figure of £9,114,623.44 by way of equitable compensation. 161. Relevance not being an issue, what weight might properly be given to this piece of evidence? Plainly its probative value is not ideal: It is based upon the assumption that Betfair, publicly listed shortly after the trial ended but before Stone J gave judgment (in February 2011), was in substance the same company, as regards assets and liabilities, as TSE before the public listing. But, realistically, can better evidence as to value of the remaining 1,031,066 shares be obtained? Assume that the matter were remitted to a Master for further inquiry, how might it progress? Betfair is not a party to these proceedings. Would Betfair, now a publicly listed company in England, be willing to disclose its historical records to the plaintiff’s solicitors, when it plainly has no obligation to do so? I agree with Ribeiro PJ (whose draft judgment I had the privilege of reading) that the Court should adopt a robust approach. Conclusion 162. The evidence tendered to this Court is the best evidence of value that can be obtained, and at the relevant time. I would accordingly hold that equitable compensation in relation to the remaining 1,031,066 shares be computed in the sum of £9,114,623.44. This makes it a global sum of £18,970,565.54. 163. Further fine-tuning to the award is needed, as explained in paras 140-142 of Ribeiro PJ’s judgment. The sum of £37,054.69 must be added to the award, taking the total to £19,007,620.23. 164. I concur in the orders proposed by Ribeiro PJ. Mr Justice Bokhary NPJ: 165. This is clearly a case in which justice is to be achieved by making an immediate award of compensation rather than by ordering any account or inquiry. Moreover, the account ordered at first instance and upheld on intermediate appeal is unworkable. On the facts and figures found by the trial judge, an appropriate award can be made in the sum at which Mr Justice Ribeiro PJ has arrived. For the reasons which he and Lord Millett NPJ give, I would allow the appeal in the terms which he proposes. Lord Millett NPJ: 166. There are traces in the arguments both here and below of the proposition that account and equitable compensation are alternative and inconsistent remedies and that a plaintiff must elect between them. It is only right to say at once that this is not the ground on which either court below ordered an account when the plaintiff asked for equitable compensation; but since the proposition is advanced from time to time it is appropriate to explain why it is mistaken. 167. It is often said that the primary remedy for breach of trust or fiduciary duty is an order for an account, but this is an abbreviated and potentially misleading statement of the true position. In the first place an account is not a remedy for wrong. Trustees and most fiduciaries are accounting parties, and their beneficiaries or principals do not have to prove that there has been a breach of trust or fiduciary duty in order to obtain an order for account. Once the trust or fiduciary relationship is established or conceded the beneficiary or principal is entitled to an account as of right. Although like all equitable remedies an order for an account is discretionary, in making the order the court is not granting a remedy for wrong but enforcing performance of an obligation. 168. In the second place an order for an account does not in itself provide the plaintiff with a remedy; it is merely the first step in a process which enables him to identify and quantify any deficit in the trust fund and seek the appropriate means by which it may be made good. Once the plaintiff has been provided with an account he can falsify and surcharge it. If the account discloses an unauthorised disbursement the plaintiff may falsify it, that is to say ask for the disbursement to be disallowed. This will produce a deficit which the defendant must make good, either in specie or in money. Where the defendant is ordered to make good the deficit by the payment of money, the award is sometimes described as the payment of equitable compensation; but it is not compensation for loss but restitutionary or restorative. The amount of the award is measured by the objective value of the property lost determined at the date when the account is taken and with the full benefit of hindsight. 169. But the plaintiff is not bound to ask for the disbursement to be disallowed. He is entitled to ask for an inquiry to discover what the defendant did with the trust money which he misappropriated and whether he dissipated it or invested it, and if he invested it whether he did so at a profit or a loss. If he dissipated it or invested it at a loss, the plaintiff will naturally have the disbursement disallowed and disclaim any interest in the property in which it was invested by treating it as bought with the defendant’s own money. If, however, the defendant invested the money at a profit, the plaintiff is not bound to ask for the disbursement to be disallowed. He can treat it as an authorised disbursement, treat the property in which it has been invested as acquired with trust money, and follow or trace the property and demand that it or its traceable proceeds be restored to the trust in specie. 170. If on the other hand the account is shown to be defective because it does not include property which the defendant in breach of his duty failed to obtain for the benefit of the trust, the plaintiff can surcharge the account by asking for it to be taken on the basis of “wilful default”, that is to say on the basis that the property should be treated as if the defendant had performed his duty and obtained it for the benefit of the trust. Since ex hypothesi the property has not been acquired, the defendant will be ordered to make good the deficiency by the payment of money, and in this case the payment of “equitable compensation” is akin to the payment of damages as compensation for loss. 171. In an appropriate case the defendant will be charged, not merely with the value of the property at the date when it ought to have been acquired or at the date when the account is taken, but at its highest intermediate value. This is on the footing either that the defendant was a trustee with power to sell the property or that he was a fiduciary who ought to have kept his principal informed and sought his instructions. 172. At every stage the plaintiff can elect whether or not to seek a further account or inquiry. The amount of any unauthorised disbursement is often established by evidence at the trial, so that the plaintiff does not need an account but can ask for an award of the appropriate amount of compensation. Or he may be content with a monetary award rather than attempt to follow or trace the money, in which case he will not ask for an inquiry as to what has become of the trust property. In short, he may elect not to call for an account or further inquiry if it is unnecessary or unlikely to be fruitful, though the court will always have the last word. 173. In the present case the trial judge ordered accounts and enquiries because he considered that the evidence was insufficient to enable him to quantify the amount of compensation to which the plaintiff was entitled to be determined with any degree of accuracy, and his decision was affirmed by the Court of Appeal. This was an exercise of the court’s discretion and as such is one which should not lightly be overturned. But the question is a procedural one and this court is in as a good a position as the trial judge to reach a decision. 174. I agree with Ribeiro PJ and for the reasons given by him that there was more evidence before the court than the courts below have given credit for, and that further accounts and enquiries are unlikely to be fruitful. After this time the number and cost of shares which the defendant ought have acquired and falsely said that he had acquired is little more than informed guesswork and the quality of the answer is unlikely to be improved by further inquiry. Where the absence of evidence is the consequence of the fiduciary’s own breach of duty the court is not without resource, for it can have resort to three principles. First, it may be able to take the fiduciary at his own word and use his falsehoods to establish the facts as if they were true even though they are known to be untrue. Secondly the court is entitled to make every assumption against the party whose conduct has deprived it of necessary evidence. And thirdly the court is entitled to be robust and do rough and ready justice without having to justify the amount of its award with any degree of precision. 175. In my judgment the failure of the courts below to consider whether further accounts and enquiries would be productive is in itself sufficient to enable this court to intervene and substitute its own order. I also agree that the court has sufficient material to justify the orders proposed. Mr Justice Chan PJ: 176. The Court unanimously dismisses the defendant’s appeal, allows the plaintiff’s cross appeal and makes the orders set out in paragraph 143 of Mr Justice Ribeiro’s judgment. (Kemal Bokhary)				Non-Permanent Judge (Lord Millett)				Non-Permanent Judge Mr Barrie Barlow SC and Mr Chan Pat Lun, instructed by Haldanes for the Plaintiff Mr Colin Wright, instructed by Kennedys for the Defendant [1] HCA 2533/2006 (25 February 2011). [2] CACV 54/2011, Tang VP, Kwan and Fok JJA (6 February 2012). [3] CACV 54/2011 (23 and 28 May 2012). [4] Whose shareholders were the same as those initially holding shares in Momentum Limited as indicated below. [5] The Court of Appeal (§20) records that the plaintiff alleged that the defendant had bought 120,000 first tranche shares (prior to the 10:1 split) for £17 per share but had charged Growthline £29.20 per share, making a secret profit of some £1,464,000.00. [6] Judgment §170. [7] Court of Appeal §§72, 88. [8] Judgment §115. [9] Judgment §§36-42. [10] Judgment §§49, 55, 71, 78-79, 103. [11] Stone J §§64 and 65. [12] Judgment §110. [13] Judgment §111. [14] Judgment §101. [15] Judgment §107. [16] Judgment §113. [17] Court of Appeal §81. [18] [2000] WLR 2436 at 2444. [19] [2009] 1 AC 990. [20] Judgment §§123-124 and 127. [21] Judgment §106. [22] Judgment §150. [23] Judgment §151. [24] Court of Appeal §57. [25] Court of Appeal §65. [26] Ibid. [27] Judgment §159. [28] Judgment §156. [29] In Section B. [30] Judgment §167. [31] Erroneously referred to as “the plaintiff”. [32] Judgment §166(d). [33] Discussed in Section B above. [34] In Section B. [35] In Section C above. [36] Court of Appeal §95. [37] Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 per Mason J at 96; Breen v Williams (1996) 186 CLR 71 per Dawson and Toohey JJ at 92, per Gaudron and McHugh JJ at 107. [38] (1996) 186 CLR 71 at 82. [39] [1998] 1 Ch 1 at 17. [40] In Permanent Building Society v Wheeler (1994) 14 ACSR 109 at 157. [41] Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 98. [42] Maruha Corporation and Muruha (NZ) Ltd v Amaltal Corporation Ltd [2007] NZSC 40 at §21. [43] [1999] 1 NZLR 664 at 686. [44] Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 99. [45] (1996) 186 CLR 71 at 137. Sometimes it is put in terms of fiduciary duties arising where a person “acts in a representative character in the exercise of his responsibility”, per Dawson and Toohey JJ at 93. [46] Norberg v Wynrib [1992] 2 SCR 226 at 272. [47] Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 102. [48] Breen v Williams (1996) 186 CLR 71 at 82. [49] As recognized in Daly v Sydney Stock Exchange Ltd (1986) 160 CLR 371 at 377 per Gibbs CJ. [50] [2009] 23 SCR 247 at §67. [51] Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 96-97. [52] (1996) 186 CLR 71. [53] Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 at 581; Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 97. [54] [1991] 3 SCR 534 at 543, §61. [55] Ibid. [56] Per Millett LJ in Bristol and West Building Society v Mothew [1998] 1 Ch 1 at 18. [57] BNZ v NZ Guardian Trust Co Ltd [1999] 1 NZLR 664 at 687. [58] Target Holdings Ltd v Redferns [1996] 1 AC 421 at 434 per Lord Browne-Wilkinson. [59] Ibid. [60] BNZ v NZ Guardian Trust Co Ltd [1999] 1 NZLR 664 at 687. [61] Canson Enterprises Ltd v Boughton & Co [1991] 3 SCR 534 at 552-553. [62] At 554. [63] BNZ v NZ Guardian Trust Co Ltd [1999] 1 NZLR 664 at 687. [64] Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 108. [65] Ibid at 109. [66] [1914] AC 932 at 952. [67] At 956-957. [68] Breen v Williams (1996) 186 CLR 71 at 135-136. [69] Canson Enterprises Ltd v Boughton & Co [1991] 3 SCR 534 at 547 per McLachlin J. [70] Target Holdings v Redferns [1996] 1 AC 421 at 434. [71] Nant-y-glo and Blaina Ironworks Co Ltd v Grave [1878] 12 Ch D 738. [72] Snell’s Equity (32nd Ed, Sweet & Maxwell, 2010) §30-012. [73] In Section F.4 above. [74] Canson Enterprises Ltd v Boughton & Co [1991] 3 SCR 534 at 556. [75] Who had endorsed the cited passage in Guerin v R [1984] 2 SCR 335. [76] (1966), 84 WN (Pt 1) (NSW) 399. [77] Ian E Davidson, "The Equitable Remedy of Compensation" (1982), 3 Melbourne Univ Law Rev 349. [78] [1999] 1 NZLR 664 at 687. [79] [2007] NZSC 40. [80] At §29 per Blanchard J. [81] Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 109. [82] Ibid, Mason J citing a quotation from Page Wood V-C in Frith v Cartland (1865) 2 H & M 417 at 418 ; 71 ER 525 at 526. [83] Ibid. [84] Canson Enterprises Ltd v Boughton & Co [1991] 3 SCR 534 at 556. [85] Bowstead and Reynolds on Agency (19th Ed, Sweet & Maxwell, 2010) §6-096. [86] Section B. [87] (2011) 14 HKCFAR 798 at §37 and §58, applying Sky Heart Ltd v Lee Hysan Estate Co Ltd (1997-1998) 1 HKCFAR 318. [88] Set out in Sections D.1 and D.2. [89] [2002] AC 164 at §71. [90] Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 96-97. [91] In Section F.2. [92] See Section A.2 above. [93] As indicated above, the question whether the defendant’s solicitors’ statement made in the course of without prejudice negotiations can be treated as an admission on the defendant’s behalf is now no longer a live issue since it is accepted that the facts purportedly admitted are not true. [94] Sections D.1 and D.2 above. [95] Stone J §134-138 and Court of Appeal §73. [96] In Section E above. [97] In Section F.5. [98] “Bribes and secret commissions again” [2012] CLJ 583 at 591. [99] Citing Lord Greene MR in Re Diplock [1948] Ch 465 at 525. [100] (1829) 1 R & M 132 at 149. [101] It is not known whether the offer of 1,777,700 shares would have led to a smaller pari passu take up rate by Softbank. As the case has throughout been argued on the footing that the 42% figure would have applied, it is adopted in this analysis. [102] Section E.1 above. [103] Judgment §159. [104] Sections B and E.1. [105] Judgment §156. [106] Section G.1 above. [107] Section H.2 above. [108] [1997] 44 NSWLR 46. The title of the case cited should apparently be LPJ Investments Pty Ltd v Howard Chia Investments Pty Ltd [No 2] (1990) 74 LGRA 290. [109] [1996] AC 669 at 701. [110] (1869-70) LR 5 Ch App 233 at 241.