Rukhadze and others v Recovery Partners: The “No-Profit” Rule Revisited and Reinforced
Executive summary In March 2025, the Supreme Court in Rukhadze and others v Recovery Partners GP Ltd [2025] UKSC 10 unanimously held that (1) a “but-for” causation test is inappropriate for an account of profits, (2) courts are not to engage in speculative counterfactual exercises about what might or might not have occurred absent the breach and (3) The “equitable allowance” consideration remains the right flexible mechanism to mitigate any excessive harshness of an account for profits. The Supreme Court upheld the existing principle established in Boardman v Phipps [1967] 2 AC 46 and Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134 : that fiduciary liability for unauthorised profit is strict—even when the fiduciary acted honestly or no harm was caused. This aligns with the prophylactic rationale of fiduciary duties (Conaglen)- aiming to deter fiduciaries from breaking their duty of “single-minded loyalty” to their principals. Key facts and issues The Appellants h...
