{{Short description|English legal terminology}} In English law, a '''secret profit''' is a profit made by an employee who uses his employer's premises and business facilities in order to engage in unauthorised trade on his own behalf. A common example is a bar manager who purchases beer from a brewery in his own right and sells it in the bar in competition with, or in preference to, that of his employer. The profit made thereby is a secret profit.<ref name="lister">''Lister v Stubbs'' (1890) 45 Ch D 1, CA</ref><ref name="ag">''Attorney-General's Reference (No 1 of 1985)'' [1986] QB 491, CA</ref><ref name="lc">Law Commission (2002) 3.39-3.40, 4.40-4.45</ref>
Where the employee deceived a customer before 15 January 2007 he could be prosecuted for obtaining property by deception, the property being the customer's money and the deception that he was selling his employer's produce.<ref>''R v Rashid'' (1977) 64 Cr App Rep 201, CA</ref> Such offences were predicated on the presumption that a customer would not purchase illicit goods were he aware of their true provenance.<ref>''R v Doukas'' [1978] 1 All ER 1061, CA</ref> The offence of obtaining property by deception has since been repealed and is now replaced by the offence of fraud by false representation.<ref name="lc2">Law Commission (2002)</ref>
The employee is a constructive trustee of the profit for the employer and the employer has proprietary interest in the profit. Hence, it is theft from the employer and the profit is not merely a civil debt owed by the employee to the employer,<ref name="ag"/> according to the case of FHR European Ventures LLP v Cedar Capital Partners LLC [2014] UKSC 45. Where more than one person is involved there could be a conspiracy to defraud<ref>''R v Cooke'' [1986] 1 AC 909</ref> and, since the coming into force of the Fraud Act 2006, the employee could be guilty of fraud by abuse of position.<ref>Fraud Act 2006, [http://www.opsi.gov.uk/acts/acts2006/ukpga_20060035_en_1#pb1-l1g4 s.4]</ref>
==References== {{reflist}}
==Bibliography== *J. C. S. (1986) "Theft: whether employee received property on account of his employer", ''Criminal Law Review'', 476-379 *Law Commission (2002) ''[https://web.archive.org/web/20081203002322/http://www.lawcom.gov.uk/docs/lc276.pdf Fraud]'', (Law Com No 276) *Martin, J. E. (1987) "Constructive trusts of the beer money", ''Conveyancer and Property Lawyer'', 209-211
Category:Criminal law of the United Kingdom Category:Fraud Category:Equity (law) Category:Common law Category:English legal terminology