Motortrak Ltd v FCA Australia Pty Ltd

A civil bribe is a secret commission paid to an agent without disclosure to the principal. Dishonesty, corrupt motive or proof that the payment influenced the agent is unnecessary. The burden remains on the party alleging bribery.

Affirmation is a question of fact and requires express words or unequivocal conduct with knowledge of the material facts and the right to rescind. Commercial reasons for delay may not prevent conduct amounting to affirmation.

Contractual charges payable quarterly in advance become due at the start of the relevant quarter. A mutual exclusion of loss of profit is construed according to its language, context and commercial consequences, and may exclude such loss caused by repudiation.

Motortrak claimed unpaid invoices and damages under agreements requiring FCA Australia Pty Ltd to purchase web-based marketing services. FCA alleged that payments made by Motortrak to a company associated with its managing director, Mr Campbell, were bribes procured to secure the agreement.

The court considered whether the payments were made under a genuine licence termination agreement, whether FCA had affirmed the agreement after learning of the payments, whether invoices for the quarter beginning 1 July 2016 were payable, and whether the agreement excluded Motortrak’s loss-of-profit claim. FCA also claimed restitution of the bribes and damages for entering into an overpriced transaction.

1. Bribery. The agreed civil-law test was applied: a bribe is a secret commission paid to the agent of the contracting party, with knowledge of the agency, without disclosure to the principal. Dishonesty, corrupt motive and actual influence need not be proved. FCA bore the burden of proof. The Licence Termination Agreement was genuine, but the payments made to ACN were not made pursuant to it. The invoices, payment timing, records, concealment of Mr Campbell’s continuing connection and inadequate procurement process established bribery on the balance of probabilities.
2. Affirmation. Affirmation required express words or unequivocal conduct with knowledge of the facts conferring the right to rescind. FCA knew by October 2015 of the payments and believed them to be bribes. Its continued operation of the agreement and encouragement of Motortrak to provide services during 2016 amounted to affirmation. FCA’s commercial need to secure replacement services did not alter that conclusion. FCA’s notice on 30 June 2016 therefore constituted repudiatory breach.
3. Invoices and exclusion clause. Charges payable quarterly in advance became due on the first day of the relevant quarter. The July–September 2016 invoices were not payable because the agreement had ended on 30 June 2016. The mutual exclusion in clause 9.5.2 was clear in context and excluded loss of profit arising from FCA’s failure to perform. Motortrak could claim wasted costs, but the exclusion did not deprive the agreement of all contractual force.
4. FCA’s remedies. FCA could recover the bribe as money had and received, notwithstanding affirmation, or elect to claim damages for actual loss, but could not recover both. FCA failed to prove that it would have entered into a different agreement or purchased a narrower service. It did prove that the same services would have been purchased at lower prices, calculated by reference to the corrected US-dollar equivalents.

First-instance judgment in the High Court (Commercial Court). No appellate history is stated in the judgment.