Eze v Conway & Anor

The law of bribes and secret commissions applies only where the recipient owes relevant fiduciary duties arising from a relationship of trust and confidence. The payment or promise must place the recipient in a real position of potential conflict between personal interest and duty.

The inquiry is fact-sensitive and directed to the recipient’s actual duties in the particular transaction. Describing someone as an agent, or showing that the person could influence events, is insufficient. A person may owe fiduciary duties for some activities but not others. A person who merely facilitates a transaction under specific instructions may therefore fall outside the doctrine.

The appellant agreed to purchase the respondents’ property for £5 million. Before introducing the opportunity to him, a property intermediary had obtained the respondents’ agreement in principle to pay a £75,000 introduction fee. The appellant later agreed separately to pay the intermediary £150,000. The respondents’ promised payment was not disclosed to the appellant.

The appellant failed to complete, and the respondents obtained judgment for damages. The Deputy High Court Judge held in [2018] EWHC 29 (Ch) that the intermediary’s relationship with the appellant did not engage the law of bribes and secret commissions. The central issue on appeal was whether the intermediary owed relevant fiduciary duties and occupied a real position of potential conflict.

1. Appeal dismissed unanimously. The law of bribes and secret commissions is engaged only where the recipient of the benefit or promised benefit owes relevant fiduciary duties. There must be a relationship of trust and confidence concerning the particular duties performed, and the payment must create a real, rather than fanciful, position of potential conflict between interest and duty.
2. The label “agent” is not determinative. Not every agent owes fiduciary duties, and a person may owe such duties in respect of some activities but not others. Equally, the necessary relationship may arise without a conventional agency. The court must examine the recipient’s actual role, duties and authority in the particular transaction.
3. The trial judge had legitimate and proper grounds for finding that the intermediary was initially acting on his own behalf by presenting a pre-packaged opportunity. He subsequently facilitated communications and progress under the supervision of the appellant’s trusted adviser. When authorised to communicate with the solicitors, he was implementing the appellant’s express instructions rather than exercising independent authority over the transaction. His isolated decision concerning use of the deposit did not make the trial judge’s overall evaluation wrong.
4. The relevant relationship was the actual relationship between the appellant and the intermediary. The respondents’ understanding of the intermediary’s role, his representations to them, and his possible ability to derail the transaction could not themselves create fiduciary obligations to the appellant.
5. As no relevant fiduciary relationship or real potential conflict was established, the law of bribes and secret commissions did not apply. It was therefore unnecessary to decide whether the promise was a bribe or secret commission, or whether the purchase contract would have been void, voidable or unenforceable.

1. Court of Appeal (Civil Division): The appeal was dismissed unanimously. The court upheld the conclusion that the intermediary’s relationship with the purchaser did not engage the law of bribes and secret commissions: [2019] EWCA Civ 88.
2. High Court, Chancery Division: His Honour Judge Keyser QC gave judgment for the vendors for £1,041,389. He held that the purchase contract remained enforceable because the intermediary did not owe the purchaser relevant fiduciary duties: [2018] EWHC 29 (Ch).