The Motoring Organisation Limited v Spectrum Insurance Services Limited

An oral commercial agreement is determined objectively from the parties’ words and conduct, viewed in context. Contemporary documents and subsequent conduct may be especially important, but the absence of written confirmation is not decisive where the parties’ established dealings explain it.

A fiduciary relationship may arise in a commercial setting where one party undertakes to act for another in relation to a specific opportunity, and the other may reasonably expect it to put the first party’s interests ahead of its own. Confidential information may consist of a valuable compilation of information, including information drawn from public sources. Where a contract governs the parties’ rights, unjust enrichment is unavailable as an alternative route to recovery.

The claimant warranty and after-sales product provider alleged that the defendant insurance provider had wrongfully exploited two business opportunities: a warranty opportunity involving SsangYong vehicles and business from certain car dealerships requiring regulated GAP insurance.

The claims alleged breach of oral contract, fiduciary duty, confidence and unjust enrichment. The trial was confined to liability. The central issues were whether agreements had been made concerning the opportunities, whether the circumstances created fiduciary or confidentiality obligations, and whether any enrichment was unjust.

1. SsangYong Opportunity. The court found that the parties had made an oral agreement in September 2019. Spectrum agreed to seek underwriting for TMO, while the opportunity remained TMO’s unless and until the proposed merger completed. Spectrum could recover reasonable placement or administration costs, but could not take the opportunity for its own benefit to TMO’s exclusion. The agreement was established objectively by the credible evidence, the commercial context and Spectrum’s own documents. The lack of a written record was given little weight because the parties commonly conducted important discussions orally.
2. The agreement was contractual. Spectrum’s exploitation of the opportunity for its own benefit therefore constituted breach of contract. The agreement also created a fiduciary relationship limited to the SsangYong Opportunity. Spectrum had undertaken to act for TMO in placing the business, and TMO was entitled to expect Spectrum to act on its side and not profit personally at TMO’s expense. Spectrum breached those duties.
3. The information supplied concerning the opportunity had the necessary quality of confidence. It included commercially valuable information about pricing, expected demand, vehicle volumes and the composition of the proposed business. It was imparted in a business context involving a common commercial purpose, so Spectrum knew or ought to have known that it was confidential. Spectrum’s use of it for its own account was unauthorised and breached confidence.
4. The unjust enrichment claim concerning the SsangYong Opportunity was unnecessary and would fail because the contract governed the parties’ financial consequences.
5. 2020 customers. No oral agreement of the alleged kind was established. By January 2020 the proposed merger faced substantial obstacles, TMO had lost its Appointed Representative status, and Acasta would not deal with TMO. The customers were transferred so Spectrum could provide GAP insurance for its own account, enabling TMO to retain non-regulated business. Spectrum therefore owed no fiduciary duty and did not breach confidence. The unjust enrichment claim failed because there was no unjust factor and the enrichment was not at TMO’s expense.
6. TMO succeeded on the contract, fiduciary duty and confidence claims concerning the SsangYong Opportunity. All claims concerning the 2020 customers failed. Quantum and remedy were left for subsequent directions.