Expert Tooling and Automation Limited v Engie Power Limited

An agent’s fiduciary duty depends on its scope in the circumstances. Disclosure that commission will be received may negate secrecy without necessarily requiring disclosure of its amount or funding. Scope depends on matters including the principal’s sophistication and vulnerability, the transaction, the reason for engaging the agent, the commission’s nature and its ascertainability. Informed consent requires sufficient disclosure of the material circumstances and the agent’s interest. Accessory liability for breach of fiduciary duty requires dishonesty. Inducing breach of contract requires an intention to procure the breach. On the facts, the commission was half-secret but disclosure of its amount and funding was outside the fiduciary duty’s scope; alternatively, the claimant gave informed consent. The defendant was neither dishonest nor shown to have intended a contractual breach.

The claimant, a manufacturing company, used Utilitywise plc as an energy broker to enter five electricity supply contracts with the defendant. The unit prices included commissions payable by the defendant to Utilitywise. The claimant knew commission would be paid but did not know its amount or that it was funded through the unit price.

The claimant sought equitable compensation and restitution from the defendant, alleging that Utilitywise had breached fiduciary duties and implied contractual terms, and that the defendant had acted as an accessory or induced breach. Issues also arose concerning limitation and quantum. The central questions were whether the claim relating to the first contract was statute-barred, whether Utilitywise owed fiduciary duties and breached them, and whether the defendant was liable for the alleged breaches.

1. Limitation. The claim concerning the contract dated 8 February 2016 was statute-barred. The equitable claims corresponded with legal remedies, so the six-year periods in sections 2 and 5 of the Limitation Act 1980 applied by analogy under section 36. Section 32(1)(b) did not postpone time. The claimant knew that commission was payable and could have discovered its amount and funding by asking. There was no evidence of an intention to conceal relevant facts.
2. Agency and fiduciary status. Utilitywise was the claimant’s agent. It had authority, under letters of authority, to affect the claimant’s legal relations by entering supply contracts. That was a paradigm agency importing fiduciary duties. Contractual wording seeking to negate agency could not prevail over the substance of the relationship.
3. Scope of duty. The commission arrangement created a conflict of interest. Disclosure of the fact of commission was within the fiduciary duty. The case was one of half-secret commission because the claimant knew commission was payable but not its amount. Whether disclosure of the amount or funding was required depended on the circumstances, including sophistication, vulnerability, the nature of the transaction, the reason for engaging the broker, bargaining inequality, and the nature and ascertainability of the commission. Applying Medsted Associates Ltd v Cannaccord Genuity Wealth (International) Ltd (2019) EWCA Civ 83, disclosure of the amount and funding was outside the scope of the duty here.
4. Informed consent. Alternatively, the defendant established sufficient disclosure and informed consent. The claimant was a substantial, commercially experienced business; its relevant managers were responsible for energy procurement; commission was disclosed; the contracts and industry material indicated that commission could be included in the unit price; and the claimant was invited to ask questions. Trade usage also supported the conclusion.
5. Accessory liability. If Utilitywise had breached fiduciary duty, the defendant would still not be liable. Under Twinsectra Ltd v Yardley (2002) UKHL 12, dishonesty is required for accessory liability. The evidence did not establish dishonesty.
6. Inducement. The claim for inducing breach of implied contractual terms also failed. OBG Ltd v Allan 2007 (UKHL) 21 requires an intention to procure or persuade the breach. That intention was neither pleaded nor proved. The claim was dismissed.