Hopcraft and another v Close Brothers Limited; Johnson v FirstRand Bank Limited (London Branch) t/a MotoNovo Finance; Wrench v FirstRand Bank Limited (London Branch) t/a MotoNovo Finance

The Supreme Court held that in the ordinary three-cornered motor finance transaction the motor dealer, acting to secure a finance package so that a sale can complete, is not as a matter of law subject to a fiduciary obligation of single-minded loyalty to the customer. Because the common law tort of bribery presupposes a conflict with a fiduciary duty, liability in bribery did not arise on the facts of the four transactions considered. The court emphasised that equitable accessory liability remains limited to dishonest assistance in a breach of fiduciary duty and that full, informed disclosure by the recipient is required to avoid equitable liability. The court also rejected the narrower rule in Hurstanger that mere disclosure that a commission "may" be paid suffices to defeat common-law bribery remedies.

Separately, the court allowed Mr Johnson’s claim under section 140A of the Consumer Credit Act 1974: the lender-debtor relationship was unfair because of the unusually large undisclosed commission, the non-disclosure of a commercial tie between dealer and lender, and the manner of concealment; the appropriate remedy was repayment of the commission with interest.

This appeal concerned widely used hire-purchase motor finance transactions in which finance lenders paid commissions to dealers that were not disclosed, or only partly disclosed, to customers. The claimants sought remedies on several grounds: that commissions were bribes actionable at common law, that dealers had received unauthorised profits in breach of fiduciary duties (with accessory liability for lenders), and in one case that the credit agreement gave rise to an unfair relationship under section 140A of the Consumer Credit Act 1974.

• Procedural history: The cases came from County Court trials, proceeded to the Court of Appeal ([2024] EWCA Civ 1282), which allowed the claimants, and were then brought to the Supreme Court by the lenders.
• Issues for decision: (i) whether English law recognises a distinct tort of bribery and, if so, what duty relationship it requires; (ii) whether the dealers owed fiduciary or other "disinterested" duties to customers when sourcing finance; (iii) the legal effect of disclosure or partial disclosure of commissions (including the correctness of Hurstanger); (iv) the scope of equitable accessory liability for dishonest assistance; and (v) whether Mr Johnson’s dealer-lender relationship was unfair under section 140A CCA and what remedy should follow.

The Supreme Court reviewed the historical development of bribery law and of fiduciary principles. It concluded that the civil wrong of bribery remains part of the common law and that its remedial structure (including restitutionary recovery of a bribe and the right to rescind) is well established and should be retained. However, the tort and the equitable claims both presuppose that the recipient of the payment occupied a fiduciary role in relation to the claimant: it is that conflict with a no-conflict/no-profit duty that makes an undisclosed commission objectionable in law. The court held that the typical dealer-customer-lender arrangement in the appealed cases did not import a fiduciary duty by the dealer to the customer because the dealer continued to act as an arm’s-length seller pursuing its own commercial interest throughout the transaction. The Court of Appeal’s extension (and Wrighton-Wood’s formulation) of a freestanding "disinterested" common-law duty independent of fiduciary obligation was rejected. The court also rejected Hurstanger’s approach that disclosure that a commission "may" be paid is sufficient to negate secrecy at common law, reaffirming that disclosure must be of all material facts to amount to fully informed consent.

Relief and outcome: the appeals by the lenders against the bribery and equitable accessory findings in Hopcraft and Wrench and against the bribery/equity findings in Johnson were allowed. Mr Johnson’s remaining statutory CCA claim succeeded: the Supreme Court found an unfair relationship under section 140A because of the size of the undisclosed commission, the concealment of the dealer-lender tie and the manner of non-disclosure; it ordered repayment of the commission with interest.

Appeals by the lenders were allowed in relation to the common-law tort of bribery and equitable accessory liability because the court held that the dealer in a typical three-cornered motor finance transaction does not owe a fiduciary duty of single-minded loyalty to the customer; accordingly, bribery and equitable claims based on such duties fail. The court rejected the view that a lesser "disinterested" duty (distinct from a fiduciary duty) suffices to engage the tort of bribery and rejected Hurstanger’s narrower rule on partial disclosure. Separately, the court held that Mr Johnson’s relationship with FirstRand was unfair under section 140A of the Consumer Credit Act 1974 because of the large undisclosed commission, the undisclosed commercial tie, and the concealment; the appropriate remedy was repayment of the commission with interest.

Appeals to the Court of Appeal ([2024] EWCA Civ 1282) followed County Court and District Judge trials. The Court of Appeal allowed the customers' claims (bribery or dishonest assistance and in one case a CCA unfairness finding). The lenders appealed to the Supreme Court, which heard the consolidated appeals and the FCA and National Franchised Dealers Association intervened. The Supreme Court gave judgment allowing the lenders' appeals on bribery/equity grounds but upholding the CCA unfairness claim of Mr Johnson and substituting an order for repayment of the commission.