At 16:35 on 1 August 2025, the Supreme Court handed down its hotly anticipated judgment in in the cases of Johnson v FirstRand Bank Limited, Wrench v FirstRand Bank Limited and Hopcraft v Close Brothers Limited concerning the payment of motor finance commission by motor finance lenders to motor dealers.
Simon Popplewell appeared for FirstRand in the above appeals, and Jonathan Kirk KC, Richard Roberts, Lee Finch and Jack Brady appeared for the National Franchised Dealers Association, who obtained permission to intervene.
In summary, the Supreme Court found that:
- The tort of bribery exists and should not be abolished, but the existence of a fiduciary duty is necessary in order for it to be engaged.
- Liability for the payment of a bribe does not arise in these appeals because the motor dealers were not the customers’ fiduciaries.
- There was no separate “disinterested duty”. Both the common law tort of bribery and the equitable cause of action of procuring a breach of fiduciary duty required there to be a “fiduciary duty” owed by the dealer to the customer.
- In these cases, the dealers did not owe fiduciary duties to the customers. The continuing status of the dealer as an arm’s length party to a commercial negotiation pursuing its own separate interests was irreconcilably hostile to the recognition of a fiduciary obligation.
- A conclusion on accessory liability for breach of fiduciary duty was, therefore, academic, but such an allegation would nonetheless require a finding of dishonesty on the lender’s part.
- The assessment of unfairness was a fact-specific exercise, and courts can take account of a broad range of factors in carrying it out. The fact that there had been no, or only partial, disclosure of the commission did not necessarily make a relationship unfair — it was simply a factor in the overall exercise.
Background
In each of the appeals, the Respondent customer entered into a hire-purchase agreement for a motor vehicle with the respective Appellant lender. The vehicle in each case was supplied by a motor dealer, which made the introduction between the customer and the lender, and therefore acted as a credit broker. The lenders paid a commission to the dealers as part of each transaction.
Each of the customers issued claims in the County Court alleging that the commissions were bribes and that the motor dealers’ acceptance of the commissions amounted to a breach of fiduciary duty for which the lender bore accessory liability. Additionally, in Mr Johnson’s case, it was claimed that the payment of the commission made the relationship between the customer and the lender unfair within the meaning of ss. 140A-C of the CCA 1974.
The customers were all unsuccessful in the County Court (either at trial or on appeal). They appealed to the Court of Appeal, where their appeals were heard together and upheld. The Appellants subsequently appealed to the Supreme Court.
Court of Appeal’s judgment
The Court of Appeal concluded that:
- In all three cases, the motor dealers owed the customers a disinterested duty and an ad hoc fiduciary duty when performing their credit broking roles;
- Only a fiduciary duty exists where the commission is partially disclosed;
- The customers’ informed consent to the payment of the commissions could only be obtained if they knew its amount;
- Mr Johnson had not given his informed consent to the payment of the commission;
- In order to establish accessory liability on the part of the lender, it is necessary to show the lender knew of the fiduciary relationship and paid the commission without the customers’ informed consent;
- The relationship between Mr Johnson and the lender in his case was unfair pursuant to s. 140A of the CCA 1974.
Issues on appeal to the Supreme Court
Permission to appeal was granted in relation to the following six grounds:
- Ground 1 – Did the dealers in the appeals owe the customers a fiduciary and/or a ‘disinterested’ duty (if that is something different to a fiduciary duty)?
- Ground 2 – Is a fiduciary duty required to engage liability for bribery or does a ‘disinterested’ duty (if that is something different to a fiduciary duty) suffice?
- Ground 3 – Does payment of a commission by a lender to a dealership in the knowledge that the dealership is a dealer amount to dishonesty, or dishonest assistance, for the purposes of accessory liability in equity?
- Ground 4 – In what circumstances can a lender be liable in the tort of bribery for the payment of commission if a lender has stated the possibility of the payment of the commission in the terms and conditions of a credit agreement.
- Ground 5 – Using the Hopcraft case alone, what is the right approach to remedies in cases of bribery?
- Ground 6 – Using the Johnson case alone, was the Court of Appeal wrong to find that the relationship between FirstRand and Mr Johnson was unfair under s.140A of the CCA 1974?
However, as can be seen from the summary of the decision below, the Supreme Court framed the issues as follows:
- Does, or should, the law recognise a distinct tort of bribery?
- What was the nature of the duty or relationship (here between dealer and customer) that must exist in order for the tort to be engaged? In a similar vein, were the dealers fiduciaries for the equitable claims?
- Was dishonesty required for the accessory liability of a lender paying a commission?
- In Mr Johnson’s case, was the relationship between customer and lender “unfair” for the purposes of the CCA 1974?
The Supreme Court’s decision
Bribery
The Court rejected the argument that the tort of bribery ought to be abolished for a number of reasons including that the tort is too well established to be questioned, it has neither impeded the development of the law nor produced results which are unjust or contrary to public policy, and its operation and the remedies available at law differ importantly from the position in equity.
Reversing the Court of Appeal’s decision in Wood v Commercial First Business Ltd [2022] Ch 123, the Court held it was necessary to establish the existence of a fiduciary duty in order to engage liability for bribery at law (and in equity). By contrast, a contractual duty to give disinterested advice does not engage the law of bribery. As the Court found the typical features of the Hopcraft, Wrench and Johnson transactions were incompatible with a duty of undivided and selfless loyalty, liability for bribery at law (or in equity) could not arise.
As to the level of disclosure required to negate secrecy, the Supreme Court disagreed with the reasoning in Hurstanger Ltd v Wilson [2007] 1 W.L.R. 2351 that the “real evil” of bribery is secrecy. Instead, the Court held that the “real evil” is the breach of the fiduciary’s no conflict rule, which could only be negated by full disclosure of all material facts. As the motor dealers were not the customers’ fiduciaries, the analysis ends here.
For completeness, the Court rejected the appellants’ case that there should be no automatic right to recovery of the bribe if a claim in the tort of bribery is made out and it did not consider whether there exists a right to rescind at common law.
Duties
“Fiduciary duty”
In all the transactions, the dealer undertook the task of sourcing finance for the customer in order for them to purchase the particular vehicle. The customers argued that, by doing the same, the dealer was the fiduciary agent of the customer and was in breach of its fiduciary obligations by accepting a commission so as to give rise to equitable remedies. The Court of Appeal agreed.
The Supreme Court, however, allowed the appeal and found that, in undertaking this task, the dealer did not act as the fiduciary agent of the customer. Therefore, the claims in equity would fail.
The Supreme Court identified the following six features of the typical tri-partite car finance transaction as being incompatible with the recognition of any fiduciary obligation of undivided or selfless loyalty by the dealer to the customer when sourcing and recommending a suitable credit package:
- First, each of the three participants (customer-dealer-lender) in the negotiation of the transaction was separately engaged at arm’s length from the other in the pursuit of a separate commercial objective of their own. This was irreconcilably hostile to the recognition of a fiduciary obligation owed by one party to another in that negotiation. Neither the parties themselves nor any onlooker could reasonably think that each of the participants to such a negotiation was doing anything other than considering their own interests.
- Secondly, the activity of the dealer as an intermediary between customer and lender in seeking a suitable finance package for the customer from among its panel of lenders might be regarded as a form of credit brokerage, but this service was not being provided by the dealer as a distinct and separate service in its own right, as the service was in mortgage-type cases such as Hurstanger and Wood.
- Thirdly, at no time in the negotiation of any of these transactions did the dealer give any kind of express undertaking or assurance to the customer that in finding a suitable credit deal for the customer it was putting aside its own commercial interest in the transaction as seller. In the Johnson transaction, the dealer did state in writing (in the Suitability Document) that it would seek the most suitable finance package from among its panel of lenders, and a similar statement was made orally to Mr Wrench, but neither of these statements involved the dealer undertaking to exclude consideration of its own continuing commercial interest in the transaction. An offer to find the best deal is not the same as an offer to act altruistically.
- Fourthly, there was no agency undertaken by the dealer for the customer in the negotiation of the finance package with the lender, in the sense in which agency is a term used in the law (rather than just a loose label where someone agrees to do something for someone else). The dealer did not have the authority of the customer to enter into legal relations with the lender. The dealer did obtain confidential information about the customer’s financial position to enable the lender to appraise the credit risk of lending to the customer, but this intermediary activity did not require or even point to the dealer assuming the mantle of agent for the customer. It is equally consistent with the dealer being an agent for the lender, or just a pure intermediary with no relationship of agency with either.
- Fifthly, there may be an element of dependency upon or vulnerability to the dealer affecting the customer in relation to the finance package. There is typically a large differential in their knowledge of the relevant part of the customer finance market. As illustrated by the Johnson transaction, there is nothing to stop customers arranging their own finance packages, or comparing the package offered by the dealer with the best which they can find online, or by ringing around. But dependency or vulnerability were not indicia of a fiduciary relationship, in the absence of an undertaking of loyalty.
- Sixthly, the way in which a dealer may proffer the service of finding a suitable finance package for the customer may engender an element of trust and confidence reposed by the customer in the dealer, in the sense that the customer may assume that the dealer will locate the most suitable finance package for the customer’s particular needs. But that did not show that this typically goes beyond that which may frequently arise between commercial parties negotiating at arm’s length, such as that which the customer might repose in advice received from a shop assistant or wine waiter, or in the advice which the dealer might give as to the best roof rack to source from the market and add to the car.
The Court of Appeal had failed to understand that the dealer has a commercial interest in the arrangement between a customer and the finance company. They had mistakenly treated the dealer as acting solely for the customer once a customer had chosen a car and agreed a price.
The Court of Appeal attached significant weight to how customers were said to trust dealers and were vulnerable, but the fiduciary duty of loyalty was not generated by feelings of trust or vulnerability. It was not a form of customer protection. The duty was generated by an undertaking to act entirely in another person’s interest without regard to their own. That was not the position of the dealers as they had their own interest throughout in achieving a sale.
“Disinterested duty”
As set out above, there was no separate “disinterested duty” for the purposes of the common law tort of bribery. Therefore, as a similar “fiduciary duty” was needed, and for the reasons set out above was not established, this meant that the customers’ claims for the common law tort of bribery would fail.
Accessory liability
The question for the Supreme Court was whether dishonesty was a required element in establishing the accessory liability of the payer of a commission to a fiduciary who assists in a breach of fiduciary duty.
In light of the findings in relation to the existence of a fiduciary duty, the Supreme Court did not consider it necessary to address the issue of accessory liability in the context of the facts of the case.
However, by way of general principles, the Supreme Court noted that the only basis which equity recognises for the imposition of accessory liability for a breach of fiduciary duty is that of dishonest assistance. That requires the claimant beneficiary or principal to show that the defendant materially assisted the fiduciary in his breach of duty, and that the defendant’s conduct was dishonest. A failure to prove dishonesty will be fatal to the claim. The Supreme Court also recognised that the remedies against the party providing the dishonest assistance are limited.
Unfair relationships
Mr Johnson’s appeal was allowed on the basis that the Court of Appeal had made factual mistakes in its considerations of the case, which vitiated the Court’s conclusions on unfairness. Approaching the decision on the correct footing, the Supreme Court found that the relationship was nonetheless unfair and awarded Mr Johnson the commission with interest.
The mistakes in the Court of Appeal’s judgment identified by the Supreme Court were that:
- First, the Court of Appeal had found that the amount paid for the vehicle exceeded its Glass’ Guide valuation and included this as a factor in considering whether the credit relationship was unfair. However, the Supreme Court held that while the fact that the price of a vehicle was inflated was capable of being a factor in certain cases, whether it should be so would depend on the explanation for the price discrepancy. In the instant case, there was no explanation for it, and that point was not pleaded or explored at trial. The Supreme Court accepted that there could be a number of explanations for it, and held therefore that it was not a relevant consideration in Johnson’s case.
- Second, the Court of Appeal had held that the difference between the purchase price of the vehicle and the Glass’ Guide price was accounted for by the commission, and thus had it not been for the commission, the customer would have been able to purchase the vehicle at a lower price. It was conceded before the Supreme Court that the similarity between the price discrepancy and the amount of the commission was coincidental and that it was not a factor that ought to have been taken into consideration in the assessment of fairness.
The Supreme Court held that when considering unfair relationship claims, courts can take account of a broad range of factors and that the issue will often be fact-sensitive. The Court set out a non-exhaustive list of factors which are likely to be relevant to the assessment, which includes: the size of the commission relative to the charge for credit, the nature of the commission (e.g. whether it is discretionary), the characteristics of the customer, the extent and manner of disclosure, and the compliance with regulatory rules. Their Lordships added that the fact that there had been no, or only partial, disclosure of the commission does not necessarily make a relationship unfair — it is simply a factor in the overall exercise.
The Court highlighted three relevant factors in Mr Johnson’s case:
- First, the size of commission, which was 55% of the charge for credit. The fact that it was so high was described as a “powerful indication” that the relationship was unfair.
- Second, the fact that the documents given to Mr Johnson did not disclose the existence of the commercial tie between the finance company and the dealer under which the finance company was given first refusal. The documents were intended to create the false impression that the dealer was offering products from a panel and recommending one that best met the customer’s individual requirements.
- Third, on the other side of the balance, Mr Johnson’s failure to read the documents he was given. The Court tempered this final point by referring to Mr Johnson’s lack of financial sophistication and the fact that no prominence had been given to the relevant statements; as a customer would not have expected a commission of that size to be payable, and so particular attention should have been drawn to it.
The Court concluded that, in Mr Johnson’s case, the Appellant lender should pay to him an amount equivalent to the commission, with interest at a commercial rate from the date of the agreement.
The Judgment is available here: Supreme Court Judgment
The Supreme Court’s press summary is available here: Press Summary
This page will be updated with further information and analysis this evening and over the coming days.