In one of the most important cases of the year, the Supreme Court heard the appeal in Hopcraft, Johnson & Wrench earlier this month. The case is all about customers who purchased cars using finance from lenders, and the commissions paid by those lenders to car dealers (often secretly), so as to incentivise the car dealers to recommend certain lenders or finance deals to their customers.

The case engages the tort of bribery, accessory liability for dishonest assistance in a breach of fiduciary duties, and the Consumer Credit Act 1974.

The implications for the motor finance sector are vast: since 2007, over 31 million car purchases have involved commission payments. But the case is also extremely significant for all industries involving the payment of commissions to intermediaries, especially where those commissions are not fully disclosed to the customer.

In a very pro-customer judgment, the Court of Appeal decided in October 2024 that the lenders were liable in all three cases and were required to repay the commissions to the customers. In Hopcraft and Wrench the Court of Appeal found the lenders liable as primary wrongdoers, in the common law tort of bribery; in Johnson, it found the lenders liable in equity as accessories, for dishonest assistance in a breach of fiduciary duty by the car dealer.

More generally, the Court of Appeal considered that the car dealers owed both a fiduciary duty, and a ‘disinterested duty’ (of the kind considered in Wood v Commercial First Business [2021] EWCA Civ 47) to their customers.

You can read about the Court of Appeal's decision and background to the case in our earlier alert.

On 1st to 3rd April, the Supreme Court heard arguments from the parties. Simon Oakes and Emily Saunderson, barristers from Quadrant Chambers, followed the hearing closely, and delivered a seminar where they attempted to predict the outcome of the case.

The main battlegrounds in oral argument included:

  • Whether car dealers owe fiduciary duties (a prerequisite for the equitable doctrine of dishonest assistance in a breach of fiduciary duty) or a lesser ‘disinterested’ duty (in the tort of bribery)
  • Even if dealers did owe and did breach fiduciary duties, whether lenders acted dishonestly by paying them commissions
  • Whether the common law tort of bribery actually exists, or whether all such cases should be resolved in equity - e.g. dishonest assistance in a breach of fiduciary duty
  • What the remedies should be in the tort of bribery, if it exists
  • Whether insufficient disclosure of the commission might make the relationship between customer and lender unfair, under the Consumer Credit Act 1974

The questions asked by the Supreme Court Justices may give a clue to their thinking, though some (Lords Briggs and Hodge) were much more vocal than others. Based on those interventions, Simon and Emily suspect that the Supreme Court is likely to largely overturn the Court of Appeal decision. In particular, the judges’ interventions seemed to suggest that:

  • Car dealers are unlikely to owe fiduciary duties when obtaining finance for their customers, absent an express/implied undertaking. And on the facts of these three cases at least, the dealers probably did not expressly or impliedly undertake fiduciaries duties. If that is right, then the claims based on dishonest assistance in a breach of fiduciary duty would fail – because there is no fiduciary duty in the first place. In any case, several judges seemed to doubt whether the lenders acted dishonestly.
  • The tort of bribery is likely to remain, including because it deters third parties from bribing trusted agents. It probably requires the agent (here, the car dealer) to owe some sort of a duty of conflict-free loyalty (perhaps the ‘common law equivalent’ of a fiduciary duty). The judges did not seem attracted by the idea that car dealers owed that kind of duty. If that is right, claims in bribery would also fail. The Supreme Court might also change the remedies available in the tort of bribery, and make the ‘presumption of loss’ rebuttable, so that a claimant would not automatically recover a bribe.
  • The Consumer Credit Act 1974 might theoretically operate as a release valve in extreme cases: very large undisclosed commissions might make the credit relationship unfair, but there were very few questions from the judges on this topic.

However, nothing is certain, particularly given the relative silence of some of the Justices. The judgment is expected at the beginning of July 2025.

We will be publishing an alert soon after the judgment and, in the meantime, if you have any question, please contact Sushil Kuner or Ian Weatherall.