Hopcraft v Close Brothers Ltd: Supreme Court puts the brakes on liability for bribery in tort

Hopcraft v Close Brothers Ltd; Johnson v FirstRand Bank Ltd; Wrench v FirstRand Bank Ltd [2025] UKSC 33

In a landmark decision, the Supreme Court has determined that the payment of “secret commissions” by finance lenders to motor dealers are not bribes for the purposes of a claim in the tort of bribery absent the existence of a “fiduciary duty of loyalty”. The judgment provides welcome clarity on the scope of the tort of bribery with implications far beyond consumer car financing. 

The Supreme Court overturned the Court of Appeal’s decision that a ‘no conflict’ or ‘disinterested’ duty in the motor dealer’s commercial relationship with the customer was sufficient, in the absence of sufficient disclosure of the payments, to result in the commissions to be deemed bribes. 

The decision up-ends the trend in recent case law on the tort of bribery, confirming that the tort of bribery is only engaged in relation to undisclosed benefits received by a person who is subject to a ‘fiduciary duty’. The existence of a ‘disinterested duty’ only, per more recent case law, is not sufficient. 

The judgment is worth reading in full for its thorough discussion of the history and development of the tort of bribery, including the policy considerations the courts have taken into account in its development in the case law over the last century. What follows is a summary of the facts of the case, the relevant legal tests, and an explanation of the Supreme Court’s reversal of the Court of Appeal’s decision leading to the law as it now stands.

Facts

The appeals arise from proceedings brought by three customers who entered into tripartite transactions with a motor dealer and a finance lender. 

In each case, the customer wished to obtain the car on finance, the motor dealer obtained an offer from one of a number of finance lenders on its panel, the motor dealer sold the car to the finance lender and the customer entered into a hire purchase agreement with the lender to finance their purchase. The customer drove away with their car and the lender paid a commission to the dealer in exchange for the referral. Importantly, there was either no disclosure of the existence of the commission to the customer or the only disclosure was that a commission (of unidentifiable amount) might be paid. 

The customers claimed that the commissions amounted to bribes, or to secret profits received by the dealers. Two of them claimed, in the alternative, compensation from the lenders for dishonest assistance in the dealers’ receipt of secret profits. 

The lenders’ case was that the credit brokerage service provided by the dealers in these typical hire purchase cases cannot be viewed in isolation from the general relationship between dealer, customer and lender in the three-cornered transaction, of which the finance package is only a part. In that context, the appellants claimed that the dealer never loses its status as seller and is entitled to act in its own interests as an arm’s length commercial seller throughout. It is incompatible with that arm’s length relationship, which persists until the transaction is completed, for there to be a fiduciary duty in that relationship or for there to be any other duty implied which would make undisclosed commission payments from the lender to the dealer objectionable as bribes.

Law

Bribery

A generally accepted definition of a bribe is that stated by Slade J in Industries & General Mortgage Co Ltd v Lewis [1949] 2 All ER 573, 575:

“For the purposes of the civil law a bribe means the payment of a secret commission, which only means (i) that the person making the payment makes it to the agent of the other person with whom he is dealing; (ii) that he makes it to that person knowing that that person is acting as the agent of the other person with whom he is dealing; and (iii) that he fails to disclose to the other person with whom he is dealing that he has made that payment to the person whom he knows to be the other person’s agent.”

In order to establish a common law claim for bribery a claimant must establish the following: 

1. that the requisite relationship exists between the principal and the payee;
2. that the payee has accrued a benefit; and
3. that the payment was secret.

Fiduciary duty

A fiduciary duty of loyalty arises where a person has undertaken to act in the interests of a principal to the exclusion of its own interests.

Millett LJ in Bristol and West Building Society v Mothew [1998] Ch 1, 18 gave the following classic description of a fiduciary: 

“A fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. The distinguishing obligation of a fiduciary is the obligation of loyalty. The principal is entitled to the single-minded loyalty of his fiduciary.”

The key principle is that a fiduciary acts for and only for another (their principal). They owe a duty of single-minded loyalty to the principal, meaning that they cannot exercise any power in relation to matters covered by their fiduciary duty so as to benefit themselves. Accordingly, if a person is a fiduciary then they must not put themselves into a position where their interest and that of the beneficiary might conflict (the “no conflict” rule), subject to the principal’s informed consent. In addition, or perhaps in consequence, they must not receive a personal benefit from their fiduciary position (the “no profit” rule), subject again to the principal’s informed consent.

A fiduciary duty may arise because (i) a party has expressly or impliedly undertaken to act solely in the interests of another, or (ii) a party may be treated by equity as having so undertaken following an objective assessment of the parties’ arrangements or a party’s unilateral acts to that effect. 

A ‘disinterested duty’

Certain case law prior to this decision had indicated that, for the purposes of assessing whether a benefit received would be a bribe, it would be sufficient to establish that the relationship between the principal and the payee was only one importing a duty to perform a service in a manner independent from any personal interest (i.e. short of a full fiduciary duty), referred to as a ‘disinterested duty’; that is, a duty to be impartial and to give disinterested advice, information or recommendations. For example, the duty owed by a professional valuer to their client when making a valuation. 

Secrecy

It is essential that the payment amounting to a bribe is secret because, as Chitty LJ noted in Shipway v Broadwood [1899] 1 QB 369, 373, it is possible for an agent to receive a benefit from his principal’s counterparty and not be found liable for bribery if that benefit is disclosed to the principal. Disclosure places the principal in a position where he can take an informed decision whether to affirm the transaction in question or to seek its rescission. Chitty LJ stated that the “real evil” of bribery is “not the payment of money, but the secrecy attending it”. In other words, that the bribe creates an interest in a fiduciary, which is incompatible with his performance of his duty to act with single-minded loyalty to his principal to the exclusion of his own interests.

The Court of Appeal

Prior to the Supreme Court’s decision, the Court of Appeal had concluded that it was unnecessary, for liability for bribery to arise at common law, that the recipient of the payment should owe a fiduciary duty of loyalty to the claimant. Instead, the ‘disinterested duty’ is sufficient. The duty was deemed to be imposed where a person performs a role in another person’s decision-making process by exercising judgement or discretion in relation to the interests and affairs of that other person.

On these facts, the Court of Appeal found that the provision of a credit brokerage service, or the relationship between the broker and the client, imported a necessarily implied ‘disinterested duty’. The car dealers, acting in the capacity as credit brokers, owed it to their customers to search for and provide a finance package from among their panel of lenders which was both competitive and suitable for their customers’ needs on an impartial or disinterested basis. While it may sometimes be appropriate to describe that duty as ‘fiduciary’, it was not necessary to do so for liability to arise. In the Court of Appeal’s view it was the content of the duty, not its label, that was important and so the receipt by the dealer/broker of a payment from a lender without full disclosure to the customer was found to be a bribe.

The Supreme Court

The central questions for the Supreme Court included both questions of law and subsequent questions of fact.

1. What duty relationship engages the tort of bribery, and what was the duty relationship between the dealer/broker and the customer in these cases?
2. What level of disclosure is required from the recipient of the benefit claimed to be a bribe to the customer to avoid liability for bribery? Had any of the dealers disclosed sufficient information about the commissions to avoid liability?

What duty relationship engages the tort of bribery?

The Supreme Court allowed the appeal and overturned the Court of Appeal’s decision, holding “that the tort of bribery is not engaged by anything other than the receipt of a benefit by a person who is subject to a fiduciary duty to which the beneficiary of that duty has not given fully informed consent”. The existence of a ‘disinterested duty’ is not sufficient to give rise to the tort of bribery. 

The Supreme Court considered that the ‘disinterested duty’ was in fact a duty that flowed from the fiduciary duty and capacity in which the person is acting, but would not flow from the mere fact that the person was in a position to influence or affect another person’s decision. The Supreme Court was concerned that if that were the law, “a duty to act disinterestedly, and remedies for the breach of that duty, would attach to a very wide range of individuals and organisations who provide information or advice without any undertaking to subordinate their interests to those of the recipient of the information or advice. Examples range from the shop assistant [advising a customer on the attractiveness of a garment] or wine waiter advising [on the suitability of a wine with a meal] to the search engine which influences decisions through the order in which it displays the results of a search for a product or service”.

Therefore, nothing short of a ‘fiduciary duty of loyalty’ would be sufficient to give rise to a claim for the tort of bribery. 

“We accept that the civil law of bribery is not confined to the established categories of fiduciary relationships. However, it was in our view a mistake to hold that a fiduciary relationship was unnecessary. As we have explained, a relationship is properly described as fiduciary where one party to the relationship owes a fiduciary duty of loyalty to the other, even if the relationship does not fall within one of the established categories or involve the full range of fiduciary duties. Since the civil law of bribery is concerned with the breach of a fiduciary duty of loyalty, as we have explained, it follows that a fiduciary relationship is indeed an essential requirement. The authorities provide no support for a contrary view.”

Was there a fiduciary duty relationship between the dealer/broker and the customer in these cases?

The courts have previously avoided any attempt to precisely define when a person is to be treated as having undertaken fiduciary duties, so there are no clear guidelines when addressing whether ad hoc fiduciary duties arise. In this case, the Supreme Court undertook a detailed review of past case law and provided several indicators that should from hereon be taken into account when seeking to answer this question:

1. A fiduciary duty will arise for persons falling within one of the established categories of fiduciary relationship, such as a trustee, company director, partner or agent.
2. An element of trust and confidence in the relationship between the parties is a consequence of a fiduciary relationship and may point to one existing, but does not itself inevitably result in a fiduciary relationship. “One may trust a plumber to do a job properly without the plumber becoming a fiduciary.”
3. That the principal is vulnerable or dependent on the person does not establish a fiduciary duty. “The vulnerability which is the typical characteristic of a person to whom a fiduciary duty is owed, is a consequence and not a cause of a fiduciary relationship.”
4. That a person has assumed responsibilities giving rise to duties in contract or tort to act to protect the interests of another is not sufficient in itself to give rise to a fiduciary duty. More is needed.
5. That a person has agreed to negotiate or refer a transaction for a customer does not lead to a necessary implication of a fiduciary duty, absent a clear undertaking or assurance to the customer that the person is putting aside its own commercial interest in the transaction and acting with single-minded loyalty in the interests of the principal, or if the commercial relationship in fact amounts to an agency relationship in which the person is authorised to enter into legal relations without further reference to the customer/principal. 

In light of the above, the Supreme Court found that there was no fiduciary duty arising in the relationship between the dealer/broker and the customer. The role of the dealer in selecting and negotiating a suitable finance package for the customer is not one to which a fiduciary obligation of loyalty can be implied, even if there was a statement of intent by the dealer to the customer that it would seek “the most suitable finance package for the customer’s requirements” (as was the case here). An offer to find the best deal is not the same as an offer to put aside one’s own commercial interests and act altruistically.

A fiduciary duty could not be implied by law, because the assumption by the dealer of the position of intermediary or broker between the customer and the lender was not one which the law (or equity) treats as habitually, or even usually, containing such an obligation (unlike the role of trustee, company director, partner or agent), nor is it analogous with any of those established fiduciary relationships. 

A fiduciary duty could not be implied in fact because it is incompatible with the arm’s length position of the dealer from start to finish of the negotiation of the transaction. The continuing status of the dealer as an arm’s length party to a commercial negotiation pursuing its own separate interests is irreconcilably antagonistic to the recognition of a fiduciary obligation owed to another party in that negotiation. No reasonable onlooker would consider that the dealer was giving up, rather than continuing to pursue, its own commercial objective of securing a profitable sale of the car for its dealership

Quoting from Snell’s Equity (35th ed (2025), para 7-007), the Supreme Court confirmed that, as a general rule, outside of the well-established fiduciary relationships, such as company director, partner, or agent, in a commercial context “it is normally inappropriate to expect a commercial party to subordinate its own interests to those of another commercial party”. 

The Supreme Court did note that the outcome may be different in a case where the very nature of the service undertaken can only be provided by a person who puts their own personal interests aside; then may satisfy the necessity test for implication. 

 “An element of trust and confidence is a widespread feature of many types of commercial transactions, far removed from any fiduciary content. The particular kind of trust and confidence that may point towards a fiduciary relationship is, as we have already explained, trust and confidence that the alleged fiduciary will act with single-minded loyalty towards the claimant, to the exclusion of his or her own interests. Trust and confidence that the dealer on the other side of an arm’s length negotiation will secure the best available finance package for the customer is not of that type.”

Secrecy

In its judgment, the Supreme Court confirmed that in order to negate liability for bribery, what is required is full disclosure of all material facts. The Supreme Court was clear that disclosure of every fact is not necessary, and what amounts to material facts necessary to be disclosed to negate liability will depend on the circumstances of the particular case.

In this case, as there had been either no disclosure of the existence of the commission to the customer or the only disclosure was that a commission (of unidentifiable amount) might be paid, the “full disclosure” test was not satisfied to avoid liability.

“Partial disclosure is never enough.”

Key takeaways

While the decision of the Supreme Court creates a significant change in the direction the law on the tort of bribery was heading in, the key takeaways are relatively straightforward:

1. A fiduciary relationship is necessary for liability for the tort of bribery to arise. A duty to act “disinterestedly” is not sufficient.
2. A fiduciary relationship can arise out of a number of scenarios, including not only the established categories of fiduciary relationships. The Supreme Court’s guidance (summarised above) should be considered when determining whether a fiduciary relationship exists.
3. The role of a car dealer (or any commercial party) in selecting and negotiating a suitable deal for a customer is not one to which a fiduciary obligation of loyalty can be implied, with or without such a statement of intent by the dealer, where it is incompatible with the very nature of the commercial arm’s length position of the dealer. Commissions paid by lenders to dealers in these sorts of arrangements are therefore not bribes.
4. In fact, it will be a rare case indeed that, outside of the established categories (such as an agency relationship), a fiduciary relationship will be deemed to exist in relation to a commercial relationship. 
5. Full disclosure of all material facts relating to any commission payment or benefit received must be made to a customer to avoid liability for common law bribery. 
6. The Supreme Court also addressed any concern that “confining the civil law of bribery to situations where a fiduciary duty of loyalty was owed will result in a lacuna in the law”. If a non-fiduciary commercial party were to be bribed, as that term is ordinarily understood, there are other legal bases for claims available, e.g. the torts of deceit, conspiracy, inducement of breach of contract and causing loss by unlawful means.