On 1 August 2025, at 16:35, the Supreme Court handed down its judgment in Hopcraft v Close Brothers Limited, Johnson v FirstRand Bank Limited and Wrench v FirstRand Bank Limited.
Whilst the judgment was focused on the payment of commission in the motor industry by finance lenders to dealers, this article from Trinity Business and Property barrister, Paul Kerfoot shall focus on the impact of the findings on claims in the business energy brokerage sector.
Bribery
Four issues arose in relation to bribery that shall be summarised for the purpose of this article:
- Does the common law recognise, or should it continue to recognise, a distinct tort of bribery [59]?
- If the tort is to be recognised, what duty engages the tort of bribery [60]? In a similar vein, in the context of the equitable claim, what duty engages the equitable claim [63]?
- What is the meaning of the requirement for ‘secrecy’ in a claim in bribery [61]?
- What remedies are available, both at common law and in equity [62]?
1. A distinct tort of bribery?
The Court began by exploring the origins of bribery in equity. It pointed to the importance of the no profit rule for those acting with single minded loyalty [68]-[70] and highlighted that, where the no profit rule is alleged to have been breached, the only defence lies in the principal giving its fully informed consent to such profits [72]. The Court noted that accessory liability arises in equity in a breach of the no profit rule [73], which requires a dishonest state of mind [74] and gives rise to a more limited range of remedies [75]-[77].
The basis of ‘fiduciary’ duties was then examined in detail [82]-[89], culminating in the summary at [90] which is worth quoting in full:
“The key principle is therefore that a fiduciary acts for and only for another. He owes a duty of single-minded loyalty to his principal, meaning that he cannot exercise any power in relation to matters covered by his fiduciary duty to benefit himself. Accordingly, if a person is a fiduciary, then he must not put himself into a position where his 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, he must not receive a personal benefit from his fiduciary position (the no profit rule), subject again to the principal’s informed consent.”
An analysis was undertaken by a further review of the authorities of how such relationships have historically arisen, both in settled categories and by analogy to such settled categories [92]-[108]. This is helpfully summarised at [109]-[110].
The Court then moved on to consider how the tort of bribery was recognised at common law through a wealth of historic authorities [113]-[134]. It noted that bribery has been treated as a type of fraud but does not require any representation to be made by either payer or payee of the bribe or reliance on such representation by the principal, and no need to prove dishonesty on the part of either the payer or the recipient of the bribe [135], in contrast to equity. The importance of adopting a strict and deterrent approach to bribery was also explored [136]-[138].
The Court analysed the submissions which sought to persuade the Court to abolish the tort of bribery and rejected them [139]-[156]. In essence, the tort was too well established to be questioned, there had been no impediment to the proper development of the law or any results which were unjust or contrary to public policy, and that the need for a strict approach to bribery was reflected at law rather than in equity in the stricter remedies available and in assigning primary liability to the payer of the bribe.
2. What duty relationship engages the tort of bribery?
Wood v Commercial First Business Ltd [2022] Ch 123 (Wood) was reversed by the Court [207], as it was held that the common law claim in bribery (and in equity) arises from the fiduciary duty of loyalty being present rather than simply a ‘disinterested’ contractual duty. The Court began by analysing the fact that commission is not inherently objectionable outside of a fiduciary relationship, but that the existence of fiduciary duties requires informed consent to be given [161]-[164]. The Court analysed the authorities in which the tort of bribery developed [165]-[188], noting that it was common throughout that every successful case of bribery cited had a payee who was a fiduciary.
The reasoning of David Richards LJ was analysed [189]-[206] and the Court set out why it disagreed with it. The authorities referred to in Wood were taken as examples of relationships with a duty of loyalty, regardless of whether they were established categories of fiduciaries [199]. Further, a purely contractual duty of loyalty was insufficient without a concurrent fiduciary duty of loyalty [201]. The Court finally observed that the law would not be powerless where non-fiduciaries were bribed [206].
3. The negation of secrecy and Hurstanger
Secrecy had been often quoted in the relevant authorities [208], particularly when highlighting the “real evil” of bribery [209]. The Court highlighted that consent to a payment of commission can only be given where full disclosure of all material facts is given to the principal, and it is not enough to place the principal on inquiry [211].
An analysis of the relevant authorities on informed consent [212]-[216] led to consideration of Hurstanger Ltd v Wilson [2007] 1 WLR 2351 (Hurstanger) [217]-[222]. The Court held [225]-[226] that the reasoning in Hurstanger in relation to disclosure was wrong as the law of bribery, both at common law and in equity, operates to avoid a conflict of interest and the need for disclosure therefore arises for the same reason – to avoid the breach of the duty – and so the required disclosure should align. Further, the Court held that partial disclosure “has never been enough” and that David Richards LJ had misunderstood the “real evil” of bribery as being secrecy, rather than the breach of the no conflict rule.
4. Remedies
The Court held that a common law claim in bribery had the automatic right to recovery of the bribe without proof of loss or gain [227]-[236]. Rescission was available both at common law for the tort of bribery and in equity, noting the greater flexibility in the concurrent jurisdiction to rescind in equity [237]-[239]. Where rescission was ordered in addition to recovery of the bribe, to avoid double recovery, it was accepted by the respondents that credit would need to be given for the bribe as part of counter-restitution [240].
The impact on business energy claims
The issue of secret commissions in the business energy sector has been the subject of much litigation recently, both at first instance and appellate level. Many claims are stayed pending the Supreme Court’s decisions both in Johnson and in Expert Tooling and Automation Limited v Engie Power Limited [2025] EWCA Civ 292 (Expert Tooling). In Expert Tooling, a claim for a ‘half-secret’ commission based on the Court of Appeal authorities in Hurstanger and Wood was brought in the context of business energy, with the Court of Appeal relying heavily on the decisions in Hurstanger and Wood together with the Court of Appeal’s judgment in Johnson.
In that claim, the claimant was a company who engaged an energy broker to arrange the claimant’s energy supply. The defendant was the energy supplier engaged after the energy broker had approached the defendant to organise electricity supply contracts for the claimant. The energy broker and the defendant had their own agreements in which the energy broker would receive commission from the defendant for each contract arranged by the energy broker with the defendant. The energy broker would tell the defendant the relevant rate of commission and, in practice, the defendant would agree to it. Commission was paid up front based upon the estimated consumption across the life of the contract and was subject to clawback if the customer introduced used less energy than estimated. It was common ground that the claimant knew that the energy broker would be paid commission by the defendant, and reference to the same was contained within both the energy broker and the defendant’s standard terms and conditions, but that the claimant did not know that the commission was added to the unit rate of electricity paid under the electricity contracts by the claimant.
Broadly speaking, this factual scenario involving businesses, energy broker and energy suppliers is reasonably common across claims that are stayed and are pre-action and involve a wide range of customers, brokers and suppliers.
The Court of Appeal held that there was a fiduciary relationship between the claimant and the energy broker and held that fully informed consent had not been given. It was noted that material facts had not been disclosed, particularly the amount of commission, the addition of commission to the unit price, the impact that this had on the length of the contract recommended to the claimant, the ability for the energy broker to set its own commission and the fact that commission was paid up-front. However, it was held that the defendant, as payer of the commission, needed to have a dishonest state of mind for the claim in equity to succeed.
The Court of Appeal has granted permission for the claimant to appeal to the Supreme Court, and the appeal has been issued by the claimant, in respect of two issues:
- That the Court of Appeal erred in distinguishing between a “half secret” and a “fully secret” commission and that both ought to be treated as bribes and the payer of a bribe incurs a restitutionary liability for money had and received in the amount of the bribe.
- Alternatively, if “half secret” commissions are to be treated differently from “fully secret” commissions, the Court of Appeal erred in applying a test of dishonesty at all and, in any event, a test which is inconsistent with Hurstanger and which required more than that the commission-payer knew of the existence of a fiduciary relationship.
Clearly, the decision in Johnson will likely have a material impact on the pending appeal in Expert Tooling. Further clarity in respect of business energy claims will no doubt be provided upon the resolution of that appeal. However, there are a number of takeaways that can be gleaned from Johnson initially:
- There is no distinction between a “fully secret” and a “half secret” commission, now that Hurstanger has been overturned. The real question is whether fully informed consent was given by a principal, which will require the energy broker/energy supplier to satisfy the burden that full disclosure of all material facts was given. This confirms that claims at common law for bribery may be brought by customers even if a “partial disclosure” has occurred.
- The fact that a principal was put on inquiry, possibly by the fact that no fee was paid directly from the customer to the broker for their service, is not enough to amount to full disclosure. The same non-disclosure of material facts as identified in Expert Tooling is likely to be common across many other claims.
- At this stage, a dishonest state of mind will still be required for accessory liability in equity, which limits the availability of rescission if claimants cannot prove dishonesty on the part of the energy supplier who pays the commission to the energy broker. However, this does not impact upon the common law claim in bribery.
The Supreme Court’s decision in Expert Tooling is therefore more predictable in light of Johnson, and Johnson appears to be promising for claimants in business energy commission claims.
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