Hopcraft and Another v Close Brothers Ltd, Johnson v FirstRand Bank ltd t/a MotoNovo Finance Wrench

On appeal from [2024] EWCA Civ 1282

The claimants in these three linked appeals each bought cars on credit supplied by either FirstRand Bank Limited or Close Brothers Limited. On each relevant occasion, only one offer of finance was presented to, and accepted by, the claimant. FirstRand Bank Limited provided the finance in Mr Johnson’s and Mr Wrench’s transactions. The lender in the Hopcrafts’ case was Close Brothers Limited.

In each instance, the dealer made a profit on the sale of the car but also received a commission from the lender for introducing the business to them. In the Hopcrafts’ case, the commission was kept secret from the claimants. Mr Wrench and Mr Johnson were both unaware that a commission would be paid, but the lender’s standard terms and conditions made reference to the payment of a commission (of unspecified amount). Mr Johnson was also supplied with a document, which he signed, indicating that the dealer could receive a commission from the lender.

Each of the claimants brought proceedings in the County Court. All three claimants contended that the commissions amounted to bribes at common law, or to secret profits received by the dealers as fiduciaries in equity.

Mr Wrench was successful before the District Judge at first instance but the Circuit Judge allowed the lender’s appeal. Mr Johnson’s claims were unsuccessful at first instance, as well as on first appeal except for his claim under the CCA which was remitted to the District Judge for reconsideration. The Court of Appeal subsequently granted permission for a second appeal in both cases. The Hopcrafts’ claims were unsuccessful at first instance and their first appeal to a Circuit Judge was then transferred to the Court of Appeal.

The customers were all successful in the Court of Appeal either on the basis of the tort of bribery or on the basis of dishonest assistance. Mr Johnson was also successful in his claim under the CCA.

The lenders now appeal to the Supreme Court.

The issues is:

Does a car dealer who receives a commission from a lender for arranging finance in a tripartite transaction between customer, dealer, and lender in which a car is bought on credit owe a duty to the buyer of the car such as to enable that buyer (absent the requisite level of disclosure) to bring a claim against the lender for bribery or dishonest assistance, or under the Consumer Credit Act 1974 (the “CCA”)?

The appeal requires the determination of the following sub-issues:

(i) Does, or should, the law recognise a distinct tort of bribery?

(ii) If such a tort is recognised, what is the nature of the duty or relationship (here between dealer and customer) that must exist in order for the tort to be engaged?

(iii) Relatedly, what level of disclosure will prevent liability for bribery from arising?

(iv) In Mr Johnson’s case, was the relationship between customer and lender “unfair” for the purposes of the CCA?

The Supreme Court holds that the customers’ claims against the lenders in equity and in tort cannot succeed. The lenders’ appeals in the Hopcraft and Wrench cases, and in the Johnson case so far as it was based on tort or equity, are therefore allowed. On the other hand, the Court holds that Mr Johnson is entitled to succeed in his claim under section 140A of the CCA, but for reasons that differ from those given by the Court of Appeal.

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