The decision has been eagerly awaited since the Court of Appeal handed down its decision last autumn. Whilst the three linked cases concern commission paid by finance lenders to car dealers who introduced customers to them, the impact of this decision could be felt across the finance industry as a whole and the wider economy in turn. HM Treasury applied (unsuccessfully) to intervene in the appeal such is the apparent significance of the decision.
The financial and economic implications are for others to consider. It is hoped that the Supreme Court can provide much needed clarification to the law following the Court of Appeal’s decision. The unanimous decision of Andrews, Birss, and Edis LJJ ended with the observation that there “are tensions between Hurstanger [Hurstanger Ltd v Wilson [2007] EWCA Civ 299] and Wood [Wood v Commercial First Business Ltd [2021] EWCA Civ 471] which we have not found it easy to reconcile”. The decision in Johson has added its own tensions which have in turn been explained in the more recent decision of Expert Tooling and Automation Ltd v Engie Power Ltd [2025] EWCA Civ 292. The Supreme Court will hopefully resolve the tensions between those four Court of Appeal decisions as well as providing guidance for the many thousands of cases which have been stayed pending this decision.
There remain questions over the nature of the relationships between the parties involved, what is necessary for an agency relationship to form, if such a relationship involves fiduciary obligations, what disclosure is necessary to adequately draw a borrower’s attention to the existence of the commission to avoid it being viewed as a bribe, together with questions as to the whether the payer of such a ‘bribe’ is liable as an accessory or as a principal and the role dishonesty plays in that analysis.
In particular, it is hoped that the Supreme Court will provide certainty as to nature of the relationship between customers, car dealers, and the lenders and whether the dealers were acting as agent for one or other of the parties involved. If they were acting as agent, what duties were owed and did they act as a fiduciary. The Court of Appeal rejected the lenders’ argument, that it had made adequate disclosure of the existence of the commission by referring to it (though not its amount) in the signed terms and conditions, with the formulation that it was “hidden in plain sight”. As a matter of English law, is someone bound by their signature confirming they have signed and read a document or are they at liberty to say they did not in fact read the literature?
Many of the claimants in the car commission cases have applied to rescind their finance agreements. It is regrettable that the Court of Appeal did not consider rescission in any detail especially in circumstances where the vehicles involved will have depreciated or been sold. The lenders’ The Court of Appeal decision refers only to the remedy to the claimants (Mr and Mrs Hopcraft, Mr Wrench and Mr Johnson) as being the payment to the sum of a sum equivalent to the commission (which the Court of Appeal erroneously refer to as ‘repayment’ of the commission’). However, the order in Mr and Mrs Hopcraft’s case in fact went on to award rescission. It is hoped that, whether it is awarded or not, the Supreme Court sets down applicable guidance for other courts to follow when the question of rescission arises in these cases.
The decision will likely be delivered during the summer with analysis to follow – watch this space!
Written by Matthew Gillett.