Bank Notes

S – Secret commission

26/3/24

EXPERT TOOLING AND AUTOMATION LTD v ENGIE POWER LTD [2024] EWHC 374 (Ch)

A principal’s claim to recover commission received by an agent failed. The claim was time-barred whether in contract, tort, or in equity by analogy under s.36 Limitation Act 1980. The primary limitation period was not extended under s.32(1)(b) because the fact that commission would be paid by a third party was known and the amount could have been discovered with reasonable diligence simply by asking. Further, although the agent had been a fiduciary, having regard to the business context, the scope of the fiduciary duty did not require the agent to advise the principal of the amount of the commission in the absence of a request for that information, the principal was regarded as having given informed consent to the payment of commission, and the case did not involve dishonesty to establish accessory liability.

18/1/24

COMMISSION RECOVERY LTD v MARKS & CLERK LLP [2024] EWCA Civ 9

The court dismissed an application under CPR r.19.8(2) for an order preventing the claimant from acting as a representative for others with the same interest in a claim to recover commissions alleged to have been received in breach of fiduciary duty by the defendant from third parties to whom the defendant referred clients. Considers principles to be applied in permitting representative claims [29] including those seeking monetary relief which require individual assessment where only some issues can be dealt with on a representative basis (the so-called bifurcated approach). The question whether the existence, scope and breach of fiduciary duty was established by the existence of a contract on the defendant’s standard terms and receipt of commission, or turned on other facts, was common to all cases. The need for individual assessment of some issues such as limitation, did not make a representative claim on other issues inappropriate even if it would not fully resolve the question of liability. Nor was it necessary for the claimant to plead an individual claim for each member of the class for the common issues to be determined.

20/3/20

CANADA SQUARE OPERATIONS LTD v POTTER [2020] EWHC 672 (QB)

A lender’s failure to disclose in 2006 a commission in connection with a PPI policy had been unfair and amounted to wrongdoing within the unfair relationship provisions of CCA 1974 ss 140A-D. The lender was to be taken to have deliberately concealed the wrongdoing for the purpose of s 32 Limitation Act 1980 so that time did not run for the borrower to bring a claim to recover the premium until the borrower discovered the commission payment in November 2016.

7/11/19

WOOD v COMMERCIAL FIRST BUSINESS LTD [2019] EWHC 2205 (CH)

A mortgage had been properly executed even if the witness who saw the claimant sign the mortgage did not sign in the claimant’s presence [47]. The claimant was entitled to set aside a mortgage loan for non-disclosure of a commission paid to a broker and to payment of the commissions, subject to counter-restitution. The court examined principles to be applied when a commission is fully secret or half secret.

11/3/15

McWILLIAM v NORTON FINANCE (UK) LTD [2015] EWCA Civ 186

A credit-broker had acted in breach of fiduciary duty in a loan transaction in which the existence of some but not all commission had been disclosed to the borrowers. It did not matter whether the broker was acting in an advisory or non-advisory capacity. The court below had been wrong to allow the broker to withdraw an admission that it had received the additional undisclosed commissions.

4/11/14

UBS AG v KOMMUNALE WASSERWERKE LEIPZIG GMBH [2014] EWHC 3615 (Comm)

Considers the legal principles for setting aside contracts on grounds of bribery of agents [587], conflict of interest on the part of an agent [621], attribution of an agent’s knowledge to a company [628], fraudulent misrepresentation [642], contractual estoppel [773] and rescission [783].

16/7/14

FHR EUROPEAN VENTURES LLP v CEDAR CAPITAL PARTNERS LLC [2014] UKSC 45

The Court of Appeal had been right to hold that where an agent receives a secret commission in breach of the fiduciary duty owed to his principal, the agent held the money on trust for his principal, so the principal had a proprietary claim to it. Cases suggesting that there is no trust are wrong.

29/1/13

FHR EUROPEAN VENTURES LLP v MANKARIOUS [2013] EWCA Civ 17, [2014] Ch 1

A secret commission paid by the seller of an hotel to the buyer’s agent was held on constructive trust for the buyer. It could not be traced into the agent’s hands, because when the seller paid the purchase price it had intended the buyer to obtain legal and beneficial title to the money. But the agent had been a fiduciary and had taken advantage of an opportunity belonging to the buyer, because the buyer might have delayed contracting if it had known that the commission was to be paid to the agent from the purchase money, or the buyer might have negotiated down the fee it paid to the agent thereby reducing the overall cost of the transaction to the buyer.