Dear all,

 

Just to add to the below, the judgment in Hopcraft v Close Brothers Limited [2025] UKSC 33 is very detailed, long, and surprisingly, unanimous. There was no Briggs/Burrows split, as there was in Rukhadze, Hotel Portfolio II and Saudi National Bank, given that only Lord Briggs (together with Lord Reed, Lord Hodge, Lord Lloyd Jones, and Lord Hamblen) was on the panel. Leaving the facts as described by James below, and leaving to one side the tort and consumer credit act aspects of the case (which run to dozens of pages each! And about which I couldn't sensibly comment), perhaps the most interesting part of the case is the Court’s discussion of what exactly a fiduciary is, and when someone is and is not one. In doing that the Court appeared to retrench English law towards an analogical and/or status based approach, as opposed to the characteristic or fact based approaches as developed in Canada (for example in Frame v Smith), as well as NZ (Chirnside v Fay; A, B and C v D and E Limited as Trustees of the Z Trust).  

 

I’ve highlighted the parts of the judgment that I found most interesting (I freely admit I am viewing this through the lens of a book chapter I'm writing, so they may not be the most interesting bits for everyone). Also, sorry, this is a (very) long email because I’ve extracted some of the most relevant parts of the judgment (just re fiduciary duties, let alone the rest of it…)

 

(To skip to the ending, the UKSC rejected all the tort and breach of fiduciary duty claims, but let one of the CCA claims pass go, in doing that it said some interesting things, for example...)The Court noted that:

 

83. The law has not created a precise definition of when a person undertakes, or is treated as having undertaken, fiduciary duties in relation to another… The categories of fiduciary relationships are not closed. This should not surprise as fiduciary duties in English law are the creation of equity and judges have developed the rules of equity over time: In re Hallett’s Estate (1880) 13 Ch D 696, 710 per Sir George Jessel MR. In a commercial setting the task is to find in a particular context the boundary between normal (self-interested) arm’s length activity and the circumstances in which equity recognises fiduciary duties of one of the commercial parties requiring that party to put aside his or her own interests and act altruistically in the interests of another.

 

84. The paradigm of a fiduciary is a trustee acting under an express trust. In its simplest form an owner of property, A, empowers and directs the trustee, B, to hold and administer property for the benefit of the cestui que trust, or trust beneficiary, C, in accordance with the terms of the trust which A sets out in the trust deed. B holds and administers the property only for those purposes and for the benefit of C. B has no beneficial interest in the trust property. The no conflict rule and the no profit rule, which we have described, apply to regulate B’s behaviour. Thus, for example, it has long been established that a trustee is not entitled to remuneration for his or her service without authorisation: Lewin on Trusts, 20th ed (2020), para 20.001.

 

85. Judges have not developed an all-embracing conceptual basis for the recognition of fiduciary duties. Instead, they have often identified the incidence of fiduciary duties in the commercial sphere by drawing analogies with the obligations of a trustee under an express trust. Thus, by analogy, company directors have been treated as fiduciaries of their company: Fraser v Whalley (1864) 2 Hem & M 10 (71 ER 361); Aberdeen Railway Co v Blaikie Brothers (1854) 1 Macq 461; In re Lands Allotment Co [1894] 1 Ch 616. Partners are treated as fiduciaries of their partners in relation to partnership property:  Aas v Benham [1891] 2 Ch 244 (see also the Partnership Act 1890, section 20). The fiduciary duties arise out of roles which a person undertakes in the office of director or as a partner in a partnership. Similarly, a solicitor is the fiduciary of his or her client to the extent of the solicitor’s retainer and in relation to the client’s funds or property which the solicitor handles: Nocton v Lord Ashburton [1914] AC 932, 956-957 per Viscount Haldane LC. The obligations attached to those roles are well known, at least in general terms. Thus a person who voluntarily assumes a well-known type of role which is generally assumed to be fiduciary will have undertaken a fiduciary obligation.

 

86. The relationship between principal and agent is another well-known example of a relationship which may give rise to fiduciary obligations where the agent has undertaken to act on behalf of a principal in circumstances which bring into being a relationship of trust and confidence: Mothew, p 18; FHR, para 5. But, as explained in paras 101-104 below, the scope of any fiduciary obligations will be ascertained by having regard to the nature of the parties’ contract or the fiduciary’s undertaking and the context of the particular relationship of agency.

 

87. Fiduciary duties may also arise outside such established relationships on an ad hoc basis where a person so acts as to bring himself or herself under such obligations. In Soar v Ashwell [1893] 2 QB 390 the Court of Appeal recognised that where a person takes on a role or exercises a power which, if exercised by a trustee or agent, would carry with it fiduciary obligations, the person’s so acting causes him or her to undertake ad hoc fiduciary duties…

 

The most important principle, according to the Court, in all these cases is that:

 

90...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  so as 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.

 

Of course, the Court accepts that a fiduciary can have conflicting interests between their principals,“91... A familiar example of such a situation is where the fiduciary is the trustee of a discretionary trust,  and has to decide which of the beneficiaries should benefit from the trust fund.  The trustee is undoubtedly a fiduciary, notwithstanding that the beneficiaries have competing interests.  He fulfils his duty of loyalty to each of them if he exercises his powers with complete impartiality as between them, and without any interest of his own.” 

 

…

 

105. Attempts have been made to argue that the existence of a relationship, in which one party, A, is in a position of power over another, B, and B is dependent on A, is sufficient to give rise to fiduciary obligations. In Galambos v Perez [2009] 3 SCR 247, the Supreme Court of Canada rejected the contention that such a power-dependency relationship was sufficient on its own to do so. Cromwell J stated (para 75) that “what is required in all cases is an undertaking by the fiduciary, express or implied, to act in accordance with the duty of loyalty reposed on him or her”…  Such an undertaking (to act only in the interests of the other) need not be express but could be implied in the particular circumstances of the parties’ relationship (paras 79 and 80).  More recently the High Court of Australia in Naaman v Jaken Properties Australia Pty Ltd [2025] HCA 1,  in the judgment of Gageler CJ and Gleeson, Jagot and Beech Jones JJ stated that vulnerability is not the touchstone of a fiduciary relationship..

 

107. Dr Paul Finn and Professor Matthew Conaglen have suggested that equity will recognise the existence of fiduciary obligations where it is reasonable to expect that the person who is said to be a fiduciary will act in the other’s interest and to the exclusion of his or her own interest. See Dr Finn in T G Youdan (ed) Equity, Fiduciaries and Trusts (Carswell, 1989), Ch 1, p 54 and Professor Conaglen in Fiduciary Loyalty (Hart Publishing) 2010, Ch 9. That may be so, but such an expectation arises because the putative fiduciary has, or is treated as having, undertaken to act with the loyalty of which Millett LJ spoke in Mothew. See Paul Finn in his capacity as Finn J in a joint judgment with Stone and Perram JJ in Grimaldi v Chameleon Mining NL (No 2) [2012] FCAFC 6; (2012) 200 FCR 296, para 177; and Children’s Investment Fund Foundation (UK) v Attorney General [2020] UKSC 33; [2022] AC 155, paras 47 and 48 per Lady Arden.

 

108. As we have said, fiduciary obligations are the creation of equity. That does not mean that the existence and scope of equitable obligations are not influenced by the

common law: see paras 101-104 above. Nonetheless, equity rather than the common law recognises the fiduciary duty. Equity analyses objectively the relationship between the parties to ascertain whether it involves a relationship of trust and confidence because a party has, or is treated as having, undertaken to act with the loyalty of which Millett LJ spoke in Mothew. The relationship of trust and confidence is the consequence, and not the cause, of a fiduciary duty. The fiduciary duty exists because the fiduciary has undertaken not to pursue his own interests. As Lord Woolf MR said in Attorney General v Blake [1998] Ch 439, 454, “the relationship of trust and confidence … arises whenever one party undertakes to act in the interests of another or places himself in a position where he is obliged to act in the interests of another”. Similarly, 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. It is because the fiduciary has undertaken to act solely in the best interests of the principal, and the latter trusts the fiduciary to do so, in a situation where it is usually possible for the fiduciary to act in a self-interested way, that the vulnerability typically arises.

 

109. As the courts have for good reasons eschewed any attempt to give a precise definition of when a person is to be treated as having undertaken fiduciary duties towards

another, there are no bright lines when addressing whether ad hoc fiduciary duties arise.

But there are clear indicators. The courts have extended the application of fiduciary duties by analogy with established fiduciary relationships. A fiduciary may expressly or impliedly undertake to act solely in the interests of another, which is the norm that Cromwell J wrote about in Galambos; or equity, in an objective assessment of the parties’ arrangements or a party’s unilateral acts (viz Soar v Ashwell and the other cases in paras 87 and 88 above), may treat a party as if he or she had so undertaken and for that reason recognise a fiduciary duty of loyalty and impose the no profit and no conflict rules which protect it. In the latter case, there must be circumstances in the relationship between the parties, and in particular arising out of the conduct of the supposed fiduciary, which make it appropriate for equity to treat the parties as if such an undertaking had been given.

 

110. As a general rule, outside 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”: Snell’s Equity, 35th ed (2025), para 7-007. We are not concerned here with one person’s subjective trust and confidence in another in the other’s performance of a contractual obligation; one may trust a plumber to do a job properly without the plumber becoming a fiduciary. The sales assistant in advising a customer on the attractiveness of a garment, or the wine waiter in advising the diner on the suitability of a wine with a meal, addresses the interests of the customer or diner without taking on a duty to act exclusively in the other’s interests. He or she provides a commercial service in the interests of his or her employer, who may thereby come under contractual obligations and may incur vicarious liability for its employee’s tortious acts. No obligation of loyalty, of which Millett LJ spoke in Mothew, arises. Such a commercial transaction or arrangement, in which one party has a personal financial interest, known or apparent to the other party, in bringing the transaction into fruition, is not one in which an undertaking of undivided loyalty and altruism can readily be implied into a contract or such a duty recognised by equity. It is against this background that we will assess the contention that the dealers owed fiduciary duties to their customers.

 

So, what did all this mean? Applied to the facts, the Court found the following:

 

270…at no time in the negotiation of any of these transactions did the dealer give any kind of express undertaking or assurance to the customer that in finding a suitable credit deal for the customer it was putting aside its own commercial interest in the transaction as seller…

 

271 …there was no agency undertaken by the dealer for the customer in the negotiation of the finance package with the lender, in the sense in which agency is a term

used in the law (rather than just a loose label where someone agrees to do something for someone else). The dealer did not have the authority of the customer to enter into legal relations with the lender…

 

274… there may typically be at least an element of dependency upon or vulnerability to the dealer affecting the customer in relation to the finance package. There is typically a large differential in their knowledge of the relevant part of the consumer finance market. We say “an element” advisedly because, as is illustrated by the Johnson transaction, there is nothing to stop customers arranging their own finance packages if they wish to do so, or comparing the package offered by the dealer with the best which they can find online, or by ringing around. But dependency or vulnerability are not, as we have already explained, indicia of a fiduciary relationship, in the absence of an undertaking of loyalty…

 

277. The assumption by the dealer of the position of intermediary or broker between the customer and the lender is, of itself, neutral as to whether an obligation of undivided loyalty is being undertaken by the dealer. The position of intermediary is not, nor is it analogous with, that of a trustee, company director, partner or agent. But the continuing status of the dealer as an arm’s length party to a commercial negotiation pursuing its own separate interests is anything but neutral. It is irreconcilably hostile to the recognition of a fiduciary obligation owed to another party in that negotiation. No reasonable onlooker would think that, by offering to find a suitable finance package to enable the customer to obtain the car, the dealer was thereby giving up, rather than continuing to pursue, its own commercial objective of securing a profitable sale of the car…

 

281 In three of the transactions under review there was, as already noted, a statement by the dealer to the customer that it would seek the most suitable finance package for the customer’s requirements. This does not amount to an undertaking of fiduciary loyalty. An offer to find the best deal is not the same as an offer to act altruistically. If made as part of a contract it might give rise to contractual remedies if not performed. If made with no honest intention to do so, it might perhaps sound in misrepresentation. But it cannot be used as a way of inserting a fiduciary obligation into an arm’s length commercial relationship, any more than in the case of the shop assistant or the wine waiter…

 

282 Nor is the role of the dealer in selecting and negotiating a suitable finance package for the customer one in relation to which a fiduciary obligation of loyalty can be implied, with or without such a statement of intent by the dealer. It is not to be implied by law, because the role is 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 relationships. It is not to 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.

 

283. While we accept that a relationship of trust and confidence is frequently a consequence of a fiduciary relationship, it is not, for the reasons already given, an invariable pointer to a fiduciary obligation, still less something which of itself gives rise to a fiduciary duty. Relationships of trust and confidence arise in many circumstances… 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.

 

284. Nor is the existence of an element of dependency or vulnerability such a pointer,  for the reasons explained in the Galambos and Naaman cases.

 

285. So we conclude that, to the extent that the Court of Appeal’s judgment and the respondents’ case depends upon the recognition of a fiduciary obligation of undivided loyalty on the part of the dealer  when selecting and negotiating a finance package for the customer, they are wrong. In particular, the weight which the Court of Appeal placed upon findings of subjective trust and confidence,  and of vulnerability, as indicative of a fiduciary relationship, at paras 90-91, 95, 100 and 103 of its judgment was wrong in law.

 

286. The outcome might be different in a case where the very nature of the service  undertaken can only sensibly be provided by a person who puts their own personal interests aside.  Then it would satisfy the necessity test for implication.  But it is in our judgment inherent in the arm’s length status of the dealer at all times during the negotiation of the typical transaction that it retains its own interest as seller,  ie that it continues throughout to pursue its own commercial interests, free of any undertaking, express or implied, to act selflessly in the finding  and negotiation of a finance package.

 

The only short comments I’ll make are that the Court seems to endorse a Birksian approach to loyalty, specifically the third type of altruism or “both positive action in the interest of another and disinterestedness” (I will admit that the word positive doesn't appear, but I think it's a little hard to say that acting in the interests of another doesn't involve positive action). The UKSC also endorses the importance of a fiduciary undertaking, even if implied, as without that one can’t have fiduciary duties, no matter one’s characteristics or the facts of the case. Lastly, as I noted above, the Court also appears to be taking a stand against what we could call ‘fiduciary expansionism’ and restating a more traditional analogical/status-based approach to fiduciary relationships and duties.

 

All the best,

Lucas 

 

Dear Colleagues,

 

The UK Supreme Court has just given judgment in the high-profile car finance decision of Hopcraft v Close Brothers/Wrench v FirstRand Bank/Johnson v FirstRand Bank [2025] UKSC 33 https://supremecourt.uk/uploads/uksc_2024_0157_0158_0159_judgment_2bb00f4f49.pdf. Judgment was given after 4:30 on a Friday afternoon because there was concern that the decision might have an effect on markets. The Court of Appeal had held that care dealers were liable to customers in respect of undisclosed commissions they would receive from lenders when the customer agreed to a product presented to them by the dealer. The Supreme Court allows the appeals and holds that the majority of the claims fail.

 

The judgment (interestingly attributed to all five Justices hearing the appeal) runs to 340 paragraphs, so I can only speak briefly to it – but the Court reaffirms the existence of the tort of bribery (though holding that it can only be established, whether at common law or equity, in the context of a fiduciary relationship); it also holds that there was no fiduciary duty owed by the dealers because they were always acting, and understood to be acting, in their own commercial interest. On the claim under the Consumer Credit Act in respect of one claimant, Mr Johnson, the Court allows the appeal but then holds in his favour for different reasons and on different terms.

 

But there are range of issues considered and engaged (and some resolved in fairly short order); with disapproval of some longstanding authorities, some citation of ODG colleagues’ work, and all in all as broad a sweep of issues considered as I can recall in a UKSC private law judgment over the last few years.

 

This will, I suspect, be a controversial judgment, but fits the trend of UK Supreme Court recent jurisprudence on equity in supposedly proceeding from (contestable) first principles and reaching what is thought to be a commercially pragmatic result.

 

Best wishes,

James

 

-

James Lee

Professor of English Law 

The Dickson Poon School of Law

Somerset House East Wing

King's College London

Strand

London WC2R 2LS

 

E-mail: james.lee@kcl.ac.uk 

Are you a student? Can I help? Please just get in touch and we can find a mutually convenient time to meet, whether in my office (SW 1.12) or on Teams.

 

My research day is on Mondays, and so my responses to e-mails sent on those days may be less prompt than otherwise.

 

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