Repairing the English Civil Law of Bribery: Fixing Johnson v FirstRand Bank Ltd [2024] EWCA Civ 1282
| Pages | 75-95 |
| Date | 01 April 2025 |
| Published date | 01 April 2025 |
| Author | Rivu Chowdhury,George Beglan |
Repairing the English Civil Law of Bribery
75
Cambridge Law Review
(2025) Vol 10, Issue 1, 75–95
Repairing the English Civil Law of Bribery: Fixing
Johnson v FirstRand Bank Ltd
[2024] EWCA Civ
1282
RIVU CHOWDHURY AND GEORGE BEGLAN
ABSTRACT
The recent Court of Appeal decision of
Johnson v FirstRand Bank Ltd
(‘
FirstRand
’) held
that a car dealer acting as a broker between a consumer and a lender for car finance will be
under a ‘disinterested duty’ and a fiduciary duty. If the lender has p aid a ‘secret’ or partially
disclosed commission to the dealer, the dealer will be liable under the tort of bribery or for a
breach of fiduciary duty. The lender will also be liable primarily under the tort of bribery or
as an accessory to a breach of fiduciary duty. This result has shocked the car finance industry,
lenders, and banks. It is submitted that there are issues in the reasoning of
FirstRand
and that
this is because of deficiencies in the law of bribery itself. Conflicting authorities and incoherent
differences between the common law and equitable action have resulted in a widening of civil
liability to an unjustified degree. We examine the history of the law of bribery and the reason-
ing in
FirstRand
, and we suggest more careful analysis of fiduciary duties and more careful
application of accessory liability. We also propose subsuming the common law action into
the equitable one. This reform, alongside improved legal analysis of the duties and accessory
liability, is more in line with the economic realities of brokerage and is better for consumers
as it reduces the likelihood of price increases and facilitates the availability of finance. It is also
more desirable from the perspectives of coherence between common law and equity, as the
law should not have two answers to one question.
Keywords: law of bribery, equity, tort, fiduciary duties, lending
I. INTRODUCTION
The English law of bribery is complex and wide. The payment and receipt of a bribe will
attract criminal liability at common law and under statute.
1
It will also attract civil liability under
LLM Candidate, University College London, BA (Oxon). We are grateful to Ruby Sanders-English, Eben MacDonald,
and an anonymous reviewer for their comments on our earlier drafts. Any errors that remain are our ow n.
LLM (Durham), BA (Oxon).
1
See Bribery Act 2010. For a detailed treatment, see also Richard L issack and Fiona Horlick,
Lissack and Horlick on
Bribery and Corruption
(3rd edn, LexisNexis 2020). The criminal law of bribery is complex and beyond the scope of
this article.
76
Cambridge Law Review (2025) Vol 10, Issue 1
both the tort of bribery
2
and as a breach of fiduciary duty.
3
Actions are available against both
bribe-givers
4
and bribe-takers ,
5
and bribes include secret commissions.
6
Secret commiss ions
are unauthorised payments that an agent or fiduciary receives from a third party. The issue of
civil liability arose recently when the Court of Appeal handed down its decision in three com-
bined appeals
in the case of
Johnson v FirstRand Bank Ltd
(‘
FirstRand’
).
7
The case con-
cerned secret and half-secret commissions given by lenders to car dealers who acted as credit
brokers for consumers. It was held that the brokers had breached their ‘disinterested’ duty
and fiduciary duty owed to the consumers and that, essentially, customers were mis-sold fi-
nance. The case has sent shockwaves through the motor finance industry, impac ting broker-
ages,
8
car manufacturers,
9
and banks, and encouraging consumer claims.
10
The cause of
concern is that, in the short term, both car dealers and lenders will be exposed to significant
liability (Lloyd’s Banking Group have set aside £1.1 billion so far to cover claims
11
) and that,
in the long term, car finance will become more expensive. The impact of the case is not
limited to the motor finance industry and applies to all credit brokers as most brokers operate
on a commission model which is usually secret or half-secret.
12
Given the wide and significant
impact of the case, the UK Supreme Court has granted permission to appeal,
13
and the case
and the law of bribery are ripe for review.
While the result of the case is defensible, the reasoning is, in the authors’ view, defi-
cient. We argue that the issues in the case arise from confusion and difficulties between the
tort of bribery and a breach of fiduciary duty, conflicting authorities, and the lack of explana-
tion as to why a fiduciary duty and disinterested duty are imposed. We propose that the com-
mon law action should be subsumed into the equitable one and that the disinterested duty
can and should be viewed as a fiduciary duty. We also put forward a better explanation of
why a fiduciary can be imposed in the case itself. This is a better result as a matter of principle,
2
T Mahesan v Malaysia Government Officers’ Co-Operative Housing Society Ltd
[1979] AC 374 (PC) 383. See Section
II(B)(ii) below.
3
FHR European Ventures LLP v Cedar Capital Partners LLC
[2014] UKSC 45, [2015] AC 520 [7]. See Section II(A)
below.
4
Mahesan
(n 2) (common law);
FHR European Ventures
(n 3) (equity).
5
See for example
Johnson v FirstRand Bank Ltd
[2024] EWCA Civ 1282
[124] (equity);
Group Seven Ltd v Nasir
[2019] EWCA Civ 614, [2020] Ch 129 [110] (equity);
Mahesan
(n 2) (common law). See Section II below for a detailed
account.
6
Hurstanger Ltd v Wilson
[2007] EWCA Civ 299, [2007] 1 WLR 2351 [39];
Industries and General Mortgage Co Ltd
v Lewis
[1949] 2 All ER 573 (KB) 575 (Slade J) (‘bribe means the payment of a secret commission ’).
7
FirstRand
(n 5).
8
See Jack Williams, ‘Close Brothers Stops Underwriting New Dealer Finance after Landmark Court Ruling’ (
Car
Dealer
, 25 October 2024) <www.cardealermagazine.co.uk/publish/close-brothers-stops-underwriting-new-dealer-f i-
nance-after-landmark-court-ruling/309297> accessed 15 December 2024.
9
Michael Bow and Matt Oliver, ‘Car Deliveries Halted amid Fears Motor Finance Scandal Is “Bigger than PPI”’
The
Telegraph
(London, 31 October 2024) <www.telegraph.co.uk/business/2024/10/31/car-deliveries-halted-amid-fears-mo-
tor-finance-scandal> accessed 15 December 2024.
10
See for example Stephen Fairclough, ‘Motorists Who Bought Cars on Finance Could Share in Billions’ (
BBC News
,
11 November 2024) <ww w.bbc.co.uk/news/articles/cgj7dy50p6vo> accessed 15 December 2024; Kalyeena Makortoff,
‘Claims Management C ompanies Circle after UK Court Ruling on Mis-sold Car Finance’
The Guardian
(London, 9
December 2024 <www.theguardian.com/business/2 024/dec/09/car-finance-scandal-uk-claims-management-consumer-
compensation> accessed 15 December 2024.
11
Ben Martin, ‘Lloyds Banking’s Bill for Possible Car Loan Misselling Rises to £1.1bn’
The Times
(London, 20 Febru-
ary 2025) <www.thetimes.com/business-money/companies/article/lloyds-bankings-bill-f or-possible-car-loan-misselling-
rises-to-11bn-wblvgsv6h> accessed 11 February 2025.
12
Larry Harris,
Trading and Exchanges: Market Microstructure for Practitioners
(OUP 2003) ch 5.
13
‘Announcement from the UK Supreme C ourt’ (
UK Supreme Court
, 11 December 2024) <https://www.su-
premecourt.uk/news/uksc-announcement-1> accessed 15 December 2024. See
Wrench v FirstRand Bank
(UKSC
2024/0159);
Johnson v FirstRand Bank
(UKSC 2024/0158);
Hopcraft v Close Brothers
(UKSC 2024/0157).
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