The High Court has held, among other things, that the scope of a broker’s fiduciary duty did not extend to an obligation to disclose the amount of commission in a “half secret” commission claim.

The claimant sought to recover the costs of “half secret” commissions from their electricity supplier, the broker having been dissolved following administration. While it knew that the broker would receive commission, it did not know the amount. The claimant also asserted that it did not know that commission would be funded by a supplement added to the unit price payable to the electricity supplier. It argued that the circumstances gave rise to:

• A breach of fiduciary duty by the broker.
• Liability on the part of the electricity supplier as accessory to the broker’s breach of fiduciary duty.

The court held that, although there was a fiduciary relationship between the broker and claimant, the scope of the broker’s fiduciary obligations did not extend to a requirement to disclose the amount of commission. The judge accepted that different facts may produce different results, for example where the claimant was unsophisticated or vulnerable or it could not have ascertained the amount upon enquiry (Hurstanger v Wilson [2007] EWCA Civ 299; FHR European Ventures LLP v Makarious [2011] EWHC 2308 (Ch)). However, these cases could be distinguished on the facts; here, there was equality of bargaining power, the claimant had the opportunity to enquire about the commission amount and there was no evidence that the rate was not a customary rate of reward in the energy market. Even if the judge was wrong, he concluded obiter that the claimant had given informed consent. In fact, adding commission to the unit price was a known industry practice which, to the extent it reflected trade usage and custom, obviated the need for informed consent.

Also of interest is the judge’s obiter confirmation that for the defendant to be liable as an accessory to a breach of the broker’s fiduciary duty, the claimant had to establish dishonesty on the part of the defendant. Attempts to argue that the defendant induced the broker to breach implied terms, including to act in good faith, also failed. Although the judge did not say whether such implied terms existed, there was no intention to procure such a breach here.