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.
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.
Written by Steven Mather, a business solicitor acting on company sales and purchases. This is general information about the law, not legal advice on your situation.
