Hopcraft and another (Respondents) v Close Brothers Limited (Appellant)

Hearing listed

Case summary
Linked cases
Appeal
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Case summary

Case ID

UKSC/2024/0157

Parties

Appellant(s)

Close Brothers Limited

Respondent(s)

(1) Amy Louise Hopcraft (2) Carl Hopcraft

Intervener(s)

Financial Conduct Authority

National Franchised Dealers Association

Issue

(1) When acting as credit brokers, do car dealers owe consumers a “disinterested” and/or fiduciary duty to provide information, advice or recommendation? (2) If so, were the payments of commissions by the lenders to the car dealers secret such that the lenders become primary wrongdoers? (3) Can the lenders be liable in the tort of bribery? If so, what is the correct approach to remedies? (4) If there was sufficient disclosure of the commission to negate secrecy, was there insufficient disclosure to procure the consumers’ fully informed consent to the payment such that the lenders are liable as accessories for procuring the credit brokers’ breach of duty? (5) Can insufficient disclosure also suffice to make the relationship between lender and consumer “unfair” for the purposes of the Consumer Credit Act 1974?

Facts

In each of these three linked appeals, the claimants were financially unsophisticated consumers on relatively low incomes who, prior to January 2021, engaged car dealers as their credit brokers to arrange hire-purchase agreements (and in one case, an additional personal loan) with lenders on their behalf, to enable them to acquire a second-hand car for less than £10,000. On each relevant occasion, only one offer of finance was presented to, and accepted by, the claimant. Although different car dealers were involved, the same lender, FirstRand Bank Ltd, provided the finance in Mr Johnson’s and Mr Wrench’s transactions. The lender in the Hopcraft case was Close Brothers Ltd. In each case, the car dealer made a profit on the sale of the car, but also received a commission from the lender for introducing the business to them. The dealer had an incentive to fix the rate of interest as high as possible within the permissible range in order to maximise the size of his commission. From January 2021, these types of agreement are now banned by the Financial Conduct Authority. In the Hopcraft case, the commission was kept secret from the claimants. In the cases of Wrench and Johnson, the claimant did not know and was not told that a commission was to be paid, but the lender’s standard terms and conditions made reference to the payment of a commission. In the Johnson case, the dealer (acting as credit broker) also supplied the claimant with a document, which the claimant signed, indicating that the dealer may receive a commission from the lender. Each of the claimants brought proceedings in the County Court against the lenders seeking, among other things, the return of the commission paid to the credit brokers. All three claimants contended that the brokers owed them a duty to provide information, advice or recommendation on a “disinterested” basis. The Hopcrafts’ case, and Mr Wrench’s primary case, was that the commission paid to the credit broker was secret. Mr Johnson’s case, and Mr Wrench’s alternative case, was that even if the lender did not pay a secret commission, the brokers never obtained the claimants’ fully informed consent to the payment. In Mr Wrench’s case, his claim was successful before a District Judge at first instance but a Circuit Judge allowed the lender’s appeal. Mr Johnson’s claim was unsuccessful at first instance and on appeal. The Court of Appeal granted permission for a second appeal in both cases. The Hopcrafts’ claim was unsuccessful at first instance and her first appeal to the Circuit Judge was then transferred to the Court of Appeal. The Court of Appeal, in a joint judgment, allowed all three of the claimants’ appeals. The lenders now appeal to the Supreme Court.