Half-secret commissions – Expert Tooling and Automation Limited v. Engie Power Limited [2025] EWCA Civ 292

The issue of half-secret commissions has once again come before the senior courts for consideration.

I have previously written about the Court of Appeal’s decision in Johnson v. Firstrand here. We await the Supreme Court judgment in that case, which is likely to be handed down in July 2025.

Facts

Expert Tooling used a third-party energy broker (UW) to source, negotiate and execute its contracts with its energy provider, Engie. Engie paid UW a commission. Expert Tooling knew this but did not know the details – importantly, where the money would come from to pay that commission (it was added onto Expert Tooling’s unit price) [28] and how much the commission was.

Expert Tooling claimed UW breached its contractual and fiduciary obligations, which Engie had procured, and Expert Tooling was entitled to the amount of the commission as money had and received or to equitable compensation for inducing UW to breach its duties.

First instance decision

The lower court dismissed the claim. It found that UW owed Tooling fiduciary duties but that their scope did not include an obligation to inform Tooling of the amount of the commission or that it was added to the price. If wrong on that, the Court found that Tooling nevertheless gave informed consent to the commission. The Court said that it would have found that Engie did not procure a breach of fiduciary duty because there was no evidence of dishonesty.

There was a limitation decision, which was the subject of appeal and with which I will not concern myself.

The appeal

The grounds of appeal were:

1. The Judge erred in his analysis of the scope of the fiduciary duty.
2. The Judge erred in his analysis of the requirements of informed consent.
3. The Judge erred in his distinction between ‘sophistication’ and ‘vulnerability’ to distinguish Hurstanger.
4. The Judge erred to the extent that he relied on trade custom or usage in considering duties and informed consent.
5. The Judge erred in finding that dishonesty was required to find Engie liable.

“The real battleground on this appeal, so far as it relates to UW’s fiduciary duty, is in respect of ground 2, namely whether the extent of disclosure of the commission was sufficient to obtain Tooling’s informed consent to what would otherwise have been a breach of UW’s fiduciary duty.” [45.]

This is because matters that seemed to be relied upon by the first instance Judge to inform the scope of the fiduciary duty more appropriately go to whether informed consent was obtained [51-54].

Although the Judge at first instance correctly directed himself as to the test for informed consent, broadly speaking whether Tooling had full knowledge of the material circumstances and the nature and extent of UW’s interest [63-64], he placed undue weight on the fact that Tooling could have asked for more information and did not. This does not vitiate the need for full informed consent to the commission.

Taking ground 3 alongside ground 2, the Court found that the principal’s relative sophistication cannot overcome a lack of informed consent when Tooling was “not told a number of material matters”, whereas it can help with a determination of what Tooling might have been expected to “appreciate” from what they were in fact told [76].

Ground 4 was dealt with shortly – there was no trade practice to speak of, none was specifically elucidated by the Judge, and so no reliance could be placed on the same at all [77].

As to dishonesty, it was contended on behalf of Tooling that the cause of action was of a new species of equitable liability that did not require dishonesty and which arose from Hurstanger. That is one where liability is established simply by showing that Engie knew UW was Tooling’s agent owing fiduciary duties to Tooling and Tooling had not given informed consent. It did not matter whether Engie knew whether there was informed consent.

The Court of Appeal rejected this [89] on the basis inter alia that it would render the distinction between secret and half-secret commissions meaningless [95], presumably in simple terms because whereas if secrecy is shown then dishonesty is present and a payer is liable, if half-secrecy is shown then dishonesty would not need to be and the payer would be liable. So, there is no sanctuary for the payer by the commission being partially disclosed.

In the light of the foregoing, Tooling sought to add a ground: that the Judge erred in finding that there was no evidence that Engie acted dishonestly. The Court of Appeal declined to permit this on the basis largely that a dishonesty point was not pursued at trial.

Given that the dishonesty points were ultimately decided against Tooling, the appeal was dismissed.

Conclusion

Once again, while the decision has added clarity, it has not cemented certainty and the final line of the judgment, just as in Firstrand, is “This is clearly a complex area of the law and clarification from the Supreme Court is much needed."