Commission claims and key takeaways from Expert Tooling

The CoA has dismissed Expert Tooling’s appeal, delivering a further favourable outcome for energy supplier defendants.

Whilst the CoA found that whilst there was a breach of fiduciary duty by the broker/agent, the CoA agreed that the High Court judge was:

• Correct to find that there is no basis in law for a claim against the energy supplier defendant in money had and received ;
• Right to conclude that a necessary ingredient in the claim against the energy supplier defendant for procuring or assisting in the broker’s breach of fiduciary duty is dishonesty; and
• Accordingly, given that no allegation of dishonesty was made against the energy supplier defendant and was expressly disavowed at trial, the High Court was right to dismiss the claim.

Further, the CoA confirmed that for limitation purposes, time started from the payment of commission from the energy supplier defendant to the agent broker, rather than the date of the energy supply contract.

In addition, the CoA refused Expert Tooling’s permission to amend their grounds of appeal to advance a claim based on dishonesty following the CoA’s findings in the motor finance commission claim Johnson v FirstRand Bank Limited, Wrench v FirstRand Bank Limited and Hopcraft v Close Brothers (FirstRand).

What were the Grounds of Appeal and the decisions of the CoA?

Ground 1 – Scope of fiduciary duty

Having rightly found that the agent was a “fiduciary”, the Judge erred in law in his analysis of the “scope” of the duties of the fiduciary agent and the consequential finding, on the basis of the attenuated “scope”, that the Broker was not in breach of its fiduciary duty.

The CoA disagreed with the High Court’s decision that certain elements in half-secret commission claims would narrow the scope of the fiduciary duty. The High Court judge considered that, in the circumstances of this case, the broker’s fiduciary duty did not extend to either (i) a duty to disclose the amount of commission or (ii) to advise on the arrangements for the funding of the commission to the business energy customer.

The CoA disagreed and found that issues such as the business energy customer’s level of knowledge that commission would be paid and its vulnerability and sophistication are relevant to the question of whether informed consent had been obtained, however they do not limit the scope of fiduciary duty. The CoA considered the disclosure requirements for informed consent to be obtained further at Ground 2.

Grounds 2, 3 and 4 – Informed consent

The Judge erred in law in his analysis of the requirements for the principal to give “informed” consent to the breach of duty and, it follows, that C had given its informed consent to the Broker’s breach of duty.

The Judge erred in law in his approach to “sophistication” and “vulnerability” as a basis to distinguish Hurstanger. 

To the extent that the Judge relied on trade, custom or usage as part of his analysis of the content of the duties or the giving of informed consent, he plainly erred in law.

The CoA considered that the following matters should have been disclosed by the energy supplier defendant:

• The amount of the commission;
• The fact that the commission was added to the unit price for electricity;
• The fact (which follows from (2) above) that the amount of commission to which the broker agent would be entitled depended on the length of the contract;
• The fact that the broker agent was free to indicate what commission it wished to add to the unit price, subject to the energy supplier defendant’s confirmation, in circumstances where the energy supplier defendant had little incentive to dispute the amount as it was passed through to the customer;
• The fact that a very substantial up-front payment of anticipated commission was payable to the broker agent on commencement of each contract.

The CoA considered that Expert Tooling’s knowledge of these factors would have affected Expert Tooling’s decision to enter into the contracts with the energy supplier defendant and that the above factors (both individually and cumulatively) created incentives for the broker agent to enter Expert Tooling into the contracts with the energy supplier defendant.

Further, the CoA stated that the fact that Expert Tooling could have simply asked about the amount of commission paid and if it had done so, it would have been told, is not relevant to the question of whether informed consent had been obtained.

The CoA confirmed that the vulnerability or sophistication can be a relevant consideration in determining whether the customer ought to have appreciated from what they were told all of the material matters which they were entitled to be informed. However, the customer needs to be told all material matters.

As such, the CoA concluded that the High Court judge erred in his conclusion that informed consent was obtained and allowed the appeal on Grounds 2-4.

Ground 5 – Dishonesty

The Judge erred in law in deciding that dishonesty was required for the Supplier to be liable in any event that argument was not open to the Supplier.

In its appeal, Expert Tooling argued that Hurstanger created a ‘new species of equitable liability’ that did not require dishonesty to be proven on the part of the energy supplier defendant. In its judgment, the CoA rejected Expert Tooling’s argument and agreed that dishonesty on part of the energy supplier defendant was a necessary element. Therefore, dishonesty must be shown for an energy supplier defendant to be held liable as an accessory for assistance in the breach of fiduciary duty by a broker agent. As discussed in our previous briefings, there is a very high bar when it comes to establishing dishonesty and mere knowledge of the breaching agent would not suffice.

The CoA therefore dismissed the appeal under Ground 5. As an alternative, Expert Tooling sought to introduce a new Ground 8 seeking to claim that dishonesty which was also refused by the CoA (see below).

Grounds 6 and 7 – Limitation

The Judge erred in law in identifying the date of formation of the contract induced by the expectation of an illicit commission as the date of accrual of the cause of action.  The cause of action accrued upon payment of the commission.

The Judge failed to take into account material facts in his analysis of whether the Supplier had deliberately concealed material facts and whether C could, with reasonable diligence, have discovered those facts.

The CoA disagreed with the High Court judge’s decision that the claim (for the first contract) was time barred as the cause of action accrued on the date that the contract was entered into (the first contract was entered into on 8 February 2016 and the claim form was not issued until 1 April 2022).

Instead, the CoA considers that the cause of action accrued from the date on which the energy supplier defendant paid commission to the broker agent. As such, the appeal on Ground 6 was allowed, however this ground of appeal did not affect the outcome of the appeal.

As Ground 6 was dismissed, it was unnecessary to consider Ground 7. However, the CoA stated had it been necessary to, they would have confirmed that time would not have been extended on the basis of deliberate concealment, as the High Court judge found the customer could have asked for further details of the commission and would have been told.

Ground 8 – Application to plead dishonesty

The Judge erred in finding that “there is no evidence of dishonesty”. He ought to have found that the Defendant was, in fact, dishonest (in the sense the word dishonesty was accorded in FirstRand) and therefore, that the elements of a claim in dishonest assistance were satisfied.

In the High Court, Expert Tooling expressly disavowed advancing a claim of dishonesty. The High Court confirmed that, even if a business energy customer could establish a breach of fiduciary duty by its broker agent, for the energy supplier defendant to be liable as an accessory to that breach, the business energy customer must also establish that the accessory was dishonest. The High Court judge concluded that there was no evidence of dishonesty, nor any intention to induce a breach of contract.

In the CoA, Expert Tooling attempted to apply the CoA decision in FirstRand. The CoA distinguished FirstRand on the basis that in FirstRand, the lender had actively encouraged the broker agent to not give full disclosure to the customer, whereas in this appeal, the same could not be said without the facts as to the energy supplier defendant’s state of mind being properly investigated at trial.

The CoA agreed with the High Court judge’s analysis and confirmed that the judge was right to conclude that dishonesty was a necessary ingredient in the claim against the energy supplier defendant for procuring or assisting in the broker agent’s breach of fiduciary duty. The CoA also confirmed that if allegations of dishonesty are to be made, it is necessary to identify the natural person involved with the transactions, whose state of mind was to be imputed to the energy supplier defendant.

As such, the application to add Ground 8 was dismissed.

Commission claims in the energy sector: What’s next?

As Lady Justice Asplin stated at the end of the CoA judgment, “This is clearly a complex area of the law and clarification from the Supreme Court is much needed.”  The CoA has therefore granted permission to Expert Tooling to appeal the decision in the Supreme Court.

The FirstRand appeal, which will deal with similar issues, is due to be heard before the Supreme Court on 1 to 3 April 2025.

Energy Commission claims: How our Energy Disputes experts can support you

Nick McQueen and our market leading Energy Disputes team have unparalleled experience, expertise and success in this area and can bring their unique breadth of knowledge and practical insight to advice provided to their clients. Nick and the team regularly act for businesses facing energy sector commission claims. As well as helping clients to handle and successfully defend an increasing number of claims, they help businesses to carry out health check reviews of existing contracts, operational processes and relationships, thereby helping to ‘future-proof’ against commission claims.

Please contact Nick for more information, advice or training.

[1] [2025] EWCA Civ 292