The tort of bribery is largely absent from New Zealand case law – it is mentioned (but not applied) in a 2004 High Court judgment,1 and briefly acknowledged as a possibility in New Zealand’s leading text on tort.2 Because of its rarity, the English Supreme Court’s recent decision in Hopcraft & Anor v Close Brothers Ltd is likely to be influential.3
With this loan, thy car I purchase
The decision arose from three conjoined appeals relating to the lawfulness of commissions paid by finance lenders to car dealers in connection with the provision of finance for the hire purchase of cars.4 These commissions were either not disclosed, or only partially disclosed, to the customers hiring the cars.5
The appeals concerned a “three-cornered” transaction between customers, car dealers and lenders with the following features:6
1. The car dealer maintains a panel of lenders who could offer finance to customers.
2. The customer wishes to purchase a car from the car dealer on credit.
3. The car dealer offers finance to the customer from one of its lenders.
4. Crucially, the lender pays the car dealer a commission.
In each case, the dealer did not disclose the commission or disclose that a commission (of an unidentified amount) might be paid.7
The customers claimed that these commissions amounted to bribes, or to secret profits received by the dealers as fiduciaries.8 They each sought payment of an amount equivalent to the lenders’ commissions under the tort of bribery.9 In the alternative, two of the customers claimed compensation from the lenders for dishonest assistance in the dealers’ receipt of secret profits.10 The customers also sought to re-open their hire purchase agreements under s 140A of the Consumer Credit Act 1974 on the basis that they gave rise to an unfair relationship.11
Something blue for the motor finance industry
The Court of Appeal had found in favour of the customers. It held that the dealer acted on the customer’s behalf when it sourced finance.12 In that capacity, the Court found the customer had reposed trust and confidence in the dealer to find an offer of finance that was suitable and competitive.13 As a consequence, the dealer owed fiduciary duties to the customer.14 The Court concluded that the commissions were received in breach of the dealers’ fiduciary duties.15 Additionally, the lenders were found to be liable for bribery and dishonest assistance, and for the repayment of the commission to the customer.16
To have and to hold
The Supreme Court overturned the Court of Appeal’s decision.
The Court was faced with the lenders’ “interesting, if bold, argument” that the tort of bribery should be abolished.17 The Supreme Court rejected this argument, confirming that the distinct tort of bribery exists at common law.18 In doing so, the Court helpfully examined the elements and nature of bribery, describing three essential elements:
1. The briber makes a payment (the commission) to the fiduciary of the other party to a transaction (the principal);19
2. The briber knows that the recipient of the payment is a fiduciary of that other party;20 and
3. The briber makes the payment without that principal’s knowledge and (fully informed) consent.21
The Court gave some important clarification to that final element. A decision of the English Court of Appeal22 had held that partial disclosure of the commission would not fulfil the secrecy requirement and only equitable remedies would be available in that case. The Supreme Court was clear, the requirement is “full disclosure of all material facts”.23
In defining the bounds of the tort, the Court drew a distinction between fraud and bribery (sometimes conflated in earlier authorities).24 For bribery to be proven there is no requirement that the payer of the bribe or its recipient make a representation to the principal, nor that the principal rely on any representation.25 There is also no requirement to prove dishonesty on the part of either the payer or the recipient of the bribe.26
The strict approach to liability is reflected in the remedies that are available.27 First is the right to rescind (limited by common law requirements).28 A principal who has entered into a contract tainted by bribery has the common law right to rescind the contract without the need for an order of a court.29 If the common law requirements30 are not met, the principal will retain the equitable right to rescind.31 If the principal elects to affirm the contract,32 there are two measures of damages:
1. To recover the amount of the bribe from the briber.33 This does not require the principal to prove any loss has been suffered at all.34 The justification for this is grounded in the law’s strict approach to bribery and the need for deterrence.35
2. To recover the actual losses suffered as a result of entering into the transaction tainted by the bribe.36 The plaintiff must positively prove that the loss has been suffered.37
These alternative remedies can be sought together, however, judgment can only be obtained for one or the other.38
A promise to be true?
The Court’s decision turned on the nature of the relationship that must be present for the tort of bribery. It is not, as some earlier decisions had implied, a requirement that there be an agency / principal relationship.39 The tort is not:40
engaged by anything other than the receipt of a benefit by a person who is subject to a fiduciary duty to which the beneficiary of that duty has not given fully informed consent.
A fiduciary relationship is necessary.41 The Court of Appeal had found that this element was satisfied because the dealers had effectively been acting as credit brokers and the customers had reposed in them trust and confidence in the selection of a lender.42 The Supreme Court disagreed. It found four features of the three-cornered transaction led to the conclusion that there was no fiduciary relationship here:
1. Each of the parties were pursuing their own commercial interest and were able to walk away from the transaction.43 This, the Court said, was “hostile’ to the finding of a fiduciary relationship.44
2. The intermediary service provided by the dealer was not separate and distinct.45 Rather it was ancillary to the dealers’ objective – selling a car at the best price.46 The position as an intermediary was, at best, neutral.47
3. The dealers gave no undertakings that they were putting aside their commercial interests in sourcing a lender.48 The dealers saying they would source the best deal for credit did not equate to a fiduciary undertaking.49 Absent an undertaking to act as a fiduciary, the law could not imply that obligation into this particular relationship.50
4. The dealer did not become an agent for the customer.51
5. While there was an element of dependency (by the customer) on the dealer, there was nothing to stop customers arranging their own finance.52
The Court’s view was that the Court of Appeal had given too much weight to the finding that the customers had reposed trust and confidence in the dealers.53 Something more, the Court said, was required – a fiduciary must act with “single-minded loyalty” towards its principal.54 That was not present in these three-cornered transactions.
Will bribery blossom in New Zealand?
While the tort of bribery has been given scant consideration in New Zealand, Hopcraft is a powerful reminder of its utility. There are limitations, including the necessity of establishing a fiduciary relationship. But, in the right circumstances, it offers plaintiffs strict liability and remedies that (a) permit self-help; and (b) do not require loss to be proven.
Hopcraft could ensure that bribery ceases to be the bridesmaid and…
…becomes the bride.
The Supreme Court’s decision is also a reminder that fiduciary duties cannot easily be implied into commercial transactions. New Zealand courts are likely to take a similar approach and treat “arm’s length” commercial relationships as not easily giving rise to a fiduciary relationship. Merely making a recommendation, or reposing trust and confidence in a party, does not give rise to fiduciary duties. Commercial parties should be cautious when entering into a relationship where Party A has trust and confidence that Party B will act with single-minded loyalty towards Party A. The Supreme Court identified this kind of trust and confidence as one that may point towards a fiduciary relationship.
Endnotes
1 Schelde Marinebouw BV v Attorney-General HC Wellington CIV-2004-485-1603, 24 November 2004 at [26].
2 Stephen Todd, Cynthia Hawes, Bill Atkin, Ursula Cheer and Andru Isaac Todd on Torts (9th ed, Thomson Reuters New Zealand Ltd, Wellington, 2023) at [14.1].
3 Hopcraft v Close Brothers Ltd; Johnson v FirstRand Bank Limited (London Branch) t/a MotoNovo Finance; Wrench v FirstRand Bank Limited (London Branch) t/a MotoNovo Finance [2025] UKSC 33.
4 At [1].
5 At [1].
6 At [1].
7 At [4].
8 At [4].
9 At [4].
10 At [4].
11 At [4].
12 Johnson v FirstRand Bank Limited, above n 3, at [18].
13 At [18].
14 At [18].
15 At [173](4).
16 At [173].
17 At [139].
18 At [140].
19 At [126].
20 At [126].
21 At [225].
22 Hurstanger Ltd v Wilson [2007] 1 WLR 2351.
23 At [226].
24 At [135].
25 At [135].
26 At [135].
27 At [233].
28 At [238].
29 At [228].
30 Including counter recission, see Wood v Commercial First Business Ltd [2021] EWCA Civ 471 at [101].
31 At [239].
32 At [240]. The Courts will be live to the prospect of double recovery if damages and recission are sought.
33 At [131].
34 At [131].
35 At [233].
36 At [131].
37 At [122].
38 At [131].
39 At [127].
40 At [288].
41 At [288].
42 At [90] and [95].
43 At [277] and [286].
44 At [167] – [286].
45 At [269].
46 At [269].
47 At [277].
48 At [270].
49 At [270].
50 At [270] and [282].
51 At [271].
52 At [274].
53 At [285].
54 At [283].