Jurisdiction(s):
United Kingdom

Secret commissions in mortgage broking: no fiduciary relationship required for rescission or damages—Court of Appeal (England and Wales) in Wood v Commercial First; Business Mortgage Finance v Pengelly

Published on: 12 April 2021

Published by a LexisNexis Commercial expert

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Article summary

Wood v Commercial First Business Ltd and other companies; Business Mortgage Finance 4 plc v Pengelly [2021] EWCA Civ 471

What are the practical implications of this case?

The Court of Appeal has reset the approach to secret commissions and bribes by returning to first principles. This judgment reminds practitioners that rescission of the transaction, recovery of the amount paid as a bribe or secret commission, and/or an award of damages are remedies available at common law as well as in equity. As a result, it is no longer necessary to engage in a fine-grained assessment of the precise nature and scope of the relationship between the parties to determine whether, and to what extent, it was fiduciary. The core enquiry is simply whether the recipient of the bribe or secret commission owed a duty to provide neutral and unbiased advice or information. Where such a duty existed, the fact of a bribe or secret commission is sufficient to justify relief for the party who relied upon that advice or information. The court’s exhaustive analysis...

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