Disputes Briefcase

Background

The claimants purchased second-hand cars on finance through car dealers acting as credit brokers. Although the dealers received commission from the lenders for having arranged the finance, the fact and/or amount of the commission was not disclosed. The claimants commenced proceedings in the County Courts for bribery, dishonest assistance and under the unfair relationships regime in the Consumer Credit Act 1974. The lenders were successful at first instance and on first appeal.

In a decision that sent shockwaves through the industry, the Court of Appeal found that the lenders were liable (i) in the tort of bribery (in Hopcraft and Wrench) and (ii) for dishonestly assisting a breach of the dealers’ fiduciary duties (in Johnson). The Court also upheld Mr Johnson’s unfair relationship claim.

The Supreme Court

The Supreme Court ruled that the car dealers did not owe a fiduciary duty to customers. Consequently, the lenders could not be held liable for bribery, or for assisting with a breach of that duty. However, the Supreme Court ruled that the relationship between Mr Johnson and his lender was unfair under the Act.

Key takeaways

1. The bar for fiduciary duties is high. Car dealers acting as credit brokers do not owe a fiduciary duty (a duty of “single-minded loyalty”) to customers. Such a duty is at odds with the commercial reality of the transaction, where each party is focused on their own self-interest.
2. The existence of a fiduciary duty is a prerequisite for a claim in bribery. A lesser “disinterested” duty is not sufficient.
3. Lenders may still find themselves liable under the unfair relationship regime. Any assessment of unfairness will be highly fact-specific. However, the following factors are likely to be relevant:

• • the size of the commission relative to the size of the credit;
  • the nature of the commission;
  • the characteristics of the customer (including whether they are commercially sophisticated);
  • the extent and manner of any disclosure;
  • whether the customer read the documents; and
  • the dealer and lender’s compliance with the applicable regulatory rules.

FCA Redress Scheme

Following the judgment, the FCA launched a consultation on a consumer redress scheme. The scheme proposes that customers be entitled to compensation where one of the following was present and not disclosed: (1) a discretionary commission arrangement; (2) a high commission arrangement (35% of the total cost of credit and 10% of the amount financed, or more); or (3) an arrangement giving a lender a right of first refusal/exclusivity. The FCA estimates that the scheme will cost £11bn. The deadline for responses to the consultation has been extended to 12 December.

Slaughter and May acted for Close Brothers Limited in the Supreme Court. Read more about the proposed redress scheme here.

Following a 28-day hearing earlier this year, the CAT’s judgment represents a comprehensive victory for the class representative.

On market definition and dominance, the CAT agreed with Dr Kent’s proposed definitions of the relevant markets: one for iOS app distribution services – which facilitate the purchase of apps to users, whether those apps are free or paid-for – and one for iOS in-app payment services – which include mechanisms for processing payments made by users who have already downloaded apps and associated support services. The Tribunal then had no difficulty finding that Apple – which had a 100% market share by virtue of its App Store – was dominant. Apple’s closed app ecosystem meant that the prospect of users switching to non-Apple devices was not a material constraint on its ability to set commission at a level of its choosing.

The CAT found that Apple had unlawfully foreclosed competition in both relevant markets by giving developers no choice but to distribute apps through the App Store and to process in-app purchases using Apple’s systems; and by tying in-app purchase services to the App Store. The Tribunal rejected Apple’s case that the competition Dr Kent contended for would breach its IP rights: Apple was not seeking to reserve to itself the exclusive use of its IP infrastructure (quite the opposite – it wanted developers to make use of it to create and distribute apps); rather it was seeking to apply contractual restrictions on developers to limit competition.

The CAT held that Apple had abused its dominant position by charging excessive and unfair prices in the form of the 30% commission levied on app developers. The Tribunal adopted the usual two-limb test set out in United Brands: first, it concluded that a significant and persistent difference existed during the relevant period between the price of the services and the cost of providing them. That meant the commission was excessive. Second, the level of commission was unfair both on its own terms and by reference to relevant comparator services.

The CAT rejected Apple’s argument that its conduct was objectively justified on the basis that it was efficient (not so, the CAT found, because its effect was to eliminate competition entirely) and objectively necessary (because the restrictions were not necessary or proportionate).

On quantum, the CAT assessed the overcharge by reference to counterfactuals and decided that, but for its infringing conduct, Apple would have charged a commission of 17.5% for app distribution services (meaning an overcharge of 12.5%) and 10% for in-app payment services (i.e. an overcharge of 20%). Applying the “broad axe” principle, the CAT considered that 50% of this overcharge had been passed on to consumers. It said that interest should be applied at a simple rate of 8%.

The CAT denied Apple permission to appeal; Apple now has until 5 December to ask the Court of Appeal for permission. An order on the amount of damages to be paid will be made in due course.

The claims

Pensions administrator, Equiniti, mistakenly posted the annual benefit statements of a group of police officers to out-of-date addresses. Over 400 police officers collectively brought claims for breaches of their rights under the UK GDPR and Data Protection Act 2018. The officers argued that Equiniti had breached their data protection rights and caused the officers “anxiety, alarm, distress and embarrassment” for fear that their personal data “may have” passed to unknown third parties.

The High Court struck out all but 14 claims holding that to have a viable claim for breach of data protection laws and/or misuse of private information (the latter claim was later dropped) the claimants needed to show they had a real prospect of establishing that the benefits statements had been opened and read by unauthorised third parties. The judge held that most of the claims could not do so and therefore had no reasonable basis. The officers appealed.

The Court of Appeal’s decision

The Court of Appeal allowed the officers’ appeal finding that:

• Proof that data was disclosed is not an essential ingredient of an allegation of processing or infringement of data privacy law. The Court considered that the judge had been wrong to strike out the claims on the basis that a third party had not opened and read the benefit statements.
• There is no “threshold of seriousness” for data privacy claims under the UK GDPR and DPA 2018. The Court held that while a “threshold of seriousness” applies to claims for misuse of private information (Prismall v Google and DeepMind), it did not consider that such a threshold should apply to data protection claims which are part of a separate regime. The Court distinguished the Supreme Court’s decision in Lloyd v Google, which held there was a “threshold of seriousness” for claims under the pre-GDPR regime in the UK Data Protection Act 1998. Instead, the Court aligned with the EU position. The Court can have regard to post-Brexit CJEU rulings where relevant and here it saw no strong reason for departing from settled CJEU case law which had found that there is no “threshold of seriousness” test under the GDPR.
• Compensation for fear or anxiety about possible misuse of data is recoverable, but only if the fears are objectively “well-founded”. The Court held that compensation for emotional responses other than distress can be recoverable under English data protection law, but claims cannot be “purely hypothetical or speculative”. The Court directed the lower courts to determine whether each individual claim meets this test.
• The claims as a class should not be struck out as an abuse of process simply because the costs of defending the claims might exceed the potential damages. The Court held that the modest amount of likely damages could not of itself be sufficient to justify dismissal of an otherwise valid claim, but the question of whether an individual case is abusive could be considered by the lower courts.

However, this may not be the last word as Equiniti has sought permission to appeal the decision before the Supreme Court. See also our blog post on the decision.

Hot on the heels of the Civil Justice Council’s report recommending reforms to the litigation funding market (see our July 2025 edition of Disputes Briefcase), the UK government issued a call for evidence on the operation of the opt-out collective proceedings regime in the CAT (these kinds of cases are only ever brought with the backing of litigation funders). Ten years after the regime’s advent, the review seeks to balance consumer redress with the avoidance of undue burdens on business.

Among its key questions are whether funding agreements are fair and transparent, whether litigation costs influence competition among funders, and how the secondary market in litigation funding has developed in relation to transparency and confidentiality. The Department for Business and Trade explicitly acknowledges the overlap between its review and the CJC’s recommendations and has confirmed that it will consider the CJC’s findings as part of its own review. Together, these initiatives signal continuing scrutiny of litigation funding, with further reforms likely in 2026.

The High Court has handed down its highly anticipated decision in Getty Images v Stability AI, finding that Getty’s claim for secondary copyright infringement failed, but Stability AI was liable (in part) for trademark infringement. The case concerned Stability AI’s generative AI tool known as ‘Stable Diffusion’ which creates synthetic images in response to user prompts. Getty argued that Stable Diffusion had been trained using copyright-protected images scraped from its websites without permission. The case is one of the first such claims against an AI developer to reach trial and has therefore attracted significant interest. Many of the big questions around primary copyright infringement fell away after Getty narrowed its claims at trial. Even so, the fact that Getty’s claim for secondary copyright infringement failed will be a relief to generative AI developers, but a blow to UK copyright holders. Read more in our blog post on Getty and our briefing on copyright infringement risks in training Generative AI.

The European Court of Human Rights has delivered its judgment in Greenpeace Nordic & Ors v Norway finding that a decision by Norway to license petroleum exploration and production in the Arctic Ocean had not breached Norway’s obligations to protect individuals’ rights to privacy under Article 8 of the European Convention on Human Rights. However, the Court’s decision sets out important procedural standards that may influence how contracting states assess and approve similar projects in future. The Court held that authorities must carry out adequate, timely and comprehensive environmental impact assessments before approving new petroleum projects, based on the best available science. Authorities must assess each project’s expected global downstream greenhouse gas emissions, including exported combustion emissions, and test the project’s compatibility with domestic and international climate commitments. In reaching its decision, the Court considered recent advisory opinions on climate change from other international courts, including the International Court of Justice, the Inter-American Court of Human Rights, and comparative cases from domestic law, notably the UK Supreme Court’s decision in R(Finch) v Surrey County Council.  In another case brought by Greenpeace Nordic, a Norwegian appeal court has found that three oil fields in the Norwegian North Sea are unlawful as the climate impacts from combustion emissions had not been sufficiently investigated or assessed. The decision follows an advisory opinion from the European Free Trade Association Court requested by the Norwegian courts.

The Ministry of Justice has consulted on how the Singapore Mediation Convention might be implemented in the UK. The Convention creates an international framework for the recognition and enforcement of cross-border commercial settlement agreements resulting from mediation. The UK government signed the Convention in May 2023 but despite plans to do so in 2024, the UK has not yet ratified the Convention. The Convention is currently in force in 19 states but some commentators have suggested that the Convention could become as significant for mediation as the New York Convention (which has over 170 parties) is for international arbitration.

Among recent developments in arbitration before the English courts:

The Supreme Court in P&ID v Nigeria has unanimously confirmed the proper approach for determining the currency of a costs order. The Court held that the general rule is that costs orders should be made in sterling or in the currency in which the solicitor billed its client and in which the client paid. The decision follows Nigeria’s successful application to set aside two arbitral awards against it for fraud. P&ID was ordered to pay Nigeria’s costs in sterling (the currency in which it had been billed by its solicitors and in which it had paid). P&ID argued that costs should be paid in Nigerian currency (naira), as payment in sterling would amount to a windfall for Nigeria at P&ID’s expense because the naira had dropped significantly against sterling. The Supreme Court disagreed, holding that an order for costs is not intended to compensate loss in the same way as an award for damages in tort or contract. A costs award is a discretionary remedy and the court’s task in making a costs award is to identify a reasonable amount which the paying party should pay as a contribution towards the receiving party’s costs incurred in litigation. 

The Court of Appeal has unanimously allowed an appeal in Star Hydro Power v National Transmission and Despatch Company. The Court found that the English courts can grant an anti-suit injunction to restrain a party’s attempts ostensibly to ‘partially enforce’ a London-seated arbitral award in the Pakistan courts under the New York Convention where the Court found the foreign proceedings would effectively have amounted to a challenge to the award. In a case to watch, the Supreme Court has granted permission to appeal.

The Court of Appeal in Eronat v CNPC has upheld a decision of the High Court to refuse permission to appeal an arbitral award. In doing so, the Court confirmed that a timeline agreed between the parties for appealing an arbitral award “within thirty (30) days after the decision is rendered” in an arbitration clause runs from the date of the award, not the date the award was delivered to the parties.  

In URE Energy v Notting Hill Genesis, the Court of Appeal has provided guidance on the limits of the principle of ‘waiver by election’ – where a party has contractual rights to either continue or to end a contract that party must elect between those rights and the right that is chosen is then lost. The Court held that an energy supplier had not lost its right to terminate the contract, which had been triggered by a merger involving its counterparty, due to ‘waiver by election’ because the energy company did not know of its termination right and so there had been no binding election to continue the contract.

In our November Contract Law Update we provide a round-up of other recent key developments in contract law, including:

• The High Court in Alaska Airlines v Virgin Aviation held that where a contract concerns several rights, the question of whether a payment obligation relates to particular rights or the complete bundle of rights is a question of interpretation. A no-set-off clause can allow recovery of payments due notwithstanding the counterparty’s other potential claims. Slaughter and May successfully represented Virgin in the proceedings.
• The Court of Appeal in DAZN v Coupang Corp held that an exchange of messages or emails can give rise to enforceable contractual obligations, even in the context of high-value commercial arrangements.
• The High Court in Learning Curve v Lewis held that a party’s ability to bring a claim under a specific indemnity does not necessarily preclude a claim for breach of warranty under a share purchase agreement.
• The Court of Appeal in Kulkarni v Gwent held that whilst a repudiatory breach cannot be cured at common law, a material or persistent breach is not necessarily irremediable simply because it is also repudiatory.
• The Court of Appeal in Orion Shipping and Trading v Great Asia Maritime held that a contractual right to terminate does not necessarily entitle a party to recover damages for loss of bargain (such as profit that would have been received). But it is open to the parties to negotiate contractual termination rights, and the consequences of termination (including the damages available) depending on the clause agreed.
• The High Court in J. P. Morgan International Finance v Werealize.com granted an anti-suit injunction in support of a no-liability clause. The High Court also held that the Contracts (Rights of Third Parties) Act 1999 was not intended to put a third party in a position to enforce and be subject to an exclusive jurisdiction clause, although these findings contrast with obiter comments in another recent case of Campeau v Gottex Real Estate Asset Fund.

In October, the CAT ruled in London Array v Nexans France that power-cable manufacturer Nexans must pay damages to wind farm London Array for cartel conduct that resulted in overcharges in relation to export cables. Permission to appeal the judgment was refused. This is only the second judgment in this jurisdiction quantifying a cartel overcharge. Read more in our Competition and Regulatory Newsletter.  

A new judgment demonstrates the breadth of the English court’s jurisdiction to grant injunctions. In Federal Government of Nigeria v Louis Williams, the Commercial Court granted an application to restrain the respondent, Dr Williams, from seeking to enforce in New York an English judgment against Nigeria he had earlier obtained by default. This is the first time a court has granted an injunction preventing overseas enforcement of one of its own judgments.

Nigeria alleged that judgment was obtained fraudulently and began proceedings in England to have it set aside; it sought an injunction to prevent enforcement in the meantime which it argued would be vexatious and oppressive in the circumstances. Henshaw J’s judgment provides a useful summary on an area that overlaps with the law on anti-suit injunctions, and its application in cases of alleged fraud.