Tooling v Engie: a glimpse into the future of the motor finance litigation?

On 21 March 2025, the Court of Appeal handed down an expedited judgment in Expert Tooling and Automation Ltd v Engie Power Ltd [2025] EWCA Civ 292, a case which, like one of the three linked motor finance cases due to be heard at the Supreme Court this week (Johnson v FirstRand Bank Limited), dealt with 'half secret' commissions. In Tooling the Court of Appeal took the opportunity to expand upon and further explain some of its reasoning in Johnson.

Background and Grounds for Appeal

The primary issue in Tooling was whether an energy supplier, Engie, was liable to Tooling as an accessory to breach of fiduciary duty by Tooling's utilities broker, Utilitywise plc (UW).  Tooling is engaged in the business of manufacturing tools, consuming a huge amount of energy.  They engaged UW to assist in obtaining energy supplier contracts for their business.  Tooling did not directly pay UW for their brokerage services.  Rather, UW received commission from Engie.  The commission was built into the unit price of the energy, and the commission levels were set by UW, with an entitlement for UW to be paid up to 80% of the total commissions they expected to be paid over the life of the contract up front, thereby incentivising UW to sign Tooling up to longer service contracts. 

Tooling knew that UW was receiving a commission from Engie, but it did not know the amount, the details of how it was set, the fact that the commission was built into the unit price for the energy, or that UW might have an incentive to sign Tooling up to longer contracts to maximise up front commission. 

UW was not involved in the litigation at all, having ceased trading before it began.  Instead, Tooling pursued Engie, asserting that Engie had wrongfully procured UW's breach of fiduciary duty owed to Tooling, and was liable to pay Tooling damages as a result.

Tooling's case was dismissed at the High Court level, and they appealed to the Court of Appeal on seven grounds.  They were granted permission to appeal in September 2024, and the Court of Appeal handed down its judgment in Johnson in October 2024.

The facts in Tooling had significant similarity to the facts in Johnson, where the claimant signed a form which informed him that a commission might be paid, but no further details were provided on the commission.  Given the factual similarity and the finding of accessory liability of the lenders in Johnson, Tooling sought permission to appeal on an eighth ground of appeal. Tooling argued the High Court judge was wrong to find that Engie had not acted dishonestly, alleging that the Johnson judgment bound the Court of Appeal to find that Engie did, in fact, act dishonestly and so was liable as an accessory.

Consideration of Johnson

The Court of Appeal affirmed, despite Tooling's arguments to the contrary, that dishonesty was an essential ingredient in accessory liability, and Tooling's efforts to argue otherwise were found to be unconvincing.

The alternative to this was the eighth ground, wherein Tooling alleged that the result in Johnson bound the Court of Appeal to find that Engie had, in fact, acted dishonestly and so was liable as an accessory. Tooling argued that Johnson concluded that the only elements required to prove dishonesty was that the lender (or in this case, Engie); (1) knew it was paying the broker a commission and (2) further knew that there was a fiduciary relationship between the broker and the claimant.  On Tooling's case, Johnson would not require that Engie also knew the payment of the commission "constituted a breach of duty because of the lack of informed consent by Tooling" (paragraph 114 of Tooling).

Engie argued that permission to appeal on these grounds should not be granted in any event because dishonesty had not been raised in the original proceedings and, in any event, Tooling's argument had no realistic prospects of success.

The Court of Appeal agreed with Engie, finding that Tooling's reading of Johnson was incorrect and took the conclusion in Johnson out of context.  The Court made it clear that the lender in Johnson was liable on an accessory basis because the Court determined the lender to be dishonest.  The Court explained that this was clear from the relevant fact the Court highlighted in Johnson, such as the fact that the lender in that case had a right of first refusal when it came to disclosure of the commission, such that the broker/dealer had to approach the lender before any others, and that "FirstRand [the lender] was actively encouraging the broker not to make full disclosure and therefore that it neither wanted nor expected full disclosure to be made. In particular, the Dealer Terms do not require disclosure of the tie between FirstRand and the dealer and this renders FirstRand complicit in the concealment of that highly material fact."  (paragraph 126 of Tooling).   In short, the finding of dishonesty was not based solely on the lender's knowledge of the fiduciary relationship and the commission, crucially, it was also based on the lender's requirements and general course of dealing with the dealer/broker.

The Court of Appeal conceded that, read in isolation, certain parts of the Johnson judgment would suggest that it was not necessary for the lender to know that the claimant had not given informed consent for accessory liability to attach.  However, the Court clarified that in their view, Johnson must be read together with the context that "the court made findings (at §129 and §134) that FirstRand [the lender] had acted dishonestly, in particular by actively encouraging the broker not to make full disclosure" The earlier finding of dishonesty meant that the Court did not need to find that the lender had actual knowledge that there had been no informed consent (paragraphs 133-135 of Tooling).

The Court of Appeal then went on to note that, because dishonesty had not been alleged by Tooling before the lower court, no evidence had been given on dishonesty, and so none could now be adduced.  What little evidence which had been adduced in the prior proceedings which could arguably go to dishonesty was either insufficient or inapplicable, and so permission to appeal on those grounds was denied.

What could this mean for Johnson post the Supreme Court?

At a minimum, it appears that Tooling gives additional needed clarity for the reasoning in Johnson, at least insofar as 'half secret' commissions are concerned.  As the Court of Appeal itself conceded in relation to its own judgment in Johnson, it was possible to read Johnson as requiring only that the lender have knowledge of the fiduciary relationship and that a commission was paid for accessory liability to attach.  However, Tooling makes it clear that this was not the intent, and the Court maintains that the outcome in Johnson was consistent with the principles concerning the need to establish dishonesty in accessory liability cases as already enshrined in case law.  In short, Tooling confirms that the reason for the outcome in Johnson when it came to the half secret commission case was that the factual circumstances were such that it was clear that the lender acted dishonestly, evidenced by the requirements it put on the broker in terms of right of first refusal and discouraging full disclosure.

Even if the Supreme Court upholds the Court of Appeal's decision in Johnson, the Tooling judgment may afford an opportunity to narrow the impact of Johnson for 'half secret' commission cases, without undoing the overall result.  This provides some comfort to motor finance lenders, particularly where their own broker contracts do not contain similar requirements as those in Johnson – it is also a welcome clarification from the Court of Appeal given that the Tooling case is clear evidence of the impact of Johnson on commission arrangements beyond motor vehicle finance.

The other useful commentary from the Court of Appeal in Tooling was in relation to limitation.  The issue of limitation arose because the first utilities contract was entered into on 8 February 2016 and the claim form was not issued until 1 April 2022 – so more than 6 years from when the contract was entered into.  The Court of Appeal found that the claim was within the primary limitation period as the cause of action did not accrue at the time the contract was entered into but when the commission was paid.  However, the Court of Appeal then went on to consider deliberate concealment under s.32 of the Limitation Act 1980 and found that s.32 was not engaged.  This was because of the finding of the lower court that, had Tooling asked UW for further details of the commission, UW would have told them – so even assuming deliberate concealment – Tooling could have, with reasonable diligence, discovered that which had been concealed at the time of entering the first contract with Engie.  This could again be a useful argument where finance arrangements involving commissions were entered into more than 6 years ago (and could form a notable restriction for any consumer redress exercise that may follow the Supreme Court decisions dependent on the outcome).

It will be interesting to see how and to what extent the Supreme Court considers Tooling in the Johnson case, and we will have to wait and see if Tooling provides a small reprieve for lenders in 'half secret' cases.  The Johnson hearing is set to take place from tomorrow until 3 April 2025.