Fiduciary Duty found to have been created during commercial M&A negotiations

20 February 2024

The Motoring Organisation Ltd v Spectrum Insurance Services Ltd [2024] EWHC 261 (Comm)


On 09 February 2024 Simon Birt KC, sitting as Deputy Judge of the High Court handed down his decision in this case where the Claimant, The Motoring Organisation Limited (TMO), brought claims for breach of contract, breach of confidence, breach of fiduciary duty and unjust enrichment against the Defendant, Spectrum Insurance Services Limited (Spectrum) in relation to Spectrum’s alleged wrongful exploitation of certain business opportunities that had been disclosed to it during merger negotiations.

Summary of the facts

TMO is a provider of warranty and after sales products to car dealerships for onward sale to their customers. Spectrum is an insurance provider to the motor industry. Over the course of 2018-2019 representatives of the Claimant and the Defendant conducted possible merger negotiations. TMO argued that an oral agreement had been reached in September 2019. Spectrum argued that final agreement was not concluded but that heads of agreement dated November 2019 did record those principal points on which the parties were in agreement.

As part of the negotiations, the Claimant disclosed to the Defendant a business opportunity with an insurance customer described as the Ssang Yong Opportunity (Sales Opportunity). The Claimant argued there was an agreement that was exclusively its opportunity and that the Defendant would only benefit from it if a merger was concluded. The Defendant argued that as there was no evidence of any agreement in writing there was no agreement. The judge pointed out that in this case many of the parties’ dealings were also unwritten and that the Defendant’s records were broadly consistent with the Claimant’s argument.


The judge found that there was an oral agreement between the parties as alleged by the Claimant.

On the breach of fiduciary duty point, the judge noted that it is very unusual for fiduciary duties to arise in purely commercial relationships outside established categories such as agency or partnership and that it would be unusual to expect a commercial party to subordinate its interests to those of the other. However, the judge felt that the terms agreed between the parties prevented the Defendant from preferring its own interests over the other. In this case practical control of the Sales Opportunity had been passed to the Defendant to be exploited exclusively for the Claimant’s benefit, providing an even stronger case that a fiduciary relationship existed. Whilst parties can trust each other without there being any fiduciary relationship, in this case because of the oral agreement between them, the Claimant clearly trusted the Defendant to act exclusively in the Claimant’s interests when exploiting this Sales Opportunity.

In finding that there was also a breach of confidence by the Defendant, the judge rejected the argument that the details of the Sales Opportunity were not confidential because they had also been shared with other insurance warranty providers. The Claimant argued that the information had only been provided to a limited number of pre-identified providers and that it had had passed it to the defendant for its own reasons, not as a mere conduit, and as such the Claimant had sufficient interest in it to prevent unauthorised use by the Defendant.

The Defendant was not found to have benefitted from any unjust enrichment.


Parties to pre-contract commercial and M&A negotiations should set out very clearly the rules of engagement in connection with the exchange of proprietary and confidential business information. Heads of Terms should always incorporate comprehensive confidentiality obligations covering not only the term of the discussions but also for a period thereafter. However, even where there is no written confidentiality agreement or understanding in place parties should be careful when exploiting disclosed information of the other party as they may be unwittingly found to owe a fiduciary duty to the disclosing party when exploiting such information.


John McMahon
Partner - Corporate, Commercial
John McMahon is a Partner Solicitor at Spencer West. He specialises in M&A, Corporate Finance, MBO/MBI, Rights issues, Start Ups, Shareholder Agreements, Finance and Security, Joint Ventures, Restructuring.