Notes from hearing: unfair relationship, Johnson’case, Wood and Plevin overview.

How three major court cases shaped your rights in credit and car‑finance deals

If you’ve ever taken out car finance, a loan through a broker, or any credit product where someone helped “arrange” it, these three cases explain what you should have been told and what fairness really means.

1. Plevin v Paragon (2014, Supreme Court)

“Does a lender’s failure to disclose a commission make the relationship unfair?”

YES — if the non‑disclosure is substantial enough to affect the consumer’s informed choice.

What happened?

Ms Plevin bought PPI.
The broker received 71% commission, never disclosed.
The Supreme Court held the arrangement was unfair, even though no law was broken.

Why it matters

• Established that non‑disclosure of commission can itself be unfair.

• Introduced the idea of “unfairness by silence”.

• Confirmed the court’s very wide powers under s140B.

Key theme:

The size and secrecy of the commission can make a relationship unfair even without wrongdoing.

2. Wood v Commercial First (2021, Court of Appeal)

“Does a broker’s undisclosed commission make the lending relationship unfair even if no fiduciary duty exists?”

YES. Fiduciary duties are irrelevant to s140A.

What happened?

Borrowers used brokers who were paid commission by the lender.
They didn’t know the amount and sometimes didn’t know commission existed at all.
The lender argued:

• “We owed no fiduciary duty.”

• “The broker was independent.”

The Court of Appeal rejected this.

Why it matters

• Clarified that commission cases do not turn on fiduciary duties.

• Partial disclosure (“a commission may be paid”) is not enough.

• Reinforced that the court must look at real‑world fairness, not technical labels.

Key theme:

Unfairness can arise purely from imbalance of information and lack of meaningful disclosure.

3. Johnson v FirstRand (2023, Supreme Court)

“How should courts actually apply s140A in motor‑finance commission cases?”

It is now the leading case and the most detailed authority.

What happened?

A car dealer received a commission.
The amount was not disclosed properly.
Lower courts wrongly treated it like a “fiduciary” case.

The Supreme Court corrected the entire approach.

Why it matters

• Reaffirmed Plevin and Wood: s140A is a wide, consumer‑oriented test.

• Confirmed that dealers are not fiduciaries, but that doesn’t matter.

• Stated that the judge must analyse:

  • consumer’s vulnerability

  • transparency

  • understanding

  • size and nature of commission

  • effect on consumer decision‑making

• Declared that both fixed and discretionary commissions can be unfair if not properly explained.

• Clarified the burden shifts to the lender to prove fairness once the issue is raised.

Key theme:

Fairness is assessed in the round: what did the consumer know, understand, rely on, and would disclosure have mattered?