Competition and Markets Authority v Truly Holdings Ltd
| Jurisdiction | England & Wales |
| Judge | Jonathan Richards |
| Judgment Date | 28 February 2022 |
| Neutral Citation | [2022] EWHC 386 (Ch) |
| Docket Number | Case No: FS-2021-000009 |
| Court | Chancery Division |
[2022] EWHC 386 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
FINANCIAL SERVICES AND REGULATORY LIST (ChD)
Rolls Building
Fetter Lane
London, EC4A 1NL
JUDGE Jonathan Richards
Sitting as a Deputy Judge of the High Court
Case No: FS-2021-000009
Toby Riley-Smith QC and Alexander Cook (instructed by The Competition and Markets Authority) for the claimant
The defendants did not appear and were not represented
The matter was determined by reference to written evidence and written submissions with the consent of the parties
APPROVED JUDGMENT
This is the trial of a Part 8 claim brought by the Claimant (the “CMA”) against associated travel companies, now in liquidation. The First Defendant is a holding company. The Second and Third Defendants (to whom I will refer together as the “Operating Defendants”) sold package holidays online to consumers under the names “Teletext Holidays” and “alpharooms.com” respectively.
The trial raises the following issues:
i) whether the court should exercise its discretion to grant relief consisting purely of a declaration to the effect that the Operating Defendants breached their obligations under The Package Travel and Linked Travel Arrangements Regulations 2018 (the “PTRs”); and
ii) if so, whether such a declaration should be made.
The CMA's standing to bring these proceedings is derived from the Enterprise Act 2002 (“ EA 2002”). Under EA 2002, the CMA is a general enforcer of consumer protection legislation. It has power to bring enforcement proceedings to stop or prevent infringements of consumer protection law that harm the collective interests of consumers. If the Operating Defendants breached their obligations under the PTRs, that would be a “Schedule 13 Infringement” for the purposes of EA 2002, engaging the CMA's power under s215 of EA 2002 to seek an “enforcement order”.
PROCEDURAL BACKGROUND
The CMA had received significant numbers of complaints from customers of the Operating Defendants that they had not received refunds on package holidays cancelled for reasons related to the COVID-19 pandemic. By letter dated 28 January 2021, the CMA asked for information on the extent to which the Operating Defendants had provided full cash refunds, as required by the PTRs, to customers whose holidays were cancelled because of the pandemic. Later in this judgment, I will make factual findings as to whether the Operating Defendants were in breach of their obligations under the PTRs. However, for present purposes it suffices to say that the CMA was concerned that the response to its letter revealed that the Operating Defendants were in material breach of their obligations.
The CMA was required to, and did, commence statutory consultation pursuant to s214 of EA 2002 before taking enforcement action. After some discussion, the Operating Defendants gave statutory voluntary undertakings pursuant to s219 of EA 2002 on 25 May 2021 (the “Undertakings”).
The CMA was dissatisfied with the Defendants' compliance with the Undertakings. On 18 October 2021, it commenced Part 8 proceedings seeking both (i) a declaration that the Defendants were in breach of their obligations under the PTRs and (ii) enforcement orders requiring the Defendants to pay refunds due and take various other future steps to safeguard travellers' interests.
On 18 November 2021, the Defendants filed an acknowledgment of service contesting the claim. They requested until 2 December 2021 to file their evidence, an extension to which the CMA agreed and which Fancourt J approved by order of 19 November 2021.
The Defendants did not file any evidence by the extended deadline of 2 December 2021. Rather, on 3 December 2021, their solicitors wrote to the court to explain that:
i) The Defendants had all been placed into creditors' voluntary liquidation on 1 December 2021 and joint liquidators had been appointed.
ii) The joint liquidators thought that the Defendants' customers would be entitled to compensation from the Travel Trust Association (the “TTA”) to the extent that the Defendants' assets available in the liquidation were insufficient to meet those customers' claims.
iii) Therefore, since customers could ultimately expect to obtain the refunds due to them, the CMA's Part 8 proceedings “no longer served any purpose” and there was no reason for them to continue.
The CMA accepted that its claim for enforcement orders in the Part 8 proceedings ran the risk of interfering with the scheme of pari passu distribution of assets in the Defendants' liquidation. However, it considered that the claim for a declaration should proceed to a trial. The joint liquidators' counsel confirmed to the court at a directions hearing on 8 December 2021 that the Defendants would not contest the claim for a declaration. Therefore, by order sealed on 8 December 2021, Meade J ordered that (i) with the exception of the claim for a declaration, the Part 8 proceedings would be stayed generally with liberty to restore but that (ii) the claim for a declaration would be listed for trial on the written evidence.
The Claimant has prepared a bundle containing the evidence and extensive written submissions. I am grateful to Mr Riley-Smith QC and Mr Cook for the care they took in their written submissions to draw all relevant matters to my attention, not limited to those which advanced their clients' case. Those written submissions were in fact so comprehensive that I asked the parties whether they felt an oral hearing was necessary. In response, the Claimant indicated by counsel that it had nothing to add to its written submissions. The Defendants' liquidators confirmed that they intended to make no submissions, whether written or oral. Therefore, both parties have had the opportunity to make written and oral submissions but, in view of their confirmations, I have decided the matter by reference to the written evidence and the Claimant's written submissions.
THE DISCRETION TO GRANT PURELY DECLARATORY RELIEF
This issue comes before the court as part of an application by the CMA for an “enforcement order” under s217 of EA 2002. Section 217 does not provide for purely declaratory relief, though it does not exclude it. Moreover, s217(5)(a) does indicate that, if a court makes an enforcement order, it must “indicate the nature of the conduct” that resulted in the order being made. The CMA is not now asking the court to make an enforcement order for reasons that I have already set out. However, I see nothing in s217 that either (i) ousts the general discretion to grant declaratory relief set out in s19 of the Senior Courts Act 1981 or that (ii) compels the conclusion that this would not be a suitable case for the court to exercise that discretion.
It follows that I have a discretion to exercise and the question is how I should exercise that discretion in the circumstances of this case. I am grateful to the CMA for drawing my attention to a number of authorities dealing with situations where purely declaratory relief has, or has not, been granted. However, I respectfully consider that the editors of Zamir & Woolf on the Declaratory Judgment are correct to point out in paragraph 4–06 of the 4 th edition of the work:
“While principles can be distilled from a number of judgments and can safely be said to provide guidance as to how the courts will exercise their discretion in circumstances of that kind, it is always open to a court in the individual circumstances of a particular case to conclude that special features of that case justify it departing from that guidance”.
I will, therefore, approach the discretion judicially, in the light of the overriding objective. I have been guided as to the exercise of my discretion by the judgment of Aikens LJ in Rolls Royce Plc v Unite the Union [2010] 1 WLR 318 in which he said, at [120]:
“[120] For the purposes of the present case, I think that the principles in the cases can be summarised as follows:
(1) The power of the court to grant declaratory relief is discretionary.
(2) There must, in general, be a real and present dispute between the parties before the court as to the existence or extent of a legal right between them. However, the claimant does not need to have a present cause of action against the defendant.
(3) Each party must, in general, be affected by the court's determination of the issues concerning the legal right in question.
(4) The fact that the claimant is not a party to the relevant contract in respect of which a declaration is sought is not fatal to an application for a declaration, provided that it is directly affected by the issue.
(5) The court will be prepared to give declaratory relief in respect of a “friendly action” or where there is an “academic question” if all parties so wish, even on “private law” issues. This may particularly be so if it is a “test case”, or it may affect a significant number of other cases, and it is in the public interest to decide the issue concerned.
(6) However, the court must be satisfied that all sides of the argument will be fully and properly put. It must therefore ensure that all those affected are either before it or will have their arguments put before the court.
(7) In all cases, assuming that the other tests are satisfied, the court must ask: is this the most effective way of resolving the issues raised. In answering that question it must consider...
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