Competition & Markets Authority v Care UK Health & Social Care Holdings Ltd
| Jurisdiction | England & Wales |
| Judge | Ms Kelyn Bacon QC |
| Judgment Date | 07 October 2019 |
| Neutral Citation | [2019] EWHC 2828 (Ch) |
| Court | Chancery Division |
| Docket Number | CH-2019-000084 |
| Date | 07 October 2019 |
[2019] EWHC 2828 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS & PROPERTY COURTS
OF ENGLAND & WALES
CHANCERY APPEALS (ChD)
The Rolls Building
7 Rolls Buildings
Fetter Lane
London, EC4A 1NL
Ms Kelyn Bacon QC
(Sitting as a Judge of the Chancery Division)
CH-2019-000084
Ms S. Ford QC and Ms Smith (instructed by CMA in-house solicitors) appeared on behalf of the Applicant.
Mr G. Facenna QC and Ms D Mackersie (instructed by CMS Cameron McKenna Nabarro Olswang LLP) appeared on behalf of the Respondents.
This is an appeal by the Competition and Markets Authority (“the CMA”) from the order of Deputy Master Henderson dated 11 March 2019, directing that the CMA's claim against the respondents, Care UK Health and Social Care Holdings Limited, and Care UK Community Partnerships Limited, should proceed under CPR Part 7 rather than CPR Part 8, and making consequential directions for the exchange of pleadings and costs.
Permission to appeal that order was given by Snowden J on 3 May 2019 on the grounds not only that there was a real prospect of success, but also that it was important that the form in which the case should proceed was correctly determined at the outset, given that these are likely to be substantial proceedings with important consequences for the parties.
The CMA's appeal is based on a point of principle. In the submission of the CMA, represented by Ms Ford QC and Ms Smith, the determinative factor that caused the Deputy Master to direct that the claim should proceed under CPR Part 7 was the conclusion that the CMA's claim included allegations of deceit and conniving in deceit, which in pre-CPR days were the sort of allegations that were not appropriate for the originating summons procedure. That, the CMA says, is an error of law because the relevant allegations in this case are based on the statutory language of the Consumer Protection from Unfair Trading Regulations 2008 (“CPUTRs”), which in turn is based on an EU Directive. The concept of deceit in that context does not originate from or equate to the domestic law tort of deceit, and there is no requirement of dishonesty.
The CMA therefore submits that the decision of the Deputy Master was premised on a manifest error of law. Moreover, the CMA says, if that decision is correct it would have serious consequences for the CMA's consumer enforcement role, because it would mean that the CMA would always have to proceed under Part 7 in this type of claim, which would significantly increase the time and cost of obtaining enforcement orders for the protection of consumers.
Mr Facenna QC and Ms Mackersie, representing the respondents, submit that the order should be upheld on the basis that the Deputy Master's order did not establish any point of principle in this regard, but was merely a fact-specific case management decision based on a number of different factors. Alternatively, if the CMA's characterisation of the Deputy Master's reasoning is accepted as accurate, Mr Facenna submits that the decision should be upheld for the different reasons that the Part 8 procedure is not suitable for the proper resolution of this claim, in particular because it is likely to involve a substantial dispute of fact.
Background to the CMA's claim
It is necessary to start by setting out, briefly, the nature of the claim advanced by the CMA in these proceedings.
The CMA's claim in its original Part 8 form was issued on 7 February 2019. It was brought as the culmination of an investigation that had started in December 2016 when the CMA launched a market study into the UK care homes market. As part of that study, the CMA sent an information request to the respondents and other large care home providers, which included a request for the information that was given to consumers before entering into a contract, as well as information relating to fees charged to residents.
Following the respondents' response to that request, the CMA decided to open a consumer protection case in June 2017, specifically relating to the administration fee charged by the respondents to residents on admission to certain of their care homes in England. The CMA then initiated a consultation with the respondents pursuant to Part 8 of the Enterprise Act 2002. In July 2018 the CMA sent the respondents a letter as part of that consultation, alleging breaches of consumer law and seeking undertakings from them.
The respondents removed their administration fee with effect from 1 August 2018. The parties were, however, unable to agree on a resolution of the CMA's investigation and in February 2019 the CMA filed its Part 8 claim. The claim form was accompanied by Details of Claim running to 12 pages, and seven witness statements on behalf of the CMA. The main witness statement was a 77 page statement from Ms Jennifer Dinmore, a Project Director in the Competition, Consumer and Markets Group of the CMA. There were also shorter witness statements from Dr Gavin Knott, a Director in the Remedies, Business and Financial Analysis team at the CMA, and Mr Paul Hughes, Assistant Director of Investigations at the CMA. The remaining witness statements were statements from four individuals whose relatives had gone into the respondents' care homes. All four had complained to the CMA about their experiences with the respondents. The witness statements were accompanied by voluminous exhibits, running to thousands of pages in total.
The CMA's claim as set out in its Details of Claim centred on the fact that between 1 February 2013 and 31 July 2018 the respondents charged residents of most of their care homes in England a non-refundable administration fee on commencement of a care home contract, which amounted to two weeks' residential fees, unless a lower amount was negotiated.
The CMA said that these administration fee terms were unfair terms within the meaning of regulation 5(1) of the Unfair Terms in Consumer Contracts Regulations (“UTCCR”), and unfair terms within s. 62(4) of the Consumer Rights Act 2015 (“CRA”). The essence of the CMA's objection in this regard was that the consumer was required to pay the administration fee at the commencement of the contract, whatever the duration of the contract might be, and before any service, or alternatively anything more than a disproportionately small service, was provided in return. The CMA also said, among other things, that unfairness resulted from the fact that the administration fee terms were not disclosed until the relevant consumers were to some degree emotionally committed to entering into the care home contracts, and that the consumers in question – either elderly people or their relatives – were at particular risk of accepting unfair contract terms. Accordingly, the CMA said that the respondents had engaged in Community infringements falling within s. 212(1)(a) of the Enterprise Act 2002 (“ EA02”), and domestic infringements falling within s. 211 of the EA02.
The CMA also said that the respondents had engaged in unfair commercial practices that were misleading actions, misleading omissions and/or aggressive practices, contrary to the CPUTRs, essentially on the basis that insufficient information was given to consumers about the administration fee. This was said to deceive or be likely to deceive the average consumer in relation to the price or the manner in which the price was calculated, thereby causing or being likely to cause the average consumer to take a transactional decision (to visit a home, or to take various further steps towards admission to the home) that they would not have taken otherwise.
Accordingly, the CMA sought a declaration that the administration fee terms used by the respondents were unfair within the relevant provisions of the UTCCR and CRA, and sought enforcement orders under the EA02 prohibiting the respondents from using unfair terms and requiring them to offer refunds to consumers who had paid administration fees under unfair terms and/or as a result of unfair commercial practices contrary to the CPUTRs.
Care UK's application to transfer the claim to Part 7
After the claim was filed the respondents invited the CMA to agree to convert the claim to a Part 7 claim. The CMA maintained its position that Part 8 was appropriate. Accordingly, on 21 and 25 February 2019 the respondents filed applications seeking an order that the claim should proceed as if commenced under Part 7 (with consequential directions), or in the alternative that there should be an extension of time for them to serve their written evidence in response to the claim.
The respondents' applications were supported by a witness statement from Mr Tom Dane, a partner at CMS Cameron McKenna Nabarro Olswang, solicitors to the respondents. Mr Dane maintained that the Part 8 procedure was inappropriate for this...
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