Office of Fair Trading v Purely Creative Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Briggs |
| Judgment Date | 02 February 2011 |
| Neutral Citation | [2011] EWHC 106 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC09C04850 |
| Date | 02 February 2011 |
[2011] EWHC 106 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
Before : Mr Justice Briggs
Case No: HC09C04850
In The Matter Of The Enterprise Act 2002 And The Consumer Protection From Unfair Trading Regulations 2008
Ms Jessica Simor (instructed by The Office of Fair Trading, General Counsel's Office, Litigation Unit, Fleetbank House, 2–6 Salisbury Square, London EC4Y 8JX) for the Claimant
Mr Kevin de Haan QC (instructed by Messrs Davies and Partners, Rowan House, Barwood, Gloucester GL4 3RT) for the Defendants
Hearing dates: 13th – 18 th January 2011
Mr Justice Briggs :
INTRODUCTION
This is an application by The Office of Fair Trading ("the OFT") for an order under section 215 of the Enterprise Act 2002 ("the Act") to prevent the defendants from continuing to distribute promotions to consumers which are alleged to involve unfair commercial practices prohibited by Regulation 3 of the Consumer Protection from Unfair Trading Regulations 2008 ("the Regulations").
The defendants' promotions about which the OFT has become concerned consist of the sending to consumers, in the form of personalised letters and of inserts in newspapers and magazines, of invitations to claim prizes, awards or rewards which are alleged to be misleading in a number of specified respects, all of which are prohibited by the Regulations. An enforcement order is sought after a lengthy process of consultation and negotiation during which the parties have attempted, but failed, to agree upon satisfactory undertakings. In short, the OFT has concluded that the undertakings offered by the defendants would fail to deal with the conduct complained of, whereas the defendants say that the undertakings sought by the OFT would require them altogether to discontinue their promotions business.
For the purpose of seeking an enforcement order, the OFT asserts and seeks to prove that the defendants have committed breaches of the Regulations in the course of five specified promotions carried out in 2008 ("the 2008 promotions"). Those promotions all took place after an earlier process of consultation and negotiation between the OFT and the defendants which, by contrast with the present impasse, did lead to the giving of undertakings in the form of assurances ("the Assurances") by the defendants on 31 st October 2007, which were approved by the OFT on 20 th November 2007, under the regime for consumer protection which was the immediate statutory predecessor of the Regulations. The OFT's case is that the 2008 promotions revealed that the defendants were complying neither with the letter nor with the spirit of the Assurances. Alternatively, the OFT claims that, even if the Assurances were being strictly complied with by the defendants in 2008, the content of the 2008 promotions has demonstrated that the Assurances were in any event inadequate to secure compliance with the Regulations in the form in force from their commencement, on 26 th May 2008.
For their part, the defendants deny any breach of the Regulations or of the Assurances, in their letter or spirit, so that their case is that no occasion (or, alternatively, no sufficient occasion) has arisen for the making of an enforcement order. Alternatively they say that the form of order sought by the OFT goes way beyond that required to secure compliance with the Regulations, and is in any event framed in such a generalised form as to make it in practice impossible for the defendants to know with sufficient precision that which they are to be prohibited from doing.
THE ISSUES
There are no significant issues of primary fact. Although both sides have adduced evidence in the form of witness statements they agreed that there was no necessity for cross-examination. Pursuant to statutory powers (under section 224 of the Act) the OFT sought, and the defendants provided, substantial detailed information about their conduct of the 2008 promotions and, partly in response to inquiries from the court, that process of the provision of information continued during the trial. No complaint has been made by the OFT that the information provided by the defendants has either been inadequate or inaccurate, although in relation to certain limited parts of it, Ms Simor for the OFT submitted that the primary facts disclosed did not always substantiate the conclusions which the defendants' evidence asserted flowed from them, after careful review. Nonetheless, it was and remained common ground that the court could identify the relevant primary facts from the documents and the information provided (mainly) by the defendants, and form its own view after hearing argument and as to relevant matters of inference.
As will appear, an important issue between the parties is whether aspects of the 2008 promotions would be likely to mislead the "average consumer" (a statutory concept to which I shall shortly return). In accordance with European and English jurisprudence, the parties abstained (wisely in my judgment) from seeking to pursue their cases on that issue by reference either to expert evidence or to statistical surveys. Both in that respect, and by their declining to cross-examine opposing witnesses, the parties are to be commended for having thereby avoided what would have otherwise have been the near certainty of giving rise to a trial of disproportionate length and expense.
The OFT's case was presented in the form of a comprehensive and generally precise statement of case, taking the form of an endorsement to its Part 8 Claim. By contrast the defendants' case was presented in witness statements rather than in a statement of case. Further time and expense might usefully have been saved if the defendants had either volunteered or been directed to prepare a statement of case by way of defence, or if, perhaps more conveniently for present purposes, the parties had agreed or been directed to produce a statement of agreed facts and issues. Nonetheless the parties' cases, and the issues, were helpfully set out in counsel's skeleton arguments.
The issues may be divided into three groups:
(1) Did the 2008 promotions involve breach of the Regulations (or of the Assurances)?
(2) If so, should the court make any enforcement order?
(3) If so, what precise form should an enforcement order take? Should the court accept an equivalent undertaking in lieu?
I suggested at the beginning of the trial that it might be convenient to take issues (1) and (2) first, and leave issue (3) (should it arise) to be dealt with after judgment on the first two. The parties readily agreed to that course and I have therefore adopted it in this judgment.
The questions which arise under the first group of issues may be summarised as follows. First, there are issues of construction or interpretation of the relevant Regulations. This is, so far as I or counsel are aware, the first occasion when an application for an enforcement order arising from alleged breach of the Regulations has been pursued to a contested trial. Since the Regulations were made for the purpose of implementing within the United Kingdom a maximum harmonisation directive, namely the Council Directive 2005/29 known as the Unfair Commercial Practices Directive ("the UCPD"), issues as to the interpretation of the Regulations depend essentially on EU jurisprudence. In fact, the points of interpretation at issue are not addressed directly in any decision of the ECJ, although the recitals to the UCPD provide a clear identification of the purpose of both the detailed provisions of the Directive itself, and the relevant provisions of the Regulations which, for the most part, mirror the language of the Directive almost word for word. I shall address the issues of interpretation after a general description of the relevant parts of the UCPD, the Act and the Regulations.
Secondly, there are serious issues about whether, by commission or omission, the content of the 2008 promotions was misleading to their consumer recipients. Thirdly, there are issues as to whether any such misleading content in the 2008 promotions had any relevant causative consequences. As will appear, the issue is whether any such misleading content causes or is likely to cause the average consumer to take a transactional decision he (or she) would not have taken otherwise. Finally, there are issues whether any breaches of the Regulations which are proved were such as to harm the collective interests of consumers.
Thus all the issues under the first group, other than the questions of interpretation, may be viewed as issues as to the application of the Regulations to uncontentious primary facts, or issues as to the inferences to be drawn from those uncontentious primary facts.
The second group of issues arise from the fact that the court's power to make an enforcement order is discretionary. In summary, the defendants say that, even if some breaches of the Regulations may be proved, if they can show nonetheless that they conducted the 2008 promotions in accordance with the letter and the spirit of the Assurances, or if the breaches are de minimis and unlikely to be repeated, then no enforcement order should be made.
In addition, the ninth defendant Mr Peter Henry submits that having resigned his directorship of the third defendant company in October 2009, and having had no involvement of any kind since then with the defendants' promotions (or any other similar promotions), it would be inappropriate for any enforcement order to be made against him.
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