Oldham Metropolitan Borough Council v Worldwide Marketing Solutions Ltd and Another
| Jurisdiction | England & Wales |
| Judge | Mr Justice Phillips |
| Judgment Date | 11 June 2014 |
| Neutral Citation | [2014] EWHC 1910 (QB) |
| Docket Number | Case No: 3MA90203 |
| Court | Queen's Bench Division |
| Date | 11 June 2014 |
[2014] EWHC 1910 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MANCHESTER DISTRICT REGISTRY
Manchester Civil Justice Centre
1 Bridge Street West
Manchester M60 9DJ
Mr Justice Phillips
Case No: 3MA90203
Mark Fenhalls (instructed by Paul Entwistle, Borough Solicitor, Legal Services, Oldham MBC) for the Claimant
Charlene Sumnall (instructed by Gately LLP) for the Defendants
Hearing dates: 10 and 11 March 2014
Approved Judgment
Introduction
The claimant ("the Council"), a local weights and measures authority, applies for a final injunction to restrain the first defendant ("WMSL"), a company engaged in telesales on a national basis, from continuing to use certain misleading advertising in selling to other traders in breach of regulation 3(1) of the Business Protection from Misleading Marketing Regulations 2008 ("the Regulations"). An injunction is also sought against the second defendant ("Mr Kay"), the sole director and shareholder of WMSL.
The defendants no longer dispute that WMSL has been acting in breach of the Regulations and accept that they could not resist the grant of an injunction (in more restricted form than that sought by the Council) if applied for by an appropriate enforcement authority. The sole defence advanced on their behalf at the trial was the contention that the Council is not such an authority. They rely on the fact that, about a year before these proceedings commenced, WMSL had moved its place of business from Oldham to Manchester, out of the Council's area. They assert that the Council ceased to have power to pursue the matter given that WMSL had left the Oldham area for a significant period.
Pursuant to regulation 13(2), the duty (and therefore the implied power) of the Council is to enforce the Regulations "within the authority's area". Given that the Council accepts that WMSL had ceased to trade in its area some considerable time prior to the commencement of proceedings, and given that the Council has not obtained any delegated authority from any other authority pursuant to section 101 of the Local Government Act 1972 ("the 1972 Act"), the Council's power to seek an injunction can only arise, if at all, from section 222(1) of the 1972 Act, which provides as follows:
" (1) Where a local authority consider it expedient for the promotion or protection of the interests of the inhabitants of their area –
(a) they may prosecute or defend or appear in any legal proceedings, and in the case of civil proceedings, may institute them in their own name, and …"
Ms Sumnall, Counsel for the defendants, argued that, as WMSL had ceased to trade from premises in Oldham in 2012, the Council could not properly consider it to be expedient for the promotion or protection of the interests of the inhabitants of its area to pursue injunctive relief against the defendants, with the effect that the Council did not have power to do so.
Mr Fenhalls, appearing for the Council, relied on what has been recognised to be the " extremely wide" wording of section 222(1) (see R v. Jarrett and Steward (1997) 161 JPN 816). He contended that, given the advanced state of the Council's investigations when WMSL relocated, the Council considered (and properly so considered) that it was in the interests of the inhabitants of its area to bring these proceedings.
The background facts
WMSL is a telesales company, selling its services to small businesses throughout the United Kingdom. The services in question are the "enhancement" of the customer's profile on the internet, in particular the position a business' website will achieve in the list which results when certain keywords are entered into the Google search engine.
Since about June 2010 the Council has been aware of many complaints that WMSL, through it sales representatives, has been engaged in misleading advertising, falsely representing to potential customers one or more of the following: (i) that the representatives were calling on behalf of Google; (ii) that they were affiliated with Google; (iii) that they could guarantee first page allocation on Google; (iv) that customers could cancel the monthly fees without notice; and (v) that the monthly fee equated to a full month's worth of advertising.
The Council, as a local weights and measures authority, investigated these complaints as potential breaches of the Regulations, taking responsibility for so doing because, although sales were on a national basis, WMSL had its registered office and place of business at the Meridian Business Centre, Kings Street, Oldham, within the Council's area. For good measure, Mr Kay also lived in Oldham.
On 26 October 2010 Mr Kay, on his own behalf and on behalf of WMSL, executed a written undertaking to the Council (which had express power to accept such an undertaking pursuant to regulation 16), agreeing that neither defendant would engage in advertising prohibited by the Regulations. The undertaking continued as follows:
" In particular, without prejudice the generality of the above, on behalf of the company and on behalf of myself I agree that neither I nor the company will use advertising that is misleading concerning:
a) the characteristics of the company's services
b) the price or manner in which the price is calculated in relation to the company's services;
c) availability of the company's services;
d) nature of the company's services;
e) quantity of the company's services in the sense of their duration;
f) specification of the company's services; or
g) results to be expected from use of the company's services"
Notwithstanding that undertaking and a contractual undertaking given by WMLS to Google Inc. on 21 October 2010, complaints continued to be made against WMSL in respect of its advertising and selling practices. On 13 December 2011 Mr Kay again signed a document, addressed to Google Inc., acknowledging that he and WMLS had breached their previous undertaking to Google and giving a further undertaking to immediately cease making false representations about WMLS' association with Google.
On 22 February 2012 the Council executed a warrant to enter and search WMSL's premises at the Meridian Business Centre and took away various documents and one laptop.
The proceedings
On 18 April 2013 the Council commenced these proceedings under CPR Part 8, seeking an injunction pursuant to regulations 15 and 18 of the Regulations to prevent the defendants from continuing the unlawful advertising referred to above, seeking to extend that injunction to anywhere within the European Economic Area. A substantial volume of evidence was served in support of the allegations, there were significant arguments about the admissibility of certain written statements, and witnesses attended on the first day of the trial to prove the breaches alleged.
Mr Kay had served a detailed witness statement dated 16 October 2013 on his own behalf and on behalf of WMSL in which he denied the alleged breaches of the Regulations.
Notwithstanding the above, at the start of the trial Ms Sumnall stated that the defendants would not contest the injunction proceedings on the merits, but would rely solely upon the preliminary point as to the Council's power to bring the proceedings.
Although Ms Sumnall had apparently warned Mr Fenhalls that she would be taking this argument in a telephone conversation in February 2014, it was first formally advanced in her skeleton argument for this trial, served less than a week before it commenced. Mr Kay had not referred in his witness statement to WMSL having relocated, let alone taken any point on the Council's powers. Even in the Case Summary, although it is stated that WMSL traded in Manchester, no reference was made to the issue of authority. Notwithstanding the late appearance of the point and the lack of material to support it in the existing evidence, Mr Fenhalls did not contend that the defendants should be prevented from taking the point.
The evidence adduced on the issue of the Council's authority
The evidence served by the Council included documents from Companies House showing that on 10 July 2012 WMSL had changed its registered office from the Meridian Business Centre, Kings Street, Oldham to Barlow House 4 th Floor Minshull Street, Manchester (which addresses are about seven miles apart). However, a change of registered office does not entail that a company has changed its place of business. In a second witness statement served on the first day of the trial, Mr Kay provided evidence that WMSL had moved premises from Oldham to Manchester in March 2012, although its registered office was not formally changed until July that year. In other words, WMSL moved out of its premises only a matter of days after the Council executed its search warrant at the Oldham premises.
In response the Council...
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