Warwickshire County Council v Halfords Autocentres Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Hickinbottom,Mr Justice Jay |
| Judgment Date | 09 November 2018 |
| Neutral Citation | [2018] EWHC 3007 (Admin) |
| Docket Number | Case No: CO/2009/2018 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 09 November 2018 |
[2018] EWHC 3007 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT IN BIRMINGHAM
DIVISIONAL COURT
Birmingham Civil Justice Centre
Priory Courts, 33 Bull Street
Birmingham B4 6DS
Lord Justice Hickinbottom
and
Mr Justice Jay
Case No: CO/2009/2018
and
Tony Watkin (instructed by Warwickshire County Council Legal Services) for the Appellant
William Hibbert (instructed by Ms Kirsty Byrom, Head of Commercial Law, Halfords Group plc) for the Respondent
Ben Lask (instructed by CMA Legal, Competition and Markets Authority) for the Intervener
Hearing date: 1 November 2018
Judgment Approved
Introduction
The appeal raises issues of some importance in respect of the proper interpretation of the Consumer Protection from Unfair Trading Regulations 2008 (SI 2008 No 1277) (“the 2008 Regulations”) in the context of a test purchase of goods or services.
It is an appeal by way of case stated against the decision of Deputy District Judge (Magistrates' Court) Noble on 14 February 2018 to dismiss an information laid by the Appellant trading standards authority (“the Council”) against the Respondent (“Halfords”) that, on 21 February 2017, it engaged in a commercial practice which was a misleading action in giving false information regarding a service, in that an invoice given to a trading standards officer employed by the Council to make a “test purchase” stated that a full service on a vehicle had been carried out which was untruthful, and that commercial practice caused or was likely to cause the average consumer to take a transactional decision he would not have taken otherwise, contrary to regulation 9 of the 2008 Regulations.
Before us, Tony Watkin of Counsel appeared for the Council, William Hibbert of Counsel for Halfords, and Ben Lask of Counsel for the Competition and Markets Authority by way of intervention. At the outset, I thank each of them for their helpful submissions.
The Regulations
The 2008 Regulations transpose the Unfair Commercial Practices Directive 2005/29/EC of the European Parliament and Council (“the Directive”) into UK law. The purpose of the Directive, which is a maximum harmonisation directive, is “to contribute to the proper functioning of the internal market and achieve a high level of consumer protection by approximating the laws, regulations and administrative provisions of the Member States on unfair commercial practices harming consumers' interests” (article 1).
The Directive targets unfair commercial practices “which directly harm consumers' economic interests and thereby indirectly harm the economic interests of legitimate competitors…. It neither covers nor affects the national laws on unfair commercial practices which harm only competitors' economic interests or which relate to a transaction between traders; taking full account of the principle of subsidiarity, Member States will continue to be able to regulate such practices, in conformity with Community law, if they choose to do so” (recital (6)).
The Directive thus applies to “unfair business-to-consumer commercial practices, as laid down by article 5, before, during and after a commercial transaction in relation to a product” (article 3(1)). Article 2(d) defines “business-to-consumer commercial practices” (or just “commercial practices”) as:
“… any act, omission, course of conduct or representation, commercial communication including advertising and marketing, by a trader, directly connected with the promotion, sale or supply of a product to consumers.”
Article 5 prohibits “unfair commercial practices”, namely a commercial practice which is:
“(a) … contrary to the requirements of professional diligence, and
(b) … materially distorts or is likely to materially distort the economic behaviour with regard to the product of the average consumer whom it reaches or to whom it is addressed, or of an average member of the group when a commercial practice is directed to a particular group of consumers”.
Recital (13) to the Directive explains:
“… the single, common general prohibition established by this directive… covers unfair commercial practices distorting consumers' economic behaviour. In order to support consumer confidence the general prohibition should apply to unfair commercial practices which occur outside any contractual relationship between a trader and a consumer or following the conclusion of a contract and during its execution…”.
It is common ground that the 2008 Regulations faithfully transpose the Directive.
Halfords was prosecuted under regulation 9 of the 2008 Regulations, which (so far as relevant to this appeal) provides:
“A trader is guilty of an offence if he engages in a commercial practice which is a misleading action under regulation 5…”.
Regulations 17 and 18 provide due diligence and innocent publication defences to a charge under regulation 9.
Regulation 5 provides (again so far as relevant to this appeal):
(1) A commercial practice is a misleading action if it satisfies the conditions in… paragraph (2)….
(2) A commercial practice satisfies the conditions of this paragraph—
(a) if it contains false information and is therefore untruthful in relation to any of the matters in paragraph (4) or if it or its overall presentation in any way deceives or is likely to deceive the average consumer in relation to any of the matters in that paragraph, even if the information is factually correct; and
(b) it causes or is likely to cause the average consumer to take a transactional decision he would not have taken otherwise.
…
(4) The matters referred to in paragraph (2)(a) are—
…;
(b) the main characteristics of the product (as defined in paragraph 5)…
(5) In paragraph (4)(b), the 'main characteristics of the product” include—
…
(d) execution of the product;…”
Regulation 2(1) defines various terms as used in the Regulations. “Product”, for these purposes, includes “a service” (regulation 2(1)). Other relevant definitions include the following:
“‘commercial practice’ means any act, omission, course of conduct, representation or commercial communication (including advertising and marketing) by a trader, which is directly connected with the promotion, sale or supply of a product to or from consumers, whether occurring before, during or after a commercial transaction (if any) in relation to a product”. [This definition rolls together those in articles 2(d) and 3(1) of the Directive. It includes reference to promotion etc from consumers, as well as to consumers, which the Directive does not. However, this appeal concerns only promotion, sale or supply of a product to consumers.]
“‘consumer’ means an individual acting for purposes that are wholly or mainly outside that individual's business”.
“'business” includes—
(a) a trade, craft or profession, and
(b) the activities of any government department or local or public authority”.
“Average consumer” is required to be construed in accordance with paragraphs (2) to (6) of regulation 2. Regulation 2(2) provides:
“In determining the effect of a commercial practice on the average consumer where the practice reaches or is addressed to a consumer or consumers account shall be taken of the material characteristics of such an average consumer including his being reasonably well-informed, reasonably observant and circumspect.”
Article 11 of the Directive requires Member States to ensure that adequate and effective means of enforcement exist to combat unfair commercial practices in the interests of consumers. The provisions are extensive, but include a requirement that courts or administrative authorities can order the cessation of unfair commercial practices; and, if such a practice has not yet been carried out but is imminent, to order the prohibition of the practice, even without proof of actual loss or damage or of intention or negligence on the part of the trader. Making unfair commercial practices a criminal offence under Part 3 of the 2008 Regulations is part of the enforcement regime. Furthermore, under Part 8 of the Enterprise Act 2002, where an infringement of relevant EU law (including the Directive) “harms the collective interest of consumers”, an enforcer (which includes the CMA and the Council) may apply for an enforcement order directing the relevant person (amongst other things) not to continue or repeat the conduct (sections 215 and 217). Breach of such an order constitutes a contempt of court.
As originally enacted, regulation 20 of the 2008 Regulations provided for test purchases by an enforcement authority for the purposes of determining whether the 2008 Regulations were being complied with. Although that provision was repealed by paragraph 115 of Schedule 2 to the Consumer Rights Act 2015 (Commencement No 3, Transitional Provisions, Savings and Consequential Amendments) Order 2015 ( SI 2015 No 1630), it was substantively replaced by paragraph 21 of Schedule 5 to the Consumer Rights Act 2015, which provides that an officer of an enforcer may make a purchase of a product or enter into an agreement to secure the provision of a product without giving notice.
The Facts
The facts are not substantially in dispute.
Paul McCabe is a trading standards officer employed by the Council, which is the trading standards authority for its area.
On 20 February 2017, a Volkswagen Passat registration mark WN07 FSX was examined by an independent motor engineer who noted several faults on the vehicle and introduced others. The following day, under an assumed name, Mr McCabe booked the vehicle in for a full service at a garage at Stratford-upon-Avon owned and managed by Halfords. It was a “test purchase”, designed to...
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