A very recent Court of Appeal case has dealt with some aspects of the 2008 Regulations.

The Consumer Protection from Unfair Trading Regulations 2008 came into force on 26th May 2008.  There was a reluctance on the part of some local authorities to bring prosecutions under the Regulations. This was understandable because the Regulations required the United Kingdom to implement Directive 2005/29/EC. The Directive and therefore the Regulations swept away the great majority of our mainstream consumer protection legislation, not least of all most of the Trade Descriptions Act 1968. Those involved in consumer protection, whether Trading Standards or lawyers, were left with no more than very unfamiliar wording to which the established body of case law in the United Kingdom was of very little, if any, assistance.

Instead of familiar and clear offences such as that of supplying goods to which a false trade description is applied, new terms such as “transactional decision”, “overall presentation” and the very central words “commercial practice” had to be grappled with and used to deal with trading law offences, which would previously have easily fitted into the relatively straightforward legislation.

The “prize” case of Office of Fair Trading v. Purely Creative Limited [2012] CTLC 40 dealt with a situation where consumers were given the impression that they had won a prize but the recommended method of claiming it required the consumer to pay money or incur a cost.  There was a reference to the European Court of Justice, which held that the wording of the Directive does not allow for any exception, even if the cost was de minimis.

R v. UK Parking Control Limited [2013] CTLC 48 arose from the conviction on one count of a misleading commercial practice, following a trial relating to documentation issued in order to attempt to recover monies from motorists as a result of alleged parking contraventions.  The Court of Appeal quashed the one count on which a conviction was obtained because of the inconsistent verdicts.

R v. X Limited [2013] Crim 818 involved a company selling home security equipment.  The equipment consisted of CCTV burglar alarms etc. Sales were achieved by cold calling on the telephone or doorstep. There were four counts; the Crown Court upheld the Defendant’s submission of no case to answer and the company was acquitted. The Court of Appeal allowed the prosecution’s appeal and remitted the case for trial.

The background of R v X involved the sale to a 76 year old widower.  It was alleged that the salesman was at his home for over three hours and sold a carbon monoxide detector, a home electrical inspection and a CCTV home security system for just over £2,500.  The system was installed two days later.  Four days afterwards there was a further visit and the sale of other products for a little over £2,300.

Count 1 alleged an unfair commercial practice in making a materially inaccurate claim concerning the nature and extent of the risk to the personal security of the customer if he did not buy a CCTV system.  The debate was about the statistics for burglaries.  The prosecution relied on a document produced by the salesman which stated that burglaries in the customer’s postcode had risen by 46.2% in the last 12 months, with an average of 6.3 homes being burgled per month. However, the figure was derived from a comparison of two periods of three months.

Leveson LJ referred to the Judge’s comments about a consumer not being influenced by the time the statistics applied to and said the question of influence was not to the point.  The alleged offence was of engaging in a commercial practice set out in paragraph 12 of Schedule 1 to the Regulations resulting in an offence under Regulation 12.  The banned practice in paragraph 12 is:-

“Making a materially inaccurate claim concerning the nature and extent of the risk to the personal security of the consumer or his family if the consumer does not purchase the product.”

The Court of Appeal said that there was a prima facie case that the data was inaccurate.

Another count dealt with the installation of the CCTV system.  The Court of Appeal dealt with the expression “commercial practice” and whether a “one off” transaction could be a commercial practice.  Reliance was placed by the defence on R (London Borough of Tower Hamlet) v. Steele [2012] CTLC 109 which was a decision of a Crown Court Recorder.  The Court of Appeal did not find its reasoning persuasive. The Steele case referred to an “outwardly facing aspect of the commercial strategy of an organization”.

The other two counts dealt with an alleged contravention of the requirements of professional diligence, contrary to Regulation 3.  The Court of Appeal acknowledged these were not offences of strict liability and the Trial Judge had held that there was no case to answer because there was no evidence that any of the directors knew anything about this particular customer.  The Court of Appeal said there was clearly evidence on which a Jury could conclude that the company was knowingly or recklessly operating a commercial practice in contravention of the requirements of professional diligence.  The Court accepted that a single failure (or perhaps more than one failing) in respect of one customer may not be sufficient but, in this case, a jury could infer that the failure ran at every stage of the process from top to bottom.