Could consumer protection laws help defective implant claimants?

The demise of breast implant manufacturer Poly Implant Prothèse – the French company that went into liquidation earlier this year after it emerged it had used industrial rather than medical grade filler – has left UK-based patients without obvious remedy if they cannot prove that it is clinically necessary to have the faulty implants removed.

This will be the case for a substantial category of potential claimants who will want these implants removed and possibly replaced.

One possibility is section 4 of the Supply of Goods and Services Act 1982, which provides that in a contract for the supply of services (in this case, implant surgery) “there is an implied condition that the goods supplied under the contract are of satisfactory quality”.

It is at least arguable that implants made of industrial standard silicone infringe this requirement. And it is this provision that may prove essential in the event of having to pursue an action under section 75 of the Consumer Credit Act 1974, where the private clinic is insolvent or refuses to offer corrective surgery.

Joint and several liability

The Consumer Credit Act 1974 has lived a varied life. Its key provisions are often protean and their clarity of drafting makes them potentially applicable to uniquely contemporary and human issues.

Patients with PIP implants could in particular seek to rely on section 75, which states: “(1) If the debtor under a debtor-creditor-supplier agreement falling within section 12(b) or (c) has, in relation to a transaction financed by the agreement, any claim against the supplier in respect of a misrepresentation or breach of contract, he shall have a like claim against the creditor, who, with the supplier, shall accordingly be jointly and severally liable to the debtor.”

This provision firstly requires a regulated “debtor-creditor-supplier agreement”.
This will exist where there is a business connection between the creditor and supplier or more specifically, an agreement intended “to finance a transaction between the debtor and a person (the “supplier”) other than the creditor” (section 11 (1) (b)) and “made by the creditor under pre-existing arrangements…between himself and the supplier” (section 12 (b)) where the cash price is between £100 and £30,000 (the current top limit).

So, in this case, a credit card company for example, may have had “arrangements” with private clinics, whereby the clinic agrees to accept the provider’s credit cards from patients as a mode of payment for the implants provided. Such tripartite relationships are known collectively as “three-party” debtor-creditor-supplier agreements.

Section 75 imposes joint and several liability on the supplier and creditor. As such, a party who obtained implants could, on the basis of section 75, claim against the credit card company or the supplier clinic where the clinic is in breach of contract, provided such a claim complies with the six-year rule under section 5 of the Limitation Act 1980.

Corrective surgery costs

Such a contractual breach, may relate to express or implied terms - in this case, section 4 of the Supply of Goods and Services Act 1982. Such compliance appears unlikely here: the implants were made of industrial standard silicone, and unlikely to “meet the standard that a reasonable person would regard as satisfactory, taking account of any … relevant circumstances” (section 4(2A)). Established guidance on aspects of quality in section 14(2B) Sale of Goods Act 1979 identifies freedom from minor defects, safety and durability as relevant considerations. Transposing this into the context of section 75 would enable the claimant to damages for the cost of corrective surgery and other associated loss subject to the rules on remoteness.

Additionally, section 75 anticipates those situations where a supplier has perpetrated a misrepresentation, for example, as to the nature of the implants. This would allow the customer, again, to pursue either party. This is the essence of joint or connected lender liability or a “like claim” against the creditor. Significantly, section 75(1) will apply even to those transactions entered into abroad by customers of UK card issuers (Office of Fair Trading v Lloyds TSB Bank plc [2008] 1 AC 316). This will be a considerable benefit to women who went abroad to obtain these particular implants and paid for the treatment with a credit card.

The consumer welfarist nature of section 75 is perfectly consistent with the overriding objective of the Consumer Credit Act. Its long title states that it exists “for the protection of consumers” – a point that has been judicially reiterated.

Lord Crowther, in his Report of the Committee on Consumer Credit (Cmnd 4596) concluded that the Act should strike a balance between the creditor and debtor and give the latter certain guaranteed contractual rights, particularly so where there was a connected lender and supplier “engaged in a joint venture to their mutual advantage” (para.6.2.24). Further, when things went wrong, it was “much easier” for the business debtor to secure a remedy against the supplier than it would be the individual (para.6.1.16) as “the lender [was] not likely to be so inhibited by expense from suing the seller”. There was little sympathy, should irretrievable losses arise, for example where the supplier or clinic is bankrupt, largely because the card issuers could simply “spread the burden over the public at large” (para. 6.1.16.i).

Indeed, this kind of policy-orientated allocation of loss is nothing new and is ?now the norm in the tort of negligence, albeit under the guise of “just, fair and reasonable”.