Swifter justice?

In April 2013, we considered Lord Justice Jackson’s decision in Robertson v Swift [2013] EWCA 1794. We took the view that Jackson
LJ had maintained the primacy of consumer protection but had not prevented a sophisticated consumer from taking unfair advantage of these rules.

Robertson was dissatisfied with his partial win and pursued his claim for the return of his £1,000 deposit to the Supreme Court: [2014] UKSC 50. Giving us a taste of things to come, this time he
was supported by the intervention of the new Competition and Markets Authority (CMA).

The CMA had intervened “because of concerns that the decision of the Court of Appeal could be misused, for example, by unscrupulous doorstep traders to take advantage of consumers”.

This, of course, is a long way from what happened in Robertson’s case. Robertson had telephoned Swift after other removal companies could not accommodate his wishes. Swift visited his home
not to sell him his services but to assess how much
work was involved. The contract was then emailed to Robertson, who had time to think about it and, without pressure from Swift, understood and agreed to the cancellation fee term and paid the deposit. He then cancelled shortly before the removal date, having found a cheaper quote.

Despite acknowledging some sympathy for Swift, Lord Kerr (giving the only judgment) ordered that the deposit was repayable. One can only assume that costs followed the event and were a lot higher than the amount in issue. A further observation is that Swift represented himself, whereas Robertson and the CMA were represented. The odds became insurmountably stacked against Swift with the introduction of European case law, which one assumes Swift had little knowledge of.

European perspective

The key to understanding this, and the CMA’s intervention, is to largely ignore the facts of this case and remember that the notional average consumer is seen in European law as an unsophisticated individual who is constantly at risk of predation from avaricious tradesmen. Against this background, Jackson LJ’s pragmatic approach was incorrect.

The preamble to Council Directive 85/577/EEC sets out the basic consumer protection principles:

• The contract is agreed away from the businessman’s usual place of business.
• The businessman often initiates the contractual negotiations.
• The consumer is usually not expecting them.
• The consumer has no means of comparing the price and quality with other available offers from competitors.
• Accordingly, a cooling off period is needed to allow the consumer to assess his contractual obligations.
• The consumer needs to be made aware of this cooling off period.

The importance of these propositions in implementing the directive is set out in C-227/08 Martín Martín v EDP Editores SL [2009] ECR-I-11939. Although Jackson LJ correctly held that this contract came under The Cancellation of Contracts Made in a Consumer’s Home, or Place of Work, etc Regulations 2008, he had not considered these propositions (and had not been asked to do so).

The directive itself does not apply to this contract because Robertson invited Swift into his home.
The regulations, however, did apply. This did not make the regulations unreasonable because article 8 of the directive allows each member state to
enact measures which give greater protection to consumers. The difference between the Supreme Court’s and the Court of Appeal’s respective application of the regulations to the facts of this
case comes down to how the regulations should
be understood in light of the directive.

Jackson LJ had decided that the cancellation
fee was not recoverable because the proper interpretation of the regulations meant that the failure to give notice of the right to cancel the contract within seven days meant that there was
no cancellation period. As there had been no cancellation period, Robertson could not cancel the contract. Accordingly, he had improperly cancelled the contract and could not recover his deposit. However, he had successfully defended the claim for the remainder of Swift’s fees and Mr Swift had lost business as a result of the late cancellation of the contract.

The directive, however, is intended to cover the average consumer and not the sophisticated one. Robertson’s actions were irrelevant: the directive’s purpose of providing effective consumer protection supervened them.

Purposive interpretation by member states of national laws is a pivotal requirement of European law. It is not constrained by the ordinary rules of construction. Crucially, it permits the implication
of words as necessary to comply with EU legal obligations; in this case, consumer protection.
The sole constraint is that purposive construction must still maintain the spirit of the underlying legislation and so not be incompatible with it.
Lord Kerr sets out the detailed guidance given in Vodafone 2 v Commissioners for HMRC [2010] Ch 77, and it is worth re-reading this.

Effect on English law

Since the purpose of the directive is consumer protection, English law must be interpreted in order to give effect to this purpose. Robertson was the consumer and so had the right to be told of the cancellation period. He was not. If the consumer is unaware of his right, he cannot exercise it (Heininger v Bayerische Hypo-und Vereinsbank AG (C-481/99 [2001] ECR I-9945). Under Martín, article 4 of the directive gives each member state the discretion
to determine the protective consequences which should flow from a failure to give this notice.

Jackson’s LJ decision ran counter to this purpose because Swift had not ensured that Robertson had had the opportunity to withdraw from the contract without suffering significant adverse consequences (the loss of his deposit). It is implicit here that the fact that Robertson wanted to move five days after the contract was signed (meaning that the seven-day cooling off period was wholly impractical)
was irrelevant. The 2008 regulations should be interpreted so as to ensure that the trader must
bear the consequences of his failure to give written notice: he should not have been allowed to keep
the deposit. If he was, then the efficacy of the protection provided by the 2008 regulations
would be significantly reduced. The risk of this is highlighted by the explanatory memorandum to these regulations, which refer to the seven-day cooling off period providing a safety net. The notice must be written and not verbal so the businessman can prove that he ensured that the consumer knew of his cancellation rights.

The preferred method of purposively interpreting the 2008 regulations was to interpret ‘within the cancellation period’ (regulations 7(1) and 8(1)) as meaning ‘at anytime prior to the expiration of the cancellation period’. The seven-day period runs from the date the notice is received by the consumer, not sent. As Swift did not serve the notice, the cancellation period never started and Robertson had the right to cancel the contract at any time. He was therefore entitled to exercise this right and to expect his deposit to be repaid. Interestingly, Lord Kerr did not say that the cancellation had to occur before completion
of the contract, and the purposive interpretation suggests quite persuasively that the right is open-ended so transgressors can be brought
to account.

More consumer cases

Accordingly, sophisticated consumers are not to be judged as separate from the rest of the population and the onus is very much on businesses to protect themselves.

This decision is binding on all lower courts,
which has important ramifications given that the vast majority of such disputes will be heard in
the County Court. Although the 2008 regulations
have been replaced with the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, pre-13 June 2014 contractual disputes are still likely. Contracts under the 2013 regulations must still be interpreted purposively, and the cooling off period has been extended to 14 days. If no such notice has been given, then the consumer may terminate the contract without penalty up to one year and 14 days after the written notice ought to have been received.

The 2013 regulations are complementary to the Consumer Rights Bill, which is expected to come into force in October 2015. One of the key aspects
of this statute is to allow approved enforcement agencies (such as the CMA) to bring group compensation cases for breaches of consumer protection law. It is also envisaged that consumers themselves will bring more cases under its provisions.

Robertson made effective use of the provisions allowing direct access to the Bar and the CMA took full advantage of its powers to intervene, which undoubtedly assisted him. It is doubtful that the CMA has the resources to intervene in every case (and waited until Robertson appealed to the Supreme Court in this case). The County Court is likely to be grateful for the assistance provided
by experienced practitioners well-versed in consumer law. That leaves one final question: how is the purpose of ensuring consumer protection assisted by the current small and fast-track claims limits and the present proportionality rules? SJ

Geoffrey Simpson-Scott is an associate at Colemans-ctts

@Colemansctts