LEE HEADLEY O'BRIEN v MGN LIMITED [2001] EWCA Civ 1279

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM MANCHESTER MERCANTILE COURT
(SITTING IN THE LIVERPOOL MERCANTILE COURT)
HIS HONOUR JUDGE HEGARTY QC
[2001] EWCA Civ 1279Case No Case No: A3/2000/2518Venue Royal Courts of Justice, Strand, London, WC2A 2LL, Wednesday 1st August 2001
Between
LEE HEADLEY O'BRIENAppellantMGN LIMITEDRespondent
Before
Lord Justice PotterLady Justice HaleSir Anthony EvansMr Jonathan Crystal (instructed by Messrs Hills) for the AppellantMr Christopher Carr QC and Mr Sa'ad Hossain (instructed by Messrs Lovells) for the RespondentDate 1 August 2001

LADY JUSTICE HALE:

The

[1]claimant suffered a cruel disappointment on Monday 3 July 1995. He thought that he had won £50,000 in the scratchcard game played in the Daily Mirror that day. Mirror Group Newspapers thought otherwise. The issue is whether the contract between them incorporated the Mirror Group's rules. It would make an excellent question in an undergraduate contract law seminar or examination. Like all good questions, it is easy to ask and difficult to answer. On 29 June 2000, in the Queen's Bench Division of the High Court sitting in Liverpool, HHJ Hegarty QC answered it in the affirmative and dismissed the claimant's claim. He gave permission to appeal to this court. The facts[2]The scratchcard game was launched in the Daily Mirror on 29 April 1995 and later extended to the Sunday Mirror and the People. Scratchcards were printed for particular newspapers published on particular dates. There were three ways of winning or (as the Defendant put it) 'playing'. When the covering foil was scratched off five sums of money were revealed. The first way to win was if three of those sums were the same. This was used for the large numbers of smaller prizes. The second way to win was if two of those sums were the same and matched the sum announced in the relevant newspaper for the relevant date. The third way to win was if two of those sums were the same and matched the sum discovered by telephoning a premium rate telephone number announced in the relevant newspaper on the relevant date. This last version of the game was launched on Sunday 25 June 1995 and was not available with every publication.[3]On that Sunday, 25 June, the claimant bought a copy of The People from his local garage. With it came a card with several sections: three red sections for use with The People that day, three green sections for use with The People next Sunday, and two blue sections, one to use with the Daily Mirror the next day, and one to use with the Daily Mirror on Monday 3 July 1995. The claimant therefore bought a copy of the Daily Mirror from the same garage on Monday 3 July. His card revealed two sums of £75 and two sums of £50,000. The sum published in the newspaper was £750. But when he telephoned the 'Mystery Bonus Hotline' number published in the newspaper, he heard a recorded message that the mystery bonus cash amount for that day was £50,000. Not surprisingly he thought that he had won that amount.[4]He experienced some difficulty in ringing up to register his claim. As it turned out, no less than 1472 people made the same claim. Someone had blundered.[5]There is no dispute about how it had happened. The game was designed and operated by Europrint Ltd in consultation with the marketing department of MGN Ltd. The number and value of the prizes on offer each day were predetermined. Then cards were printed to produce that number of winners, allowing for the fact that a high proportion of prizes is never claimed. There was a large number of the smaller prizes, but fewer of the larger ones, and only one or two top prizes of £50,000 each week. The judge found that it was intended that there should be only one winning card for £50,000 on Monday 3 July 1995 which could only be won through the telephone version of the game.[6]Unfortunately, the man at Europrint responsible for determining the winning and losing combinations had failed to take into account that a large number of cards (in particular those distributed with The People of 25 June) had already been printed and distributed for use in conjunction with the Daily Mirror of 3 rd July. The judge found this a little surprising, as care had been taken to ensure that none of the earlier cards had two figures of £750 before printing that sum in the newspaper for that day. He speculated that the mistake might have been made because the telephone version of the game had only recently been introduced. But the evidence that this was indeed an oversight was not challenged and the judge accepted it.[7]Once the mistake was realised, the defendant did not act with conspicuous good sense in seeking to avoid the consequences. When the claimant rang the newspaper direct, because of his difficulties in registering his claim, he was told to throw the card away because there had been a printing error and his card was void. He was told much the same when he eventually succeeded in registering his claim. He did not take that advice.[8]On Sunday 9 July 1995 the Editor of the People wrote an article apologising for the 'mix-up'. She said that the only cards eligible for the telephone prize on 3 July were those from the Daily Mirror of Saturday 1 July and the Sunday Mirror of Sunday 2 July. This was because the 'Ring and Win Today' section in the Daily Mirror giving details of the Mystery Bonus Hotline had referred to 'three chances to win':
'This is because you have THREE cards to play. One was in The People yesterday and another in the Sunday Mirror - and you already had a card in Saturday's Daily Mirror .'
The Editor explained that in fact there were only two eligible cards, because there had been no 'card in The People yesterday'. Hence, she said, anyone with a card issued in The People on 25 June 1995 was not eligible for a prize. She apologised and announced a special draw for one prize of £50,000, for which all those with cards from The People of 25 June showing two sums of £50,000 would be eligible. In addition, a further £50,000 would be shared equally among all those with such cards. The claimant's card was entered in the draw. It was unsuccessful, but he did receive £33.97 as his share of the extra £50,000.[9]Eventually the claimant began these proceedings. MGN Ltd raised a number of defences. One was the argument put forward in the article of 9 July: that only holders of cards issued with the Daily Mirror for Saturday 1 July, the Sunday Mirror for Sunday 2 July, and The People for Sunday 2 July could be eligible. However that defence was abandoned shortly before the trial so the judge did not consider it. Another was that any contract between the parties was a gaming or wagering contract covered by s 18 of the Gaming Act 1845. This too was abandoned shortly before the trial. The judge did not think it necessary to invite submissions on whether this might be an illegal contract, but emphasised that he expressed no view on the lawfulness the game whether at common law or under the 1845 Act or under any other relevant legislation.[10]That left only the point upon which the case was decided: whether or not the contract between claimant and defendant incorporated the "Rules". The first announcement of the game, in the Daily Mirror on 29 April 1995, had a heading in capital letters with white text in a black box INSTANT SCRATCH RULES. Under this were printed eight numbered paragraphs ("the Rules"). Rules 2 and 5 read as follows:
'2. The prizes for each game will be awarded to the player or players who make a successful claim. '5. Should more prizes be claimed than are available in any prize category for any reason, a simple draw will take place for the prize.'
The judge concluded that 'only one £50,000 prize was "available" on 3 July 1995 in the sense that MGN Ltd and Europrint Ltd had previously determined that there should be only a single prize in that category. I have also concluded that the terms should not be construed in a sense which required the precise number of prizes to be published or drawn to the attention of participants at or before the time when the telephone game was announced.' Hence more prizes were claimed than were available. If the Rules formed part of the contract, MGN were entitled to insist upon holding a draw.[11]The Rules were published in the relevant newspapers on the following dates: in the Daily Mirror on 29 April when the game started there; in the Sunday Mirror on 30 April, when the game started there; in the Daily Mirror on 1, 2, 3, 6, and 12 May; in The People on 21 May when the game started there; again in The People on 28 May and 4 June; and again in the Daily Mirror on 10 June. They were not published in The People on 25 June 1995 when the card in question was distributed, but the paper did contain a reference in the main text to the 'rules as previously published' and a further statement in the box dealing with the telephone game that day that 'Normal Mirror Group rules apply'. The card itself stated on its face FULL RULES AND HOW TO CLAIM SEE DAILY MIRROR. The Rules were published again in the Daily Mirror on 30 June. They were not published in the Daily Mirror on 3 July, but under the heading RING AND WIN TODAY giving instructions on how to discover the extra bonus sum, after the call charges came the same words, 'Normal Mirror Group rules apply', as had appeared in The People on 25 June.[12]The judge thought it 'highly likely' that the claimant bought the Daily Mirror on 29 April when the game was first introduced and read the page on which the Rules were set out. The judge said that he must have seen them, although he probably paid little attention to them, but it was likely that he would have appreciated that they constituted a set of Terms and Conditions intended to apply to the game publicised on the same page. The judge also thought it likely that the claimant, a regular purchaser of these newspapers, and with a particular interest in the game, would have seen the Rules on more than one occasion, although he would probably not have paid much attention to them. The claimant did of course buy The People on 25 June containing the two references to the Rules, and the judge thought it more likely than not that anyone wishing to know about the telephone game would have read the words in the box. He did not consider that he could hold on the evidence that the claimant actually saw or read either of these references. But the claimant must have seen and read the words on the face of the card, although again it was unlikely that he paid much attention to them. The claimant bought the Daily Mirror on 3 July and accepted in evidence that he must have seen the reference to 'Normal Mirror Group rules' when looking at how to discover the bonus number, although he considered that they did not seem important at time. The claimant also accepted in evidence that the reference on 3 July was clear enough to alert him and his friend Mr Murphy to the need to check the rules. They were later able to buy a back issue containing them. Mr Murphy confirmed this and said that they knew that there had to be some rules when you could find them. The decision[13]The judge directed himself in accordance with the passage in the judgment of Bingham LJ, as he then was, in Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1989] 1 QB 433, at p 445B:
'The tendency of the English authorities has, I think, been to look at the nature of the transaction in question and the character of the parties to it; to consider what notice the party alleged to be bound was given of the particular condition said to bind him; and to resolve whether in all the circumstances it is fair to hold him bound by the condition in question.'
[14]The judge concluded that the contract was made on 3 July. There had been no prior commitment to people acquiring cards on 25 June that they would be entitled to play a telephone game on 3 July. The offer was made that day and accepted when the claimant telephoned the hotline. (That being so, it is perhaps surprising that the defendant had abandoned the argument based on the content of the telephone game offer on 3 July, which is arguably limited to the holders of cards issued in the three newspapers mentioned. But it was abandoned and it is not for us to speculate why.)[15]As to whether that contract incorporated the Rules, the judge emphasised that he was concerned with this particular claimant and not with some other actual or hypothetical claimant. He was satisfied that this claimant must have appreciated that there would be a limit on the number of prizes and that the number of prizes in the highest category would be small. He was also satisfied, in the light of his earlier findings, that the claimant must in fact have been aware that there were relevant rules and he must at least have seen them. He went on:
'I bear in mind the balance of risk and opportunity in a case of this kind. Though I have no doubt that the promotion was seen as being in the commercial interests of MGN Ltd, it clearly faced substantial financial risks if anything went wrong with the game. In an extreme case, as Mr Carr [counsel for MGN] was at pains to point out, it could result in the insolvent demise of the company. On the other hand, readers and participants no doubt gained amusement and satisfaction from the game at little or no expense to themselves. They also had the chance of winning a substantial prize, which would in effect be a pure windfall. Though any limitation on apparently successful claims would be a grave disappointment to anyone who might assume he had won, that seems to me to be very different from the sort of situation where standard terms are invoked in order to impose punitive financial liabilities or to avoid liability for injuries caused by negligence.'
He also bore in mind that 'the limited evidence' from Miss Amanda Platell, Marketing Director of MGN at the time, 'appears to show that provisions of the kind sought to be relied on in this case are not unusual or uncommon in the field of games and competitions.' On the other hand, the rule 'purports to limit the right to claim a prize which was otherwise formulated without qualification or restriction.' Eventually, balancing all the various factors as best he could, he concluded that it was fair to hold the claimant bound by the Rules. The arguments on appeal[16]Mr Jonathan Crystal for the claimant does not argue that the judge misdirected himself in law but that he misapplied that law. He emphasises that rule 5 'turns winners into losers'. The offer under the heading 'Ring and Win Today' clearly states that if the bonus cash amount announced on the mystery bonus cash hotline 'matches two identical cash amounts you have scratched off on today's section of the card, you win that amount.' Rule 5 took that away. This was not a game in which everyone knew that there was only one prize, such as a car or a foreign holiday, so that if there was more than one winner the organiser would have to draw lots. It was not made clear that there was only one £50,000 prize to be won. If it had been, one might expect it to be shared rather than one winner picked by lot.[17]In those circumstances, he argues, the defendant had not done enough to bring the rule to the claimant's attention. It was not published in the paper either for 25 June or for 3 July. It was not on the card itself. The reference on the card was to the Daily Mirror, but that was useless because the rules were not in the Daily Mirror on the date on which the card was to be played. There was no other reference on the card to where the rules might be found. The reference in the paper to 'Normal Mirror Group rules apply' did not explain where those rules could be found. The Rules were not published regularly or frequently around that time.[18]Mr Carr's primary argument for the defendant is that this particular claimant had actual notice of the rules. The judge found that he had in fact seen them when previously published, even if he had not paid much attention to them. He appreciated that the game was governed by rules. He would have understood what the reference on the card and in the paper meant. If a person knows that a document contains contractual terms he ought to pay attention to it. Mr Carr accepts that even in that situation, special steps have to be taken to give proper notice of an onerous or unusual term. But he argues that there was nothing onerous or unusual about this particular term. It simply deprived the claimant of a windfall. It could not be compared with the exclusion of liability for negligently causing personal injuries in Thornton v Shoe Lane Parking [1971] 2 QB 163 or the imposition of extortionate charges for delay in Interfoto Library Ltd v Stiletto Ltd [1989] 1 QB 433. His secondary argument was that, even if this was not a case of actual notice, in all the circumstances the defendant had taken reasonable steps to draw it to the claimant's attention. Conclusion[19]In my view the judge was right to hold that the contract was made on 3 July. The offer was contained in the paper that day. In my view it was accepted when the claimant telephoned to claim his prize. The offer and therefore the contract clearly incorporated the term 'Normal Mirror Group rules apply'. The words were there to be read and it makes no difference whether or not the claimant actually read or paid attention to them.[20]The question, therefore, is whether those words, in the circumstances, were enough to incorporate the Rules, including Rule 5, into the contract. In the words of Bingham LJ in Interfoto Library Ltd v Stiletto Ltd [1989] 1 QB 433, at p 445E, can the defendant 'be said fairly and reasonably to have brought [those rules] to the notice of' the claimant? This is a question of fact. It is clear from the passage in the same judgment quoted earlier (at para 13) that one has to look at the particular contract made on the particular day between the particular parties. But what is fair and reasonable notice will depend upon the nature of the transaction and upon the nature of the term. As Dillon LJ summed it up in Interfoto , at pp 438H to 439A:
'In the ticket cases the courts held that the common law required that reasonable steps be taken to draw the other parties' attention to the printed conditions or they would not be part of the contract. It is, in my judgment, a logical development of the common law into modern conditions that it should be held, as it was in Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163 , that if one condition in a set of printed conditions is particularly onerous or unusual, the party seeking to enforce it must show that that particular condition was fairly brought to the attention of the other party.'
Bingham LJ put the same point in this way at p 443C:
' . . . what would be good notice of one condition would not be good notice of another. The reason is that the more outlandish the clause the greater the notice which the other party, if he is to be bound, must in all fairness be given.'
[21]In my view, although Rule 5 does turn an apparent winner into a loser, it cannot by any normal use of language be called 'onerous' or 'outlandish'. It does not impose any extra burden upon the claimant, unlike the clause in Interfoto . It does not seek to absolve the defendant from liability for personal injuries negligently caused, unlike the clause in Thornton v Shoe Lane Parking . It merely deprives the claimant of a windfall for which he has done very little in return. He bought two newspapers, although in fact he could have acquired a card and discovered the hotline number without doing either. He made a call to a premium rate number, which will have cost him some money and gained the newspaper some, but only a matter of pennies, not pounds.[22]The more difficult question is whether the rule is 'unusual' in this context. The judge found that the claimant knew that there was a limit on the number of prizes and that there were relevant rules. Miss Platell's evidence was that these games and competitions always have rules. Indeed I would accept that this is common knowledge. This is not a situation in which players of the game would assume that the newspaper bore the risk of any mistake of any kind which might lead to more people making a claim than had been intended. Some people might assume that the 'get out' rule would provide for the prize to be shared amongst the claimants. Some might assume that it would provide for the drawing of lots. In the case of a single prize some might think drawing lots more appropriate; but it seems to me impossible to say that either solution would be 'unusual'. There is simply no evidence to that effect. Such evidence as there is was to the effect that such rules are not unusual.[23]In any event, the words 'onerous or unusual' are not terms of art. They are simply one way of putting the general proposition that reasonable steps must be taken to draw the particular term in question to the notice of those who are to be bound by it and that more is required in relation to certain terms than to others depending on their effect. In the particular context of this particular game, I consider that the defendants did just enough to bring the Rules to the claimant's attention. There was a clear reference to rules on the face of the card he used. There was a clear reference to rules in the paper containing the offer of a telephone prize. There was evidence that those rules could be discovered either from the newspaper offices or from back issues of the paper. The claimant had been able to discover them when the problem arose.[24]The judge had 'great sympathy for Mr O'Brien who struck me as a thoroughly decent young man who must have suffered a cruel disappointment when his hopes were raised only to be dashed.' There can be little sympathy for a newspaper which introduces such a game to attract publicity and readers, and then devotes space which could have been devoted to printing the Rules to hyperbole about the prizes to be won and the people who have won them. But the fact of the matter is that there was nothing at all outlandish about the rules of this game and indeed it would have been surprising if there had been no protection on the lines of Rule 5. I would dismiss this appeal. SIR ANTHONY EVANS:[25]I agree that the appeal should be dismissed, but I do so for one reason only. I feel constrained to accept Mr Carr QC's final submission, that this Court should not interfere with the Judge's finding on an issue of fact, unless the finding is clearly wrong. The issue is whether the respondents took reasonable steps to draw the particular term to the notice of those who are to be bound by it (quoting from the judgment of Lady Justice Hale, para.23).[26]The words "Normal Mirror Group rules apply" clearly formed part of the contract. Unless it was established that the claimant had actual knowledge of Rule 5, which it was not, it is immaterial in my judgment that he had had the opportunity to read it on previous occasions, or was aware from the earlier editions of the newspapers that some Rules did exist. If those matters were relevant, it would mean that whether he was bound by it would itself be a matter of chance in the individual case.[27]There was no obvious reason why the Rules could not appear in every edition which offered tickets for the game, except as my Lady has said the editor's wish to use the space for publishing hyperbole about the prizes to be won and the people who had won them. The reference to the Rules could have been accompanied by some indication of where they had been printed or could be found, for example 'last Friday's copy' or 'published on' a particular weekday. Instead, on Monday 3 July the only publication in the Daily Mirror during the previous month had been on 10 June and 30 June. A person reading the offer on 3 July could not be expected to have ready access to back issues, even if he or she knew what date to look for. Whether the reader could discover what the Rules were was left essentially as a matter of chance. The promise of significant riches, in my judgment, deserve more.[28]I would also have considered that a Rule which gave the 'winner' no more than a further chance to obtain the prize was sufficiently onerous, if not unusual, to require greater prominence than was given to this one. This, in my judgment, was the strength of Mr Crystal's main submission.[29]However, the judge concluded differently, and my colleagues agree with him. I cannot say that he was clearly wrong, and so reluctantly, I must agree that the appeal should be dismissed. LORD JUSTICE POTTER:[30]For the reasons given by Hale LJ I agree that this appeal should be dismissed.

ORDER

Appeal dismissed with costs; appellant's costs to be assessed if not agreed in accordance with Community Legal Service (costs) Regulations or their predecessors as appropriate application for permission to appeal to the House of Lords refused. (Order does not form part of approved Judgment

Cited in 6 later judgments