“The purpose of the Directive is twofold, viz the promotion of fair standard contract forms to improve the functioning of the European market place and protection of consumers throughout the European Community. The Directive is aimed at contracts of adhesion, viz “take it or leave it” contracts. It treats consumers as presumptively weaker parties and therefore fit for protection from abuses by the stronger contracting parties. This is an objective which must throughout guide the interpretation of the Directive as well as the implementing Regulations.”
“ apply for an injunction (including an interim injunction) against any person appearing to the Director ... to be using, or recommending use of, an unfair term drawn up for general use in contracts concluded with consumers.” 65. This provision, by using the word “concluded”, is plainly susceptible of the interpretation that it applies to injunctions in respect of existing contracts. Regulation 12 further provides that on any such application, the court may: “grant an injunction on such terms as it thinks fit. ” 66. Regulation 12(1) and (3) are designed to implement article 7 of directive 93/13/EEC on Unfair Terms in Consumer Contracts. This obliged Member States to ensure that: "in the interests of consumers and competitors, adequate and effective means exist to prevent the continued use of unfair terms in contracts concluded with consumers by sellers or suppliers.” 67. Article 7 thus invokes the principle of effectiveness in Community law. Under this principle, domestic courts must ensure that their own rules permit the grant of remedies necessary to achieve the object of Community legislation. Their own procedural autonomy takes effect subject to this principle. Accordingly, domestic rules must be disapplied if they are inconsistent with the requirements of Community law. 68. In this case, the judge held that the investigation on a collective challenge would be limited to the case of a typical consumer and would not lead to an injunction against future reliance on an existing contract. In my judgment this conclusion is inconsistent with Community law, which by virtue of the directive requires that in an appropriate case an injunction should extend to the use of unfair terms in existing contracts. 69. While none of the jurisprudence shown to us has in terms considered the question whether the remedy granted in a collective challenge can extend to the future use of an unfair term in contracts already concluded, in my judgment the jurisprudence clearly gives priority to the protection of the interests of consumers over freedom of contract and emphasises the importance of the collective challenge as the means of protecting consumers against unfair contract terms. On that basis, there cannot sensibly be a distinction between a remedy against use of a contract term in (or in connection with) future contracts and a remedy against the future use of a contract term in (or in connection with) an existing contract. The policy which justifies the availability in an appropriate case of a remedy in the former case equally justifies the availability in an appropriate case of a remedy in the latter case. Accordingly I conclude that the remedies available on a collective challenge must include the power to grant an injunction against future use of an unfair term in an existing contract. 70. In the circumstances, there is no case for restricting the wide and general language of regulation 12(1) or (3) so that it does not include an existing contract. Regulation 12 extends only to collective challenges and accordingly does not extend to individual challenges. The court could not in an individual challenge properly grant an injunction against the future use of an unfair term in an existing contract not made between the parties to the individual challenge because the right parties are not before the court. Effect of an injunction against use of an unfair term in an existing contract 71. I thus conclude that, on a collective challenge, the judge will have power to grant an interim or final injunction preventing the continued use of an unfair term in an existing contract. Further, as I see it, it is the terms of that injunction which will regulate the ability of the supplier to enforce an existing contract. There is no question of the findings in a collective challenge being binding in a subsequent individual challenge in proceedings between the supplier and an individual consumer: the parties to those proceedings are different. The issue decided as between the parties to a collective challenge can thus be revisited in an individual challenge. But, if there is an injunction which extends to existing contracts, the ability of the supplier to initiate or participate in such proceedings will be governed by the terms of that injunction. Indeed, it is the fact that the findings on a collective challenge are not binding in an individual dispute which makes it necessary in order to protect consumers in a meaningful way for the court to be able to grant an injunction in the case of an existing contract. I do not read the judgment of Waller LJ as inconsistent with my conclusions on this point. 72. The critical matter, therefore, is whether on the collective challenge the court grants an injunction preventing the supplier from continuing to enforce a term in an existing contract. The supplier is not prejudiced because he has the opportunity to adduce evidence and to address the court on the terms of the injunction and (subject to the terms of any injunction) on a subsequent individual challenge he will have the opportunity to show that the term is not unfair: there is no suggestion that he is prevented from doing this by regulation 8 or any other rule. Discretion to grant an injunction in a collective challenge against use of an unfair term in an existing contract 73. The decision whether or not to grant an injunction in a collective challenge against the continued use of an unfair term in an existing contract will depend on the circumstances of the case. Thus far this court is in agreement, and in fact it is unnecessary to go further than that. Provisionally it seems to me that under general principles of Community law, the grant of the injunction will have to be proportionate, that is to say the interference with the rights of the supplier by the grant of the injunction will have to be justified by the need to protect consumer interests. In addition, Community law requires that the remedy should be sufficiently effective. In respectful disagreement with Moore-Bick LJ (whose judgment I have read in draft), I would not wish to lay down a categoric rule that it would never be right to grant an injunction in unqualified terms if there was any possibility that the term in question could be regarded as fair in the light of all the circumstances surrounding an individual contract. The trial judge is unlikely to know whether the term could be regarded as fair in the light of all the circumstances surrounding an individual contract since he will only have been dealing with a collective challenge and may not therefore know precisely what individual contracts have been made, still less the circumstances surrounding them. In my judgment, the terms of any injunction should be left to the discretion and good sense of the trial judge. He will have full power to fashion any injunction in appropriate terms. 74. Accordingly, in my judgment, in this case the judge was in error in holding that the question of the availability of an injunction extending to existing contracts should not be left to trial. 75. Regulation 12(3) gives the court a very wide discretion as to the form of any injunction. In an appropriate case, the court could, for example, "carve out" contracts fulfilling a particular description. Alternatively, the court could give the supplier leave to seek the permission of the court to bring claims to enforce existing contracts in particular circumstances. The supplier is not therefore on an application for an injunction in a collective challenge prevented from showing that there are good reasons why existing contracts, or particular existing contracts, should be excluded from any injunction. It is moreover implicit in any order granting the injunction that the supplier can always return to the court to apply for a variation or discharge of the injunction if new circumstances emerge which justify its variation or discharge. Article 5 point 76. Under Article 5 of the Directive, where there is ambiguity, the court must on an individual challenge adopt the interpretation most favourable to the consumer in an individual challenge but this rule does not apply on a collective challenge. It is possible therefore that the result in an individual challenge may be different from that in a collective challenge. In my judgment, this does not mean that relief in collective challenges must be limited to the use of unfair terms in future contracts. In reality there are likely to be few cases where the result in individual and collective challenges is different simply because of the availability of this presumption in an individual challenge. The exclusion of the presumption in a collective challenge is explained by the fact that the regulator will be in a stronger position than an individual consumer to show that a term is unfair. 77. Accordingly I would allow the appeal and dismiss the cross-appeal. Lord Justice Moore-Bick : 78. The circumstances giving rise to this appeal are set out fully in the judgment of Waller L.J. and need not be repeated here. In formal terms the question raised by the appeal is whether, on an application by the Office of Fair Trading (“the OFT”) under regulation 12(1) of the Unfair Terms inConsumer Contracts Regulations 1999 (“the Regulations”) in relation to certain terms in Foxtons’ standard conditions, the court has jurisdiction to grant an injunction restraining Foxtons from seeking to enforce those terms in existing contracts (and declaratory relief in corresponding terms), and if so, whether in the exercise of its discretion it should do so. In substance, however, as Waller L.J. points out, it raises a question of the interpretation and effect of Council Directive 93/13/EEC on unfair terms in consumer contracts, which the Regulations are intended to implement. 79. It was common ground that the Regulations must be construed to give effect to the Directive, but whereas regulations 5 to 9 reproduce almost word for word the English language text of articles 3 to 6 of the Directive which contain substantive provisions rendering unfair contract terms unenforceable against a consumer, regulations 10 to 12 provide the procedure by which the OFT can take steps to enforce the Directive for the benefit of the public at large. These regulations (and regulations 13 to 15 which contain ancillary powers designed to assist in the prosecution of such proceedings) are intended to implement the United Kingdom’s obligation under article 7 of the Directive to ensure that adequate and effective means exist to prevent the continued use of unfair terms, in particular by enabling persons or organisations which have a legitimate interest in protecting consumers’ interests to take proceedings with a view to achieving that result. 80. Regulation 12 is drawn in broad terms. It gives the OFT power to apply for an injunction against any person appearing to be using, or recommending the use of, an unfair term drawn up for general use in contracts concluded with consumers and empowers the court on such an application to grant an injunction on such terms as it thinks fit. I do not think there can be any doubt, therefore, that if the court were to find that any of Foxtons’ standard terms is unfair it would have the power to grant an injunction to prevent Foxtons from seeking to enforce it in existing contracts. The real question is whether it would be right to do so. 81. The judge’s initial inclination was to leave that question to the trial judge, who, having presided over the trial, would be the person best placed to decide what was the appropriate remedy. In the end, however, he decided not to do so and struck out that part of the prayer in which the OFT sought relief in unqualified terms on the grounds that the court had no power to grant it. I think he was wrong to take that course and should have left the matter to the trial judge, but I sympathise with his desire to reach a decision on a matter that was thought to have a significant bearing on the scope of the trial. 82. The judge’s decision was based on his view that, although on a generic or “collective” challenge to the fairness of a particular term under regulation 12 the court might have found it to be unfair, it would still be open to it to take a different view of the same term in an individual case, depending on the circumstances surrounding the particular contract. In order to decide whether that is correct it is necessary to examine the provisions of the Directive itself. 83. In paragraphs 13 and 14 of his judgment Waller L.J. has set out those paragraphs of the recitals that are most material to this appeal together with articles 3 to 7 of the Directive. I shall not repeat them here, but it is important to note that whereas article 3 sets out the criteria of unfairness, article 4 provides (without prejudice to article 7) that the unfairness of a contractual term is to be assessed at the time of conclusion of the contract, taking into account the nature of the goods or services to which it relates and “all the circumstances attending the conclusion of the contract, including all the other terms of the contract or of another contract on which it is dependent”
“ [16] The distinction made in Article 5 of the directive concerning the applicable rule of interpretation, as between actions involving an individual consumer and actions for cessation which involve persons or organisations representative of the collective interest of consumers may be accounted for by the different aims pursued by those actions. In the former case, the courts or competent bodies are required to make an assessment in concreto of the unfair character of a term contained in a contract which has already been concluded, while in the latter case it is their task to assess in abstracto the unfair character of a term which may be incorporated into contracts which have not yet been concluded. . . . .” (Emphasis added.)