Robertson v Swift [2012] EWCA Civ 1794

Case No B2/2012/1299[2012] EWCA Civ 1794
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM EXETER COUNTY COURT
HIS HONOUR JUDGE TYZACK QC
1QT84424
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 15/01/2013
Before
LORD JUSTICE MUMMERYLORD JUSTICE JACKSONLORD JUSTICE LEWISON
Between
TOBY ROBERTSONAppellantTERENCE JOHN SWIFTRespondent
(Transcript of the Handed Down Judgment ofWordWave International LimitedA Merrill Communications Company165 Fleet Street, London EC4A 2DYTel No: 020 7404 1400, Fax No: 020 7831 8838Official Shorthand Writers to the Court)
Mr. John Antell (instructed by Doctor Toby Robertson) for AppellantMr. Terence John Swift appeared in person for in personHearing Hearing date: 29th November 2012
JudgmentLord Justice Jackson :
[1]This judgment is in seven parts, namely: Part 1. Introduction, Part 2. The facts, Part 3. The present proceedings, Part 4. The appeal to the Court of Appeal, Part 5. The construction of paragraph 5 (a) of the 2008 Regulations, Part 6. Are the 2008 regulation ultra vires? Part 7. What are the financial consequences?

Part 1. Introduction

[2]This is an appeal by a householder against a county court decision that he is liable to pay a cancellation charge of £2,450.60 to a removal firm. The householder contends that by virtue of consumer protection regulations the removal agreement is unenforceable against him, alternatively that he was entitled to and did cancel that agreement. The householder also claims the return of the £1,000 deposit which he paid.[3]Although the sums in issue in this appeal are small, the legal issues which arise are of some importance.[4]The claimant in this action is Mr. Terence John Swift, who is the proprietor of the firm “A Swift Move”. This is a long established family firm of removers based in London SW20. The defendant is Doctor Toby Robertson, who now lives in Exmouth, Devon but formerly lived in Weybridge, Surrey.[5]In this judgment I shall refer to Council Directive 85/577/EEC as “the European Directive” or “the Directive”. The European Directive is intended to protect consumers in respect of contracts negotiated away from business premises.[6]The preamble to the Directive makes clear that the purpose of the Directive is to protect consumers against a variety of unfair commercial practices which may occur when a trader visits a consumer at his home. The preamble includes the following passage:
“Whereas the special feature of contracts concluded away from the business premises of the trader is that as a rule it is the trader who initiates the contract negotiations, for which the consumer is unprepared or which he does not except; whereas the consumer is often unable to compare the quality and price of the offer with other offers; whereas this surprise element generally exists not only in contracts made at the doorstep but also in other forms of contract concluded by the trader away from his business premises; Whereas the consumer should be given a right of cancellation over a period of at least seven days in order to enable him to assess the obligations arising under the contract; Whereas appropriate measures should be taken to ensure that the consumer is informed in writing of this period for reflection;”
[7]Article 1 of the Directive provides: “This Directive shall apply to contracts under which a trader supplies goods or services to a consumer and which are concluded – – during an excursion organised by the trader away from his business premises, or – during a visit by the trader –(i) to the consumer’s home or to that of another consumer;(ii) to the consumer’s place of work; where the visit does not take place at the express request of the consumer.” (i) to the consumer’s home or to that of another consumer; (ii) to the consumer’s place of work;[8]Article 8 of the Directive provides:
“This Directive shall not prevent Member States from adopting or maintaining more favourable provisions to protect consumers in the field which it covers.”
[9]In order to give effect to the Directive in our domestic law, the Consumer Protection (Cancellation of Contracts Concluded away from Business Premises) Regulations 1987 were made. I shall refer to these as “the 1987 Regulations”.[10]With effect from 1st October 2008 the 1987 Regulations were replaced by the Cancellation of Contracts made in a Consumer’s Home or Place of Work etc Regulations 2008. I shall refer to these regulations as “the 2008 Regulations”.[11]Paragraph 2 of the 2008 Regulations provides: “Interpretation (1) In these Regulations: … “cancellation notice” means a notice in writing given by the consumer which indicates that he wishes to cancel the contract; “cancellation period” means the period of 7 days starting with the date of receipt by the consumer of a notice of the right to cancel; “consumer” means a natural person who in making a contract to which these Regulations apply is acting for purposes which can be regarded as outside his trade or profession; … “notice of the right to cancel” means a notice given in accordance with regulation 7; … “trader” means a person who, in making a contract to which these Regulations apply, is acting in his commercial or professional capacity and anyone acting in the name or on behalf of a trader”.[12]Paragraph 5 of the 2008 Regulations provides: “Scope of application These Regulations apply to a contract, including a consumer credit agreement, between a consumer and a trader which is for the supply of goods or services to the consumer by a trader and which is made—(a) during a visit by the trader to the consumer’s home or place of work, or to the home of another individual;(b) during an excursion organised by the trader away from his business premises; or(c) after an offer made by the consumer during such a visit or excursion”. (a) during a visit by the trader to the consumer’s home or place of work, or to the home of another individual; (b) during an excursion organised by the trader away from his business premises; or (c) after an offer made by the consumer during such a visit or excursion”.[13]Paragraph 7 of the 2008 Regulations provides: “Right to cancel a contract to which these Regulations apply(1) A consumer has the right to cancel a contract to which these Regulations apply within the cancellation period.(2) The trader must give the consumer a written notice of his right to cancel the contract and such notice must be given at the time the contract is made except in the case of a contract to which regulation 5(c) applies in which case the notice must be given at the time the offer is made by the consumer.(3) The notice must — (a) be dated; (b) indicate the right of the consumer to cancel the contract within the cancellation period; (c) be easily legible; (d) contain— (i) the information set out in Part I of Schedule 4; and (ii) a cancellation form in the form set out in Part II of that Schedule provided as a detachable slip and completed by or on behalf of the trader in accordance with the notes; and (e) indicate if applicable — (i) that the consumer may be required to pay for the goods or services supplied if the performance of the contract has begun with his written agreement before the end of the cancellation period; (ii) that a related credit agreement will be automatically cancelled if the contract for goods or services is cancelled.(4) Where the contract is wholly or partly in writing the notice must be incorporated in the same document.(5) If incorporated in the contract or another document the notice of the right to cancel must— (a) be set out in a separate box with the heading “Notice of the Right to Cancel”; and (b) have as much prominence as any other information in the contract or document apart from the heading and the names of the parties to the contract and any information inserted in handwriting.(6) A contract to which these Regulations apply shall not be enforceable against the consumer unless the trader has given the consumer a notice of the right to cancel and the information required in accordance with this regulation”. (a) be dated; (b) indicate the right of the consumer to cancel the contract within the cancellation period; (c) be easily legible; (d) contain— (i) the information set out in Part I of Schedule 4; and (ii) a cancellation form in the form set out in Part II of that Schedule provided as a detachable slip and completed by or on behalf of the trader in accordance with the notes; and (e) indicate if applicable — (i) that the consumer may be required to pay for the goods or services supplied if the performance of the contract has begun with his written agreement before the end of the cancellation period; (ii) that a related credit agreement will be automatically cancelled if the contract for goods or services is cancelled. (a) be set out in a separate box with the heading “Notice of the Right to Cancel”; and (b) have as much prominence as any other information in the contract or document apart from the heading and the names of the parties to the contract and any information inserted in handwriting.[14]Paragraph 8 of the 2008 Regulations provides: “Exercise of the right to cancel a contract(1) If the consumer serves a cancellation notice within the cancellation period then the contract is cancelled.(2) A contract which is cancelled shall be treated as if it had never been entered into by the consumer except where these Regulations provide otherwise”.[15]Paragraph 10 of the 2008 Regulations provides:
“Recovery of money paid by consumer (1) On the cancellation of a contract under regulation 8 any sum paid by or on behalf of the consumer in respect of the contract shall become repayable except where these Regulations provide otherwise.”
[16]I shall refer to the European Communities Act 1972 as “the 1972 Act”. I shall refer to the Consumers, Estate Agents and Redress Act 2007 as “the 2007 Act”.[17]After these introductory remarks, I must now turn to the facts.

Part 2. The facts

[18]In July 2011 the defendant was planning to move from his home in Weybridge to a new address in Exmouth. The completion date for the sale of his house in Weybridge was 5th August 2011.[19]On Wednesday 27th July 2011 the defendant telephoned the claimant’s office and asked if the claimant could provide a quotation for undertaking the removal. On Thursday 28th July the claimant duly attended the defendant’s home in Weybridge and surveyed the contents. After discussion the two men orally agreed upon a price of £5,750 plus extended liability insurance cover plus VAT. That produced a total figure of £7,595.40.[20]The claimant returned to his office. He prepared a removal acceptance document, including the agreed total price of £7,595.40, and emailed this document to the defendant. He also emailed a copy of his standard conditions to the defendant. Clause 7 of the claimant’s standard conditions reads as follows:
“7.1 If you postpone or cancel this agreement, we will charge you according to how much notice is given. ‘Working days’ refer to the normal working days of Monday to Friday and excludes weekends and public holidays. 7.1.1: More than 10 working days before the removal was due to start – no charge; 7.1.2: Between 5 and 10 working days inclusive before the move was due to start – not more than 50 percent of the removal charge; 7.1.3: Less than 5 working days before the removal was due to start – not more than 80 percent of the removal charge.”
[21]On the evening of 28th July the claimant made a second visit to the defendant’s home. On this occasion the claimant delivered some boxes to be used for packing up the defendant’s goods. At the same time the defendant signed and handed over the acceptance document to the claimant. At that moment, therefore, there was a concluded written agreement for the claimant to carry out the removal of the defendant’s house contents from Weybridge to Exmouth for the stipulated price. It was agreed that the removal operation would start on Tuesday 2nd August. The defendant paid a deposit of £1,000 to the claimant.[22]Over the next couple of days the defendant made enquiries of other removers. A firm based in Farnborough called “Overs” quoted a total price of £3,490. This was substantially less than the total figure quoted by the claimant. The defendant decided to dispense with the claimant’s services.[23]On Saturday 30th July 2011 the defendant telephoned the claimant and said that he was cancelling the removal agreement which they had made. The claimant said that the normal cancellation charge was 60%, but he would accept 50%. The defendant agreed to pay that sum. On the 1st August 2011 the defendant wrote the following letter to the claimant:
“Dear Mr Swift. Following our telephone conversation, I am writing to confirm that I wish to cancel the contract agreed between us on 28th July 2011 for packing and removal services. Yours sincerely, Toby Roberston.”
On the facts as found in the county court, the defendant posted that letter on 1st August but the claimant never received it.[24]The defendant accepted Overs’ quotation. Overs duly carried out the removal of the defendant’s house contents from Weybridge to Exmouth during the first week of August 2011.[25]Thereafter the claimant demanded payment of the cancellation charge by the defendant. The defendant, however, having done some research, concluded that he had no liability to pay this charge by reason of the 2008 Regulations. Accordingly the defendant refused to make any payment. In those circumstances the claimant commenced the present proceedings.

Part 3. The present proceedings

[26]By a claim form issued in the Northampton County Court on 10th August 2011 the claimant claimed the sum of £2,450.60 against the defendant. This sum comprised 50% of the removal cost plus VAT, minus the deposit previously paid.[27]On 7th September 2011 the defendant served a defence and counterclaim, denying any liability to the claimant and seeking recovery of the £1,000 deposit. The defendant asserted that he had cancelled the removal agreement within the seven day cooling off period allowed by the 2008 Regulations. He also asserted that the agreement was unenforceable under paragraph 7 (6) of the 2008 Regulations. He added that he was unaware of the 2008 Regulations at the time when he had agreed to pay the 50% cancellation charge.[28]Following service of the defence and counterclaim, the action was transferred to the Exeter County Court and allocated to the small claims track. The matter came on for trial before Deputy District Judge Batstone on 5th January 2012.[29]Both parties appeared in person and argued their respective cases clearly. This is entirely appropriate in a small claim, where it is imperative that costs be kept to a minimum.[30]The deputy district judge held that paragraph 5 (a) of the 2008 Regulations applied to a contract made in a single visit to a consumer’s home. He held that the contract in this case was made in two separate visits to the defendant’s home, albeit on the same day. The deputy district judge held on this ground that the 2008 Regulations did not apply. Accordingly he gave judgment for the claimant on the claim and dismissed the counterclaim.[31]The defendant appealed against that decision. The appeal came on for hearing before His Honour Judge Tyzack QC sitting in the Newton Abbott County Court on 27th April 2012. Once again the parties appeared in person and presented their arguments with clarity. The judge thanked both parties for their assistance.[32]Turning to the substantive issue, Judge Tyzack construed the 2008 Regulations in the same way as the deputy district judge. He concluded that the word “visit” in paragraphs 5 (a) and 5 (c) of the Regulations meant a single visit. Since there were two visits in the present case and the contract was concluded during the second visit, the judge held that the 2008 Regulations did not apply. Accordingly he dismissed the defendant’s appeal.[33]The defendant is aggrieved by the two adverse decisions in the county court. Accordingly he appeals to the Court of Appeal.

Part 4. The appeal to the Court of Appeal

[34]By an appellant’s notice dated 29th May 2012 the defendant appealed to the Court of Appeal on the ground that Judge Tyzack had erred in his construction of paragraph 5 of the 2008 Regulations.[35]At the hearing of the appeal the defendant was represented by counsel, Mr. John Antell. The claimant, who is respondent to the appeal, appeared in person as he did in the county court.[36]Three issues have been debated in the course of the appeal. The first issue is how paragraph 5 (a) of the 2008 Regulations should be construed. The second issue is whether the 2008 Regulations are so wide in their effect as to be ultra vires. The third issue is to determine what are the financial consequences in this case.[37]The second issue concerning vires arose during the course of the hearing. We invited the parties to lodge their submissions on this issue in writing. Although the claimant is unrepresented, we understand that he is able to receive legal advice through the trade association to which he belongs.[38]I shall now address the three issues in the order set out above, starting with the construction of paragraph 5 (a) of the 2008 Regulations. Part 5.

Part 5. The construction of paragraph 5 (a) of the 2008 Regulations

(a) of the 2008 Regulations

[39]The crucial words in paragraph 5 of the 2008 Regulations read as follows:
“These regulations apply to a contract … between a consumer and a trader which is for the supply of goods or services to the consumer by a trader and which is made – (a) during a visit by the trader to the consumer’s home or place of work, or to the home of another individual”
[40]Two alternative interpretations of these words have been deployed in argument. The first interpretation is that paragraph 5 (a) only applies if the contract was negotiated and concluded in a single visit to the consumer’s home. The second interpretation is that paragraph 5 (a) applies if the consumer’s home is the place where the contract is concluded, irrespective of whether there have been earlier negotiations between the parties at the consumer’s home.[41]In my view the second interpretation is correct. I reach this conclusion for three reasons: i) The focus of paragraph 5 (a) is upon the occasion when and the place where the consumer becomes legally committed. A contract is not made until all the ingredients are present, in particular offer and acceptance, intention to create legal relations and consideration. At that moment, and not before, the contract springs into existence. At that moment the parties become subject to all the common law and statutory incidents of the contractual relations into which they have entered. ii) In the phrase “during a visit” the word “a” is simply the indefinite article. It is not limiting the contractual process to a single visit. If the offer is made in one visit and the acceptance occurs during a second visit, it would be bizarre if this circumstance takes the contract outside paragraph 5 (a). The target of this provision is contract-making in the consumer’s home. That is a place where the consumer is believed to be vulnerable: see the preamble to the European Directive. iii) The phrase “a visit” appears in both sub-paragraph (a) and sub-paragraph (c). It must be construed in the same way in both places. The phrase in sub-paragraph (c) “during such a visit” cannot be confined in its scope to a single visit. It would be absurd if a trader could escape the effect of paragraph 5 (c) by making the same offer in two separate visits.[42]In my view, therefore, both the district judge and the circuit judge erred in their construction of paragraph 5 (a) of the 2008 Regulations. On the natural meaning of that provision the removal agreement made between the claimant and the defendant on 28th July 2011 falls within the scope of that provision.[43]Certain consequences flow from this decision. The first consequence is under paragraph 7 (2) of the 2008 Regulations the claimant was under a duty to give the defendant written notice of his right to cancel. He did not do this. Therefore the removal agreement was and is unenforceable against the defendant. The second consequence was that if such a notice was given the defendant would be entitled to cancel the agreement during the cancellation period.[44]Mr. Swift submits with some force that such consequences are absurd. Doctor Robertson is an intelligent man well able to negotiate contracts which suit his interests. He specifically invited Mr. Swift to his home in order to make the removal agreement. Any remover has to visit the homes of his customers in order to assess what goods need to be packed up and transported. If removal contracts can be cancelled at will during a seven day cooling off period, it is impossible for removers to carry on their businesses. They have to book transport and organise their labour force to carry out the various removals. Also, having accepted a booking, a remover has to turn away other work during the same period, as happened in this case. If the customer can cancel the contract at one day’s notice, as happened here, it is harsh indeed for small businesses, especially in the present economic climate.[45]I see much practical force in the points made by Mr. Swift. Also I cannot pretend that I find the defendant’s conduct in the present case to be attractive. He put the claimant’s firm to a great deal of work and expense and then sought to resile from his obligations in reliance on consumer protection legislation.[46]The European Directive, which the 2008 Regulations purport to implement, does not apply if the trader visits the consumer’s home at the express request of the consumer. Thus the Directive would have no application to the facts of this case. When one looks at the mischief against which the Directive is aimed, as set out in the preamble to the Directive, that is far removed from the circumstances of this case.[47]The question therefore arises whether the 2008 Regulations, which have such far reaching effects, are ultra vires. It is to this question that I must now turn.

Part 6. Are the 2008 Regulations ultra vires?

[48]Article 1 of the European Directive contains important words of limitation after sub-paragraph (ii). These are:
“where the visit does not take place at the express request of the consumer.”
[49]Paragraph 3 (1) of the 1987 Regulations incorporated that restriction into our domestic law. Thus under the 1987 Regulations, if a trader is invited to a customer’s house in order to assess the services which he is to provide, there is no problem about him entering into a contract there and then. If he does so, the Regulations do not apply and the customer has no right to cancel the contract.[50]The 2008 Regulations are wider in scope than the European Directive and the 1987 Regulations. Subject to certain exceptions set out in paragraph 6 (1) (d), the 2008 Regulations apply even if the customer specifically requests the trader to come to his house in order to assess the services which he is to provide.[51]Before drafting the 2008 Regulations, the Government embarked on a consultation exercise. The outcome of this exercise was a policy decision that the scope of the regulations should be widened, so as to embrace visits a trader made to the consumer’s home at the request of the consumer. There were a number of reasons for this policy decision. These included the need to make the law simple and clear, as a well as a concern that consumers are vulnerable in their own homes, even if they have requested the trader to visit.[52]The statutory provisions under which the 2008 Regulations have been made are section 2 (2) of the 1972 Act and section 59 of the 2007 Act. Section 2 (2) of the 1972 Act enables any government minister to make regulations to implement EU obligations.[53]Section 59 of the 2007 Act provides: “Contracts concluded away from business premises(1) The Secretary of State may make regulations entitling a consumer who is a party to a protected contract to cancel the contract.(2) A protected contract is a contract between a consumer and a trader which is for the supply of goods or services to the consumer by a trader and is made – (a) During a solicited visit by a trader to the consumer’s home or place of work, or to the home of another individual, or (b) After an offer made by the consumer during such a visit.(3) A visit is solicited if it is made at the express request of the consumer.(4) Regulations made under this section may make any provision which may be made by regulations under section 2 (2) of the European Communities Act 1972 (c.68) (by virtue of section 2 (4) of that Act).” (a) During a solicited visit by a trader to the consumer’s home or place of work, or to the home of another individual, or (b) After an offer made by the consumer during such a visit.[54]In my view, when section 2 of the 1972 Act is read together with section 59 of the 2007 Act, there can be no doubt that 2008 Regulations have been made within the powers conferred by statute. Furthermore article 8 of the European Directive makes it clear that the Directive does not prevent Member States from adopting provisions to protect consumers which are more favourable than those required under the Directive.[55]Accordingly, my answer to the question posed in Part 6 of this judgment is no. Against that background I must now turn to the financial consequences in the present case.

Part 7. What are the financial consequences?

[56]The claimant entered into the removal agreement at his home. The claimant did not give to the defendant written notice of his right to cancel, as required by paragraph 7 (2) of the 2008 Regulations. Paragraph 7 (6) sets out the consequences of this omission: the agreement is unenforceable against the defendant.[57]As a result the claimant is not entitled to make any charge for cancellation under clause 7 of his standard conditions. It follows that the defendant’s appeal in relation to the claim must be allowed. The judgment in favour of the claimant for £2,450.60 plus costs must be set aside.[58]I reach this decision with regret. For consumer protection regulations to apply in the circumstances of this case is, in my view, inappropriate. Many removal firms are small businesses. They necessarily visit customers at home in order to assess the proposed work. It must often happen that the remover and the customer enter into an agreement at the customer’s home. Once the deal is done, the remover must incur costs in preparing for the move. He may also turn away other work during the relevant period. If the customer has seven days grace in which to cancel the contract, the remover is put in an impossible position. I express hope that the Department for Business, Innovation, and Skills will review the 2008 Regulations in the light of this case and consider whether any amendments are appropriate. It may, for example, be thought appropriate to include removal contracts in the list of “excepted contracts” in Schedule 3 to the Regulations.[59]I turn now to the counterclaim. Since the claimant did not serve any written notice under paragraph 7 (2) of the 2008 Regulations, there was no cancellation period as defined in paragraph 2 (1) of the Regulations. It follows that the defendant was not entitled to cancel the contract under paragraph 7 (1). The effect of the 2008 Regulations is that the contract remained alive, but it was unenforceable as against the defendant.[60]It follows from this analysis that paragraph 10 (1) of the 2008 Regulations does not apply. Therefore the defendant has no right under the Regulations to recover the £1,000 deposit which he paid.[61]Mr. Antell submits that this analysis cannot be right because the claimant would then be benefiting from his own wrong. I do not agree.[62]Regulation 6 provides two separate protections for the consumer. If the statutory notice is served, the consumer has a right to cancel the contract within seven days. If the statutory notice is not served, then the contract is and remains unenforceable against the consumer. In the second scenario the protection given to the consumers is different but it is not limited to a seven day period; it continues indefinitely. In this case the defendant has benefited from the second form of protection. He has thereby escaped liability for the cancellation charge. It is not appropriate for this court to enlarge the protection which the 2008 Regulations give to the consumer in either of the two scenarios identified in regulation 6.[63]Does the Defendant have some restitutionary right to recover the deposit which he paid? I do not see how it can be said that there was a total failure of consideration. The claimant, at the defendant’s request, made urgent arrangements and entered into the necessary financial commitments in order to carry out the removal.[64]Mr. Antel has not suggested any other legal basis upon which the defendant might be entitled to recover the deposit.[65]For all these reasons I consider that both the deputy district judge and the circuit judge were correct to dismiss the counterclaim. I arrive at the same result by a different route.[66]Let me now draw the threads together. If my Lords agree, the defendant’s appeal will be allowed in relation to the claim. The judgment in favour of the claimant on the claim will be set aside. The defendant’s appeal in relation to the counterclaim will be dismissed.

Lord Justice Lewison:

[67]I share Jackson LJ's regret at the conclusion to which we have been compelled to reach on the appeal. No doubt the judges in the county court were trying to decide the case in accordance with the underlying commercial merits. But the language of the Regulations does not permit this. Accordingly I agree with the result proposed by Jackson LJ for the reasons that he gives.

Lord Justice Mummery:

[68]I agree with both judgments.

Cited in 3 later judgments