Secretary of State for Business, Innovation & Skills v PLT Anti-Marketing Ltd [2013] EWHC 3626 (Ch)

Case No 3376 of 2013

[2013] EWHC 3626 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Venue MANCHESTER DISTRICT REGISTRY, Manchester Civil Justice Centre

1 Bridge Street West

Venue Manchester

Date Monday, 28 th October 2013

M60 9DJ

Before

HIS HONOUR JUDGE HODGE QC

sitting as a Judge of the High Court

Between

THE SECRETARY OF STATE FOR BUSINESS, INNOVATION & SKILLSRespondent

-v-

Between

PLT ANTI-MARKETING LIMITEDRespondent

Transcribed from the Official Tape Recording by

Apple Transcription Limited

Suite 104, Kingfisher Business Centre, Burnley Road, Rawtenstall, Lancashire BB4 8ES

Telephone: 0845 604 5642 – Fax: 01706 870838

Counsel for Petitioner/Respondent: MR DAVID MOHYUDDIN

(Instructed by Howes Percival Solicitors)

Counsel for Respondent/Applicant: MR SIMON POPPLEWELL and

MR ADAM DEACOCK

(Instructed by Leathes Prior Solicitors)

JUDGMENT

APPROVED JUDGMENT

JUDGE HODGE QC:

[1]This extemporary judgment is a sequel to, and should be read in conjunction with, an extemporary judgment I delivered on 13th May 2013 (

[2013] EWHC 3625 (Ch)

). A transcript of that judgment is available and is in evidence before me as part of exhibit “SFC 5” at pages 1 through to 12 (which form pages 225 to 236 of bundle A at divider 12). That earlier judgment adequately sets out the basis for the public interest winding up petition which has been presented by the Secretary of State for Business, Innovation and Skills in relation to PLT Anti-Marketing Limited on 30th April 2013. That earlier judgment also provides the background to the instant application.

[2]As related in the written skeleton argument of counsel for the petitioner, having presented a public interest winding up petition against the company, the Secretary of State sought the appointment of the Official Receiver as provisional liquidator of the company. That application came on for an effective hearing before me on 13th May 2013. In the light of the extemporary judgment I delivered on that day, and as an alternative to the indication that I had given that I would appoint a provisional liquidator unless appropriate undertakings were given, the company did give a series of undertakings that are incorporated within my order of 13th May 2013. Those undertakings included: (a) That the company would not undertake any sales, save for: (i) Variations to contracts it presently holds with existing customers; and (ii) Completing sales procured as a result of a potential customer contacting the company; and (m) That the company would in advance of any sale, whether such sale was made pursuant to undertaking (a)(i) or (a)(ii), require customers to be specifically advised that the company would register the customers’ details with the Telephone Preference Service and the Mail Preference Service and that these services were free services otherwise available to them individually. On the basis of those undertakings, and for the reasons I gave in my extemporary judgment, I adjourned the application for the appointment of a provisional liquidator to the hearing of the petition, and gave the petitioner permission to apply to restore the application prior to the hearing of the petition on three days’ notice to the company. No such application to restore the provisional liquidator application has been made by The Secretary of State.

[3]In my order, I also recorded that the court considered the matter suitable for a speedy trial. At the hearing before me I had indicated that a second fixture might be available for that purpose in August. The company was concerned that an August hearing might allow insufficient time for the company to mount a proper defence to the petition. On that basis, I also indicated that a first fixture should be available in January. In the event, the matter has not yet even been listed for a full hearing of the petition.

[4]The matter came back before District Judge Richmond on the first hearing of the petition on 12th July 2013. During the course of that hearing, the company applied in the face of the court for a direction for a preliminary issue and for the variation of the validation order of 7th May 2013. District Judge Richmond ordered that a hearing be listed before me, on the first available date after 6th September for a full day, to hear the following applications advanced orally by the company to him. The first, described as the ‘disclosure application’, was an application for an order that the petitioner do give standard disclosure to the respondent. Happily, the parties have arrived at an accommodation that will address the disclosure application without the need for any judicial determination by me.

[5]What is before me, however, is the second limb of the hearing directed by the district judge, which he described as the ‘variation application’. That is, as recorded in the district judge’s order, an application that the court do consider the question of whether or not the undertakings provided to the court by the respondent in response to the petitioner’s application for the appointment of a provisional liquidator may be varied. Further, as part of this application, that the respondent will seek a direction from the court that it can trade within the relevant consumer protection legislation provided that it discloses that it registers customers with the Telephone and Mail Preference Services, but that it is not obliged to disclose that the customer could register himself for free. In other words, the company seeks to vary undertakings (a) and (m) to allow it to resume trade. That application is resisted by The Secretary of State.

[6]District Judge Richmond also adjourned the petition for further directions to be given by me at the end of this hearing. District Judge Richmond also gave directions for evidence on the variation application and the disclosure application. In addition to the evidence that was before me on 13th May, I, therefore, have further evidence. That evidence takes the following form. First, I have a witness statement from Mr Kevin Lee Thurston, a director and shareholder of and in the company, dated 26th July 2013. Of particular relevance are paragraphs 12 to 19 and 26 and 27. The Secretary of State responded to that evidence in the form of a fourth witness statement of Mr Crichton dated 22nd August 2013. Of particular relevance to the variation application are paragraphs 7 through to 17. The company replied to that evidence in the form of a second witness statement from Mr Thurston of which paragraphs 6 to 18 are of particular relevance. That witness statement is dated 9th September 2013.

[7]I have before me five lever arch files containing the material that was available to the district judge on 12th July. Those bundles are numbered 1 through to 5. I also have five further bundles, lettered A to E, which contain the witness statements and exhibits which have come into existence since the hearing before the district judge. On this application, the Secretary of State, who is effectively in the position of respondent, is represented by Mr David Mohyuddin of counsel. He had appeared before me on two hearings before 13th May; but he did not appear on that day, nor did he appear before District Judge Richmond on 12th July. For the company, in the position of applicant, I have heard from Mr Simon Popplewell of counsel. It had been intended that he should appear with Mr Adam Deacock of counsel, who has represented the company throughout these proceedings after the first without notice hearing that took place before me on 2nd May. Unfortunately, due to today’s inclement and stormy weather, Mr Deacock was prevented from reaching court in Manchester until about twenty to three this afternoon. Therefore, Mr Popplewell addressed me on matters that were to have fallen within the province of Mr Deacock. He did so before Mr Deacock arrived; and, in the event, I have heard only from Mr Popplewell (although I had given Mr Deacock and Mr Popplewell, after the former’s appearance, an opportunity to consult before hearing from Mr Mohyuddin). I had received written skeleton arguments settled by counsel for both the Secretary of State and the company. They are extremely detailed. I had pre-read them, and I had pre-read the relevant evidence.

[8]There was a preliminary point taken which was whether I should entertain this application at all. It is clear from a note of the hearing before the district judge that was prepared by the Secretary of State’s solicitors, Howes Percival, that the district judge had intended that it should be open to the Secretary of State to object to the variation application being brought forward at all. That was a matter that was addressed specifically in Mr Mohyuddin’s written skeleton argument. He says that by the variation application, the company is asking the court to determine a hypothetical question, namely, whether if the company trades in a manner in which it informs consumers that it will register them for the Telephone and Mail Preference Services, but does not tell them that they can do that themselves for free, it will nevertheless be complying with the requirements of the Consumer Protection from Unfair Trading Regulations 2008. Those Regulations were formulated in order to give effect within this jurisdiction to Council Directive 2005/29 on unfair consumer practices.

[9]Mr Mohyuddin invites the court to examine the company’s approach from the point of view of procedure. He submits that the company’s reluctance to tell customers that the two Preference Services can be obtained for free can only be because the company fears that to do so would have a detrimental effect on its business. He says that the company wants to restart trading after a gap of some six months - it last traded in April of this year - no doubt, he says, because the flow of monies from existing customers is beginning to dry up. Mr Mohyuddin points out that paragraph 35 of the petition alleges, in terms, that the company trades in breach of Regulation 6 of the Consumer Protection from Unfair Trading Regulations 2008 by failing to inform members of the public, prior to entering into a contract with those individuals and requiring payment, that they can obtain a service similar to that offered by the company free of charge through registration themselves with the two Preference Services. Although the company has not yet chosen to serve evidence in response to the petition, Mr Mohyuddin recognises that it will be likely to assert that it has modified its practices so that it no longer breaches the Regulations; and it may also assert that its previous practices did not breach them as well.

[10]In those circumstances, Mr Mohyuddin acknowledges that it is an issue to be resolved on the hearing of the petition whether the company’s trading practices, as known to the Secretary of State at the time the petition was presented, breached Regulation 6. It may also be an issue whether any changes to the company’s practices remedy such breach. However, he says, the complication from the perspective of the company is that it had volunteered an undertaking to the court on 13th May. He invites the court to note the context in which those undertakings were given. He submits that the issue of whether the company should be informing consumers that it was offering services that were available elsewhere for free had been a live issue since at least March 2010. It was a matter that was expressly raised in the petition itself. It was a matter that had been touched upon in the evidence filed on behalf of the company by one of its then directors, Mr Lloyd, in his first witness statement of 6th May.

[11]Within paragraph 14, subparagraph (a) of his first witness statement, Mr Lloyd had referred to evidence from Mr Crichton that the company’s revised script did not inform customers that a similar service could be obtained free of charge by registering with the Telephone and Mail Preference Services. Mr Lloyd had stated, in terms, that he was not aware that there was any legal obligation on PLT to advise customers of the action that they might take of registering with schemes, free or otherwise. He also emphasised that the service offered by PLT was not simply one with effective registration to those schemes.

[12]Mr Mohyuddin emphasises that since the Secretary of State’s investigation commenced at the end of October 2012, the company had taken legal advice and had suspended its sales operations for five months from November 2012 to April 2013 so that a risk audit could be undertaken. That resulted in what is said by the company to have been significant changes to its trading practices. They are said to have been taken after the company had taken legal advice. The provisional liquidator application had first been heard on notice to the company on 7th May, and adjourned to the effective hearing on the 13th. The company had been represented by the same firm of solicitors that had advised it on the changes to its trading practices, and also by Mr Deacock of counsel. Submissions were made on behalf of the Secretary of State to the effect that it was wrong for PLT not to tell customers that they could register for the two Preference Services for free.

[13]The Secretary of State’s submissions on that were recorded at paragraphs 20 and 42 of my judgment. Mr Deacock, for the company, addressed me in response to those submissions, as recorded at paragraphs 31 through to 35. I addressed the company’s submissions at paragraphs 36 through to 38 of my judgment. I indicated that, whilst I was not deciding the point, it seemed to me that there was a seriously arguable case that there was a breach of Regulation 6 in omitting to point out to consumers that they could obtain a similar free service from the Telephone and Mail Preference Services, and that that was a breach of Regulation 6 even though the company provided other services in addition. I also touched upon the matter at paragraph 45 of my judgment. Mr Mohyuddin, therefore, submits that it cannot be said that the company had not taken legal advice, had not had an opportunity to address the court on the point, or that it was forced to give the undertakings in great haste.

[14]Against that background, Mr Mohyuddin submits that the proper procedural approach for the company was to have pursued its request for a speedy trial. That is because the question of breach of Regulation 6 should be determined in the proceedings on the petition rather than in the context of the provisional liquidator application, which is necessarily an interim, and not a final, determination. He submits that, as far as the provisional liquidator application is concerned, the issue was dealt with on 13th May 2013, when the court indicated its view without making a final determination. That, he submits, was entirely the correct approach because it left the question for determination at the trial of the petition. Therefore, he submits that the court should not entertain the variation application, but should rather give directions for a speedy trial to take place, as had been canvassed on 13th May. If, however, the court were minded to entertain the variation application, he says that the procedural basis for it must be identified. Regrettably, that basis, he says, is wholly unclear. He acknowledges that the court has the power to direct a separate trial of an issue. Most obviously, that power is used to direct the trial of preliminary issues. He refers to paragraph 3.14 of the Chancery Guide: ‘Costs can sometimes be saved by identifying decisive issues, or potentially decisive issues, and ordering that they are tried first. The decision of one issue, although not itself decisive of the whole case, may enable the parties to settle the remainder of the dispute. In such cases a preliminary issues may be appropriate’.

[15]Mr Mohyuddin submits that the issue the company seeks to have determined is not a preliminary issue and that great care was taken at the hearing before the district judge not to describe it as such. He says that it is, rather, a hypothetical issue. That is not to say that it is academic, in the sense that parties to private litigation have settled their dispute so that the legal question arising from it no longer needs to be answered. Rather, he says that the facts which are postulated have not yet arisen by reason of the undertakings volunteered by the company. That begs the immediate question whether the court should entertain it. He says that since there is no factual dispute to be resolved, the court ought not to entertain the variation application. He says that it has been made for the sole purpose of establishing a change of circumstance so that the company can argue for the variation of the undertakings it offered on 13th May. Mr Mohyuddin submits that this is an attempt to engineer a change of circumstances, justifying reconsideration of the undertakings that were offered to, and accepted by, the court on 13th May. There is no proper procedural basis for that. The provisional liquidator application was compromised on terms that the company gave undertakings, and the application was, on that basis, adjourned to the hearing of the petition.

[16]The court has held that there was a seriously arguable breach of Regulation 6, and, in the light of that, the company chose to give undertakings. The company’s position was that there should be a speedy trial. It gave the undertakings knowing that this point about the applicability of Regulation 6 was a seriously live issue. On 13th May the company had not sought to say that it needed to take specialist advice, or that it was unable to deal with the point; nor did it reserve its position for the future. Rather, it argued it, and the court concluded, that the matter gave rise to a serious issue that resulted in the company giving the undertaking. The Secretary of State was unclear as to the jurisdiction the company was seeking to invoke. The reason for that is because it is difficult, according to Mr Mohyuddin, to identify any basis upon which the interim relief can properly be re-opened. The Regulation 6 point can be dealt with at the hearing of the petition, but not before then. There is no change of circumstances justifying an application to vary the undertaking. There is no preliminary issue before the court. The matter can only be decided on the hearing of the petition itself.

[17]For the company, Mr Popplewell submits that in the interests of justice the point should be decided now. First, he says it is part of the petitioner’s case that failure to inform customers that the Mail and Telephone Preference Services are available for free is a breach of the Regulations; and the issue would, therefore, have to be decided sooner or later. Secondly, he says that it will save time at trial, even though it may not dispose of the petition altogether, if the issue is decided in the company’s favour. If the issue is decided against the company there will, equally, be a saving of time at the hearing. Thirdly, he says that it is only fair to the company, which wishes to trade, for the court to decide definitively whether it is able to trade lawfully. If the company is right about that, but only establishes that it is right at trial, it will have lost considerable revenue in the meantime, and will not be compensated because the Secretary of State, as petitioner, has not given a cross-undertaking in damages.

[18]Mr Mohyuddin submits that the court is being invited to make a declaration on an uncertain procedural basis, and on a hypothetical set of facts. The answer to the point about the company’s inability to trade pending the hearing of the petition is that the company opted for a speedy trial, and gave undertakings in the meantime. The only reason for pursuing the variation application now is to seek to establish a material change of circumstances, entitling the company to apply for a variation of the undertaking. The court should, therefore, decline to entertain the application, and should list the matter for as expeditious a trial as the court can accommodate. In answer to a question from the court about the absence of a cross-undertaking in damages, Mr Mohyuddin reiterated that the answer was for the company to seek a speedy trial. It has chosen not to follow that course, and now cannot complain that there is a delay. All of that is of the company’s own making.

[19]In response to the point that the 13th May hearing had come on very quickly, and despite submissions from Mr Deacock that more time should be allowed for the company to prepare for it, Mr Mohyuddin made the point that the company had been properly represented on 13th May, the issue had been addressed, and, knowing the view that the court took on the issue, the company had chosen to give an undertaking in the terms that it did. The company must identify a change of circumstances, but there was no such change. The court should not deal with the matter as a preliminary issue because it could not be determinative of the petition. Rather, the solution was to go along the route of a speedy trial. Even if the court were minded to address the point as a preliminary issue, there could be no assurance that, even if the company were to lose, it would not continue to defend the petition. There was nothing to support the proposition that resolving this particular issue would enable the parties to settle the remainder of their dispute. Mr Popplewell had failed to identify any proper procedural basis for the application. The fact that court time was available to hear the matter today, and would be wasted if it were not heard, was the inevitable consequence of the company’s failure to identify a proper procedural basis for the application. In fact, the procedural basis was bad.

[20]In response, Mr Popplewell submitted that the company had wanted to defend the petition to the best of its ability. If it can persuade the court that it can continue to trade lawfully, then that would remove the need for a speedy trial. As he observed, we are where we are today, and the parties are now ready to argue this particular point. He said that, effectively, the court had offered a Hobson’s choice to the company: either give the undertakings or face the appointment of a provisional liquidator. He submitted that it was very clear that the court was being asked, by the variation application, to allow a variation of the undertakings to enable the company to trade, on the footing that the court could now see that what it had previously concluded was seriously arguable was in fact wrong. In doing so, the court would determine whether the company could trade properly in compliance with the applicable Consumer Protection Regulations on the basis of the presently proposed script and manner of working.

[21]At the conclusion of those submissions, I indicated that I would treat the matter as though there was before me a preliminary issue to be disposed summarily, namely, whether the proposed manner of trading would be in breach of Regulation 6 of the Consumer Protection from Unfair Trading Regulations 2008. I fully recognise the undesirability, in normal civil litigation, of allowing a respondent to an application for interim relief to re-open matters on an application to, effectively, vary the terms of the relief granted. There must be a material change of circumstances. However, I am also conscious of the overriding objective of enabling the court to deal with cases justly, and, since 1st April this year, at proportionate cost. I have the duty actively to manage cases, and that includes identifying issues at an early stage, deciding promptly which issues need full investigation and trial and accordingly disposing summarily of the others, and dealing with as many aspects of the case as I can upon the same occasion. I also must bear in mind the need to allot to a case an appropriate share of the court’s resources, while taking into account the need to allot resources to other cases.

[22]It is, in my judgment, an important feature of the variation application that the undertakings were given in response to an application to appoint a provisional liquidator that had been brought on for hearing within an extremely compressed timescale. There is some force in Mr Popplewell’s point that I was, effectively, giving the company a Hobson’s choice in either giving the undertakings or accepting that a provisional liquidator would be appointed. True it is that the Regulation 6 point was fairly in issue before me on 13th May. But it was only resolved on the basis that the point was seriously arguable; I did not determine the point itself. I am conscious also that in this litigation the Secretary of State quite properly - because he is pursuing the public interest - gives no cross-undertaking in damages. That does mean that the court has to approach applications to vary undertakings in a slightly different way to that which it would adopt if those undertakings were secured by an effective cross-undertaking in damages.

[23]The parties had come to court today ready, willing and able to argue the Regulation 6 point. In those circumstances, it seems to me that it would be a waste of the parties’ resources, and of the court’s resources, for that point not to be resolved. It may have some impact upon the way in which this whole petition proceeds. Part of Mr Mohyuddin’s submission was that the company’s reluctance to tell customers that the Preference Services can be obtained for free can only be because it fears that to do so would have a detrimental effect on its business. If I find that Regulation 6 requires such disclosure, then it may lead the company to conclude that its proposed business model would not be financially viable. Be that as it may, resolution of this issue will, as Mr Popplewell says, reduce the time taken up at trial, and will enable a more focused approach to be brought to the remaining issues. For all of those reasons, I decided that I should decide the issue that was sought to be raised as to the potential application of Regulation 6.

[24]I do so on the footing that it will be a final determination that will be binding on the parties at trial, rather than the determination of an interim nature as I had made on 13th May. I am conscious also that there might well be an appeal from my decision. I did raise the question whether, by extending time for filing an appellant’s notice of appeal, I could ensure that no appeal was brought until after the final disposal of the petition because I did not want any possibility of an appeal adversely to affect the progress of this case towards a substantive hearing of the winding-up petition. The Secretary of State, for reasons that I can understand, has indicated that he will not be prepared to defer any appeal against a decision in favour of the company until after the final disposal of the petition. In those circumstances, it seems to me that it would be wrong to require the company to indicate that it will not pursue any appeal until after the final disposal of the petition if the matter goes against it. I bear in mind that my decision may, therefore, have implications for the hearing of the petition itself. Nevertheless, for the reasons I have given, I am quite satisfied that, in the exercise of my case management powers, and notwithstanding all of the points made so forcefully by Mr Mohyuddin, I should use the resources of today’s hearing to determine the issue that the parties are ready for me to determine, and are able to argue.

[25]Therefore, I turn to the substantive issue, which is: will the proposed business practices of the company be in breach of the Consumer Protection from Unfair Trading Regulations 2008. The background to that question is that, as part of the service that the company provides to its customers to reduce or eliminate unwanted marketing calls, the company registers those customers with the Telephone and Mail Preference Services. Both services are ones that a consumer could, if they so chose, register with themselves. It is contended by the Secretary of State that in not informing consumers that a similar free service is available elsewhere, the company has committed a misleading omission within the meaning of Article 6 of the Regulations. That, by virtue of Regulation 10, constitutes a criminal offence.

[26]Mr Popplewell submits that, for present purposes, to constitute a misleading omission for the purposes of Regulation 6 there must be:(1) A commercial practice;

(2) That commercial practice must omit, or hide, material information, or otherwise provide such information in a manner which is unclear, unintelligible, ambiguous or untimely; and

(3) That, in consequence, this hiding of information, or omission to provide it, must cause, or be likely to cause, an average consumer to take a transactional decision that he would not have taken otherwise. Mr Popplewell submits that there is no dispute that the company is engaging in a commercial practice, and that when customers sign up with the company they are taking a transactional decision. There is also no dispute that the company is not proposing to disclose to consumers that there is a similar free service available elsewhere, which can constitute an omission. The two areas of contention between the parties are: (1) Is the fact that a consumer can sign up for a similar free service elsewhere ‘material information’ for the purposes of Regulation 6; and (2) If so, has the failure to provide this material information caused, or is it likely to cause, a consumer to take a transactional decision that they would not have taken otherwise.

[27]Mr Popplewell begins by considering the correct approach to interpreting the Regulations. He makes the point that they implement Council Directive 29 of 2005, concerning unfair commercial practices in the internal market; in other words, the Regulations are intended to give effect to a market harmonisation directive. As such, Mr Popplewell submits that the traditional canons of English statutory interpretation are not applicable. Rather, the Regulations must be interpreted, as far as possible, so as to implement the purposes and provisions of the Directive. He has taken me to the only directly relevant English authority, the decision of Mr Justice Briggs in the case of The Office of Fair Trading v Purely Creative

[2011] EWHC 106 (Ch)

, reported at [2011] CTLC 45. Mr Popplewell has taken me to the headnote, to paragraph 40, and to paragraphs 62 through to 74. Mr Popplewell emphasises, in particular, what was said by Mr Justice Briggs at paragraph 62 as to the identification of the attributes of the average consumer. Mr Justice Briggs observed that:

‘The requirement to assume that the consumer is reasonably well informed, observant and circumspect reflects the common sense proposition that the Unfair Commercial Practices Directive exists to protect from being misled consumers who take reasonable care of themselves, rather than the ignorant, the careless or the over-hasty consumer.’

He drew my attention specifically to recital 18 to the Directive, which makes the point that:

‘The average consumer test is not a statistical one. National courts and authorities will have to exercise their own faculty of judgment having regard to the case law of the Court of Justice to determine the typical reaction of the average consumer in a given case.’

[28]Mr Popplewell emphasises from paragraph 64 of Mr

Justice Briggs’s judgment that:

‘Generally speaking, the EU jurisprudence encourages the court to conduct that exercise so far as possible without recourse to statistical or other expert evidence about typical consumer behaviour, or even the evidence of particular consumers.’

Mr Justice Briggs, at paragraph 65, considered it unnecessary to require statistical or expert evidence, or the evidence of particular consumers, to be placed before the court. Mr Popplewell also emphasised the fact that Mr Justice Briggs observed at paragraph 70 that:

‘Although it may be said that the general requirement to provide a "high" level of consumer protection may properly incline the court towards a lower rather than higher hurdle in the causation test, it needs to be borne in mind that consumer protection is not to become so paternalistic in its extent as to constitute a barrier to the free movement of goods.’

I also bear in mind that at paragraph 72 Mr

Justice Briggs observed that:

‘The combined effect of all relevant misleading acts and omissions must first be ascertained, and then subjected to the test whether, taken in the aggregate, it would probably cause the average consumer to take a transactional decision which he would not otherwise have taken. Otherwise a communication which contained misleading acts and omissions, none of which would separately satisfy the causation test, may escape from classification as an infringement, even though (as may have been intended by the trader) their combined effect would satisfy the causation test.’

[29]I must also bear in mind that at paragraph 74 Mr

Justice Briggs had observed that:

‘A literal reading of Regulation 6(3)(a) and its equivalent in Article 7.1 of the Directive might suggest that something approaching an utmost good faith obligation is imposed in relation not merely to the consumer's decision whether to contract, but also to every transactional decision.’

Mr Justice Briggs said in terms that he regarded that analysis as ‘imposing an excessively high hurdle.’ He said that it cannot have been the intention of the framers of the Directive to require an overly high level of disclosure because to do so would indeed ‘cause barriers to the free movement of goods and services beyond that necessary to achieve a high degree of consumer protection.’ In Mr Justice Briggs’s judgment:

‘The key to understanding this paragraph is the concept of "need". The question is not whether the omitted information would assist, or be relevant, but whether its provision is necessary to enable the average consumer to take an informed transactional decision.’

[30]Against that background, Mr Popplewell took me to the first of the two questions: Is the fact that consumers can obtain a similar service to that provided by the company for free elsewhere material information for the purposes of the Regulations? As I have said, in that regard Mr Popplewell places reliance upon Mr Justice Briggs’s emphasis upon the test of necessity, or the concept of need. Mr Popplewell submits that what is material, or what a consumer needs, in order to take an informed transactional decision about whether or not to purchase a product or service is information about that product or service, things such as the price, the provider of the service, and any additional charges. What he says is not necessary for the consumer to decide whether or not to purchase the service is information about the features of alternative products or services that may be available to the consumer elsewhere. The test, he submits, looks inwards at the trader’s own product on offer. It does not require a trader to look outwards, to explain to consumers features of other products or services on the market. It is a matter for the consumer what research, if any, they are to put into the market. The Regulations do not require a trader to carry out their research for them.

[31]That the test looks inwards and not outwards is, he submits, supported by Regulation 6(4) of the Regulations, which corresponds to Article 7.4 of the Directive. That Regulation sets out certain matters that are always to be regarded as material in an invitation to treat, if not already apparent from the context. Each of those matters is said to be something that relates either to the trader itself, or to the trader’s own product or services. None of those matters requires the trader to look outwards at the market in general. Whilst acknowledging that the list in Regulation 6(4) is not an exhaustive list of what is or is not to be considered material, and that Article 7.4 of the Directive is intended to set out key items of information, Mr Popplewell submits that, given the high level of protection that both the Article and the Regulation are intended to offer, it is noteworthy that all of the matters identified are inwards looking. He submits that the court must use its own judgment to determine what information the consumer needs to make an informed transactional decision. To adopt the language of Recital 14 to the Directive, it must be ‘essential’ material. The test is not whether it would be helpful, but what is necessary for the consumer. He submits that if one is obliged to tell a consumer that a service is free elsewhere, logically the service provider should be under an obligation to tell the customer that it is cheaper elsewhere. There is nothing, Mr Popplewell submits, in any of the guidance that even hints of such a wide-ranging obligation. He also points to the fact that a breach of Regulation 6 gives rise to a criminal offence of strict liability under Article 10 of the Regulations.

[32]Mr Popplewell also submits that, if material information could include outward-looking information, it would have remarkable consequences for how goods and services are sold across the EU. There will often be circumstances where a consumer may have acted differently had he been aware of the features of another product or service. He might well not have purchased goods if told that they were available more cheaply elsewhere. He may well not have done so if aware that alternative goods had additional features, or that an alternative service provider could provide a more comprehensive service, or that an alternative service provider had more experience. If one were to interpret Article 7 of the Directive and Regulation 6 as meaning that material information includes information relevant to other products or services available on the market, then Mr Popplewell submits that traders would be obliged to disclose matters about competitors’ products to consumers prior to sale. There is no reference to this in the recital to the Directive, or in the guidance issued by the Commission, or in the United Kingdom in the joint guidance issued by any of the official government bodies. Nowhere is there any suggestion that either the Directive or the Regulations are intended to have this far-reaching effect. That, Mr Popplewell submits, is highly suggestive that the interpretation placed on the Regulations by the Secretary of State is incorrect.

[33]Mr Popplewell proceeds to develop that submission at paragraphs 34 and 35 of his written skeleton submissions. He raises the spectre of traders being obliged to trawl the marketplace for the best deals, or for relevant information, in order to keep the consumer properly informed. All of that, Mr Popplewell submits, supports his submission that the concept is only inward, and not outward, looking. For all of those reasons, Mr Popplewell submits that the Secretary of State’s interpretation of Regulation 6 is incorrect. There is no obligation on the company to have to disclose that a similar service is available for free elsewhere; and, hence, the company is able to trade under its proposed script without breaching the Regulations, even though it does not inform consumers that the service is available for free from the two Preference Services.

[34]Mr Popplewell then addresses his second area of submission. If, contrary to his primary submission, the fact that a similar service is available for free elsewhere is material information, he asks: has the omission of this material information caused an average consumer to take a transactional decision that they would not otherwise have taken? It is the company’s position that the average consumer, as defined by the Regulations, would already be aware that he can register with the two Preference Services himself for free. In those circumstances, failing to inform consumers of this fact cannot have affected their transactional decision. He cites the passage from Mr Justice Briggs’s judgment at paragraph 62 to which I have already made reference. He emphasises that the requirement to assume that the consumer is reasonably well informed, observant, and circumspect reflects the common sense proposition that the Directive and the Regulations exist to protect consumers from being misled where those consumers have taken reasonable care of themselves rather than seeking to protect the ignorant, the careless or the over-hasty consumer. The average consumer test is not a statistical one, and does not rely on expert evidence about typical consumer behaviour, or even evidence of actual consumer complaints.

[35]Mr Popplewell accepts that it is a matter for the court to determine the effect on the average consumer having regard to the court’s own faculty of judgment. However, he submits that taking into account that the average consumer is reasonably well informed, reasonably observant and circumspect, the court is entitled to conclude that the average consumer would be aware that both services are ones that are available, and that the consumer can himself register with those services for free if he so chooses. In support, he relies upon the fact that the Telephone Preference Service publicises itself, and both the Telephone and Mail Preference Services have a presence online. He cites copies of numerous articles which refer to the TPS and which are exhibited to Mr Thurston’s second witness statement. He emphasises that these are not simply available from the website, but were first published elsewhere, including reports in the general press and on television news. He emphasises that these are matters in the public domain, having been incorporated in mainstream news publications. At least one of them, he submits, is likely to have been seen by the reasonably well informed, reasonably observant and circumspect consumer. He also relies upon the fact that the TPS’s own report on unwelcome calls in 2008 recorded that at that time the TPS file stood at 14.7 million landline numbers, which were said to be over 60 per cent of UK households. He said that there are even more who have registered since then. Self-evidently, he says, a person must have been aware of the TPS to register with it. In those circumstances, Mr Popplewell submits that the fact that the company does not expressly inform consumers that there is a similar service available for free elsewhere cannot have influenced the average consumer’s transactional decision, for the average consumer would already be well aware of the existence of the two Preference Services. As such, he says, there can be no breach of the Regulations.

[36]Mr Mohyuddin dealt with the matter rather more shortly. He submitted that the appropriate question was what, in the proper context, does the average consumer need to have in order to take an informed transactional decision? The context is the fact that a telephone call is made which asks for an immediate transactional decision. In that regard, I am required to bear in mind the terms of the proposed script, which is to be found as part of exhibit “KLT 1” to Mr Thurston’s first witness statement at page 114 of bundle A. I bear the terms of that script very much in mind. Mr Mohyuddin submits that what is necessary is the information necessary to enable the consumer who receives such a call from the company to assess the value of the service that is being offered to him. He needs to know, according to Mr Mohyuddin, that at least part of the service he is being offered is available for free.

[37]In that context, Mr Mohyuddin referred me to one of the documents within exhibit ”SFC 5” to Mr Crichton’s fourth witness statement, which is the report of the action taken by the Office of Fair Trading over misleading European Health Insurance websites. That internet printout includes a statement from a senior director of the OFT’s consumer group, where she is quoted as saying:

‘While it is not unlawful to charge money for a reviewing and forwarding service, traders must be clear about the product or service they are offering and not trick consumers into parting with money for services they do not want.’

Mr Popplewell had relied upon that printout in support of the submission that it is not unlawful to charge money for a reviewing and forwarding service. Mr Popplewell had submitted that such a service is analogous to that being provided by the company in the instant case. Mr Mohyuddin, however, emphasises that the thrust of the point being made by the OFT is that consumers should not be tricked into parting with money for services they do not want. He says that the same should apply to services that they do not need because those services are available for free elsewhere.

[38]Mr Mohyuddin submits that a consumer needs to know that they can register themselves for free in order to decide whether they want the services being offered by the company in the present case, just as those buying from companies offering a reviewing and forwarding service for European Health Insurance Cards needed to know that they could obtain such cards directly from the health service for free themselves. Mr Mohyuddin submits that to assess the value of the service being offered by the company, a consumer needs to know what, if any, service is available for free elsewhere. He submits that, contrary to Mr Popplewell’s submission, such information is inward-looking. It requires the company to indicate, not only what it provides at a price, but also what is available elsewhere for free. He makes the point that the company in the present case knows full well that the service is available for free elsewhere because the company has had to take this into account in formulating its business model, and in arriving at the price which it charges for its services. However, even if the court were to reject that submission, and take the view that Mr Popplewell is right to say that information which the Secretary of State says should be provided is outward-looking, then so be it. The question is not whether the information to be provided is inward or outward looking; the question is one of consumer need: what information is it necessary for the consumer to receive? To make an informed transactional decision, the consumer needs to know that registration with the Telephone Preference Service is available for free.

[39]Mr Mohyuddin identified what he described as a tension between paragraphs 14 and 17(1) of Mr Popplewell’s written submission. At paragraph 14, it is said that as part of the service that the company provides to its customers, the company will register those customers with the Telephone and Mail Preference Services, and that both of those services are services that a customer could, if they so chose, register with themselves. Mr Popplewell, in reply, made it clear that the reference to both of these services is a reference to both TPS and MPS. Mr Mohyuddin says that there is a tension between that and subparagraph 17(1). There it is said that, whilst the company is under an obligation to inform consumers about the service that it is offering them, it is not obliged to have to inform consumers about a similar free service available elsewhere, or that consumers are able to register themselves with such a service for free. It is said that those are not features of the service that PLT is providing, and, therefore, a failure to mention those matters does not fall within the scope of a misleading omission under the Regulations.

[40]Mr Mohyuddin makes the point that part of the service that the company is offering is registration with MPS and TPS. It is charging for such registration, whereas a consumer could go directly to the two services and register for free. Mr Mohyuddin says that the company is providing registration as part of the service that it provides, and so a consumer needs to know that registration is free in order to assess the value to him of the service that the company will be providing in practice. Mr Popplewell, in reply, disclaimed any tension between those paragraphs of his written submissions. How a person assesses the value of a service is by receiving information as to what service is being provided, and what is its cost. The service provider’s mark-up is said not to be material information for the consumer. The consumer knows what he is paying for. If he is told what service will be provided, he does not need to know what the service is worth, or what the provider is or is not paying for it.

[41]Those, essentially, are the submissions, to which I have had full regard in arriving at my decision. On the first issue, I have no difficulty in arriving at the conclusion that the fact that consumers can obtain a similar service to that provided by the company for free elsewhere is indeed material information for the purposes of the Regulations. I accept Mr Mohyuddin’s submissions in that regard. Applying the test formulated by Mr Justice Briggs in The Office of Fair Trading v Purely Creative, namely, the concept of need, in my judgment the omitted information is not merely information that would assist or be relevant to the consumer. Rather, it is information, the provision of which is necessary to enable the average consumer to take an informed transactional decision. It seems to me clear that it is material to a prospective consumer who receives a call utilising the proposed telephone script to know that he is to be charged for a service that is available for free. He is told that the company will register his details with the Telephone Preference Service and Mail Preference Service. It seems to me material that he should know that he can register himself with those services for free.

[42]The crucial feature in the present case is that an important part of the very service the company is offering is available free of charge from the very persons, namely, the MPS and TPS, who the company will be approaching to provide that service. This is not a case where the company has to trawl the market to investigate products being produced by its competitors. As Mr Mohyuddin submitted, its business model involves registration with TPS and MPS; and it knows, and is charging, upon the basis that such registration is free. I agree that there is, in general, no obligation on a supplier to identify its particular mark-up. However, in my judgment it is an obligation on a supplier of a service to say that the service for which it is proposing to charge can be obtained for free from an alternative supplier. Therefore, I accept the submissions of Mr Mohyuddin and reject the competing submissions of Mr Popplewell.

[43]Having found that the fact that a similar service is available for free elsewhere is material information for the purposes of Regulation 6, I have to go on to consider whether the omission of this material information causes, or is likely to cause, the average consumer to take a transactional decision he would not have taken otherwise. I have to focus upon the concept of the average consumer, as described in the Regulations and Directive, and bearing in mind the official guidance that has been cited to me, and the observations in the judgment of Mr Justice Briggs. As Mr Popplewell submits, this is a matter for the court to determine having regard to the court’s own faculty of judgment. In arriving at that judgment, I cannot ignore the fact that, as Mr Mohyuddin submits, and as I accept, the company’s reluctance to tell customers that the two Preference Services can be obtained for free can only be explained on the basis that the company fears that to do so would have a detrimental effect upon its business. I have to ask myself: why does the company not want to have to notify consumers that they can register with TPS and MPS themselves for free? The only answer that I can supply, and that is consistent with the answer given by Mr Mohyuddin, is that the company is concerned that if that information were to be provided, an appreciable number of customers would decline the service that is being offered by the company. I have to bear in mind that this selling operation is conducted over the telephone, using a script following the form to which I have already made reference and which is in evidence before me. Although there are rights of cancellation that are even more generous than those strictly required by statute, nevertheless the consumer is being signed up on the phone there and then. Without wishing in any way to adopt a paternalistic approach to the provision of services and to the protection of consumers, it does seem to me that the average consumer, even though he is reasonably well-informed, observant and circumspect, is, as a result of the omission of what I have found to be material information, likely to be caused to take a transactional decision that he would not have taken otherwise.

[44]In my judgment, again for the reasons given by Mr Mohyuddin, and contrary to the submissions of Mr Popplewell, I reject the latter’s submission that the fact that the company does not expressly inform consumers that there is a similar service available for free elsewhere cannot affect, or be likely to affect, the average consumer’s transactional decision. I cannot accept that the average consumer would already be well aware, not simply of the existence of the Telephone and Mail Preference Services, but also, as Mr Mohyuddin rightly emphasises, that such services are available to the consumer for free. As I say, it seems to me that that is borne out by the vigour with which the company is pursuing the present application, in order to be able to trade without informing prospective customers of this fact.

[45]Therefore, for those reasons, I find that the proposed manner of trading would indeed be in breach of Regulation 6. As such, there is no material change of circumstance to justify the court in reviewing the undertakings that were offered to the court in return for the adjournment of the provisional liquidator application on 13th May 2013. In short, therefore, I dismiss the application. [Judgment ends]