Warwickshire County Council v Johnson [1991] UKHL 11

House of Lords
Between
Warwickshire County CouncilAppellantJohnsonRespondent
Before
Lord Griffiths
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of the Divisional Court of the 2nd day of April 1992 complained of in the said Appeal be, and the same is hereby, Set Aside and that the conviction be quashed: And it is further Ordered. That the first question certified by the Divisional Court be answered in the affirmative and that the second question be answered in the negative: And it is further Ordered. That the Costs incurred by the Appellant in respect of the said Appeal be paid out of central funds pursuant to section 17 of the Prosecution of Offences Act 1985 the amount thereof to be certified by the Clerk of the Parliaments: And it is also further Ordered. That the Cause be, and the same is hereby, remitted back to the Queen's Bench Division of the High Court of Justice to do therein as shall be just and consistent with this Judgment.Cler: Parliamentor:

Judgment: 10.12.92

HOUSE OF LORDS

REGINA

v.

WARWICKSHIRE COUNTY COUNCIL (RESPONDENTS)

EX PARTE JOHNSON (APPELLANT)

(ON APPEAL FROM A DIVISIONAL COURT OF THE QUEEN'S BENCH DIVISION)

Lord Griffiths Lord Emslie Lord Roskill Lord Ackner Lord Lowry

LORD GRIFFITHS

My Lords,I have had the advantage of reading in draft the speech of my noble and learned friend Lord Roskill. I agree with him and for the reasons which he gives I would allow the appeal and make the order which he proposes.

LORD EMSLIE

My Lords,I have had the advantage of reading in draft the speech of my noble and learned friend Lord Roskill. I agree with him and for the reasons which he gives I would allow the appeal and make the order which he proposes.

LORD ROSKILL

My Lords,On 24 November 1989 the Warwickshire County Council ("the Respondents") as the prosecuting authority laid an information against the appellant in respect of an offence allegedly committedagainst section 20(1) of the Consumer Protection Act 1987 on 29 May 1989. The appellant was on that date the manager of the Stratford-upon-Avon branch of Dixon's Store Group Ltd ("Dixon's"). The wording of the information is of some importance and I set it out in full, italicising the most crucial words:-
"Neil Kirk Johnson gave, in the course of a business of his, to Graham Rodney Thomas an indication by means of a notice stating 'We will beat any TV, Hi-Fi and Video price by £20 on the spot' which was misleading as to the price at which a JVC remote control television was offered in that the price was not £20 less than the price at which it was offered by another person in Stratford-upon-Avon contrary to section 20(1) of the Consumer Protection Act 1987."
The essential facts are not in dispute. The appellant with the authority of Dixon's had placed outside the shop a notice in the terms set out in the information. On 29 May while the notice was still displayed Mr Thomas saw a TV set of the particular kind in question offered for sale elsewhere in Stratford-upon-Avon at a price of £159.95. Mr Thomas then went to Dixon's and was told that Dixon's had an identical set in stock. Mr Thomas thereupon took the appellant to see the set on sale elsewhere for £159.95. But when Mr Thomas sought to purchase the set at Dixon's for £139.95 the appellant refused to sell it, apparently asserting that he was within his rights in refusing to sell the set at the reduced price. Mr Thomas reported the matter to the Respondents' Trading Standards Department. Later when he was interviewed by an officer of that department, the appellant frankly agreed that he had been wrong but said he had acted in the heat of the moment when he was under pressure. These proceedings then followed.The information came before the justices at Stratford-upon- Avon on 27 April 1990. They dismissed the information. They reached the conclusion that the notice was not misleading but they also held that the appellant "was . . . acting in the course of a business of his". The Respondents understandably applied to the justices for a case to be stated. After considerable delay the case was signed on 23 November 1990. The appeal came on for hearing in the Divisional Court on 2 April 1992. That court (Stuart-Smith L.J. and Popplewell J.) allowed the appeal for the reasons given in the judgment of Popplewell J. They held that the notice was misleading because the appellant refused to honour the terms of the notice in that he refused to "beat any TV, Hi-Fi or Video price by £20 on the spot". They also held, contrary to the appellant's submission on the second issue, that in failing to honour the notice the appellant was acting "in the course of any business of his" interpreting that phrase as meaning "in the course of his business, trade or profession". The Divisional Court dealt with the question of sentence by granting the appellant an absolute discharge upon payment by him of the costs of the appeal to the Divisional Court.The appellant invited the Divisional Court to certify two points of law of general public importance. The Divisional Court certified these two questions:-
"(1) Whether for the purposes of section 20(1) of the Consumer Protection Act 1987 a statement, which in

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itself is not misleading on the face of it, can be rendered misleading by virtue of the fact that, even in the absence of evidence to show a general practice or intention to dishonour the offer contained therein, on one occasion the person making the statement declined to enter into a contract within the terms of the statement.(2) Whether for the purposes of section 20(2)(a) of the Consumer Protection Act 1987 an employed branch manager who fails to comply with a price indication so that the same is to be regarded as misleading does so "in the course of any business of his."In addition to the two issues so certified the appellant in his printed case raised a third issue not raised - it could not be so raised - in the Divisional Court. Before the hearing of this appeal, your Lordships' House had heard the further submissions in Pepper v. Hart but had not at that time given judgment. The appellant invited your Lordships in seeking to resolve the second issue to look at what was said in your Lordships' House on 12 March 1987 (Hansard, Volume 485 col. 1140 et seq) by the Minister concerned, Lord Beaverbrook, at the Report stage of the then Consumer Protection Bill when replying to an amendment moved by the noble and learned Lord, Lord Morton of Shuna. Lord Morton of Shuna was supported on this occasion by the noble and learned Lord, Lord Denning. It was said that if your Lordships when considering the second issue found the language of section 20(1) and 20(2)(a) ambiguous, the ambiguity should be resolved in favour of the appellant by reason of what was then said by the Minister as to the clear intention of these sub-sections.My Lords,your Lordships' House has now given judgment in Pepper v. Hart. It has thus become proper in the strictly limited circumstances defined by my noble and learned friend Lord Browne-Wilkinson in his speech, with which the majority of their Lordships who heard that appeal agreed, to have regard to what was said in Parliament in the course of the passage of the Bill. I should mention for the sake of completeness that your Lordships were assured that when the Bill was passed through the later stages in your Lordships' House and also when it reached another place there was no further reference at any stage to this issue. But before considering this matter further I shall first consider the two questions of construction.As to the first it was strenuously argued that because the notice was not misleading on its face it could not subsequently become misleading by a refusal to honour its terms. It was said that it never ceased to be a genuine offer. Overcharging could not of itself convert that notice itself not misleading into a notice which was misleading. Counsel for the appellant frankly admitted that Mr Thomas was misled. I ask - by what was Mr Thomas misled? There can only be one answer. Mr Thomas was misled by the notice. I find myself in complete agreement with the reasoning of the Divisional Court on this issue. "The notice is a continuing offer and whether it is misleading or not can only be tested by somebody taking up the offer. It was misleading because the Respondent "[now the appellant]" did not in accordance with the terms of the notice "beat any TV, Hi-Fi, Video price by

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£20 on the spot". To hold otherwise would be seriously to restrict the efficacy of this part of the Consumer Protection legislation. Seemingly innocent notices could be put up and then when such notices were followed by a refusal to honour them by a person acting in the course of his business no offence would be committed. I would therefore answer the first certified question as "yes".The second certified question is more difficult. At first sight the answer given by the Divisional Court has the appeal of simplicity and common sense. The appellant's business was to manage Dixon's branch at Stratford-upon-Avon. His refusal arose in the course of that business. Hence he is guilty of the offence charged. It does not matter that he had no business of his own.The Divisional Court was referred to a number of cases, some in the last century, all decisions upon the the construction of other statutes and upon very different facts. The second certified question must be answered by reference to this statute and to what can be deduced from its language in the various relevant sections. For ease of reference I shall set out the relevant parts of those sections to which your Lordships were referred.

"Section 20

Subject to the following provisions of this Part, a person shall be guilty of an offence if, in the course of any business of his, he gives (by any means whatever) to any consumers an indication which is misleading as to the price at which any goods, services, accommodation or facilities are available (whether generally or from particular persons).

Subject as aforesaid, a person shall be guilty of an offence if-

(a) in the course of any business of his, he has given an indication to any consumers which, after it was given, has become misleading as mentioned in subsection (1) above; . . .

Section 39

(1) Subject to the following provisions of this section, in proceedings against any person for an offence to which this section applies it shall be a defence for that person to show that he took all reasonable steps and exercised all due diligence to avoid committing the offence.(5) This section shall apply to an offence under section. . . 20(1) above.

Section 40

(1) Where the commission by any person of an offence to which section 39 above applies is due to an act or de fault committed by some other person in the course of any business of his, the other person shall be

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guilty of the offence and may be proceeded against and punished by virtue of this subsection whether or not proceedings are taken against the first-mentioned person.

Section 45

(1) In this Act, except in so far as the context otherwise requires-

. . .
"business" includes a trade or profession and the activities of a professional or trade association or of a local authority or other public authority; . . ."
During the argument it was suggested that some support for the Respondents' construction of Section 20(1) might be found in section 40(1). It was suggested that the words "in the course of any business of his" might be read not as referring to the immediately preceding words "some other person" but to the earlier phrase namely the person who has committed "an offence to which section 39 above applies". But there are a number of difficulties in the way of this suggested construction. First it involves construing these words otherwise than in the order in which they appear in the subsection. Secondly the somewhat opaque drafting of section 40(1) involves the incorporation via section 39(5) of the language of section 20(1) into the opening words of the subsection. This involves treating the phrase "in the course of any business of his" as also appearing in the opening words of section 40(1). This seems to me to make it impossible to relate those same words when they appear later in the subsection as applying to the "person" mentioned in the opening words. Thirdly and apart from these difficulties, as my noble and learned friend Lord Ackner pointed out during the argument, the appellant was charged with an offence against section 20(1) and not with an offence against section 40(1).The obscurity of this language has puzzled commentators to whom it has seemed odd that when a misleading notice or advertisement is published the person responsible for refusing to honour the advertisement, if an employee and not the owner of the business in question, is not guilty of an offence against section 20(1). In commenting upon the decision of the Divisional Court in the present case in (1992) Crim. L.R. 644 at 646/7 Professor J.C. Smith wrote in discussing the phrase "any business of his":-
"The inconvenience of holding that the offence can be committed only by the owner of the business is obvious but what did the draftsman mean by this emphatic and inelegant phrase if he did not mean any business belonging to the defendant? Perhaps the answer to the difficulty is to be found in section 40(1)." He then set out the text of section 40(1) and continued "There is an ambiguity here. Does 'any business of his' refer to a business of 'any person' or of 'some other person'? If the latter, we are no farther forward; but, if the former, there is no difficulty about convicting the employee. This assumes that the employer is guilty of the offence as well - i.e. that the offence is one imposing strict and vicarious liability."

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Professor Smith thus highlights the problem of construction but does not resolve it. I have already indicated the impossibility of construing these words out of their natural order and the effect of the incorporation of section 20(1) into section 40(1).Counsel also drew attention to the commentary in O'Keefe's "The law relating to trade descriptions" Volume II paragraph 3081. After setting out the differences between the position under section 23 of the Trade Descriptions Act 1968 and this legislation, the author suggests that the latter legislation is more restrictive than the former and continues:-
"The main difference between the Trade Descriptions Act 1968 section 23 and the 1987 Act section 40(1) is that the latter contains a pre-requisite to any prosecution. This is that the commission of the (misleading price offence under section 20(1)) offence must have been committed by the other person "in the course of any business of his'. Section 45 defines 'business' as including 'a trade or profession . . . ' It is therefore submitted that an employee whose act or default results in the commission by his or her employer of an offence contemplated by s 39 cannot be prosecuted as the actual offender under s 40 (1), though this proposition remains to be tested by a court of record. If this conclusion is a correct interpretation of s 40(1) it is quite a startling conclusion compared with previous practice under the now repealed price offences contained in the 1968 Act."
It clearly appeared strange to these learned commentators, as indeed it appeared to some of your Lordships during the argument, that the person actually responsible for what happened, as the appellant clearly was, should be immune from conviction. But study of these various sections and the changes between the Trade Descriptions Act 1968 and this legislation has led me to conclude that the words "in the course of any business of his" must mean any business of which the defendant is either the owner or in which he has a controlling interest. Not without some reluctance I find myself unable to share the view taken by the Divisional Court. I would therefore answer the second certified question "no".I have, in respectful agreement with Professor Smith, criticised the drafting of these sections and I share his particular criticism of the drafting of section 40(1). As already stated it is now, within the limitations already mentioned, permissible to have regard to statements by a Minister in Parliament in order to ascertain the true intention of ambiguous legislation the interpretation of which has become a matter of controversy.As already stated at the Report Stage of the Bill which became the Consumer Protection Act 1987, the noble and learned Lord, Lord Morton of Shuna moved an amendment to clause 20(1) of the Bill, as it then was, to delete the words "of his". At column 1140 of Hansard Vol. 485 he said:
"The words 'of his' appear to be quite unnecessary and unnecessarily restrictive. What is to be the position of somebody who is giving a misleading price indication in the

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course of his employer's business, possibly unauthorised by his employer? Is that employee who is acting against instructions to be safe from prosecution? That is the way it reads. There does not appear to be a necessity for the words "of his". The sense would remain if it is just "in the course of any business" which would restrict the subsection to a business use, so to speak, but allow the prosecution of somebody who might say, Well, it was not my business. I was acting for somebody else when I gave the misleading price".The noble and learned Lord, Lord Denning added:
"The words 'of his' are not only unnecessary but misleading."

In reply the Minister, Lord Beaverbrook said:-

"On the main point of this amendment as set out by the noble Lord, Lord Morton, it is a general principle of law that employers are largely responsible for the actions of their employees. I believe that it is especially right that this principle should apply in the case of misleading price indications. Policy on price indications in an individual store is rarely in the hands of individual employees, but it is more often a matter of centrally determined company policy. It is for the employer to ensure that his procedures and staff training are adequate and appropriate to prevent misleading price indications being given to consumers. I therefore think it is right so to draft the Bill that proceedings are directed against employers - that is the corporate body standing behind the misleading price indication - rather than individual employees. Accordingly we have included the words "of his" in the Bill to ensure that individual employees will not be prosecuted.It is of course for employers to institute systems and staff training to ensure that their employees do not give misleading price indications. If, in spite of all these precautions, a rogue employee nevertheless gives a misleading price indication, then the defence of due diligence, as set out in Clause 39, is likely to be available to his employer. But I have to say that I see little point in prosecuting individual employees in these circumstances."

At the end of the short debate the Minister said:-

"I think that we would like to look at this again carefully to see whether something has been missed and whether it can be looked at further."
Lord Morton of Shuna then withdrew his amendment. As already stated the matter was never raised again.In my view the answers given by the Minister are consistent with the construction I have felt obliged to put upon this legislation. Although the Minister said that the Government would look into the matter again there are no further references to this issue at any later stage of the progress of the Bill through Parliament. The adoption of the contrary construction would be to reach a conclusion contrary to the plain intention of Parliament

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simply because the draftsman has used language which on one view has failed to give effect to that intention. On the second certified question I must therefore respectfully differ from the Divisional Court. I would answer it "no". It follows that theappeal must be allowed and the conviction set aside.As to costs the Respondents were well justified in prosecuting the Appellant for without doubt it was he who was solely responsible for that which occurred and which made the notice misleading. Moreover the issue on which the Appellant has succeeded is one of general importance both to prosecuting authorities and to questions of consumer protection. If your Lordships agree I would order the costs of both the Appellant and the Repondents to be defrayed from central funds.

LORD ACKNER

My Lords,I have had the advantage of reading in draft the speech of my noble and learned friend, Lord Roskill. I agree with it and for the reasons which he has given I too would allow the appeal and make the order which he proposes.

LORD LOWRY

My Lords,I have had the advantage of reading in draft the speech of my noble and learned friend, Lord Roskill.I agree with it and for the reasons which he has given I too would allow the appeal and make the order which he proposes.

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