JUDGMENT
Robertson (Appellant) v Swift (Respondent)
before
Lady Hale, Deputy President
Lord Kerr
Lord Wilson
Lord Carnwath
Lord Hodge
JUDGMENT GIVEN ON
9th September 2014
Heard on 19th March 2014
Appellant Respondent
John Antell Terence John Swift
(Instructed Directly)
Intervener
Sarah Ford
(Instructed by Office of
Fair Trading)
LORD KERR (with whom Lady Hale, Lord Wilson, Lord Carnwath and
Lord Hodge agree)
Introduction
1. Mr Swift owns a removal business. On 27 July 2011 he received a telephone
call from Dr Toby Robertson, the appellant in this appeal. Dr Robertson asked for
a quotation for moving his furniture and effects from Weybridge to his new home
in Exmouth. The following day Mr Swift visited Dr Robertson’s home and
inspected the items to be moved. He proposed a price of £6,000. This did not
compare well with other quotations that Dr Robertson had received. These had
ranged between £3,000 and £4,000 but the firms that had quoted these figures had
been unable to move Dr Robertson’s furniture etc at a time that suited his plans. Dr
Robertson explained the position to Mr Swift. The latter responded that the quotes
Dr Robertson had been given were not typical and that his was a standard price. So,
after some discussion, the two men agreed a price of £5,750 plus extended liability
insurance cover and VAT, making a total of £7,595.40.
2. Mr Swift prepared a removal acceptance document which he sent by email
to Dr Robertson. He also sent a copy of his standard conditions. These included the
following:
“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
3. On the evening of 28 July Mr Swift made a second visit to Dr Robertson’s
home. On this occasion he delivered some boxes to be used for packing. At the same
time Dr Robertson signed the acceptance document and gave it to Mr Swift. It was
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agreed that the removal operation would begin on Tuesday 2 August and Dr
Robertson paid a deposit of £1,000.
4. Over the following days, Dr Robertson reflected on what had been agreed
and made further inquiries of other removal firms. These led him to believe that the
price which Mr Swift had quoted was well above the average cost of removal. After
further research, he found a firm that was prepared to undertake the work for £3,490.
On 30 July 2011 he telephoned Mr Swift and told him that he wished to cancel the
contract. Mr Swift reminded Dr Robertson that there were cancellation charges; he
said that the normal charge was 60% of the contract price but that he would accept
50% and, at this stage, Dr Robertson agreed to pay that. On 1 August he wrote to
Mr Swift confirming his decision to cancel the contract, posting the letter on the day
that it was written. It appears that Mr Swift did not receive the letter but, for reasons
that will become clear, this is of no importance.
5. In due course Mr Swift demanded payment of the cancellation charges. Dr
Robertson, having conducted some research in the meantime, decided that he had
no liability for the charges and he refused to pay. Mr Swift duly issued proceedings
and Dr Robertson counterclaimed for the return of his deposit.
The proceedings
6. The case was heard as a small claim by Deputy District Judge Batstone at
Exeter County Court on 5 January 2012. Dr Robertson argued that he was entitled
to cancel the contract by virtue of The Cancellation of Contracts made in a
Consumer’s Home, or Place of Work etc Regulations 2008. The deputy district
judge held that these regulations did not apply because the contract had not been
concluded during a single visit to Dr Robertson’s home. That decision was upheld
by His Honour Judge Tyzack QC in the Torquay and Newton Abbot County Court
on 27 April 2012.
7. Dr Robertson appealed. The Court of Appeal (Mummery, Jackson and
Lewison LJJ) allowed his appeal in part. Jackson LJ, delivering the principal
judgment, held that the 2008 Regulations applied if the consumer’s home was where
the contract was concluded, irrespective of whether there had been earlier
negotiations between the parties. He also held, however, that although, by virtue of
regulation 7(6), the contract was unenforceable as against Dr Robertson, it remained
alive and the deposit could not be recovered. This was because Mr Swift had not
given Dr Robertson notice of his right to cancel the contract as required by
regulation 7(2) of the 2008 Regulations and Dr Robertson was therefore not entitled
to cancel under regulation 7(1). Dr Robertson appeals that decision to this court.
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The Consumer Protection Directive
8. Council Directive (85/577/EEC) was the genesis for the 2008 Regulations
(and their predecessor, The Consumer Protection (The Cancellation of Contracts
concluded away from Business Premises) Regulations 1987). The preamble to the
Directive contains the following recitals:
“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 [expect];
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 …”
9. In Case C-227/08 MARTÍN MARTÍN v EDP Editores SL [2010] 2 CMLR
27 CJEU in para 22 explained the importance of the first two of the recitals cited
above:
“In that regard, it should be noted that the Directive, as is apparent
from recitals 4 and 5, is designed to protect consumers against the risks
inherent in the conclusion of contracts away from business premises
(Hamilton v Volksbank Filder eG (C-412/06) [2008] E.C.R. I-2383;
[2008] 2 C.M.L.R. 46 at [32]), as the special feature of those contracts
is that as a rule it is the trader who initiates the contract negotiations,
and the consumer has not prepared for such door-to-door selling by,
inter alia, comparing the price and quality of the different offers
available.”
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10. Article 1(1)(i) of the Directive provides that it is to apply to contracts under
which a trader supplies goods or services to a consumer and which are concluded
during a visit to the consumer’s home. Article 4 requires traders to give consumers
written notice of their right to cancel the contract within a period stipulated in article
5. In the case of article 1(1) transactions (such as involved in this case) the notice
is to be given at the time the contract was concluded. Significantly, article 4 also
requires member states to ensure that their national legislation prescribes
“appropriate consumer protection measures” in cases where the information about
cancelling the contract has not been supplied by the trader.
11. Article 5 gives the consumer the right to “renounce the effects of his
undertaking” by sending notice within 7 days of receiving the notice provided for in
article 4. It is sufficient if the notice is dispatched before the end of the period and
the giving of notice has the effect of releasing the consumer from any obligations
under the cancelled contract.
12. Article 7 provides that if the consumer exercises his right of renunciation, the
legal effects of that are to be governed by national laws, particularly regarding the
reimbursement of payment for goods or services.
The 2008 Regulations
13. Regulation 2 defines ‘cancellation notice’ as a notice in writing given by the
consumer that he wishes to cancel the contract. ‘Cancellation period’ is defined as
the period of 7 days starting with the date of receipt by the consumer of a notice of
the right to cancel. Regulation 5 deals with the scope of application of the
regulations. By regulation 5(a) they are said to apply to a contract for the supply of
services by a trader to a consumer which is made during a visit by the trader to the
consumer’s home or place of work, or to the home of another individual.
14. Regulation 7(1) gives the consumer the right to cancel a relevant contract
within the cancellation period and regulation 7(2) requires the trader to give the
consumer written notice of his right to cancel. In the case of a contract such as was
made between Mr Swift and Dr Robertson that notice is required to be given at the
time the offer was made. Regulation 7(3) requires the notice to be dated and to
indicate the consumer’s right to cancel the contract within the cancellation period.
Regulation 7(6) provides:
“A contract to which these Regulations apply shall not be enforceable
against the consumer unless the trader has given the consumer a notice
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of the right to cancel and the information is in accordance with this
regulation.”
15. Regulation 8(1) provides that if the consumer serves a cancellation notice
within the cancellation period, the contract is cancelled and regulation 8(5) provides
that a cancellation notice sent by post is taken to have been served at the time of
posting, whether or not it is actually received. The deputy district judge in this case
accepted that Dr Robertson had, as he claimed, sent the letter in which he purported
to cancel the contract on 1 August 2011. He also accepted Mr Swift’s evidence that
he had not received it. If the cancellation notice contained in the letter was effective,
by virtue of regulation 8(5), it is irrelevant that Mr Swift did not receive it.
16. Regulation 10 deals with recovery of money paid by the consumer.
Paragraph (1) provides that on the cancellation of a contract under regulation 8, any
sum paid by the consumer in respect of the contract shall become repayable except
where the regulations provide otherwise. The latter provision does not arise in the
present case.
The decision of the Court of Appeal
17. In para 40 of his judgment Jackson LJ adumbrated two possible
interpretations of regulation 5(a). The first was that the regulation only applied
where the contract was negotiated and concluded during a single visit to the
consumer’s home. The second was that it applied if the consumer’s home was where
the contract was concluded, whether or not earlier negotiations had taken place
there. For a number of reasons, which need not be repeated, he concluded that the
second of these was to be preferred. This was plainly right. To have the important
protection of these regulations depend on the adventitious circumstance that
negotiations were confined to a single occasion would be distinctly out of keeping
with their intended breadth of application.
18. Jackson LJ acknowledged that a consequence of the finding that the contract
was governed by the 2008 Regulations was that Mr Swift was obliged to give Dr
Robertson written notice of his right to cancel whereupon the latter would have the
right to do just that during the cancellation period. He found force in Mr Swift’s
submission that this was absurd because, among other things, Dr Robertson had
invited Mr Swift to his home; Mr Swift had had to turn away other work in order to
carry out this commission; and Dr Robertson was able to cancel the contract at one
day’s notice. In making these observations, Jackson LJ noted that the Directive did
not apply if the trader visits the consumer’s home at his express request and this
prompted him to consider whether the 2008 Regulations were ultra vires their
enabling provisions, section 59 of the Consumers, Estate Agents and Redress Act
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2007 and s.2(2) off the European Communities Act 1972. He concluded that they
were not, particularly having regard to article 8 of the Directive which makes it clear
that member states should feel free to adopt provisions which are more favourable
to consumers than those required by the Directive. Again, this conclusion was
plainly correct.
19. Since the contract was unenforceable against Dr Robertson, by virtue of
regulation 7(6), Jackson LJ held that Mr Swift was unable to make any charge for
cancellation under clause 7 of his standard conditions. He found, however, that
because no written notice had been given as required by regulation 7(2), there was
no cancellation period as defined in regulation 2(1). On that account he decided that
Dr Robertson was not entitled to cancel the contract. He therefore dismissed the
counterclaim.
The correct approach to interpretation of the regulations
20. A national court must interpret domestic legislation, so far as possible, in the
light of the wording and purpose of the Directive which it seeks to implement. This
is now well settled. Thus in Case C-350/03 Schulte v Deutsche Bausparkasse
Badenia AG [2006] 1 CMLR 11, the Court of Justice of the European Union said at
para 71:
“… when hearing a case between individuals, the national court is
required, when applying the provisions of domestic law adopted for
the purpose of transposing obligations laid down by a directive, to
consider the whole body of rules of national law and to interpret them,
so far as possible, in the light of the wording and purpose of the
directive in order to achieve an outcome consistent with the objective
pursued by the directive (see Pfeiffer and others, [2005] 1 CMLR 44]
paragraph 120)”
21. The breadth and importance of this principle was authoritatively set out in
Vodafone 2 v Commissioners for Her Majesty’s Revenue and Customs [2010] Ch
77, where, at paras 37 and 38, after listing the authorities to which the court had been
referred, Sir Andrew Morritt, C said:
“37 … The principles which those cases established or illustrated were
helpfully summarised by counsel for HMRC in terms from which
counsel for V2 did not dissent. Such principles are that:
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“In summary, the obligation on the English courts to
construe domestic legislation consistently with
Community law obligations is both broad and farreaching. In particular: (a) it is not constrained by
conventional rules of construction ( per Lord Oliver of
Aylmerton in the Pickstone case, at p 126B); (b) it does
not require ambiguity in the legislative language (per
Lord Oliver in the Pickstone case, at p 126B and per
Lord Nicholls of Birkenhead in Ghaidan’s case, at para
32); (c) it is not an exercise in semantics or linguistics
(per Lord Nicholls in Ghaidan’s case, at paras 31 and
35; per Lord Steyn, at paras 48—49; per Lord Rodger of
Earlsferry, at paras 110—115); (d) it permits departure
from the strict and literal application of the words which
the legislature has elected to use (per Lord Oliver in the
Litster case, at p 577A; per Lord Nicholls in Ghaidan’s
case, at para 31); (e) it permits the implication of words
necessary to comply with Community law obligations (
per Lord Templeman in the Pickstone case, at pp
120H—121A; per Lord Oliver in the Litster case, at p
577A); and (f) the precise form of the words to be
implied does not matter (per Lord Keith of Kinkel in the
Pickstone case, at p 112D; per Lord Rodger in
Ghaidan’s case, at para 122; per Arden LJ in the IDT
Card Services case, at para 114).
38. Counsel for HMRC went on to point out, again without dissent
from counsel for V2, that:
“The only constraints on the broad and far-reaching
nature of the interpretative obligation are that: (a) the
meaning should go with the grain of the legislation and
be compatible with the underlying thrust of the
legislation being construed: see per Lord Nicholls in
Ghaidan v Godin-Mendoza [2004] 2 AC 557, para 33;
Dyson LJ in Revenue and Customs Comrs v EB Central
Services Ltd [2008] STC 2209, para 81 …”
22. It is important to note that, in order to observe the imperative that this
guidance contains, the court must not only keep faith with the wording of the
Directive but must have closely in mind its purpose. Since the overall purpose of
the Directive is to enhance consumer protection, that overarching principle must
guide interpretation of the relevant national legislation.
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The wording and purpose of the Directive
23. The centrality of the right to cancel a contract as a feature of the protection
which the Directive is designed to afford to the consumer was emphasised by CJEU
in the MARTÍN case cited above. At paras 23 et seq CJEU dealt with that issue in
this way:
“23. … the directive ensures consumer protection by granting, first of
all, a right of cancellation to the consumer. Such a right seeks
specifically to offset the disadvantage, for the consumer, of sales
which take place away from business premises, to enable him over a
period of at least seven days to assess the obligations arising under the
contract (see, to that effect, Hamilton [2008] 2 C.M.L.R. 46 at [33]).
24 In order to strengthen consumer protection in situations where
consumers find themselves caught unawares, art 4 of the Directive
also requires traders to give consumers written notice of their right to
cancel the contract and the conditions for and means of exercising
such a right.
25 Lastly, it is apparent from art 5(1) of the Directive that the
minimum period of seven days must be calculated from the date of
receipt of that notice from the trader. That provision is explained, as
the Court has previously indicated, by the fact that if the consumer is
not aware of the existence of the right of cancellation, he will not be
able to exercise that right (Heininger v Bayerische Hypo-und
Vereinsbank AG (C-481/99) [2001] E.C.R. I-9945; [2003] 2 C.M.L.R.
42 at [45]).
26 In other words, the system of protection established by the
Directive assumes not only that the consumer, as the weaker party, has
the right to cancel the contract, but also that he is made aware of his
rights by being specifically informed of them in writing.
27 It must therefore be held that the obligation to give notice of the
right of cancellation laid down in art.4 of the Directive plays a central
role in the overall scheme of that directive, as an essential guarantee,
as the Advocate General stated in [AG55] and [AG56] of her Opinion,
for the effective exercise of that right and, therefore, for the
effectiveness of consumer protection sought by the Community
legislature.”
Page 9
24. The requirement to give notice of the right to cancel should not therefore be
seen as a technical prerequisite to the arousal of the right but as a means of ensuring
that the consumer is made aware that he is entitled to cancel the contract after a
period of reflection. That this is its essential purpose is underscored by the provision
in article 4 of the Directive that national legislation should lay down appropriate
consumer protection measures where a trader fails to give written notice of the right
to cancel. Although this gives national authorities a discretion as to the consequences
that should follow a failure to give notice, the discretion must be exercised in a way
that will promote the overall purpose of the Directive. This is clear from para 32 of
CJEU’s judgment in MARTÍN:
“ … it must be pointed out, first, that the concept of “appropriate
consumer protection measures” in the third paragraph of art.4 of the
Directive, affords to the national authorities a discretion in
determining the consequences which should follow a failure to give
notice, provided that that discretion is exercised in conformity with
the Directive’s aim of safeguarding the protection granted to
consumers under appropriate conditions with regard to the particular
circumstances of the case.”
25. To hold that the consumer did not have the right to cancel because the trader
had not served written notice of the right to cancel would run directly counter to the
overall purpose of the Directive in ensuring that a consumer has the opportunity to
withdraw from a contract without suffering significant adverse consequences. The
circumstances in which the particular contract in this appeal was made and in which
Dr Robertson sought to cancel it may be out of the ordinary. There may even be
reason to suppose that Mr Swift, the owner of a small business, fared rather badly
out of this transaction. But if the right to cancel could be effectively nullified by a
failure (or refusal) of a trader to give written notice of the right to the consumer, this
would create a considerable gap in the level of protection that the Directive sought
to provide.
26. Although Dr Robertson invited Mr Swift to his home and was clearly a man
of intelligence, well able, as the Court of Appeal found, to conduct negotiations, it
is clearly the intention of both the Directive and the regulations that those less well
equipped than Dr Robertson should have what is considered to be the necessary
protection. Moreover, although the Directive did not cover solicited visits, it is clear
that Parliament intended that a consistent approach to solicited and unsolicited visits
was appropriate. At para 7.7 of the Explanatory Memorandum to the regulations
states:
“The government believes that these regulations will make the law
simpler and clearer for consumers, businesses and enforcement
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agencies. Consumers will be less at risk from disreputable traders
exploiting the different treatment of solicited and unsolicited visits;
businesses will, in general, be able to work with one contract for both
unsolicited and solicited visits, reducing ongoing costs in training
sales staff; and enforcers will not have to use valuable resources
determining whether a visit was solicited or not as the same rules will
apply.”
27. The question of entitlement to cancel in the absence of a written notice has
been authoritatively settled by CJEU in Case-481/99 Heininger [2003] 2 CMLR 42
at para 45 and Case C-215/08 E Friz GmbH v Carsten von der Heyden [2010] 3
CMLR 23 paras 37-39 as follows:
“37 … art.5 (2) of the Directive provides that notification by the
consumer of the renunciation of the effects of his undertaking has the
effect of releasing him from any obligations under the cancelled
contract.
38 It follows that, if the consumer has been properly informed of his
right of renunciation, he may be released from his contractual
obligations by exercising his right of renunciation within the period
provided for in art.5(1) of the Directive, in accordance with the
procedure laid down by national law.
39 On the other hand, as the Court has already held, where he did not
receive that information, that period of not less than seven days does
not start to run, so that the consumer can exercise his right of
renunciation under art.5 (1) of the Directive at any time (see, to that
effect, Heininger [2003] 2 C.M.L.R. 42 at [45]).”
28. In fairness, it should be said that these authorities were not drawn to the
attention of the Court of Appeal. But it is clear from the decisions in these cases
that the objective of the Directive where a contract is cancelled is that the consumer
should not suffer adverse consequences; that, in effect, he should be placed in the
position that he would have been in if he had not entered the agreement in the first
place. That the achievement of this objective should be dependent on whether the
trader has given written notice to the consumer of his right to cancel would be
incongruous, to say the least. Again, there is authoritative guidance from CJEU on
the point. In Schulte (cited above at para 20) the consumers had not been informed
of their right to cancel a contract made with a bank for the purchase of an apartment.
The court dealt with the consequence of that in paras 97-101 as follows:
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“97 If the Bank had informed Mr and Mrs Schulte of their right of
cancellation under the HWiG at the correct time, they would have had
seven days to change their minds about concluding the loan
agreement. If they had chosen then to cancel it, it is common ground
that, given the link between the loan agreement and the purchase
contract, the latter would not have been concluded.
98 In a situation where the Bank has not complied with the obligation
to inform the consumer incumbent on it under Art.4 of the Directive,
if the consumer must repay the loan under German law as construed
in the case law of the Bundesgerichtshof, he bears the risks entailed
by financial investments such as those at issue in the main proceedings
…
99 However, in a situation such as that in the main proceedings, the
consumer could have avoided exposure to those risks if he had been
informed in time of his right of cancellation.
100 In those circumstances, the Directive requires Member States to
adopt appropriate measures so that the consumer does not have to bear
the consequences of the materialisation of those risks. The Member
States must therefore ensure that, in those circumstances, a bank
which has not complied with its obligation to inform the consumer
bears the consequences of the materialisation of those risks so that the
obligation to protect consumers is safeguarded.
101 Accordingly, in a situation where, if the Bank had informed the
consumer of his right of cancellation, the consumer would have been
able to avoid exposure to the risks inherent in investments such as
those at issue in the main proceedings, Art.4 requires Member States
to ensure that their legislation protects consumers who have been
unable to avoid exposure to such risks, by adopting suitable measures
to allow them to avoid bearing the consequences of the materialisation
of those risks.” (emphasis added)
29. By analogy, where Mr Swift had failed to inform Dr Robertson of his right
to cancel the contract, national law, in the form of the 2008 Regulations should have
ensured that he (Mr Swift) bore the consequences of that failure and that Dr
Robertson was allowed to avoid the forfeit of his deposit. The question therefore
arises whether the 2008 Regulations can be interpreted in a way to achieve this
result.
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Purposive construction of the regulations
30. The 2008 Regulations can, and should, be given a purposive construction
under both EU and domestic law. A purposive construction is one which eschews a
narrow literal interpretation in favour of one which is consonant with the purpose of
the relevant legislation, in this case, the comprehensive protection of the consumer
in the event of the cancellation of the contract. As Lord Bingham observed in R
(Quintavalle) v Secretary of State for Health [2003] 2 AC 687 at para 8, “The court’s
task, within the permissible bounds of interpretation, is to give effect to Parliament’s
purpose.” Parliament’s purpose was plain. As the Explanatory Memorandum makes
clear, it was to ensure that all consumers should have the “safety net” of a coolingoff period. The efficiency of that safety net would be significantly compromised if
a deposit paid was not recoverable because the trader had not given written notice
of a right to cancel.
31. On behalf of the intervener, the Office of Fair Trading, Ms Ford suggested
that there were two possible means of achieving a conforming/purposive
construction of the regulations which would fulfil the Directive’s objective. The first
would be to read the word “within” where it appears in regulation 7(1) and
regulation 8(1) as meaning “at any time prior to the expiration of”. This, she
submitted, would have the effect that a consumer would have the right to cancel at
any time before the end of the cancellation period which would either expire 7 days
after the consumer received notice of the right to cancel or, in the event that no such
notice was served, would not expire at all so that the consumer could cancel at any
time.
32. The second possibility advanced by Ms Ford was to interpret “cancellation
period” in regulation 2(1) so as to permit the words, “the period of 7 days starting
with the date of receipt by the consumer of a notice of the right to cancel” as
meaning, “the period commencing from when the trader is required to give the
consumer a written notice of his right to cancel pursuant to regulation 7(2) and
expiring 7 days after the date of receipt by the consumer of a notice of the right to
cancel”.
33. Either of these interpretations is feasible and both would achieve the object
of advancing and being in conformity with the obvious purpose of the Directive.
But the first interpretation has much to commend it, not least because it is a simple
and tenable reading of the actual wording of the 2008 Regulations. I would therefore
hold that this is the interpretation to be preferred.
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Conclusion
34. A failure by a trader to give written notice of the right to cancel does not
deprive a consumer of the statutory right to cancel under regulation 7(1) of the 2008
Regulations. Dr Robertson was therefore entitled to cancel the contract as he did by
his letter of 1 August 2011. He is therefore entitled to recover his deposit of £1000.
I would allow the appeal.
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