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 committed
against 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
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-
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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-
-
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(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 the
appeal 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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