Office Of Fair Trading v. MB Designs (Scotland) Ltd & Ors [2005] ScotCS CSOH

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Scottish Court of Session Decisions

You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Office Of Fair Trading v. MB Designs (Scotland) Ltd & Ors [2005] ScotCS CSOH_85 (29 June 2005)
URL: http://www.bailii.org/scot/cases/ScotCS/2005/CSOH_85.html
Cite as: [2005] CSOH 85, 2005 SCLR 894, [2005] SLT 69, [2005] ScotCS CSOH_85

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Office Of Fair Trading v. MB Designs (Scotland) Ltd & Ors [2005] ScotCS CSOH_85 (29 June 2005)

OUTER HOUSE, COURT OF SESSION

[2005] CSOH 85

P1992/04

OPINION OF

LORD DRUMMOND YOUNG

in the petition of

THE OFFICE OF FAIR TRADING

Petitioner;

against

(FIRST) MB DESIGNS (SCOTLAND) LIMITED, (SECOND) MARTIN BLACK, AND (THIRD) PAUL BRADLEY BETT

Respondents:

For

Enforcement Orders and Enforcement Orders ad interim under and in terms of Part 8 of the Enterprise Act 2002

_________

Act: S Wolffe; Hugh Macdiarmid, Solicitor to the Advocate General

Alt: Bartos; Blacklock Thorley, (for Cannons, Glasgow)

29 June 2005

[1] The petitioner is a body corporate constituted under section 1 of the Enterprise Act 2002. Under section 213 of that Act, it is designated a general enforcer for the purposes of Part 8 of the Act. Part 8, which comprises sections 210-236 of the Act, deals with the enforcement of certain consumer legislation and other provisions of law designed to protect consumers. The relevant legislation has two sources, the domestic legislation of the United Kingdom, including such provisions as the Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982, and directives and other legislation of the European Union. For Part 8 to apply, it is necessary that a person carrying on a business should have committed an "infringement", as defined in the 2002 Act. Two categories of infringement are recognized, a domestic infringement, which involves a contravention of United Kingdom legislation or other provisions of the domestic law of contract within the United Kingdom, and a Community infringement, which involves a contravention of European Union legislation. For an infringement of either sort to occur, it is necessary that there should have been a contravention of the requirements imposed by the law on suppliers of goods and services, whether under United Kingdom or European legislation or at common law. In addition, it is necessary that such contravention should harm the collective interests of consumers. The latter expression is of fundamental importance; it makes clear that Part 8 is not concerned with individual breaches of contract or breaches of statutory provisions on the part of traders, but is rather concerned with the enforcement of general standards of trading.

Part 8 of the Enterprise Act 2002
[2] The legislation covered by Part 8 is aimed at the protection of consumers, and the word "consumer" is defined in section 210 of the Act. In relation to domestic infringements, a consumer is an individual in respect of whom two conditions are satisfied. First, goods or services are supplied or are sought to be supplied to the individual in the course of a business carried on by the person making the supply. Secondly, the individual must receive or seek to receive the goods or services otherwise than in the course of a business. In relation to Community infringements, a consumer is a person who is so defined for the purposes of a number of listed European directives. These provide, generally speaking, that a consumer is a natural person who acts for purposes outside his trade, business or profession. Thus in both cases a consumer may be described as an individual who is not acting in a trading or professional capacity.

[3] "Domestic infringement" is defined by section 211 of the Act. So far as material, that section provides as follows:

"(1) In this Part a domestic infringement is an act or omission which -

(a) is done or made by a person in the course of a business,

(b) falls within subsection (2), and

(2) An act or omission falls within this subsection if it is of a description specified by the Secretary of State by order and consists of any of the following -

...

(d) an act or omission in respect of which an enactment provides for a remedy or sanction enforceable by civil proceedings; ...".

[4] The descriptions of acts and omissions that fall within subsection (2) are specified in The Enterprise Act 2002 (Part 8 Domestic Infringements) Order 2003 (SI 2003 No. 1593). Two categories of such acts and omissions are relevant for present purposes. The first, found in Part I of the Schedule, comprises acts or omissions in respect of a number of Acts of Parliament, which include the Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982; in both these cases the whole Act is specified. The second category, found in Part II of the Schedule, is defined as "An act done or omission made in breach of contract for the supply of goods or services to a consumer". It follows that a domestic infringement must involve something done by a seller or supplier in the course of his business. It must in addition involve either the contravention of one of the enumerated statutes or the breach of a statutory or common law contractual term. It is also necessary that the act or omission in question should harm "the collective interests of consumers" in the United Kingdom. I discuss the meaning of this expression below at paragraphs [12] et seq.
[4] "Community infringement" is defined by section 212 of the 2002 Act. The material provisions of that section are as follows:

"(1) In this Part a Community infringement is an act or omission which harms the collective interests of consumers and which -

(a) contravenes a listed Directive as given effect by the laws, regulations or administrative provisions of an EEA State, or

(b) contravenes such laws, regulations or administrative provisions which provide additional permitted protections.

...

(3) The Secretary of State may by order specify for the purposes of this section the law in the United Kingdom which -

(a) gives effect to the listed Directives;

(b) provides additional permitted protections".

The listed Directives are those specified in Schedule 13 to the 2002 Act; the most important are the Injunctions Directive, Directive 98/27/EC of 19 May 1998, and Council Directive 93/13/EEC of 5 April 1993, dealing with unfair terms in consumer contracts. What is required for a Community infringement, therefore, is an act or omission that contravenes one of the listed Directives, or certain other legislation, and which harms "the collective interests of consumers".

[5] The enforcement procedure to be followed by the petitioner is specified in section 214 and the following sections of the 2002 Act. Section 214 provides that an enforcer cannot make an application for an enforcement order unless he has engaged in appropriate consultation with the person against whom the enforcement order is to be made. "Appropriate" consultation is defined, generally speaking, as consultation for the purpose of achieving the cessation of the infringement and ensuring that there will be no repetition. In the case of Community infringements, it also covers consultation for the purpose of ensuring that an infringement does not take place which the enforcer believes is likely to take place. Section 215 authorizes an enforcer to apply for an enforcement order in respect of any infringement to a range of courts, including the Court of Session.

[6] Section 217 of the Act authorizes the court to make an enforcement order and defines the circumstances in which such an order can be made. Its material provisions are as follows:

"(1) This section applies if an application for an enforcement order is made under section 215 and the court finds that the person named in the application has engaged in conduct which constitutes the infringement.

(2) This section also applies if such an application is made in relation to a Community infringement and the court finds that the person named in the application is likely to engage in conduct which constitutes the infringement.

(3) If this section applies the court may make an enforcement order against the person.

...

(5) An enforcement order must -

(a) indicate the nature of the conduct to which the finding under subsection (1) or (2) relates, and

(b) direct the person to comply with subsection (6).

(6) A person complies with this subsection if he -

(a) does not continue or repeat the conduct;

(b) does not engage in such conduct in the course of his business or another business;

(c) does not consent to or connive in the carrying out of such conduct by a body corporate with which he has a special relationship (within the meaning of section 222(3)). ...".

[7] Section 217 is concerned with the making of an enforcement order after a full hearing of the case against the trader, including evidence if that should be necessary. The legislation contemplates, however, that it may be necessary for an enforcer to take action on a more urgent basis. Consequently section 218 authorises the court to make an interim enforcement order, and specifies the conditions that must be satisfied before such an order can be made. So far as material, this section is in the following terms:

"(1) The court may make an interim enforcement order against a person named in the application for the order if it appears to the court -

(a) that it is alleged that the person is engaged in conduct which constitutes a domestic or Community infringement or is likely to engage in conduct which constitutes a Community infringement,

(b) that if the application had been an application for an enforcement order it would be likely to be granted,

(2) An interim enforcement order must -

(a) indicate the nature of the alleged conduct, and

(b) direct the person to comply with subsection (3).

(3) A person complies with this subsection if he -

(a) does not continue or repeat the conduct;

(b) does not engage in such conduct in the course of his business or another business;

(c) does not consent to or connive in the carrying out of such conduct by a body corporate with which he has a special relationship (within the meaning of section 222(3)).

...

(5) An application for an interim enforcement order against a person may be made at any time before an application for an enforcement order against the person in respect of the same conduct is determined.

(6) An application for an interim enforcement order must refer to all matters -

(a) which are known to the applicant, and

(b) which are material to the question whether or not the application is granted. ...".

The present case involves an application made under section 218, and I discuss its provisions below at paragraphs [20] and [21].

[8] Part 8 also makes specific provision for bodies corporate, including limited liability companies. It is obvious that the separate legal personality of such bodies could be used as a device to evade the requirements of the 2002 Act. Consequently Part 8 allows corporate personality to be disregarded, by permitting enforcement orders to be made against persons such as directors and controlling shareholders who consent to or connive in conduct that amounts to a domestic or Community infringement. This power is relevant to the present case, because the first respondent is a limited company incorporated under the Companies Acts and the second and third respondents are directors of the first respondent. The relevant provisions are found in section 222 of the 2002 Act; that section, so far as material, provides as follows:

"(1) This section applies if the person whose conduct constitutes a domestic infringement or a Community infringement is a body corporate.

(2) If the conduct takes place with the consent or connivance of a person (an accessory) who has a special relationship with the body corporate, the consent or connivance is also conduct which constitutes the infringement.

(3) A person has a special relationship with a body corporate if he is -

(a) a controller of the body corporate, or

(b) a director, manager, secretary or other similar officer of the body corporate or a person purporting to act in such a capacity.

...

(5) An enforcement order or an interim enforcement order may be made against an accessory in respect of an infringement whether or not such an order is made against the body corporate. ...".

It follows that the separate corporate personality of a body corporate is disregarded to the extent of making its directors, among others, liable for the acts of the body corporate. Thus an enforcement order or interim enforcement order can be pronounced against a director on the basis of the acts of the company of which he is a director.

The general approach to construction of the legislation
[9] The provisions of Part 8 of the Enterprise Act 2002 dealing with Community infringements are intended to implement the obligations of the United Kingdom under European legislation dealing with consumer protection, notably the Injunctions Directive (Directive 98/27/EC of 19 May 1998 on injunctions for the protection of consumers' interests). Moreover the concepts used in those provisions are in large part derived from the Injunctions Directive. Consequently those provisions must be construed in the light of the wording and purpose of that Directive; that is in accordance with the principles laid down by the European Court of Justice in Marleasing SA v La Comercial de Alimentación SA, [1990] ECR I-4153, at paragraphs 7-9 and 14, and accepted by the Scottish courts in cases such as Litster v Forth Dry Dock & Engineering Co. Ltd, 1989 SC (HL) 96: see Lord Templeman at 104-105 and Lord Oliver of Aylmerton at 105. Concepts derived from the Injunctions Directive are also used in Part 8 in respect of domestic infringements. That applies in particular to one of the fundamental concepts used in the legislation, the collective interests of consumers. It seems clear that such concepts must be given the same meaning throughout Part 8; that is the obvious reason for using the same wording in relation to both Community and domestic infringements. Consequently the Injunctions Directive is important for the construction of the provisions relating to domestic infringements as well as those relating to Community infringements.

[10] Article 1.1 of the Injunctions Directive, which defines the scope of the Directive, is in the following terms:

"Scope

1. The purpose of this Directive is to approximate the laws, regulations and administrative provisions of the Member States relating to actions for an injunction referred to in Article 2 aimed at the protection of the collective interests of consumers included in the Directives listed in the Annex, with a view to ensuring the smooth functioning of the internal market".

The Directives listed in the Annex correspond generally to those listed in Schedule 13 to the Enterprise Act. It can be seen from article 1.1 that the purpose of the Directive is to bring about an approximation of the legal provisions governing certain actions for an injunction, a word that obviously corresponds to the Scottish interdict. The function of the Directive is therefore procedural rather than substantive.

[11] The categories of proceedings that are governed by the Directive are found in article 2, which, so far as material, provides as follows:

"Actions for an injunction

1. Member States shall designate the courts or administrative authorities competent to rule on proceedings commenced by qualified entities ... seeking:

(a) an order with all due expediency, where appropriate by way of summary procedure, requiring the cessation or prohibition of any infringement; ...".

The concept of a "qualified entity" is defined by article 3 as a body or organisation which has a legitimate interest in ensuring that the provisions referred to in article 1 are complied with. Under the Enterprise Act, the qualified entities are the enforcers defined by section 213; these include the present petitioner. Under article 2, Member States are obliged to designate courts or other bodies for enforcement proceedings as envisaged by the Injunctions Directive; this is achieved by section 215(5) of the 2002 Act, which nominates a range of courts for proceedings, including the Court of Session.

[12] The orders contemplated by the Directive are those requiring the cessation or prohibition of any "infringement". This expression is defined in article 1.2, which is in the following terms:

"For the purpose of this Directive, an infringement shall mean any act contrary to the Directives listed in the Annex as transposed into the internal legal order of the Member States which harms the collective interests referred to in paragraph 1".

Thus the orders contemplated by the Directive are designed to prohibit acts contrary to the consumer protection Directives set out in the Annex, to the extent that such acts harm the "collective" interests of consumers. The Injunctions Directive is accordingly not concerned with the vindication of the rights of individual consumers, but rather the protection of consumer interests generally.

[13] The policy underlying the Injunctions Directive is found in the preamble. This contains, in paragraph (2), a specific reference to the collective interests of consumers. Paragraph (1) refers to the consumer protection Directives listed in the schedule annexed to the Injunctions Directive. Paragraph (2) then provides as follows:

"Whereas current mechanisms available both at national and at Community level for ensuring compliance with those Directives do not always allow infringements harmful to the collective interests of consumers to be terminated in good time; whereas collective interests mean interests which do not include the cumulation of interests of individuals who have been harmed by an infringement; whereas this is without prejudice to individual actions brought by individuals who have been harmed by an infringement".

It is obvious that this provision is poorly expressed. Its second recital, defining "collective interests", is a particularly bad case of drafting. If it is read literally, it suggests that "collective" interests are something quite separate from the interests of individuals who have been harmed by an infringement, in such a way that the interests of those individuals form no part of the collective interests. In my view this does not make sense. In a typical case, harm to the collective interests of consumers will be inferred from a number of instances where harm has been done or at least threatened to individual consumers. It is difficult to see any other basis on which a court could rationally arrive at the conclusion that the collective interests of consumers had been or were likely to be harmed; without concrete instances of individual harm or the threat of harm any such conclusion would normally be mere speculation. This matter is clarified, however, by the French version of the Injunctions Directive. In the French text, paragraph (2) of the preamble is in the following terms:

"considérant que les mécanismes existsant actuellement, tant sur le plan national que sur le plan communitaire, pour assurer le respect de ces directives ne permettent pas toujours de mettre un terme, en temps utile, aux infractions préjudiciables aux intérêts collectifs de consommateurs; que, par intérêts collectifs, on entend des intérêts qui ne sont pas un simple accumulation

d' intérêts de paticuliers auxquels il a été porté atteinte par une infraction; que cela est sans préjudice des recours individuels formés par des particuliers lésés par une infraction".

The literal English translation of the crucial second part of this recital is as follows:

"[considering] that, by collective interests, one means interests which are not a mere accumulation of the interests of individuals to whom harm has been caused by an infringement" (emphasis added).

This makes it clear that the expression "collective interests" is not something wholly separate from the interests of individual consumers who have been harmed by infringements. "Collective interests" include those interests, but amount to something more than the mere aggregation of those interests. That makes perfectly good sense; it means that the adjective "collective" denotes the generality of consumers, considered as a body, but at the same time recognizes that the interests of individual consumers are part of those collective interests, and that harm to the collective interests will normally be inferred from a number of instances of harm to individual interests. The error in the English version is the failure to provide any equivalent for the French word "simple". This point is of some practical importance for reasons that are discussed below.

[14] The notion of the collective interests of consumers, therefore, indicates that there must be harm or a risk of harm to the public generally, or more precisely to members of the public who may buy the particular goods or services in question. This is distinct from the rights that any particular consumer may have against his or her supplier, whether under the general law of contract or under statutory provisions such as the Supply of Goods and Services Act 1982 or the European Directives listed in Schedule 13 to the 2002 Act. The collective interests of consumers, by contrast, are concerned not with the contractual rights of individual consumers but with general trading standards, and in particular with the general standard of goods or services supplied by a particular trader. Part 8 of the 2002 Act is designed to enforce such trading standards. In my opinion a statutory provision of this nature has two important features. First, it is not designed to ensure that no defective product or service is ever supplied; it is rather designed to ensure that the incidence of defective products or services is kept at a low level, and that in cases where a defective product or service is supplied reasonable steps are taken to put matters right. The occasional instance where defective goods or services are supplied cannot be said to harm the collective interests of consumers; it is only when there is an accumulation of a number of such instances that the collective interests can be said to be engaged. Secondly, Part 8 is intended to deal with the overall incidence of defects in a trader's products or services, and it is immaterial for this purpose what the particular defects may be. It is accordingly immaterial that the defects may vary widely in their nature. The existence of a wide range of defects will often be an indication of poor management or poor quality control, and the function of consumer protection legislation is to protect against poor management or quality control just as much as poor fitting or poor manufacturing processes.

[15] The foregoing features of Part 8 have significant implications both for the evidence required to support an order under section 217 or section 218 and for the form of such an order. In relation to the evidence, harm to the collective interests of consumers will normally be inferred from an accumulation of individual instances. Evidence relating to those individual instances will generally be provided, however, by officials of the relevant enforcer, such as the present petitioner, or officials in the trading standards departments of local authorities. That is appropriate because it is the collective interests that are relevant, and the individual instances are only adminicles of evidence that go to establish harm to the collective interests. In the present case, the evidence for the petitioner is presented in the form of two affidavits, one from an officer of the petitioner's Consumer Regulation Enforcement Division and one from a Divisional Trading Standards Officer of one of the local authorities most directly concerned with the first respondent, South Lanarkshire Council. In my opinion the use of evidence of this sort is appropriate. Those affidavits are backed up by documentation relating to individual complaints about defective products or services supplied by the first respondent. It appears from the documentation that some of the complaints were investigated by independent third parties appointed or recommended by the Consumer and Trading Standards Department of South Lanarkshire Council and found to be justified; others were investigated by tradesmen or surveyors instructed by the householder concerned, or were backed up with photographs. In my opinion the fact that a significant number of complaints have been investigated or documented in this manner is important, because obviously ill-founded complaints are possible. In the present case, I am satisfied that the investigation of complaints relied on by the petitioner relates to a sufficiently large proportion to establish that those complaints are for the most part well-founded.

[16] In my opinion the features discussed at paragraph [14] above also have important implications for the form of order granted under section 217 or section 218. Counsel for the respondents submitted that the form of order available under those sections should conform to the requirements of an interdict at common law. He referred in particular to two well established principles of the law of interdict. First, the court will not generally grant an interdict that is merely an echo of a statutory provision; an interdict must rather be directed against a specific act that is alleged to be in contravention of the statute: Fleming v Liddesdale District Committee 1897, 24 R 281. Secondly, an interdict must be so precise and clear that the person interdicted is left in no doubt what he is forbidden to do: Murdoch v Murdoch 1973 SLT (Notes) 13; Webster v Lord Advocate, 1985 SC 173. That degree of precision is clearly essential in proceedings designed to vindicate a private right, where exact definition of the right is both possible and necessary. Where a trading standard is to be enforced, however, I am of opinion that the same degree of precision is not necessary; nor indeed does it appear possible. The critical point is that the enforcement of provisions such as Part 8 is not designed to ensure that no defective goods or services are ever supplied; it is rather designed to compel traders to achieve an acceptably low incidence of defects, and to rectify such defects as appear. Any court order of that nature must involve some degree of vagueness about the permissible incidence of defects. The order may also bear some degree of imprecision as to the nature of the defects that are prohibited. This is because the function of trading standards legislation is to minimize defects of every sort, and in cases where management or quality control is poor such defects may take many forms. For that reason I do not think it necessary that the court's order should specify the precise nature of the defects that are covered by it; it is rather designed to cover defects of every sort. Consequently it is not necessary that such an order should be directed against specific acts that are said to be in contravention of Part 8. This does not appear unreasonable or unfair, for two reasons. First, the standards that apply to the goods or services in question are drawn from the general provisions of the law applicable to contracts for the supply of goods and services. In addition to the common law, these include provisions such as the Sale of Goods Act 1979, the Supply of Goods and Services Act 1982, and the European Directives specified in Schedule 13 to the 2002 Act. Those standards involve obligations that are incumbent on those who supply goods and services, regardless of the 2002 Act. Moreover, the standards are well known, and should certainly be known to those who trade in goods and services. Secondly, a trader will normally be a specialist in the particular goods or services that he supplies. Thus he should be well aware of how the general standards apply to his particular products or services.

[17] I am accordingly of opinion that the standard of precision that is required in proceedings for interdict is not appropriate to an order under section 217 or section 218 and that it is not necessary, or indeed practicable, that such an order should be directed against specific acts. This has the consequence that such an order will often amount in large part to a repetition of the statutory provisions, but that seems inevitable in view of the considerations discussed in the last paragraph. Thus the function and purpose of sections 217 and 218 require that the principles that govern the Scots law of interdict should not apply to orders under those sections. In any event, I am of opinion that rules of domestic law should not generally be imported into the construction of Part 8. Part 8 is essentially inspired by European legislation, in the form of the Injunctions Directive, and sections 217 and 218 are designed to enforce European legislation. Consequently the interpretation of Part 8 should aim at ensuring a uniform approach throughout the European Union. That interpretation should not be constrained by the detailed rules of procedure of any domestic legal system. Part 8 should rather be construed in a manner calculated to give effect to its underlying purposes, in particular the purposes disclosed in the Injunctions Directive. It follows that orders pronounced under sections 217 and 218 should be regarded as sui generis, and not as an example of interdicts or interim interdicts in Scots law. This is so even though certain of the features of the two sections can be seen to parallel requirements of the Scots law of interdict. I should mention that counsel for the petitioner informed me that she had been instructed not to argue that the rules relating to interdict in Scots law had no application to enforcement orders under sections 217 and 218, although the petitioner wished to reserve its position for the future. Despite this, it seems to me to be clear that the detailed rules of domestic law cannot apply to those sections because of their origins in European legislation, and I think it right to record this conclusion.

[18] Breach of an enforcement order or interim enforcement order made under section 217 or section 218 will be treated as a contempt of court. Section 220 permits enforcers, including the present petitioner, to apply to the court in respect of any failure to comply with an order, but says nothing more about enforcement procedures. Counsel for the respondents submitted that, unless such orders were framed with the same precision as an interim interdict, the person affected by the order would be uncertain what he had to do to avoid the penal consequences of breach of interdict. It would in any event be uncertain whether there was a breach. That, he submitted, was manifestly unsatisfactory. I do not agree. In the first place, it is clear that, before penal sanctions can be imposed, the existence of a breach of a court order must be clear. That is itself a major protection to the subject of an enforcement order. In the second place, it is important to bear in mind that a single instance where defective products or services are supplied will not of itself amount to a breach of the order, because on the basis of a single instance it is normally impossible to say that there is harm to the collective interests of consumers. More than one instance of defective supply is required before there can be a breach of the order, and even then, if steps are taken to correct the defects, that will often be sufficient to take the particular instance out of consideration. The need for more than one instance of defective supply means that a trader is likely to have clear advance notice that a breach of the order is possible. In the third place, the sanctions imposed for a contempt of court depend on such considerations as whether the breach is deliberate. Consequently, in the case of an inadvertent breach, the sanction is likely to amount to no more than a warning that a breach exists and should not be repeated. In the fourth place, the element of uncertainty as to whether or not a breach exists is something that frequently occurs in legal proceedings; it is inherent, for example, in concepts such as satisfactory quality and fitness for purpose as used in United Kingdom consumer protection legislation. In such cases the court must simply decide on which side of the line the facts lie. The need for such a ruling does not mean that no useful line exists; it simply reflects the element of uncertainty that is inherent in almost any attempt to draw a line. As I have said, in cases of doubt there will be no contempt of court, and in cases where the breach is inadvertent the sanction is unlikely to go beyond a warning. That state of affairs does not appear to me to cause serious practical difficulties.

The requirements of sections 217 and 218
[19] The material provisions of sections 217 and 218 are set out at paragraphs [6] and [7] above. Under section 217(1), the court must find that the person named in the application has engaged in conduct which constitutes the infringement, infringement being defined in sections 211 and 212. In the case of a domestic infringement, as defined in section 211, what the court must find in practice is as follows: (i) the first respondent has engaged in conduct in the course of a business (section 211(1)(a)); (ii) that conduct involves an act done or omission made in breach of contract (section 211(1)(b) and (2)(b) and (d), together with The Enterprise Act 2002 (Part 8 Domestic Infringements) Order 2003 (SI 2003 No. 1593)); (iii) that act or omission harms the collective interests of consumers in the United Kingdom (section 211(1)(c)). In the case of a Community infringement, what the court must find in practice is that the first respondent has engaged in conduct that consists of an act or omission (i) which harms the collective interests of consumers and (ii) contravenes one of the Directives listed in Schedule 13 to the 2002 Act. In the case of Community infringements, not only past conduct is relevant; prospective conduct will also suffice, in terms of section 217(2). If the relevant conditions exist, the court may make an enforcement order. Under section 217(5), that order must indicate the nature of the conduct to which the finding under subsection (1) or (2) relates.

[20] An enforcement order under section 217 clearly contemplates a full hearing of the application, with the leading of evidence if that should be necessary. Section 218 empowers the court to make an interim enforcement order at an earlier stage in proceedings. This has an obvious analogy with remedies such as interim interdict, although for the reasons discussed above I am of opinion that the detailed rules of law relating to interim interdict do not apply to interim enforcement orders. Section 218(6) requires any person making an application for an interim enforcement order to refer to all matters known to the applicant that are material to the question whether or not the application should be granted. The basic requirements if an interim enforcement order is to be made are set out in section 218(1). First, it must appear to the court that it is alleged that the respondent is engaged in conduct that constitutes a domestic or Community infringement, or is likely to engage in conduct that constitutes a Community infringement. Secondly, it must appear to the court that, if the application had been for an enforcement order, it would be likely that the enforcement order would be granted. Thirdly, it must appear to the court to be expedient that the conduct in question should be prohibited or prevented immediately.

[21] The second of those requirements was the subject of dispute between the parties. Counsel for the respondents submitted that the expression "likely to be granted" as used in section 218(1)(b) meant more likely than not; thus the court would have to reach the view that on a balance of probabilities an enforcement order would be granted. Counsel for the petitioner, on the other hand, submitted that the word "likely" signified something less than probability. The legislation in question was concerned with the protection of consumers, and if there were doubt it should be resolved in favour of the interests of consumers. In my opinion the argument for the respondents is to be preferred. Section 218 involves a remedy that may have serious consequences for the person against whom it is used. If the petitioner's construction is correct, such an order could be imposed even if the court thought it less likely than not that a full enforcement order would be pronounced after a full hearing. That seems an improbable construction. I accordingly hold that the word "likely" in section 218(1)(b) means more likely than not.

Retrospective effect of Part 8
[22] The respondents contended that Part 8 of the 2002 Act had no effect prior to the date when it came into force; consequently all complaints made about the respondents prior to that date ought to be disregarded. Part 8 came into force on 20 June 2003, by virtue of The Enterprise Act 2002 (Commencement No. 3, Transitional and Transitory Provisions and Savings) Order 2003 (SI 2003 No. 1397). Before that date the substance of the provisions of the 2002 Act relating to domestic infringements had been in force by virtue of Part III of the Fair Trading Act 1973, although a different system of definitions was in use. Section 7 of the relevant commencement order contained a saving provision for proceedings that had been begun under Part III of the 1973 Act prior to 20 June 2003. Counsel submitted that that was an indication that the new régime was not intended to be retrospective. He further submitted that that result was confirmed by the way in which a domestic infringement was defined. The definition in section 211 of the 2002 Act was based on an order made by the Secretary of State (see section 211(2) and paragraph [3] above), but no such order was made until The Enterprise Act 2002 (Part 8 Domestic Infringements) Order 2003 (SI 2003 No. 1593) came into force on 20 June 2003. If Part 8 was not retrospective, the petitioner could not found on conduct prior to 20 June 2003 to establish any domestic infringement by the first respondent. That excluded a substantial number of the individual instances of defective products and services relied on by the petitioner in the petition and supporting documentation.

[23] In my opinion the foregoing argument is not correct. In the first place, it is clear that there is a continuity of function between the provisions of the Fair Trading Act 1973 and the Enterprise Act 2002; in particular, the functions formerly exercised by the Director General of Fair Trading were transferred to the Office of Fair Trading by section 2 of the Act. That is an indication that the enforcement powers of the Office of Fair Trading are intended to continue those formerly exercised under earlier legislation. In the second place, Part 8 is concerned with the enforcement of certain trading standards. It does not set those standards; so far as domestic infringements are concerned, those are contained in statutory provisions such as the Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982 and in certain provisions of the common law. Consequently, if goods or services supplied prior to 20 June 2003 were not of satisfactory quality, that is not affected in any way by the 2002 Act. In the third place, Part 8 of the Act takes practical effect through the granting of enforcement orders. Those orders do not impose liability in respect of past conduct but rather deal with the future conduct of the person affected. Obviously past conduct forms the basis for granting the order, but the character of that conduct as a breach of contract or breach of a statutory provision is not affected by Part 8. For these reasons I am of opinion that the conduct of a trader both before and after 20 June 2003 is relevant to the question of whether an enforcement order should be granted. To that extent I consider that Part 8 was intended to have retrospective effect. If that were not the case, a trader who had supplied defective goods or services on numerous occasions prior to 20 June 2003 would effectively be granted an amnesty. I cannot believe that that was intended.

The application to the court
[24] The petitioner has raised proceedings against the respondents for a series of enforcement orders and interim enforcement orders. The case called before me on a motion for interim enforcement orders in terms of the prayer of the petition. The motion was opposed by the respondents. The averments of fact on which the petitioner founds are as follows.

[25] The principal activity of the first respondent is the supply of windows, doors and conservatories in domestic or residential premises to individual consumers. It does so in the course of its business. The service offered by the first respondent in respect of such items includes taking measurements of the window or door apertures or of the area where a conservatory is to be fitted. All of the foregoing averments are admitted by the respondents; those that follow are not. The petitioner then avers that, following the taking of measurements, the first respondent arranges for the delivery of the goods to the customer's house and for those goods to be fitted or installed. The first respondent is responsible for the goods it supplies in the course of its business and for the quality of the fitting and workmanship in any question with its customers. This is the position as represented by the respondents and their sales personnel to prospective customers.

[26] The petitioner goes on to aver that in fitting and installing the goods that it supplies to its customers the first respondent regularly failed, and continues regularly to fail, to exercise the requisite level of skill and care of a reasonably competent installer of windows, doors and conservatories. That involves of a breach of the common-law contractual term spondet peritiam artis et imperitia culpae enumeratur (a man is responsible for achieving the standard of skill of his profession, and lack of skill is counted a fault). In addition, it is averred that the first respondent had and has a practice of regularly supplying goods in breach of certain of the statutory terms implied by the Supply of Goods and Services Act 1982. The relevant terms are those in section 11D(2), that goods supplied should be of satisfactory quality, section 11D(6), that goods supplied should be fit for the purpose for which they are purchased, and section 11C(2), that goods supplied should correspond with the description attached to them. Various specific examples of breaches of the statutory terms are given.

[27] In support of the averments of fact in the petition, the petitioner has lodged two affidavits. The first of these is given by Lynn Parker, who is an officer of the Consumer Regulation Enforcement Division of the petitioner. The most salient parts of that affidavit are as follows:

"19. The OFT is extremely concerned about the conduct of the Respondents in their dealings with consumers from 2001 to the present. It is particularly concerned that, despite regular contact regarding consumer complaints and advice regarding their statutory obligations under consumer law from the local Trading Standards Service at South Lanarkshire (TSD) the number of consumer complaints have risen year on year. The OFT has been advised by Mrs. Johan Cleland, the Trading Standards Officer who was responsible for dealing with complaints about MB Designs (Scotland) Ltd since 1999 until her retirement in June 2004. Information from Mrs. Cleland shows a rising trend in complaint numbers. In the period September to December 2001 there were 18 complaints, during 2002 there were 72 complaints, during 2003 the number rose to 96. In 2004 again there is a rise to 69 in the six months of that year to 10 June. This growth in complaint numbers is despite Trading Standards' regular contact with Mr. Black, in particular, and Mr. Bett about individual complaints. In the majority of cases, the Respondents denied liability for any problems and rarely offered to carry out any remedial work. Mrs. Cleland has also advised that Mr. Black is often threatening and abusive to complainants. ...".

"22. The OFT has also been in correspondence with the Respondents since January 2004, under Part 8 of the Enterprise Act 2002, seeking a cessation of the infringements of consumer protection law. The respondents have refused to provide undertakings that the infringements will cease. The OFT has meanwhile been advised by the TSD that since June 2004 there have been a further 93 complaints made to that service".

It is then stated that, after South Lanarkshire Trading Standards Department made the OFT aware of problems with the respondents, the OFT drafted a questionnaire for sending to consumers who had complained about the first respondent. Thirty completed questionnaires were received, and from these, it is said, it became apparent that there were serious problems with the quality of the products supplied by the first respondent and in particular with the fitting of windows and conservatories. Examples of the questionnaires were produced with the affidavit, and these appear to bear out the allegations made by Miss Parker. Her affidavit went on to make the following statements:

"40. Since the issue of the original approach letter under the Enterprise Act, 9 January 2004, the OFT is aware that the TSD continued to see a large number of complaints about MB Designs. The OFT sent out questionnaires to complainants, who had complained during the period July 2003 to August 2004. During the period December 2003 and August 2004 the OFT received a further 27 questionnaires bringing the total number of completed questionnaires received to 57 ...

"41. The OFT has received information and advice from Mrs. Johan Cleland ... detailing her involvement with consumers who have made complaints about MB Designs, since January 2001 ... According to Mrs. Cleland TSD received a total of 299 complaints about MB Designs since the first recorded complaint on 17 July 2000 to 10 June 2004. MB Designs had been made aware of complaints by Mrs. Cleland, in writing, as they were received and MB Designs was asked to comment on and/or remedy them but Mrs. Cleland has indicated that they rarely accepted liability for problems and rarely offered any remedial works. Mrs. Cleland has also indicated that Mr. Black [has] often been threatening and abusive to complainants. OFT have been advised by Mrs. Cleland that in May 2004 the TSD was instructed to address any further correspondence directly to Cannons solicitors. The OFT has been further advised by Mrs. Cleland that, in general, the response from Cannons to complaints about MB Designs is that their clients contract is for the supply of the product only and as such problems with fitting are not a matter for their clients".

Miss Parker then states that the petitioner is of the view, on the basis of information provided by complainants, that the first respondent has committed a number of domestic and Community infringements; these correspond to the averments made in the petition. On that basis the petitioner considers that the first respondent has engaged in conduct in the course of its business which has harmed the collective interests of consumers in the United Kingdom, and that the second and third respondents have consented to or connived at conduct constituting infringements. The affidavit concludes by stating the consultation that has taken place with the respondents.

[28] The second affidavit lodged with the petition is from Mr. David Templeton, who is a Divisional Trading Standards Officer employed by South Lanarkshire Council. In early 2001 he assumed responsibility for the team of officers who deliver civil consumer law advice to consumers and businesses. Such advice is normally provided in the course of dealing with complaints and inquiries. Mr. Templeton was made aware by Mrs. Cleland of difficulties involving the respondents. Mr. Templeton had accordingly met the second respondent in July 2001 to discuss aspects of the first respondent's business, including its trading conditions and liability for the supply of defective goods and the provision of defective services. The second respondent had expressed the view that he could avoid liability for defective goods and services by relying on standard contract terms which Mr. Templeton considered to be potentially unfair. Numerous telephone conversations took place subsequently between Mr. Templeton and the second respondent, during which the second respondent normally asserted his belief that his standard terms and conditions of contract governed the situation. Mr. Templeton records that the second respondent would normally adopt a hostile and confrontational manner during these conversations. Appended to Mr. Templeton's affidavit were analyses of complaints received from consumers against the first respondent. The last summary, which related to complaints received since 12 July 2004 by a national consumer advice telephone helpline known as Consumer Direct Scotland, recorded a further 47 complaints; on that basis they were the second-most complained about double glazing company in Scotland, second only to a United Kingdom national trader.

[29] Miss Parker's affidavit is supported by extensive documentation relating to particular complaints made about the first respondent's products. I was referred to parts of this documentation. It was clear that in a significant number of cases the complaints made by the first respondent's customers had been checked by independent tradesmen or surveyors who had indicated that the products supplied were defective; in at least one case it was stated that they were dangerous. In addition, in other cases photographs were available to vouch the complaints made by the first respondent's customers. Most of the complaints were simple in nature; recurring examples include visible gaps around windows, scratches on windows, windows that could not open, doors that were not properly fixed in a very obvious way, and damage to surrounding parts of the customer's property. In all cases complaints were made to the respondents, but the response was considered to be inadequate. It is also noticeable that a constant theme of the responses from the respondents and their solicitors is that defects in the fitting of doors, windows and conservatories are the responsibility not of the respondents but of the independent contractors who carried out such fitting. I deal with this argument below at paragraphs [33]-[40]. For present purposes, it is significant that the respondents did not appear to deny the existence of problems with the fitting of their products, but rather denied responsibility for such problems.

[30] On the basis of the affidavits provided by Miss Parker and Mr. Templeton and the documentation produced along with those affidavits, I am satisfied that the conduct of the first respondent referred to in the petition was conduct in the course of a business; this point was not in dispute. I am further satisfied that that conduct involved repeated acts done or omissions made in breach of contract. This finding relates to the supply of both goods and services by the first respondent. In relation to the supply of goods, I am satisfied that in a substantial number of cases the goods supplied were defective, and that the defects involved breaches of contract, including breaches of terms of the Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982. In relation to the supply of services, I am satisfied that the installation works carried out by or on the instructions of the first respondent were defective in a substantial number of cases, and that the defects amounted to breach of contract on the first respondent's part. In this connection, for the reasons discussed below at paragraphs [33]-[40] I regard the first respondent's Quick Trade contracts as involving the supply of services by the first respondent in at least a substantial number of cases. That finding is sufficient in my opinion for me to take those contracts into account in considering whether there have been breaches of contract by the first respondent that are relevant for the purposes of Part 8.

[31] I am further satisfied on the basis of the affidavits and other documentation produced by the petitioner that the conduct complained of by the petitioner harms the collective interests of consumers in the United Kingdom. As I have already indicated, I am of opinion that harm to the collective interests of consumers will normally be inferred from the existence of a number of individual breaches of contract or other relevant defaults on the part of a trader. It must be possible, however, to conclude that something more exists than an accumulation of individual breaches. The extra element is harm to the public generally, in their capacity as consumers, or more precisely to the section of the public who are likely to buy or consider buying the first respondent's doors, windows or conservatories and to have those products installed by the first respondent or persons acting on behalf of the first respondent. In my opinion that extra element exists in the present case. The breaches of contract evidenced by the documents produced by the petitioner, which include breaches of the Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982, are sufficiently extensive and sufficiently serious to enable me to draw the inference that there is indeed harm to the section of the public likely to buy the first respondent's products and services. On this basis I conclude that the first respondent's conduct has involved and continues to involve repeated domestic infringements in terms of section 211 of the 2002 Act.

[32] I am further satisfied that the second and third respondents have a special relationship with the first respondent in terms of section 222 of the 2002 Act, and that they have consented to or connived in the conduct of the first respondent that constitutes a domestic infringement as described in the last two paragraphs. It was not in dispute that a special relationship existed; the second and third respondents are both directors of the first respondent. It was clear from the documentation that they effectively directed the business of the first respondent. This included extensive dealings with dissatisfied customers, and is fair to say, on the basis of the statements from those customers, that the manner in which the second and third respondents dealt with the complaints gave rise to further dissatisfaction. I deal with the question of Community infringements below at paragraphs [41]-[46]. At this point, however, I should state that I am satisfied that the second and third respondents have consented to or connived in the conduct of the first respondent that constitutes Community infringements as described in those paragraphs.

"(1) Quick Fit - where the First Respondent carries out the survey, manufacture, delivery and installation of the products;

(2) Quick Trade - where the First Respondent carries out the survey, manufacture, delivery of the products and the customer chooses his own tradesman to install the products or chooses an independent tradesman from a list of tradesmen approved by the First Respondent or allows the First Respondent to choose from the list on his behalf;

(3) Quick Glass -- where the customer carries out the survey and the First Respondent merely manufactures the product".

The submission for the respondents was, in short, that many of their customers chose the Quick Trade option. This involved using an independent contractor to carry out the installation work. The contract for such work was between the customer and the independent contractor, and the first respondent had no concern with that relationship. Consequently any responsibility for the installation lay with the independent contractor, and the first respondent was not responsible in any way for defects in the work of installation.

[34] Examples of the forms of contract used by the respondents were produced. These included both Quick Fit contracts and Quick Trade contracts. I was informed that in Quick Trade contracts the contract is normally concluded on a printed form with contractual conditions printed on the reverse; these include clause 6, which is discussed at paragraph [41] below. On the front of the form, the customer's name, address and telephone number are written in spaces provided at the top. Next to these are boxes for the contract price, value added tax and the total sum due on delivery. Above these is the statement "Supply only price". In the middle part of the form, in a series of boxes, the details and measurements of the products to be supplied are set out. Beneath this is the statement "Sign if you want to be legally bound by the terms of the contract as detailed overleaf", and underneath that are boxes for the customer's signature and a signature on behalf of the first respondent, described as the Quick Group. Below that is the following:

"FITTING INSTRUCTIONS AND DECLARATION

Now that I/we have purchased the above goods from The Quick Group, I/we authorise them to appoint on my/our behalf a trade installer to install the goods as per our instructions below. I/we acknowledge this will be for a separate fee as detailed below."

I/WE REQUIRE THE ABOVE PRODUCTS INSTALLED AND AGREE A FEE OF:

£ INITIALS

YOU WILL BE INVOICED SEPARATELY BY YOUR APPOINTED INSTALLER

FITTING DETAILS

In the conditions on the reverse of the form, under the heading "Fitting", clause 8 provided as follows:

"The Appointed Installers are independent of The Quick Group and guarantee's [sic] in respect of installation is their responsibility. Their appointment is at your request. Their details can be sought by contacting us prior to installation".

For the respondents, it was submitted that the result of the foregoing passages was to confer authority on the first respondent to appoint a fitter on the customer's behalf. As an alternative, the customer had the option of choosing a fitter himself. I was informed that the first respondent's representatives provided a list of approved fitters to their customers. Examples of the forms containing these lists were produced. These bore the heading "The Quick Group", with the first respondent's address. There followed a list, headed "Approved trade installers", containing the names of twelve firms or individuals that appeared to be joinery contractors. These were all referred to by initials, followed by the word "Joinery". The first four were "S. S. Joinery", "D. F. Joinery", "B.P.S. Joinery" and "MAC Joinery". The other names were similar to these. In each case a mobile telephone number was placed beside the name. Item 13 on the form was "Company to choose on my behalf". The customer was instructed to choose at least three of the installers, as they could only be allocated on availability. At the foot of the form were spaces for the customer's name, address and signature, and the date of signature. In the examples of the forms lodged in process the customer had invariably circled number 13, that the company should choose on his or her behalf. This does not surprise me; the list provided by the first respondent's representatives would be no help whatsoever to a customer in choosing a suitable contractor.

[35] Counsel for the respondents submitted that the effect of this option was that the first respondent, acting as agent for its customer, appointed an independent installer on the customer's behalf. Thereafter the installation contract was between the independent joinery contractor and the customer. He stated that the Quick Trade option was attractive to customers because it enabled savings to be made in the total price of the goods and installation. The potential liability of the first respondent was reduced if this option were chosen, and that was reflected in the price. When I asked how the reduction came about (since clearly someone was liable for any defects in the installation), counsel stated that he was unable to give an indication of how the reduction arose.

[37] The documents produced with Miss Parker's affidavit certainly indicate that a substantial number of customers who concluded Quick Trade contracts understood that the fitters were employed by the first respondent, and in many cases had been surprised to learn subsequently that the fitters were supposed to be independent contractors. Those documents also generally support the contentions made by counsel for the petitioner as to the manner in which the Quick Trade contracts operated in practice. It was submitted that the commercial reality of the Quick Trade contracts was that the fitters were subcontractors, not independent contractors. In my opinion that was the clear commercial reality of the transactions; for all practical purposes the fitters were engaged by the first respondent and carried out work on the first respondent's instructions. The customers were not given any meaningful choice of fitter, and had no control over what the fitter did other than through the first respondent. It is true that a separate fee was paid for the fitting work, directly to the fitter, but that arrangement is not unusual in small domestic building contracts; moreover, the balance of the price due to the first respondent was collected by the fitter as well as his own fee. In these circumstances I do not find it surprising that a substantial number of Quick Trade customers thought that the fitting was being carried out by the first respondent.

[38] Nevertheless, the commercial reality of the arrangements entered into among the first respondent, its customer and the fitter cannot be decisive. What matters is the legal effect of those arrangements. In this connection, however, it is essential to bear in mind the critical issue between the parties. It is not in dispute that the installation work was carried out by fitters who were independent of the first respondent. What is in dispute is whether the customers had entered into contracts directly with those fitters through the agency of the first respondent. The alternative is that the fitters performed the work under contracts with the first respondent, as subcontractors for the latter.

[39] In my opinion the proper approach to this issue is as follows:

(1) It is neither possible nor necessary to reach any general decision applicable to all of the Quick Trade contracts. Ultimately the nature of the contracts concluded in any individual case depends upon the particular circumstances of that case. For present purposes, what matters is whether it appears probable that in a significant proportion of the cases relied on by the petitioner the fitter's contract was a subcontract with the first respondent. That is because the primary matter with which I am concerned is the collective interests of consumers; those interests will be affected by the actings of the first respondent if a substantial number of cases exist where the first respondent is responsible to the customer for the quality of the installation work.

(2) The statements on the face of the Quick Trade form of contract are not in my opinion sufficient by themselves to create a contract between the customer and the fitter. In particular, the statements are not sufficient to give rise to a plain inference that the customer who signs the contract gave his or her consent to the creation of a contract directly with the fitter. On the face of the contract there are references to a "supply only price" and to a fee for the installation. All that that suggests, however, is that the total price, for goods and installation, was broken down into its components. The passage headed "Fitting instructions and declaration" contains authority to the first respondent "to appoint on my/our behalf" a trade installer "as per our instructions below". The fact that instructions are given by the customer does not appear to me to be decisive, because those instructions could be given, through the first respondent, to a subcontractor just as much as to an independent contractor. The expression "on my/our behalf" is likewise ambiguous; it is capable of meaning nothing more than that a subcontractor is to be appointed to carry out the installation work at the customer's house.

(3) Clause 8 found on the reverse of the Quick Trade form of contract is likewise insufficient by itself to create a contract between the customer and the fitter. It is stated in that clause that the appointed installers are independent of the Quick Group, but that is equally true of a subcontractor and a contractor who has an independent contract with the customer. The statement that any guarantee in respect to the installation is the responsibility of the installer is similarly ambiguous. That would normally, I think, be understood by a member of the public to refer to a written guarantee of the work, often provided by an independent insurance company or similar body. Such a guarantee could clearly be provided by a subcontractor. The statement that the appointment of the installer is at the customer's request is likewise quite capable of applying to a subcontractor.

(4) Even when the statements on the front and reverse of the Quick Trade form of contract are taken together, I am of opinion that they do not establish clearly that the customer is to enter into a direct contract with the installer. That is particularly so when the practical operation of the arrangements is taken into account. As indicated above, I am satisfied that customers of the first respondent were given no meaningful choice of fitter, and had no control over what the fitter did other than through the first respondent. All instructions given to the fitter were given by the first respondent. For all practical purposes, I consider that the fitters were appointed and controlled by the first respondent.

(5) The documentation produced with Miss Parker's affidavit makes it clear that many, perhaps most, of those who entered into Quick Trade contracts were under the impression that it was the first respondent, not the fitter, who ought to be responsible for the manner in which installation took place. Moreover neither party suggested that the first respondent's representatives ever made the position clear when the contracts were concluded. These factors support the view that at least in a substantial number of cases not enough was done to set up an independent contract between the customer and the fitter.

(6) Even if the wording of the Quick Trade contracts were sufficient to set up an independent contract, I am of opinion that such wording may be disregarded if it can be regarded as a device or façade concealing the true legal position. In relation to the Quick Trade form of contract, I consider that, in at least a substantial number of cases, the wording could be regarded as such a device. The reality of the situation was that the entire task of selecting and instructing a fitter was carried out by the first respondent, and the work was carried out by the fitter for the first respondent. On this basis, the wording of the forms of contract is fundamentally inconsistent with what was actually done, as a matter of both commercial and legal reality. The use of a supposed agency relationship between the first respondent and the customer for the purpose of giving such instructions does not alter the position; it too is essentially a device to conceal the reality of the situation.

[40] On the foregoing basis, I conclude that, in cases where the Quick Trade form of contract was used between the first respondent and its customer, the customer's contract for the fitting of the first respondent's products was with the first respondent, and not with the individual fitter. It follows that it was the first respondent that was responsible for any defects in the installation work. In considering whether the first respondent's actings have harmed the collective interests of consumers, accordingly, I take into consideration cases where the Quick Trade form of contract was used and defects are said to have occurred in the installation work.

Unfair terms in contractual documentation
[41] The petitioner advances a further argument that the first respondent has, in its contractual documentation, included and relied upon a term which is unfair in terms of the Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999 No 2083). This argument relates to a term, found in both the Quick Fit contracts and the Quick Trade contracts, to the following effect (clause 7 of the Quick Fit contract and clause 6 of the Quick Trade contract):

"The Customer should ensure that any representation or promise made before or at the time of signature to the contract not included in the printed form of the contract is added in writing to the face of the contract and signed by the Customer and the Company or its agent. In this way there will be no doubt as to the terms of the representation or promise. Any such statement not in written form must be agreed by the surveyor in writing."

I should say that in both forms of contract this term is obscurely located; it is contained in the middle of detailed contractual provisions in small print which extend over one or two pages, and there is nothing to mark it out as a particularly important term. That is significant, because a term of this nature is of a different order from ordinary contractual terms. It is not a substantive term, but is designed to regulate the manner in which the contract is concluded. In particular, it regulates how alterations may be made to the substantive terms to meet the requirements of a particular contract. As such, it should in my opinion be placed in a prominent position, so that the customer who signs the contract is aware of what he must do to effect any necessary alterations to the printed form.

[42] Regulation 5(1) of the 1999 Regulations is as follows:

"A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirements of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer".

Regulation 6(1) is as follows:

"... the unfairness of a contractual term shall be assessed, taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of conclusion of the contract, to all the circumstances attending the conclusion of the contract and to all the other terms of the contract or of another contract on which it is dependent".

The petitioner claims that terms in the form of clause 7 and clause 6, as described in the last paragraph, are unfair under the 1999 Regulations because they have the potential for abuse. The abuse is said to arise where pre-contractual representations are made by a representative of the first respondent to induce a prospective customer to enter into a contract. Pre-contractual representations of that nature may be inconsistent with or not reflected in the written contract terms. It is likely that unsophisticated consumers may reasonably rely on such representations or other verbal assurances in deciding to enter into the contract in question. Such consumers do not always or necessarily consider whether any written terms might apply, and might not be aware of the existence or effect of a term such as clause 7 or clause 6. In particular, it is said that such consumers might not be aware that such a term might displace all of the pre-contract representations made by representatives of the first respondent; such consumers do not generally examine the written terms closely. The petitioner further submits that, even if such customers of the first respondent were aware that there might be written contractual terms, or had such terms presented to them, good faith demands that the customers should be able to rely on representations or assurances made by sales personnel as inconsistent with any written contractual terms, and that such customers should not be obliged to draft additional contract wording to record any representations that may be made.

[43] For the respondents it was submitted that the aim of the terms objected to was to achieve clarity for both parties, in order that both parties would know exactly where they stood. Counsel pointed out that such a clause could work for or against the consumer, and should therefore be regarded as a neutral term. He referred to one particular case where it had been discovered when a conservatory was fitted that there was insufficient clearance for the floor to go in. The first respondent had to accept responsibility for this, and because of the existence of the term complained of it had not been able to claim that the customer had changed his mind. I am bound to say that I do not find isolated examples of this nature of assistance in considering whether a term contravenes regulations 5 and 6 of the 1999 Regulations; what matters is the generality of cases. It seems to me obvious that the main practical effect of terms of this nature will be to prevent the customer from relying on representations made by the first respondent's salesman. Such cases are likely in my opinion to represent the vast majority of cases where the clauses in question are relevant. In those cases, it is clear that it is the customer who is likely to be prejudiced, not the first respondent. I accordingly reject the submission for the respondents that clause 7 and clause 6 should be regarded as essentially neutral terms. That is not how they operate in practice, and I am obliged by regulation 6(1) to take account of all the circumstances attending the conclusion of contracts between customers and the first respondent.

[44] I am of opinion that the petitioner's submissions on this matter are correct. I have already drawn attention to the fact that clause 7 and clause 6 are obscurely located and are not highlighted in any way, even though they are terms of a different order from other contractual terms and are of particular importance at the time when a contract is concluded. The first respondent's contracts with their customers will normally be concluded between the customer and a representative of the first respondent who visits the customer's home; such a visit is required to enable the necessary measurements to be taken. It is obvious that the customer is likely to raise questions with the representative, and that the representative will reply. On the basis of the documentation produced by the petitioner, I conclude that those replies may frequently be at variance with the written terms and conditions. This applies in particular to the Quick Trade form of contract, at least if the analysis in paragraphs [33]-[40] is not correct. On its face this form of contract involves a separate installation contract between the customer and an independent installer. It is clear from the documentation produced by the petitioner, however, that in many cases, possibly a majority, the customer gained the impression from the representative's statements that the first respondent was responsible for the installation. I accordingly consider that the documentation fully supports the submission made by the petitioner.

[45] I am further of the opinion that the use of clauses such as clause 7 of the Quick Fit from of contract and clause 6 of the Quick Trade form of contract causes a significant imbalance in the parties' rights and obligations under the contract, to the detriment of the consumer, and that that is contrary to the requirement of good faith. The terms in question had clearly not been individually negotiated. In these circumstances I am satisfied that the requirements of regulation 5 of the 1999 Regulations are satisfied, and that the terms in question must be regarded as unfair in terms of those Regulations. That amounts to a Community infringement, in the following manner. Under section 212(3) of the 2002 Act the Secretary of State is empowered by order to specify the law in the United Kingdom which gives effect to the listed Directives of the European Union. The order in question is The Enterprise Act 2002 (Part 8 Community Infringements Specified UK Laws) Order 2003 (SI 2003 No 1374). In the Schedule to that Order, reference is made to one of the listed Directives, Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts. The corresponding United Kingdom legislation is specified as the 1999 Regulations. Thus a contravention of the 1999 Regulations is capable of giving rise to a Community infringement. If an act or omission is to constitute a Community infringement, it must harm the collective interests of consumers, in accordance with section 212(1) of the 2002 Act. I am satisfied that the use of terms such as clause 7 and clause 6 does harm the collective interests of consumers. Those terms appear, on the basis of the petitioner's documentary productions, to be used very widely by the first respondent, and they may accordingly have practical application in a substantial percentage of the first respondent's contracts. On that basis I am able to infer that there is harm to the section of the public likely to buy the petitioner's doors, windows and conservatories and to have those goods installed in their homes. On this basis, therefore, I conclude that the first respondent has committed Community infringements through the use of terms in the form of clause 7 and clause 6.

[46] I should add that there had been correspondence between the petitioner and the first respondent and the latter's agents regarding those terms, but that the first respondent was not willing to give undertakings that the terms would not be used. An undertaking was offered that involved placing the term in question in a prominent place in a written contract and mentioning in it that any other representation or promise could be on a separate sheet of paper signed by the customer and the first respondent or its agent. While such an undertaking would clearly go some way to deal with the problems with the terms in question, I consider that in the particular types of contract under consideration, involving the supply of doors, windows and conservatories, the use of any term restricting liability for representations made by salesmen will normally be objectionable in itself. That is because it is of the nature of such contracts that the salesman will make statements about the product and its installation, and there is a very clear risk that such statements will not conform to the written terms. That risk is in my opinion sufficiently great to make it unfair and contrary to the requirement of good faith for a supplier of such products to make use of a term that restricts liability for such statements.

The orders sought by the petitioner
[47] On the basis of the foregoing information the petitioner seeks a number of orders against the respondents, on both a permanent and an interim basis. The wording of the orders sought was revised in the course of the hearing, and the final version is as follows. For the avoidance of doubt, I record that I have allowed the prayer of the petition to be amended so that the orders sought are in the terms stated below. First, in relation to the first respondent, the principal order sought is:

"(1) To make against the said MB Designs (Scotland) Limited enforcement orders in the following terms:

(i) that the First Respondent shall not supply windows, doors and conservatories which are not of satisfactory quality, in breach of Section 11D(2) of the Supply of Goods and Services Act 1982 (as amended) (hereinafter referred to as "the Act of 1982"), such as to harm the collective interests of consumers;

(ii) that the First Respondent shall not supply windows, doors and conservatories which are not fit for the purpose for which they were purchased, in breach of section 11D(6) of the Act of 1982, such as to harm the collective interests of consumers ;

(iii) that the First Respondent shall not supply windows, doors and conservatories which do not correspond with the description supplied with the goods, in breach of Section 11C(2) of the Act of 1982, such as to harm the collective interests of consumers ;

(iv) that the First Respondent shall not supply windows, doors and conservatories that do not conform to a contract for the supply or transfer of goods, in breach of Section 11S of the Act of 1982, such as to harm the collective interests of consumers ;

(v) that the First Respondent shall not fail to exercise the requisite level of skill and care of a reasonably competent installer of windows, doors and conservatories, such as to harm the collective interests of consumers;

(vi) that the First Respondent shall cease to use or recommend for use a contract term in the following or in similar terms, namely 'The Customer should ensure that any representation or promise made before or at the time of signature to the contract not included in the printed form of a contract is added in writing to the face of the contract and signed by the Customer and the Company or its agent. In this way there will be no doubt as to the terms of the representation or promise. Any such statement not in written form must be agreed by the surveyor in writing', such as to harm the collective interests of consumers;

(vii) that the First Respondent shall refrain from enforcing or otherwise seeking to rely on such contractual terms which have been included in any existing agreement with customers, such as to harm the collective interests of consumers".

A further order, dealing with compliance with the Sale of Goods Act 1979, is sought against the first respondent as follows:

"(2) To make against the said MB Designs (Scotland) Limited, enforcement orders in the following terms:

(i) that the First Respondent shall not supply goods which are not of satisfactory quality, in breach of Section 14 of the Sale of Goods Act 1979 ('SOGA 1979'), such as to harm the collective interests of consumers;

(ii) that the First Respondent shall not supply goods which do not correspond with the description supplied with the goods, in breach of Section 13 of SOGA 1979, such as to harm the collective interests of consumers".

The petitioner seeks a further order against the second and third respondents in the following terms:

"(4) To direct that each of the Second and Third Respondents:

(a) shall not continue or repeat the conduct set out in the orders (1)(i) to (vii) and (2)(i) to (ii) in this Prayer;

(b) shall not in the course of any business carried on by him engage in conduct such as that which constitutes the Domestic and Community infringements committed by the body corporate, namely the First Respondent as set out in the orders 1(i) to (vii) and 2(i) to (ii) above;

(c) shall not consent to or connive in the carrying out of such conduct by a body corporate with which he has a special relationship (within the meaning of section 222 (3))".

Orders in all of the foregoing terms are sought ad interim.

[48] Counsel for the petitioner moved me to grant interim enforcement orders in terms of paragraphs (1), (2) and (4) of the petition. The requirements for an interim enforcement order are set out in section 218 of the 2002 Act, and are discussed at paragraphs [20] and [21] above. I am satisfied for the reasons stated at paragraphs [30] and [31] above that the first respondent's conduct has involved repeated domestic infringements in terms of section 211 of the 2002 Act. I am further satisfied, for the reasons stated at paragraphs [44] and [45] above, that the first respondent's conduct in using terms such as clause 7 of the Quick Fit form of contract and clause 6 of the Quick Trade form of contract has constituted a Community infringement. It follows that the requirements of section 218(1)(a) are satisfied.

[49] Section 218(1)(b) requires that, if an interim enforcement order is to be made, it must appear to the court that if the application had been for an enforcement order such order would be likely to be granted. I have already held, at paragraph [21] above, that this means that it should be more likely than not that an enforcement order would be granted. In my opinion this test is satisfied. The requirements of an enforcement order, as set out in section 217, appear to me to be clearly satisfied, for the reasons stated at paragraphs [30], [31], [44] and [45] above, and in the light of the petitioner's documentary productions. I find those productions to be quite sufficiently credible and reliable material, so far as one can reach such a judgment at this stage, to arrive at the foregoing conclusion. I attach particular importance to the substantial number of examples of domestic and Community infringements that are evidenced by those productions, and to the fact that in a substantial number of cases there has been independent verification of complaints. The use of objectionable terms, which constitutes the Community infringement, is of course evidenced by the documents themselves.

[50] Section 218(1)(c) requires that it should appear to the court to be expedient that the conduct of the respondent that constitutes a domestic or Community infringement should be prohibited or prevented immediately. In my opinion this requirement is also satisfied in the present case. I think it clear that the supply of defective goods and services by the first respondents and the use of the objectionable contractual terms is continuing, and that it is appropriate that that should be prohibited in the manner contemplated by Part 8 of the 2002 Act. In this connection, I am of opinion that both the defects in the first respondent's products and services and the impact of the objectionable contractual terms is sufficiently serious to warrant action under Part 8.

[51] So far as the second and third respondents are concerned, I am satisfied for the reasons stated above at paragraph [32] that they are accessories in terms of section 222 of the 2002 Act, and that they have consented to or connived in the domestic and Community infringements committed by the first respondent. For that reason I consider that it is appropriate that interim enforcement orders should be made against the second and third respondents.

[52] Finally, I am satisfied that the orders sought by the petitioner are in appropriate terms. As indicated above at paragraph [16], I am of opinion that it is not necessary for the orders to specify the precise nature of the defects that are covered by it, nor that it should be directed to specific acts on the part of the respondents; a considerable degree of generality is acceptable. In addition, as indicated at paragraph [17] I do not regard it as objectionable that the orders in large part echo the statutory provisions; I do not think that any other course is practicable. Overall, I am of opinion that the terms of the orders sought are quite adequate to let the respondents know how they must regulate their future conduct. I will accordingly grant interim enforcement orders in the terms sought by the petitioner in heads (1), (2) and (4) of the petition as amended.

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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Office Of Fair Trading v. MB Designs (Scotland) Ltd & Ors [2005] ScotCS CSOH_85 (29 June 2005) URL: http://www.bailii.org/scot/cases/ScotCS/2005/CSOH_85.html Cite as: [2005] CSOH 85, 2005 SCLR 894, [2005] SLT 69, [2005] ScotCS CSOH_85