Purely Creative Ltd & Ors v The Office of Fair Trading

On the Court of Appeal’s provisional construction, paragraph 31 of Schedule 1 to the Consumer Protection from Unfair Trading Regulations 2008 covers any action relating to claiming a prize where the consumer pays money or incurs a cost. It is not confined to the cheapest or recommended method, and contains no express substantiality or comparator requirement. Importing such limits would conflict with the Directive’s aim of securing a high level of consumer protection. Because the OFT’s proposed bright-line construction of de minimis costs was not acte clair, and national implementations diverged, the appeal and cross-appeal were stayed and questions were referred to the Court of Justice of the European Union. Existing undertakings remained in force.

The Office of Fair Trading instituted Part 8 proceedings under section 215 of the Enterprise Act 2002 concerning five prize promotions. Consumers were told that they had won prizes but were directed principally to premium-rate telephone lines and, in some cases, delivery or insurance charges.

Briggs J held that the promotions infringed paragraph 31 of Schedule 1 to the Consumer Protection from Unfair Trading Regulations 2008 and accepted undertakings in lieu of injunctions: [2011] EWHC 106 (Ch). The promoters appealed against part of the undertakings. The OFT cross-appealed, seeking a wider interpretation covering any cost, including a de minimis cost. The central issue was the proper interpretation of paragraph 31 and whether the questions required a reference to the Court of Justice.

The Chancellor gave the judgment, with Jackson LJ and Munby LJ agreeing. Permission was granted for the OFT’s cross-appeal.

1. Promoters’ appeal. On the court’s provisional view, paragraph 31 was expressed in unqualified terms. It applied to “any action” in relation to claiming the prize and to the consumer “paying money or incurring a cost”. The wording did not confine the prohibition to the only, cheapest or recommended method of claiming, and did not require the cost to be substantial by comparison with another cost. The promoters’ appeal would therefore have been dismissed if those had been the only issues.
2. Cross-appeal. The OFT sought a bright-line rule covering any cost, including a de minimis cost. Neither that construction nor the alternative construction was acte clair. The Directive pursued harmonisation, legal certainty and a high level of consumer protection. Divergent national implementations, including differences between the Directive and the Irish provision, demonstrated the need for authoritative guidance.
3. Reference and order. The court considered it inappropriate to limit the reference to the cross-appeal or to fetter the Court of Justice’s consideration of paragraph 31 in the context of the whole Directive. Both the appeal and cross-appeal were stayed. Questions concerning de minimis costs, alternative claiming methods, the meaning of false impression and the appropriate value comparator were referred to the Court of Justice of the European Union. Counsel were invited to prepare a draft reference under Part 68 of the Civil Procedure Rules 1998 and its practice direction. The undertakings recorded in the order below remained in full force.

1. Court of Appeal (Civil Division): Permission was granted for the appeal and the OFT’s cross-appeal. The appeal and cross-appeal were stayed pending a reference to the Court of Justice of the European Union.
2. Chancery Division: Briggs J heard the OFT’s Part 8 claim and concluded that the five promotions infringed paragraph 31 of Schedule 1 to the Consumer Protection from Unfair Trading Regulations 2008. He accepted undertakings in lieu of injunctions: [2011] EWHC 106 (Ch).