Competition & Markets Authority v Care UK Health & Social Care Holdings Ltd & Anor

For the purpose of choosing between CPR Parts 7 and 8, allegations that a commercial practice “deceives or is likely to deceive” under regulation 5 of the Consumer Protection from Unfair Trading Regulations 2008 are not allegations of fraud, dishonesty or the tort of deceit. The statutory concept concerns the practice’s deceptive effect on the average consumer, and can apply even where information is factually correct. The procedure remains case-specific. Part 8 is unsuitable where the claim is likely to involve substantial and important factual disputes, including disputes about the value of services, consumer circumstances, the trader’s purpose and the transactional decisions made by consumers.

The Competition and Markets Authority appealed an order by Deputy Master Henderson dated 11 March 2019 directing that its consumer-enforcement claim against Care UK should proceed under CPR Part 7 rather than Part 8. The claim concerned administration fees charged to care-home residents and alleged unfair contract terms and misleading commercial practices.

The Deputy Master treated allegations that the respondents had deceived or connived in deceiving consumers as requiring the fuller pleading associated with Part 7. The appeal concerned whether that approach involved an error of law and, independently, whether the claim was likely to involve substantial disputes of fact making Part 8 inappropriate.

1. Appeal dismissed. The order requiring the claim to proceed under CPR Part 7 was upheld, although partly for different reasons.
2. The Deputy Master had treated the allegations under regulation 5 of the Consumer Protection from Unfair Trading Regulations 2008 as akin to fraud, deceit or dishonesty.
3. That approach was an error of law. Regulation 5 implements Article 6 of Directive 2005/29/EC. A misleading action does not inherently require proof of dishonesty and need not amount to the tort of deceit. The statutory reference to a practice that deceives or is likely to deceive concerns its deceptive nature in relation to the average consumer, even where information is factually correct. The related offence under regulation 9 is one of strict liability, subject to the due-diligence defence in regulation 17.
4. Whether Part 8 is suitable depends on the facts of the particular claim. CMA collective or enforcement claims are not inherently suited to Part 8. Extensive pre-action investigation or reliance on the respondents’ documents does not eliminate the possibility of substantial factual disputes.
5. The claim involved substantial and important disputes concerning the extent and value of services said to justify the administration fee; whether consumers received sufficient information before becoming emotionally committed to a care home; whether the fee covered pre-admission costs or generated profit; the factual matrix relevant to the statutory average consumer, including the particular consumer group identified by regulation 2(4); and whether consumers were caused to take transactional decisions they would otherwise not have taken.
6. The order was therefore upheld because the identified disputes made the claim unsuitable for Part 8.

• High Court (Chancery Division): The appeal from Deputy Master Henderson’s order dated 11 March 2019 was dismissed. The order directing the claim to proceed under CPR Part 7 was upheld.