Oppressive Practices
Cases
Purely Creative Ltd & Ors v The Office of Fair Trading
[2012] 1 CMLR 21, [2011] EWCA Civ 920 The Chancellor
In this action the OFT’s complaints relate to five promotions carried out in and between June and December 2008. Whilst they differed in detail they had a number of common features. First the consumer was told that he had won one of a number of specified prizes. At one end of the range was a prize of considerable value at the other end was a prize worth, at most, a few pounds. In between were a number of prizes of values between the two extremes. Second, the consumer was informed that to ascertain which prize he had won and to claim it he had to telephone a specified number to find out. Though the consumer was given a postal alternative it was given minimal prominence in comparison with the telephone number. Third, the telephone number was a premium rate line. The consumer was told the cost per minute and the maximum duration of the call. He was not told that the minimum time within which he would obtain the information he sought was only seconds short of the maximum. Nor was he told that from the cost per minute of £1.50 the promoter took £1.21. In addition, in some cases, the consumer was invited to pay the cost of delivery and/or insurance. Fourth, except for a very small fraction of 1%, all who claimed a prize got the prize of least value, the equivalent, or a substantial proportion, of which he had already paid in telephone charges and costs of delivery and/or insurance.
The judgment of Briggs J
Briggs J considered the proper interpretation of Paragraph 31 in paragraphs 42 to 61 of his judgment. In paragraph 45 he rejected the argument advanced by counsel for the OFT to the effect that the paragraph applied if any payment, however small, had to be made in connection with claiming the prize on the ground that a small payment would not necessarily create a false impression as to the status of the prize. By contrast, in paragraph 47 he accepted the argument, attributed to counsel for the Promoters, to the effect that paragraph 31 would not be engaged if the payment required was de minimis in relation to the value of the prize won. He considered that falsity lies at the heart of the prohibition in paragraph 31. Notwithstanding this conclusion paragraph 1(a) of the undertakings refers to payment which is “a substantial proportion of the unit cost to the [promoter]” of providing the prize.
In paragraph 57 Briggs J rejected the submission of counsel for the Promoters that if a cheap alternative to the premium line telephone call for claiming the prize is provided then the paragraph is not engaged on the basis that the prize remains a prize and no false impression is created. He noted that his initial reaction had been to accept that submission but had changed his mind. He considered that if the more expensive alternative was presented in the form of a recommended method then the cost incurred in adopting that method should be considered. It was for this reason that paragraph 1(a) of the undertaking refers to “any action recommended by the” promoter.
Briggs J concluded in paragraph 59 that:
“If the consumer is given the impression that he has won a prize even if he adopts the recommended (but relatively more expensive) method or methods of claiming it, then if the cost of that method is sufficient to falsify the impression, that commercial practice should be, and is, prohibited by Paragraph 31. This is because the trader will be profiting by recommending a method of claiming which involves a cost which falsifies the assertion that the consumer has won something, rather than having bought it.”
In paragraphs 91, 137, 161, 174 and 183 he concluded that in each of the five promotions under consideration paragraph 31 was infringed. In each of them the telephone claim was recommended and cost, in addition to the delivery and insurance charges where applicable, the equivalent or a substantial proportion of the unit cost to the promoter of providing the prize to the consumer. He concluded in addition that each of them had infringed other regulations relied on by OFT as well.
Before leaving the judgment of Briggs J I should note that in paragraph 41 he referred to the submission of counsel for the OFT drawing attention to the various, apparently different, ways in which different Member States had implemented paragraph 31 of the Directive. He concluded:
“In my judgment recourse to differences of implementation of a directive intended to have uniform effect throughout the EU is likely to prove a time-consuming and ultimately fruitless exercise, as will become apparent from [counsel]’s attempt to pray in aid the different language of the Irish regulations implementing paragraph 31 of Annex 1 to the UCPD.”
I agree; but the different approaches of Member States may well be important to the exercise of this court’s discretion whether to refer questions of interpretation of the Directive to the Court of Justice of the European Union.
The Appeal and Cross Appeal
As I have already indicated, the Promoters appeal with the permission of the judge. By a respondent’s notice issued on 15th April 2011 the OFT sought permission to cross-appeal. We granted such permission at the commencement of the hearing. The broad effect of the appeal, if successful, would be to limit the scope of paragraph 31 as applied by the judge in paragraph 1 of the undertakings. By contrast, the broad effect of the cross-appeal, if successful, would be to widen its scope.
The Promoters suggest that Briggs J erred in five specific respects. First, the Promoters contend that the cost of submitting a claim is not such cost as paragraph (b) of paragraph 31 refers to, particularly where the consumer is given a choice between a premium rate service or a postage stamp. Second, even if the premium rate line was to be regarded as recommended, in the sense the judge used that word, it did not falsify the impression that a prize had been won. Third, the judge was wrong to have considered whether or not the promoter made a profit from a particular consumer by comparing its costs of providing the prize with what he received from the premium rate calls and, where applicable, the costs of delivery and insurance. The Promoters contend that such a consideration is neither decisive nor relevant. Fourth, if there is to be a comparison between the cost to the consumer with some other cost it should be the cost to the consumer of acquiring the prize from an alternative source. Fifth, the judge was wrong to have characterised the award and claim of the prize as a transaction of sale and purchase.
The oral argument of counsel for the Promoters in support of these five grounds focussed on the words “subject to” in paragraph (b) of paragraph 31 and the fact that sub-paragraph (b) is an alternative to sub-paragraph (a). Accordingly, so he submitted, it is necessary to assume the existence of a prize when considering the proper interpretation and application of sub-paragraph (b). The costs to which the claim is subject and to which paragraph (b) applies are, he submitted, only those necessary to the claim, not those of some other more costly method the consumer chose to use. He pointed out that there is nothing in paragraph 31 of either the Directive or the Regulation which requires the method to be recommended or the cost to be compared with any comparator. But if a comparator was required then it should be the cost to the consumer of obtaining the prize from an alternative source and not the cost to the promoter of providing it.
If these were the only issues in these appeals I would reject the arguments of counsel for the Promoters and dismiss the appeal. Paragraph 31 is quite specific. It applies to “any action in relation to claiming the prize”, not the ‘only’, ‘cheapest’ or ‘recommended’ action. Similarly it applies to the consumer “paying money or incurring a cost”. This is entirely unspecific. Literally the words apply to any money or any cost. There is no requirement that they should be substantial in comparison with any other cost. Taking the words of paragraph 31 at their face value each of these promotions infringes the provision. In addition to import the restrictions for which counsel for the Promoters contends would be contrary to one of the clear purposes of the Directive, namely “to establish a high level of consumer protection”, see recital 5 to the Directive.
In their cross-appeal the OFT raise again the arguments they advanced before Briggs J which I have referred to in paragraph 5 above. They submit that paragraph 1 of the Undertakings should be replaced by one or other of the following:
“Create the impression that the consumer has already won, will win, or will on doing a particular act win, a prize or other equivalent benefit, when in fact taking any action identified by the Defendants in relation to claiming the prize or other equivalent benefit is subject to the consumer paying money or incurring a cost.
or
“Create the impression that the consumer has already won, will win, or will on doing a particular act win, a prize or other equivalent benefit, when in fact taking any action identified by the Defendants in relation to claiming the prize or other equivalent benefit is subject to the consumer paying money or incurring anything other than a de minimis cost.”
Counsel for the OFT points to the fact that recital 17 indicates that another of the purposes of the Directive is to introduce legal certainty which the ‘brightline’ interpretation for which she contends would produce. Her primary submission is, therefore, that this court should substitute the first alternative set out in paragraph 14 above for the whole of paragraph 1 of the undertakings. The second alternative is a secondary submission designed to recognise some of the possible objections to her first. She frankly admits that neither of her submissions as to the true construction of paragraph 31 can be described as acte clair. Her preferred solution is that if we do not feel able to adopt either of them then we should dismiss the appeal, stay her cross-appeal and refer to the Court of Justice of the European Union questions on the interpretation of paragraph 31 designed to elicit the answer to her cross-appeal.
There is much to be said for a reference. We were told that there is no judgment of any court of any Member State on the proper interpretation of paragraph 31 of the Directive or its various national equivalents. In addition the translations of the various provisions enacted by each Member State to give effect to paragraph 31 of the Directive display a divergence indicative of doubt as to what that true interpretation is. As another of the purposes of the Directive, clearly expressed in recitals 6 and 12 and article 5 quoted in paragraph 2 above, is to harmonise the laws of the Member States these translations indicate that that purpose may require a decision of the Court of Justice of the European Union. To give but one example, and one which does not require any translation, the relevant provision in the Republic of Ireland is in the following form:
“Making a representation or creating an impression that a consumer has won or will win a prize or other equivalent benefit, if –
(i) there is no prize or equivalent benefit, or
(ii) in claiming the prize, the consumer has to make a payment or incur a loss;”
Such an implementation of paragraph 31 omits the word ‘false’ which had been inserted into the draft Directive by an amendment approved by the European Parliament on 2nd February 2005. Perhaps of greater significance is the substitution of ‘loss’ for ‘cost’.
Accordingly, in my view, the need for a reference in order to determine the cross-appeal is clearly made out. Nevertheless I am reluctant only to refer the issues arising on the cross-appeal lest it somehow inhibit the freedom of the European Court of Justice to consider the whole of paragraph 31 in the context of the whole of the Directive. Equally it would be unwise for this court to limit or fetter what order it might make on the appeal in the light of the response to the reference by dismissing the appeal now. For all these reasons I would stay the appeal and the cross appeal and refer to the European Court of Justice the questions (for which I am grateful to counsel) set out in the appendix to this judgment. I would invite counsel for the parties to produce for the consideration of this court a draft of the form of reference required by CPR Part 68 and its PD. Lest there be any misunderstanding I emphasise that all the undertakings given to the court by the Promoters and recorded in the order of Briggs J will remain in full force and effect.
Appendix
1. Does the banned practice set out in paragraph 31 of Annex 1 to Directive 2005/29/EC prohibit traders from informing consumers that they have won a prize or equivalent benefit when in fact the consumer is invited to incur any cost, including a de minimis cost, in relation to claiming the prize or equivalent benefit?
2. If the trader offers the consumer a variety of possible methods of claiming the prize or equivalent benefit, is paragraph 31 of Annex 1 breached if taking any action in relation to any of the methods of claiming is subject to the consumer incurring a cost, including a de minimis cost?
3. If paragraph 31 of Annex 1 is not breached where the method of claiming involves the consumer in incurring de minimis costs only, how is the national court to judge whether such costs are de minimis? In particular, must such costs be wholly necessary:
a. in order for the promoter to identify the consumer as the winner of the prize, and/or
b. for the consumer to take possession of the prize, and/or
c. for the consumer to enjoy the experience described as the prize?
4. Does the use of the words ‘false impression’ in paragraph 31 impose some requirement additional to the requirement that the consumer pays money or incurs a cost in relation to claiming the prize, in order for the national court to find that the provisions of paragraph 31 have been contravened?
5. If so, how is the national court to determine whether such a ‘false impression’ has been created? In particular, is the national court required to consider the relative value of the prize as compared with the cost of claiming it in deciding whether a ‘false impression’ has been created? If so, should that ‘relative value’ be assessed by reference to:
a. the unit cost to the promoter in acquiring the prize; or
b. to the unit cost to the promoter in providing the prize to the consumer; or
c. to the value that the consumer may attribute to the prize by reference to an assessment of the ‘market value’ of an equivalent item for purchase?
Mediaprint Zeitungs- und Zeitschriftenverlag (Environment and consumers)
[2011] 1 CMLR 48, [2010] EUECJ C-540/08
The first question
15 By its first question, the referring court asks, in essence, whether the Directive must be interpreted as precluding a national provision which lays down a general prohibition on sales with bonuses and is designed not only to protect consumers but also pursues other objectives, such as, for example, the safeguarding of pluralism of the press and protection of the weakest competitors.
16 In order to reply to the question referred, it is necessary first of all to determine whether sales with bonuses, which are the subject of the prohibition at issue in the main proceedings, constitute commercial practices within the meaning of Article 2(d) of the Directive and are therefore subject to the rules laid down by that directive.
17 In that regard, it should be borne in mind that Article 2(d) of the Directive gives a particularly wide definition to the concept of commercial practices: ‘any act, omission, course of conduct or representation, commercial communication including advertising and marketing, by a trader, directly connected with the promotion, sale or supply of a product to consumers’.
18 Promotional campaigns, such as those at issue in the main proceedings, which enable consumers to take part free of charge in a lottery subject to their purchasing a certain quantity of goods or services, clearly form part of an operator’s commercial strategy and relate directly to the promotion thereof and its sales development. It follows that they constitute commercial practices within the meaning of Article 2(d) of the Directive and, consequently, come within its scope (Case C-304/08 Plus Warenhandelsgesellschaft [2010] ECR I-0000, paragraph 37 and case-law cited).
19 That conclusion cannot be called into question by the observations by Mediaprint and by the Austrian and Belgian Governments according to which Directive 2005/29 does not apply to the sales promotion practices at issue in the main proceedings, on the ground that they were expressly covered by a Commission proposal for a European Parliament and Council regulation (COM(2001) 546 final), amended (COM(2002) 585 final). Suffice it to note that that circumstance cannot, by itself, preclude the possibility, particularly in view of the fact that that proposal was withdrawn in 2006 and did not therefore lead to the adoption of a regulation, that such practices may constitute, in the current state of Union law, unfair commercial practices within the terms of that directive and come within its scope (Plus Warenhandelsgesellschaft, paragraph 33).
20 That having been determined, it also needs to be examined whether a national provision such as Paragraph 9a(1)(1) of the UWG may fall within the scope of the Directive notwithstanding the fact that, as the referring court states, it has a more extensive purpose than that of the Directive since it is not only designed to protect consumers but also pursues other objectives.
21 As has been stated at paragraph 17 of the present judgment, the Directive is characterised by a particularly wide scope ratione materiae which extends to any commercial practice directly connected with the promotion, sale or supply of a product to consumers. As is evident from recital 6 in the preamble to the Directive, only national legislation relating to unfair commercial practices which harm ‘only’ competitors’ economic interests or which relate to a transaction between traders is thus excluded from that scope.
22 That is clearly not the case with the national provision at issue in the main proceedings.
23 As the referring court has stated, Paragraph 9a(1)(1) of the UWG refers expressly to the protection of consumers and not only to that of competitors and other market participants.
24 In addition, the documents before the Court show that the UWG, which constitutes the national law on unfair competition, was amended by the Law of 13 December 2007 (BGBl. I, 79/2007), without the said Paragraph 9a being modified, precisely in order to ensure transposition of the Directive in Austria. Consequently, the national legislature took the view that that law was capable of ensuring conformity of national law with the Directive and thus, as the eighth recital thereof provides, permitted the direct protection of consumer economic interests from unfair business-to-consumer commercial practices and the ensuring, as stated in particular in Article 1 of the latter, of a ‘high level of consumer protection’.
25 In that context, it should be recalled that, at the hearing, the Austrian Government argued that the national provision at issue in the main proceedings did not fall within the scope of the Directive in that it essentially pursues the maintenance of pluralism of the press in Austria. It thus distanced itself from the assessment of the objectives of that provision carried out by the referring court, as that assessment is apparent from paragraphs 12 and 20 of this judgment.
26 Even if the national provision at issue in the main proceedings does essentially pursue the maintenance of pluralism of the press in Austria, it is important to note that the possibility of Member States maintaining or establishing in their territory measures which have as their aim or effect the classification of commercial practices as unfair on grounds relating to maintenance of the pluralism of the press does not appear amongst the derogations from the scope of the Directive set out in the sixth and ninth recitals and in Article 3 thereof.
27 In that regard, it should be emphasised that the Directive carries out a complete harmonisation of the rules concerning unfair commercial practices of undertakings vis-à-vis consumers.
28 Therefore, the Austrian Government cannot validly argue that Paragraph 9a(1)(1) of the UWG falls outside the scope of the Directive in that it essentially envisages objectives relating to maintenance of the pluralism of the press.
29 That having been established, it is necessary to verify whether the Directive precludes a prohibition on sales with bonuses, such as that laid down in Paragraph 9a(1)(1) of the UWG.
30 In that regard, it should be borne in mind, first, that, since Directive 2005/29 fully harmonises the rules relating to unfair business-to-consumer commercial practices, as Article 4 of the Directive expressly provides, Member States may not adopt stricter rules than those provided for in the Directive, even in order to achieve a higher level of consumer protection (Plus Warenhandelsgesellschaft, paragraph 41 and case-law cited).
31 In addition, Article 5 of Directive 2005/29 provides that unfair commercial practices are to be prohibited and sets out the criteria on the basis of which practices may to be classified as being unfair.
32 Thus, in accordance with Article 5(2), a commercial practice is unfair if it is contrary to the requirements of professional diligence and materially distorts, or is likely materially to distort, the economic behaviour of the average consumer with regard to the product.
33 Moreover, Article 5(4) of the Directive defines two precise categories of unfair commercial practices, that is to say, ‘misleading’ practices and ‘aggressive’ practices corresponding to the criteria set out in Articles 6 and 7 and in Articles 8 and 9 of Directive 2005/29 respectively.
34 Lastly, Annex I to Directive 2005/29 establishes an exhaustive list of 31 commercial practices which, in accordance with Article 5(5) of the Directive, are regarded as unfair ‘in all circumstances’. Consequently, as recital 17 in the preamble to Directive 2005/29 expressly states, those commercial practices alone can be deemed to be unfair without a case-by-case assessment against the provisions of Articles 5 to 9 of the Directive.
35 As regards the national legislation at issue in the main proceedings, it is undisputed that practices consisting in offering consumers bonuses associated with the purchase of products or services do not appear in Annex I to the Directive. Therefore, they cannot be prohibited in all circumstances, but can be prohibited only following a specific assessment allowing the unfairness of those practices to be established.
36 However, Paragraph 9a(1)(1) of the UWG prohibits any commercial transaction which links the offer of bonuses with the purchase of goods or services. In other words, that type of practice is prohibited generally, without it being necessary to determine, having regard to the facts of each particular case, whether the commercial transaction at issue is ‘unfair’ in the light of the criteria set out in Articles 5 to 9 of the Directive.
37 Second, such national legislation, laying down measures which are more restrictive than those envisaged by the Directive, runs counter to the content of Article 4 of Directive 2005/29, which expressly prohibits Member States from maintaining or adopting more restrictive national measures, even where such measures are designed to ensure a higher level of consumer protection.
38 In those circumstances, it must be held that Directive 2005/29 precludes a prohibition, such as that provided for by the national legislation at issue in the main proceedings, of commercial offers which link the purchase of goods or services to the offer of bonuses.
39 The fact that Paragraph 9a(2) of the UWG lays down a certain number of exceptions to that prohibition of sales with bonuses does nothing to call such a conclusion into question.
40 As the Court of Justice has already held, even if those exceptions are liable to restrict the scope of the prohibition of commercial practices consisting in the linking of an offer of bonuses with the purchase of goods or services, the fact remains that, because of its limited and pre-defined nature, such an exception cannot take the place of the analysis, which must of necessity be undertaken having regard to the facts of each particular case, of the ‘unfairness’ of a commercial practice in the light of the criteria set out in Articles 5 to 9 of the Directive, where, as here in the main proceedings, that practice is not listed in Annex I thereto (see Plus Warenhandelsgesellschaft, paragraph 53 and case-law cited).
41 In the light of the whole of the above, the answer to the first question must be that the Directive must be interpreted as precluding a national provision, such as that at issue in the main proceedings, which lays down a general prohibition on sales with bonuses and is not only designed to protect consumers but also pursues other objectives.
The second question
42 By its second question, the national court asks, in the event of an affirmative answer to the first question, whether sales with bonuses must be regarded as unfair commercial practices within the meaning of Article 5(2) of the Directive, merely on the ground that the possibility of gain represents, for at least part of the public concerned, the deciding factor which causes it to buy the main product.
43 As indicated in paragraph 35 of this judgment, where a commercial practice falling within the scope of the Directive does not appear in Annex I to the latter, that practice can be regarded as unfair, and thus prohibited, only after a specific assessment, particularly in the light of the criteria set out in Articles 5 to 9 of the Directive.
44 The fact that, for at least part of the public concerned, the possibility of participating in a competition represents the factor which determines the purchase of a newspaper constitutes one of the factors which the national court may take into account when making such an assessment.
45 That fact may lead the national court to consider that the commercial practice in question materially distorts or is likely materially to distort the economic behaviour of the consumer, within the meaning of Article 5(2)(b) of the Directive.
46 However, that fact does not in any way lead in itself to the conclusion that a sale with a bonus constitutes an unfair commercial practice within the meaning of the Directive. For that purpose, it must also be verified whether the practice in question is contrary to the requirements of professional diligence within the meaning of Article 5(2)(a) of the Directive.
47 In those circumstances, the answer to the second question must be that the possibility of participating in a prize competition, linked to the purchase of a newspaper, does not constitute an unfair commercial practice within the meaning of Article 5(2) of the Directive, simply on the ground that, for at least some of the consumers concerned, that possibility of participating in a competition represents the factor which determines them to buy that newspaper.
Costs
48 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.
On those grounds, the Court (Grand Chamber) hereby rules:
1. Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council (‘the Unfair Commercial Practices Directive’) must be interpreted as precluding a national provision, such as that at issue in the main proceedings, which lays down a general prohibition on sales with bonuses and is not only designed to protect consumers but also pursues other objectives;
2. The possibility of participating in a prize competition, linked to the purchase of a newspaper, does not constitute an unfair commercial practice within the meaning of Article 5(2) of Directive 2005/29, simply on the ground that, for at least some of the consumers concerned, that possibility of participating in a competition represents the factor which determines them to buy that newspaper.
Tiscali UK Ltd v British Telecommunications Plc
[2008] EWHC 3129 QB Eady J
On 1 December 2008, I handed down a reserved judgment in which I gave my reasons for striking out the libel aspect of these proceedings: [2008] EWHC 2927 (QB). I then heard an application on the Claimant’s behalf to amend the pleaded case in order to add a further cause of action based on the same facts as are already pleaded; namely, the sending out of the letter to the Claimant’s customers in July 2008 with a view to encouraging them to change to the Defendant’s broadband service. I indicated at the conclusion of the hearing that I would grant permission to amend and that I would hand down my reasons in writing at a later date. That is the purpose of the present judgment.
The Claimant now seeks to rely upon interference with its business by unlawful means. The case is put in two ways. On the one hand, reliance is placed on the existing allegations of malicious falsehood, as providing the unlawful means, and on the other it is sought to introduce alleged breaches of the Consumer Protection from Unfair Trading Regulations (2008/1277) and the Business Protection from Misleading Marketing Regulations (2008/1276), both of 2008. These are, together, intended to implement the provisions of the Unfair Commercial Practices Directive (2005/29/EC) and the Misleading and Comparative Advertising Directive (2006/114/EC). Reliance is also placed on the Control of Misleading Advertisement Regulations 1988 (as amended). It is argued that the alleged infringement of these regulations, which does not require the establishment of dishonesty on the Defendant’s part (unlike malicious falsehood), would provide an alternative route to establishing the necessary unlawful means.
I do not need to set out the lengthy amendments contained in paragraphs 8.4 to 8.6 of the proposed pleading. They can be summarised by saying that the Claimant relies upon the allegedly misleading effect on recipients of the letter of the false information to the effect that the Claimant’s broadband service was, or was about to be, put in jeopardy by the prospect of a takeover.
The central point of the Claimant’s case is that there simply were no grounds for suggesting that the talk earlier in the year of a takeover, or the possibility of its coming to fruition in the medium term, provided any grounds for thinking that the broadband service would no longer be available to customers. Nor does the letter actually say so; what it does is to sow the seeds of doubt – with a view to coaxing the Claimant’s existing customers to come over to the Defendant’s service as being more secure.
There is no reason to suppose that if the Claimant succeeds in establishing an infringement of these new regulations, aimed at the protection of consumers and businesses, this could not serve as “unlawful means” for the purpose of establishing that tort.
It is interesting to see that the relatively unfamiliar concepts of “honest market practice” and “the general principle of good faith”, which are both relevant to the concept of “professional diligence” in Regulation 3(3) of the Consumer Protection Regulations, are construed in such a way that a breach may be found even in the absence of dishonesty as it is traditionally understood in domestic jurisprudence. That is why Mr Spearman QC, on the Claimant’s behalf, observed at the earlier hearing that infringement of the regulations would be easier for his client to prove than the ingredients of the tort of injurious falsehood (which do include the need to establish dishonesty).
This broad interpretation is borne out by the remarks of Jacob LJ in Boehringer Ingelheim Ltd v Vetplus Ltd [2007] FSR 29 at [27]-[29]:
“27. … I think a man who makes a damaging statement involving use of another’s mark which he reasonably believes to be true at the time but which later turns out to be untrue would not be acting in accordance with an honest practice if he were not prepared to compensate the owner of the damaged mark. He can express his honestly held opinion, but unless that is on the basis that he will compensate his trade rival if it is proved to be wrong, he is not acting in accordance with an honest practice and will be adjudged to infringe.
…
29. Indeed the Comparative Advertising Directive (97/55/EC) rather confirms the position. It is not in dispute that a comparative advertiser will be acting in accordance with ‘honest practices’ provided he does so in accordance with the conditions of Art 3a of the Misleading Advertising Directive (84/450/EC). One of those conditions is that the advertising must not be misleading. If an advertisement is in fact misleading, however honestly the advertiser believed what he said at the time, he would be outside the Directive.”
It is a relatively new concept in English law that there is an “objective” test of dishonesty; that is to say, in this context it is not necessary to demonstrate that at the time the offending statement was made its maker knew it to be false or had no honest belief in its truth: see also Cable & Wireless Plc v British Telecommunications Plc [1998] FSR 383, 391, per Jacob J (as he then was).
The grounds of objection to these amendments are quite narrow. It is naturally disputed that the July letter contained any false statement. I cannot at this stage, however, conclude that there is no realistic prospect, or only a “fanciful” prospect, of establishing (a) that the letter conveyed the notions to reasonable recipients that there was a risk that the Claimant’s broadband service would shortly cease to be available, or (b) that this was false and/or unsupported by evidence.
Secondly, it is argued that it would, even for the purpose of showing a breach of any of the regulations cited above, be necessary to show that relevant persons within the Defendant’s organisation had actually been dishonest or indifferent to the truth of the letter’s contents at the time of publication. Yet, as I have indicated, that does not appear to be sound in law: I shall, therefore, allow these novel amendments.
There was also before the court an application to augment the claim for special damages. Specifically, it is sought to plead reliance on a significant “spike” for the month of July showing a much larger departure of customers compared to the statistics available for other months. It is alleged that the statistics show that nearly 12,000 more customers than average left the Claimant in that month. The loss for each customer is estimated at the moment to be of the order of £306. There may be considerable difficulty and expense involved in bringing those consumers’ decisions home to the Defendant’s letter. But I cannot at this stage exclude such a claim and I give permission to add it.