The Office of Fair Trading v Ashbourne Management Services Ltd & Ors  EWHC 1237 (Ch)
Archive for the ‘Case Reports’ Category
83. In my judgment, then, the Directive and the Regulations apply to contracts relating to land. I turn to the next question arising on the second issue, namely whether the Directive and the Regulations apply to public authorities such as the Council. More accurately, the question should be whether the measures apply to the Council vis-à-vis its functions under Part VII of the 1996 Act.
88. It is to my mind plain beyond doubt that the Council is not taken out of the Directive’s scope by reason only of the fact that it is a public or governmental body. Such a conclusion is not only strongly suggested by the Hofner line of reasoning in the competition cases. It is also I think lent force by the two further recitals from the Directive’s preamble which I have set out, and, for good measure, the expression “whether publicly owned or privately owned” in Article 2(c). The true question here is analogous to that arising in Bettercare relating to “economic activity”: do the Council’s Part VII functions fall within the meaning of “trade, business or profession” in Article 2(c)?
89. I have no doubt but that the answer to this question is Yes. The Part VII functions centrally involve the grant of a tenancy for rent. This is obviously “an activity which could… be carried on by a private undertaking in order to make profits”. It is so carried on by private undertakings every day.
24. Mr. Bompas submitted that when making his findings about the requirement of reasonableness the judge should have had regard to the provisions of the Unfair Terms in Consumer Contracts Regulations 1999 (“the 1999 Regulations”) in order to ensure harmony between the two sets of legislative requirements. For that purpose he sought to place particular reliance on paragraphs (b) and (q) of Schedule 2 to the Regulations, which identify as terms that may be considered unreasonable clauses that inappropriately exclude or limit the customer’s legal rights (including rights of set-off) or which exclude the right to take legal action or exercise other legal remedies.
25. The 1999 Regulations were made to implement Directive 93/13/EEC, which is concerned with unfair terms in consumer contracts. A “consumer” is defined for these purposes as a natural person acting for purposes outside his trade, business or profession. The scope of the 1999 Regulations is therefore narrower in some respects than that of the Unfair Contract Terms Act, which in many cases applies to business contracts as well as consumer contracts, but the principles that are to be applied are broadly the same: in each case it is necessary to judge the reasonableness of the term in question at the time the contract is made by reference to all the surrounding circumstances. I doubt very much whether the extended list of terms that may be regarded as unfair which is set out in schedule 2 to the Regulations adds much of substance to schedule 2 to the 1977 Act. Indeed, as one can see from Granville Oil v Davis Turner, in a case such as the present the court will consider the effect on the parties’ interests of terms such as clauses 21(A) and 27(B) when deciding whether they satisfy the requirement of reasonableness. In my view no assistance is to be gained in the present case from the 1999 Regulations.
2. Article 267 TFEU must be interpreted as meaning that the jurisdiction of the Court of Justice of the European Union extends to the interpretation of the concept of ‘unfair term’ used in Article 3(1) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts and in the annex thereto, and to the criteria which the national court may or must apply when examining a contractual term in the light of the provisions of that Directive, bearing in mind that it is for that court to determine, in the light of those criteria, whether a particular contractual term is actually unfair in the circumstances of the case.
This was a reference by the Spanish Tribunal Supremo for a ruling about the application of Article 4(2) of the Directive (this became regulation 6(2) in the UTCCR). Article 4(2) provides that a term will be exempt from consideration for unfairness in relation neither to the “definition of the main subject matter of the contract nor to the adequacy of the price and remuneration, on the one hand, as against the services or goods [to be supplied] in exchange, on the other, in so far as these terms are in plain intelligible language.”
In Spain Article 4(2) has not been transposed into the legal system
On those grounds, the Court (First Chamber) hereby rules:
Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts must be interpreted as meaning that a national court or tribunal hearing an action for enforcement of an arbitration award which has become final and was made in the absence of the consumer is required, where it has available to it the legal and factual elements necessary for that task, to assess of its own motion whether an arbitration clause in a contract concluded between a seller or supplier and a consumer is unfair, in so far as, under national rules of procedure, it can carry out such an assessment in similar actions of a domestic nature. If that is the case, it is for that court or tribunal to establish all the consequences thereby arising under national law, in order to ensure that the consumer is not bound by that clause.