Welcome to Dispute Update, Taylor&Emmet’s bulletin looking at the best ways to avoid, handle and win business disputes. This month’s Boardroom Briefing considers what to do when Trading Standards officers arrive on your business’s doorstep. As usual, we’ll be giving a round-up of some of the more interesting recent cases for the benefit of in-house lawyers. Don’t forget that our interactive workshop on handling small claims takes place on 10 October. Following the recent Jackson reforms, company directors, credit managers and in-house lawyers will find themselves attending small claims hearings more often. If you’d like some practical advice on how to represent your business in court, please click here. As always, if you do have any queries, please feel free to contact us.
One of the occupational hazards faced every day by consumer-facing businesses is interference from local authority trading standards teams. For most well-run businesses, a visit from trading standards will come as a shock; it’s something most of you won’t face every day. Most investigations are triggered by complaints from customers, often but not always without justification.
Any sensible business that deals with consumers will have a culture of achieving customer satisfaction. If there is a complaint, most will then have procedures in place to deal with it. Sometimes, you can bend over backwards to help a consumer and still it doesn’t work. The angry customer can cause havoc. Some will seek redress through the civil courts; others will involve trading standards.
Trading standards departments are operated by local authorities and aren’t organised into one national body. They have far-reaching investigatory and regulatory powers and can pursue prosecutions which, if successful, can see company directors and employees fined or even imprisoned. They can also have a negative impact on your business’s reputation and shake consumer confidence.
Trading standards have powers to investigate a wide range of offences related to consumer credit, product safety and labelling, weights and measures, copyright and so on. Crucially, they also have very wide powers under the Consumer Protection from Unfair Trading Regulations 2008. These regulations outlaw unfair commercial practices, which include misleading or aggressive sales practices and business activities which fall short of professional diligence.
Professional diligence is a grey concept. It encompasses a wide range of activities, from the fraudulent to the mere incompetent, provided it is deliberate or reckless. That means your business might make a simple mistake in its dealings with a customer and find itself on the wrong end of a prosecution.
Usually, the first time you will know that your business is under investigation is when you receive a letter from trading standards officers explaining the nature of the complaint and inviting a director to attend an interview under caution. An interview under caution is simply a formal, recorded interview at the start of which you are told:
“You do not have to say anything. However, it may harm your defence if you do not mention when questioned something which you later rely on in court. Anything you do say may be given in evidence.”
You don’t have to attend the interview. Trading standards have no power of arrest if you decide not to go. On the other hand, if you don’t attend, it may not present the right image for your business and it also denies you the opportunity to explain your position. It’s usually best to co-operate as fully as possible with trading standards. If you really don’t want to go, you may be able to persuade trading standards to carry out their investigation in correspondence, but they rarely agree!
It’s usually best to have a solicitor present during the interview but you don’t have to. Your solicitor’s job is to make sure that procedures are followed correctly and that you aren’t asked inappropriate questions. Whoever attends, you should always make sure that at the start of the interview you ask the trading standards officers to explain what your business is alleged to have done wrong.
You should answer any questions honestly but you can decline to answer if you wish. You should be aware that negative inferences may be drawn if you don’t answer a question. Your answers may later be brought up in court if a prosecution follows. Things the officers will be looking for include evidence that:
- The allegedly unlawful practice was something your business habitually engages in rather than a one-off;
- Your business has put in place measures to make sure it doesn’t happen again; and
- The complaint has been dealt with fairly.
After the interview, trading standards will speak to the consumer again before deciding on their next course of action. You may be able to discuss with trading standards the possibility of agreeing a written warning or a caution. In more serious case, they’re more likely to prosecute. Anecdotally, many trading standards teams are currently looking to impose fines, perhaps as a reaction to local authority spending cuts. If trading standards do decide to prosecute, you will need a solicitor to represent your business’s interests and advise you on the correct tactics and approach.
This month, we’re looking at a case that highlights the importance of making sure that you meet court deadlines since the Jackson reforms came into effect.
Mitchell –v- News Group Newspapers Limited  EWHC 2179
Those who take great delight in poking politicians between the ribs will enjoy this. Andrew Mitchell is the MP who keeps on giving. Not satisfied with his comic turn in the “plebgate” scandal, he has made a mess of the consequent litigation too.
He sued News Group, owners of The Sun, for defamation. The case was approaching the case management conference, the cue for his solicitors to file at court his costs budget. Although this case was governed by the slightly different rules for defamation cases, the requirement to file a costs budget was almost identical to the new Jackson-inspired costs budgeting rules. A costs budget had to be filed not less than seven days before the case management conference, failing which the new rules provide that the only recoverable costs are the court fees.
Unfortunately, Mr Mitchell’s lawyers only managed to file his costs budget the day before the hearing. The reason for the late service was simply his solicitor’s pressure of work. He applied for relief from the mandatory sanction but the court disagreed, and ordered that he should only be entitled to court fees.
Two outcomes are now likely: the first is settlement of the claim against News Group, the second is the inevitable claim to his solicitors’ insurers.
Elvanite Full Circle Limited –v- AMEC Earth & Environmental (UK) Limited  EWHC 1191
This was an interesting case (if you like that sort of thing) about exclusion clauses. It doesn’t raise any new principles of law and was fact-specific but it serves as a useful reminder that the court won’t interfere in big boys’ tussles.
Elvanite is a demolition and recycling contractor. AMEC is a planning consultancy. Elvanite bought a plot of land and instructed AMEC to apply for planning permission to use the land for waste recycling. The contract between Elvanite and AMEC was on AMEC’s standard terms and conditions, which said that:
- “AMEC shall NOT be responsible for any consequential, incidental or indirect damages”; and
- “All claims by CLIENT shall be deemed relinquished unless filed within (1) year after substantial completion of the Services.”
AMEC didn’t do what they were supposed to do so Elvanite terminated the contract and claimed damages for loss of profit of around £800,000. AMEC successfully defended the claim on the facts. The reason the case has aroused the interest of commentators (including us) is that Coulson J commented on the exclusion clauses.
He decided that the loss of profit was indirect damage and so was caught by the exclusion clause which was effective. He also considered that the time limit was effective, although he was concerned by the wording. Claims are not “filed” so the judge felt that this could only require a letter to be sent within one year. No such letter had been sent so Elvanite could not succeed.