England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MRS JUSTICE SLADE

		Royal Courts of Justice Strand, London, WC2A 2LL
		21/07/2017

Lord Justice Lewison:

1. The underlying claim in this appeal is a class action by large numbers of members of the Turkish Cypriot community in London against AtlasJet which, so it was alleged, had failed to honour airline tickets originally bought from Cyprus Turkish Airlines. The claimants (or many of them) purported to enter into conditional fee agreements ("CFAs") with Goldsworth, a firm of solicitors. Judgment in default was entered against AtlasJet but that judgment was later set aside. AtlasJet were ordered to pay the costs. The claimants have no complaint about their lawyers and are, apparently, content with their contractual arrangements. AtlasJet, on the other hand, have taken the point that the manner in which the CFAs were made did not comply with the Cancellation of Contracts Made in a Consumer's Home or Place of Work etc. Regulations 2008 ("the Regulations"). Although AtlasJet are not a consumer, if their technical point is right they do not have to pay the costs of any claimant whose CFA is non-compliant: compare Cox v Woodlands Manor Care Home [2015] EWCA Civ 415, [2015] CTLC 53. AtlasJet's point succeeded before the Costs Judge (Master Rowley) but failed before Slade J, sitting with Senior Costs Judge Master Gordon-Saker as assessor, whose judgment is at [2016] EWHC 1125 (QB); [2016] 3 Costs L.O. 365. This, therefore, is a second appeal.
2. Regulation 5 of the Regulations provides:

"These regulations apply to a contract including a consumer credit agreement between a consumer and a trader which is for the supply of goods or services to the consumer by a trader and which is made:

(a) during a visit by the trader to the consumer's home or place of work, or to the home of another individual;

(b) during an excursion organised by the trader away from his business premises; or

(c) after an offer made by the consumer during such a visit or excursion."

3. A "trader" is defined by regulation 1 as:

"… a person who, in making a contract to which these Regulations apply, is acting in his commercial or professional capacity and anyone acting in his name or on behalf of a trader."

4. Where a contract is one to which the Regulations applies regulation 7 goes on to provide:

"(1) A consumer has the right to cancel a contract to which these regulations apply within the cancellation period.

(2) The trader must give the consumer a written notice of his right to cancel the contract and such notice must be given at the time the contract is made, except in the case of a contract to which regulation 5(c) applies, in which case the notice must be given at the time the offer is made by the consumer."

5. If no such notice is given the contract is unenforceable against the consumer.
6. The Regulations were passed in order to implement Council Directive 85/577/EEC of 20 December 1985 ("the Directive") to protect the consumer in respect of contracts negotiated away from business premises. In some respects (although not in respects that are relevant to this case) the Regulations offer more protection to the consumer than is required by the Directive. It will be necessary to look at the Directive, and its background, in due course. First, however, I must set out the relevant facts.
7. Many members of the Turkish Cypriot community had bought airline tickets from Turkish Cypriot Airlines. That company got into financial difficulty as a result of which it was effectively grounded. AtlasJet entered into an arrangement with the government of the Turkish Republic of Northern Cyprus to transport Turkish Cypriot Airlines' passengers to their destinations (or to nearby destinations), with the cost being met by that government. However, despite that arrangement many ticket holders were denied the right to board AtlasJet's aircraft.
8. The Turkish Cypriot community in London is served by a charitable organisation called the UK (Alevi) Cultural Centre, known as the Cemevi, in East London. It is run by a committee, and many members of the community are also members of the Cemevi. The committee of the Cemevi became aware that "hundreds if not thousands" of members of the community were concerned about AtlasJet's failure to honour their alleged obligations to them. Mr Erbil, the chairman of the committee, was receiving a large number of telephone calls. The committee sought advice on possible legal redress. Mr Erbil contacted a number of different firms of solicitors but almost all declined to take on such a large case. Finally, he spoke to Goldsworth, who said that they would be prepared to take on the case under CFAs. In April 2015 Mr Erbil arranged a meeting with Goldsworth at the Cemevi to discuss matters. The lawyers decided that there was some merit in pursuing the case and the question of obtaining instructions arose. During the course of a telephone call between one or more members of the Cemevi committee and one or more of the lawyers at Goldsworth probably at the end of April 2015, a decision was reached to hold a meeting for that purpose. Goldsworth asked the committee of Cemevi to arrange it. The committee advertised the meeting in the Turkish press. One such advertisement appeared as part of an article in the Acik Gazette on 3 May 2012. It read (in translation):

"Legal assistance for CTA victims

The Alevi Cultural Centre and Cemevi (IAKM-Cemevi) had initiated the support for the victims of the Cyprus Turkish Airlines, and now there is legal assistance. IAKM-Cemevi have invited lawyers to a meeting.

The notice from the IAKM-Cemevi reads as follows:

A group of lawyers and legal assistants from Goldsworth Solicitors will take instructions from victims of Cyprus Turkish Airlines on 12 May between 11.00-16.00 hours. The meeting will take place at the Ingiltere Kulture Merkezi and Cemevi, and we would like to see you among us. We invite all the victims of Cyprus Turkish Airlines."

9. The address in Hackney was then given. There was thus 10 days' prior notice of the meeting and its purpose. In addition to the advertisements Ms Yaldiz, a secretary at the Cemevi, on the instruction of the Cemevi committee sent out bulk text messages to potential participants in early May. Master Rowley said that this was done at the request of Goldsworth; but there is no evidence to support that apparent finding. According to Mrs Celik of Goldsworth (whose evidence the Master appears to have accepted in this respect) the initiative for sending out the text messages came from Mr Erbil, one of the committee members. Mr Erbil had explained to Goldsworth that the committee were able to do this because the majority of aggrieved passengers were members of the Cemevi. Because of the numbers of people expected to attend a meeting for the purpose of giving instructions Goldsworth asked to rent the Cemevi's hall. A written agreement for the rental was made on 7 May 2012, some four days after the advertisement had appeared in the press. That agreement permitted Goldsworth "to put up banners of Goldsworth as they wish." In preparation for the meeting Goldsworth photocopied 2,000 sets of documents consisting of the CFA, a "what you need to know" document and notice to cancel the CFA.
10. The meeting between the solicitors and some of the potential claimants took place at the premises of Cemevi on 12 May 2012. As the Goldsworth staff arrived Ms Yaldiz' evidence was that Cemevi staff helped them with their boxes and banners. There is no evidence about what was written on the banners. Large numbers of people attended the meeting. Members of the community are spread out across north London and all would have had to travel in order to attend.
11. It soon became clear that because of the numbers of attendees it would be impossible for Goldsworth to take full instructions from potential claimants there and then. Master Rowley described the meeting as chaotic. The evidence about precisely what happened at the meeting was conflicting and Master Rowley had to make findings of fact. He found that the oral account given by Mr Sik (who was a trainee solicitor at the time) was likely to be the most accurate. He said that initial details of claimants were taken by paralegals who took copies of photographs, proof of address and filled in the relevant details of the CFAs. Once that was done it was sorted by a solicitor who was in charge who went through the document and filled in whatever was missing and whatever was not in the agreement. Master Rowley thus found that those claimants who signed the CFAs at the Cemevi on 12 May 2012 did so before receiving the client care letter. A second group of claimants signed a partially completed CFA at the meeting, and they too received the client care letter after the meeting. A third group who had not been at the meeting at the Cemevi attended Goldsworth's offices where they signed CFAs and were given the client care letter and other relevant documents. Those in the first two groups did not receive notice of their right to cancel the contract at the time of contracting. If, therefore, the Regulations apply it follows that the CFAs signed by members of those two groups are unenforceable. The consequence is that, because of the indemnity principle, AtlasJet are not liable to pay their costs.
12. The argument for AtlasJet, which Master Rowley accepted but Slade J rejected, was that the meeting at the Cemevi was "an excursion organised by the trader away from his business premises."
13. It is common ground that since the Regulations were made in order to transpose a Directive into national law, they must be interpreted in a way that gives effect to the purpose of the Directive. Counsel for both parties referred to the travaux préparatoires which led up to the making of the Directive. Ms Rhee QC, on behalf of the respondents, showed us some of them. However, as Lord Steyn explained in Effort Shipping Co Ltd v Linden Management SA [1998] AC 605, 623:

"… I would be quite prepared, in an appropriate case involving truly feasible alternative interpretations of a convention, to allow the evidence contained in the travaux préparatoires to be determinative of the question of construction. But that is only possible where the court is satisfied that the travaux préparatoires clearly and indisputably point to a definite legal intention:…Only a bull's eye counts. Nothing less will do."

14. I do not consider that she found a bull's eye. I prefer, therefore, to concentrate on the Directive. As one might expect the purpose of the Directive is explained in its recitals. Correcting one obvious misprint the relevant recitals read:

"Whereas the special feature of contracts concluded away from the business premises of the trader is that as a rule it is the trader who initiates the contract negotiations, for which the consumer is unprepared or which he does not [expect]; whereas the consumer is often unable to compare the quality and price of the offer with other offers; whereas this surprise element generally exists not only in contracts made at the doorstep but also in other forms of contract concluded by the trader away from his business premises;

Whereas the consumer should be given a right of cancellation over a period of at least seven days in order to enable him to assess the obligations arising under the contract;

Whereas appropriate measures should be taken to ensure that the consumer is informed in writing of this period for reflection"

15. Mr Beal QC, on behalf of AtlasJet, referred to other language versions of the first of these recitals. Three will suffice:

i) French: "le consommateur ne s'est, en aucune façon, préparé à ces négotiations et se trouve pris au dépourvu…"

ii) Italian: "il consommatore è impreparato a queste transative e si trova preso di sorpresa…"

iii) Spanish: "el consumidor no está, de ningún modo, preparado para dichas negociaciones y se encuentra desprevenido…".

16. The elements of surprise and unpreparedness emerge even more strongly from these other language versions of the recital. It is this recital which explains the overall purpose of the Directive. As Mr Beal correctly pointed out, its focus is consumer protection. I accept his submission that the Directive is concerned with contracts made away from the trader's usual business premises, but only up to a point. First, some contracts are expressly excluded from the scope of the Directive wherever and in whatever circumstances they are made. Second, for others they must fall within the terms of article 1 which sets out the conditions that must be fulfilled before a consumer contract falls within the scope of the Directive.
17. Article 1.1 provides:

"This Directive shall apply to contracts under which a trader supplies goods or services to a consumer and which are concluded:

during an excursion organized by the trader away from his business premises, or

- during a visit by a trader

(i) to the consumer's home or to that of another consumer;

(ii) to the consumer's place of work;

where the visit does not take place at the express request of the consumer."

18. The other language versions of the first indent of article 1.1 read:

i) French: "pendant une excursion organisée par le commerçant en dehors de ses établissements commerciaux."

ii) Italian: "durante un'escursione organizzata dal commerciante al di fuori dei propri locali commerciali".

iii) Spanish: "durante una excursión organizada por el comerciante fuera de sus establecimientos comerciales."

19. Article 1.2 provides:

"This Directive shall also apply to contracts for the supply of goods or services other than those concerning which the consumer requested the visit of the trader, provided that when he requested the visit the consumer did not know, or could not reasonably have known, that the supply of those other goods or services formed part of the trader's commercial or professional activities."

20. "Trader" is defined by Article 2 as follows:

"'trader' means a natural or legal person who, for the transaction in question, acts in his commercial or professional capacity, and anyone acting in the name or on behalf of a trader."

21. Mr Beal emphasised that the Directive was concerned not only with the surprise element, but also with the lack of choice available to the consumer who had embarked on an "excursion". An excursion, he said, was simply a trip to a forum or place where goods or services are to be offered by a trader outside his normal business premises. The key motivation of the Directive is to capture a business meeting at which a trader intends to offer his goods or services. He also stressed the point that the Directive does not prohibit the making of consumer contracts in such circumstances. All that it requires is that, at the time the contract is made, the consumer is given notice of his right to cancel. Ex hypothesi the trader (unlike the consumer) will be prepared for the meeting because it will have been organised by him or on his behalf, and it is not difficult for him to come prepared with the necessary paperwork.
22. In (Case C-568/15) Zentrale zur Bekämpfung unlauteren Wettbewerbs Frankfurt am Main eV v comtech GmbH the CJEU said at [19] of a term that was undefined in a Directive:

"… the meaning and scope of that concept must be determined by considering its usual meaning in everyday language, whilst also taking into account the context in which it occurs and the purpose of the rule of which it is part…"

23. I begin, then, with the meaning of "excursion" in ordinary language. One of the meanings of "excursion" given in the Shorter Oxford English Dictionary is "a pleasure trip taken esp. by a number of people to a particular place". In the French Larousse online dictionary the meaning of "excursion" is stated to be "voyage d'agrément ou d'étude fait dans une région." The Italian Olivetti online dictionary defines "escursione" as "gita a scopo di studio o di piacere", while the Spanish online dictionary of the Real Academia Espanola defines "excursión" as "ida a alguna ciudad, museo o lugar para estudio, recreo o ejercicio físico". Pleasure or study features in almost all these dictionary definitions. Thus in all these various languages "excursion" or its cognates has a meaning which is something more than merely a trip or journey. In my judgment Mr Beal's interpretation gives no weight at all to the usual meaning of excursion in everyday language. If his interpretation were right the Directive would surely have used a less nuanced term such as "meeting".
24. What is that something more? In my judgment it is that, at the very least, the trip or journey in question is not undertaken for the very purpose of entering into the consumer contract in question. That fits with the purpose of the Directive as explained in the recitals. The recital emphasises that the mischief against which the consumer is to be protected is the element of surprise and unpreparedness which would be occasioned if on such a trip he were to be presented with a legally binding contract to sign. It is that element which also explains why the Directive (although not the Regulations themselves) exempts from its scope a visit to a consumer's home or place of work which he has himself requested, unless what he is offered is something that he could not reasonably have anticipated.
25. As a matter of ordinary language, then, I would not characterise a consumer's visit to a community centre for the express purpose of meeting solicitors with a view to instructing them to take on his case as an "excursion". Nor, in my judgment, does that conflict with the purpose of the Directive. A consumer who attends such a meeting whose purpose has been announced in advance would not be surprised or unprepared to give instructions. The judge distinguished between an "excursion" which features in the first indent of Article 1.1 and a "visit" which features in the second indent. She considered that they must be given different meanings. I agree. It was argued on behalf of AtlasJet that whereas "visit" described travel by the trader, an "excursion" described travel both by the consumer (away from his home or place of work) and also by the trader (away from his business premises). Up to a point that is true. But a visit by a trader is (from his perspective) a visit for business or commercial purposes, whereas an "excursion" by a consumer is not. The other language versions use the same distinction of language.
26. There is also considerable force in Ms Rhee's submission that the two parts of article 1.1 should be interpreted congruently. The second indent deals with unsolicited visits to the consumer's home or place of work. In that situation there is clear initiative on the part of the trader in turning up on the consumer's doorstep. There is also clear unpreparedness on the part of the consumer, because the visit was unsolicited. One would expect the first indent to be broadly concerned with the same sort of situation.
27. Thus far, therefore, I would hold that what took place at Cemevi on 12 May 2012 was not an "excursion".
28. In reaching the opposite conclusion Master Rowley was influenced by the decision of the CJEU in (Case C-423/97) Travel Vac SL v Sanchis [1999] 2 CMLR 1111. The facts of the case can be taken from the opinion of the Advocate-General. Travel Vac was a company based in Valencia. It owned a holiday complex in Denia, some 100 kilometres away. Mr Sanchis repeatedly received letters urging him to travel to Denia as a matter of urgency to receive a luxurious gift which would be presented to him solely on the basis of his attendance and without any obligation. These letters were followed by numerous telephone calls urging him to take part in the sales events in the holiday complex. In the event Mr Sanchis did travel the 100 kilometres to Denia. He did so on a date and at a time stipulated by Travel Vac. Travel Vac did not, however, provide the transport. Mr Sanchis arrived in Denia at the appointed venue which consisted of large function rooms within the holiday complex which Travel Vac had arranged for the purposes of presenting its product to a large number of consumers. The event apparently went on for several hours. During the course of the event, gifts were distributed and alcohol offered, presumably in order to put consumers in a positive mood and encourage them to sign. At the function Mr Sanchis signed a contract for a time-share. On those facts the Advocate-General unsurprisingly advised the court that Mr Sanchis was entitled to the protection of the Directive.
29. Before the court Mr Sanchis argued that the term "excursion" implied that "the consumer leaves the town where he lives." None of the other participants in the case argued the contrary. The Commission argued that there was an excursion where the consumer was invited to a particular place in order for the trader to present his products and services, if the invitation is accompanied by inducements which have nothing to do with the products or services in question. The court's judgment on the question was as follows:

"[35] As regards the question whether a contract was concluded during an excursion organised by the trader, it must be observed, first, that a contract concluded in a town other than the one in which the consumer lives and at a certain distance from it, such that he has had to undertake a journey to reach that town, must be considered to have been concluded during an excursion within the meaning of Directive 85/577.

[36] Secondly, where the initiative for such an excursion comes from the trader, in the sense that he invites the consumer to a specified place by letters and/or telephone calls indicating the date, time and place of the meeting, it must be considered that the excursion has been organised by the trader within the meaning of Directive 85/577.

[37] As regards the question whether the contract was concluded away from the trader's business premises, it must be observed that this concept refers to premises in which the trader usually carries on his business and which are clearly identified as premises for sales to the public.

[38] The answer to the third question must therefore be that a contract concluded in a situation in which a trader has invited a consumer to go in person to a specified place at a certain distance from the place where the consumer lives, and which is different from the premises where the trader usually carries on his business and is not clearly identified as premises for sales to the public, in order to present to him the products and services he is offering, must be considered to have been concluded during an excursion organised by the trader away from his business premises within the meaning of Directive 85/577."

30. Neither party suggested (rightly in my opinion) that in this passage the CJEU purported to give a comprehensive description of what amounts to an "excursion organised by the trader". Even so, there are, in my judgment, a number of elements that come out of this very compressed reasoning. The elements that led the court to conclude that the facts of Travel Vac fell within the scope of the first indent were that (a) the trader issued the invitation to the consumer to go to a specified place (b) the place to which the consumer was invited was "a certain distance" from his home (c) the place was not the trader's usual business premises and (d) the place in question was not clearly identified as a place for sales to the public.
31. Mr Beal placed some reliance on the decisions of the CJEU in (Case C-481/00) Heininger v Bayerische Hypo-und-Vereinsbank AG [2001] ECR 1-9945 and (Case C-350/03) Schulte v Deutsche Bausparkasse Badenia AG [2005] 1-9215. These cases were cited for the proposition that the intervention of a third party in the negotiations does not preclude the application of article 1 of the Directive. However, in Heininger the national court referred questions to the CJEU on the premise that the relevant agreement was entered into in the circumstances referred to in article 1: see [25]. Whether the premise was correct was not an issue before the court. The same premise underlay the questions referred to the court in Schulte: see [41]. Once again the correctness of the premise was not before the court, although it appears to have been hotly contested in the national proceedings. So neither case is authority for the proposition for which they were cited.
32. The only other decision of the CJEU to which I need to refer is (Case C-229/04) Crailsheimer Volksbank eG v Conrads [2006] 1 CMLR 21. In that case a property development company built an apartment complex in the Stuttgart area intended for letting to businessmen. The property was to be run by an operating company acting as a lessee. The apartments were sold on a joint ownership basis to individuals, including the borrowers. The purchase and its financing were arranged by a sales company used by the development company under its supervision. The sales company, in its turn, used independent intermediaries, including brokers who negotiated the purchases at issue. The bank provided the finance for the property development company to construct the complex, and financed part of the expenditure of the borrowers with a lower-ranking charge as security. One of the questions in dispute was whether the activities of the independent intermediaries should be attributed to the bank. The national court in Germany referred a number of questions to the CJEU. The first question was carefully framed as follows:

"Is it compatible with Article 1(1) of Directive 85/577/EEC for the rights of consumers, in particular their right of cancellation, to be made subject not only to the existence of a doorstep-selling situation as referred to in Article 1(1) of the directive but also to additional criteria for responsibility, such as a trader's deliberate use of a third party in the conclusion of the agreement or a trader's negligence in respect of the third party's conduct in connection with the doorstep selling?" (Emphasis added)

33. The focus of the question was on third parties. Unfortunately, the CJEU did not answer that question. Instead it chose to answer a much easier question. The reformulated question and the court's answer were:

"[41] By this question the referring court essentially seeks to know whether Arts 1 and 2 of the Directive must be interpreted as meaning that, when a third party intervenes in the name of or on behalf of a trader in the negotiation or conclusion of a contract, the application of the Directive can be made subject not only to the condition that the contract has been concluded in a doorstep-selling situation defined in Art.1 of the Directive but also to the condition that the trader was or should have been aware that the contract was concluded in that situation.

[42] In that regard, suffice it to observe that there is no basis in the wording of the Directive for inferring the existence of such an additional condition. Article 1 of the Directive provides that it applies to contracts concluded between a trader and a consumer in a doorstep-selling situation and, under Art.2 of the Directive, for the purposes thereof, "trader" means any person who acts in the name or on behalf of a trader.

[43] Moreover, to accept such an additional condition would be contrary to the objective of the Directive which is to protect the consumer from the element of surprise inherent in doorstep selling."

34. By reformulating the question to cover only cases in which when a third party intervenes in the name of or on behalf of a trader, the court simply paraphrased the definition of "trader" in article 2. Thus the question answered itself. However, what we can draw from this decision is the reiteration of the proposition that the objective of the Directive is to protect the consumer from surprise.
35. I agree with Ms Rhee that although it is possible to divide the question whether the meeting was "an excursion organised by the trader" into two parts (i.e. (a) was it an "excursion" and (b) if so, was it "organised by the trader?), both parts of the indent must be considered together. In the present case contact with Goldsworth was initiated by the committee, following unsuccessful attempts by the committee to interest other lawyers. The initiative for the meeting came from the committee; not from Goldsworth. It was the committee that arranged the meeting, albeit at the request of Goldsworth. The invitation to the community to attend the Cemevi was issued by the committee not by Goldsworth. The date and time of the meeting appears to have been determined by the committee. It was the committee that invited Goldsworth to attend the meeting (as the news item made clear), not the other way round. That invitation, according to the news item, was issued to Goldsworth some days before the rental agreement was made. It is far removed from the persistent invitations made by Travel Vac to Mr Sanchis. It is, in my judgment, quite unrealistic to view the committee as in some way acting as agents for Goldsworth. If the committee are to be viewed as acting on behalf of anyone, they were acting on behalf of their members and other members of the Turkish community. Second, I do not consider that the CJEU's reference in Travel Vac to "a certain distance" can be taken to mean the same as "any distance however small". I agree with Ms Rhee that the mere fact that a consumer leaves home in order to meet a trader away from his business premises does not without more amount to an "excursion". Third, the location and purpose of the meeting was well advertised in advance; many of the consumers were individually notified; and the hall contained banners erected by Goldsworth. Thus the premises were clearly identified, at least in relation to that time and date, as a place for sales to the public. There was no element of surprise in the meeting.
36. In those circumstances I do not consider that the meeting can be said to have been an "excursion organised by the trader".
37. I would dismiss the appeal.

Lord Justice Kitchin:

38. I agree.

Lord Justice Floyd:

39. I also agree.