Trade or Business.
When does someone act in the course of a trade or business? Or, in terms of the Consumer Protection from Unfair Trading Regulations 2008, who is a trader? First published in the Justice of the Peace (2001) 165 JPN 636.
Definitions of trade or business
Offences in relation to false trade descriptions and false statements under sections 1 and 14, respectively, of the Trade Descriptions Act 1968 ("TDA") are not complete unless it can be proved that the actus reus was carried out in the course of trade or business. Most other offences under consumer legislation also have a "business" element to them either in the sense that there has to be a "sale" or because the statute expressly provides that "business" is an ingredient of the offence. Under the Food Safety Act 1990 ("FSA"), for example, the substantive offences require there to be a "sale" but s 2(1) provides that "the supply of food, otherwise than on sale, in the course of a business … shall be deemed to be a sale of the food …". There are some statutory definitions of "business" but, where they occur, they tend not to be exhaustive. In s 1(3) of the FSA "business", for the purposes of that Act, "includes the undertaking of a canteen, club, school, hospital or institution, whether carried on for profit or not, and any undertaking or activity carried on by a public or local authority." Definitions of "business" in other consumer legislation have similarities but are by no means the same. For the purposes of the Consumer Protection Act 1987, s 45(1) of that Act says it "includes a trade or profession and the activities of a professional or trade association or of a local authority or other public body", whereas s 137(2) of the Fair Trading Act 1973 defines "business" as a word which "includes a professional practice and includes any other undertaking which is carried on for gain or reward or which is an undertaking in the course of which goods or services are supplied otherwise than free of charge." There is certainly no universal definition of "business". The TDA does not define "trade or business" at all and so the meaning of that expression has had to be determined from the common law.
Willes J, in Harris v Amory (1865) 13 LT 504 said that "trade" was "a word having a technical meaning connected with buying and selling, and is limited to the case of the buying and selling of wares, and so forth." However, in Skinner v Jack Breach Ltd [1927] 2 KB 220, Hewart LCJ said: "No doubt in a great many contexts the word 'trade' indicates a process of buying and selling, but that is by no means an exhaustive definition of its meaning. It may also mean a calling or industry or class of skilled labour." In Smith v Anderson (1880) 15 Ch D 247, Jessel MR said: "When a person habitually does a thing which is capable of producing a profit, for the purpose of producing a profit, he is carrying on a business." The words "trade" and "business", according to Cotton LJ in Rolls v Miller (1884) 27 Ch D 71, cannot be read as synonymous. "There are a great many businesses which are not trades." In the same case Lindley LJ said : "The word ['business'] means almost anything which is an occupation, as distinguished from a pleasure – anything which is an occupation or duty which requires attention is a business." Although these old authorities give us a flavour of what "trade or business" means it is necessary to look at more recent case law and, in particular, that which specifically relates to the TDA.
One of the most recent authorities on "trade or business" is Telford & Wrekin Council v Jordan (2001) 165 JP 107.
Telford & Wrekin Council v Jordan
Mr Jordan was in business as a car repairer. He contended that during his 18 months in that business he bought and sold only one car. He bought that car at auction, for £1,085, when it had an odometer reading of 131,000 miles. He originally intended that the car would be used by his wife. He carried out a number of repairs to it, at his business premises, including the replacing of the instrument cluster with a second hand one. The recorded mileage on the replacement odometer was only 71,000. About three months after he had purchased the car, Mr Jordan told Mr Heyes, someone he knew, about how he was doing it up for his wife. Mr Heyes agreed to purchase the car for £1,900. Mr Jordan gave Mr Heyes a receipt stating "mileage on clock plus three months warranty". The car gave Mr Heyes a good deal of problems and he complained to the Trading Standards authority which proceeded to investigate the car's history. When interviewed, Mr Jordan told the trading standards officer that, at the time he replaced the odometer, he had no intention of selling the car and that he was not in the business of selling cars. Mr Jordan was charged with applying a false trade description to the car, in the course of a trade or business, through his act of replacing the odometer, contrary to s 1(1)(a) of the TDA. He was also charged with offences of applying a false trade description to the car by means of the statement on the receipt. He was further charged, under s 1(1)(b) of the TDA, with offering to supply the car with the false odometer reading, supplying it with the false odometer reading and supplying it with the false description in the receipt. He was acquitted of all five allegations, apparently on the basis that the supply did not take place in the course of trade or business. The Trading Standards authority appealed.
Wright J, giving the judgment of the Divisional Court, is reported as saying: "On first considering the papers when they came before us, it certainly occurred to me that there was no effective defence that Mr Jordan could possibly have in relation to the [allegation] that he had altered or replaced the odometer of that vehicle at the time when he replaced the existing instrument cluster with one that was in the vehicle when Mr Heyes bought it. It could not again be said, and indeed was never challenged by Mr Jordan, that he had in fact applied a false trade description to the vehicle by the act of replacing the odometer." It is necessary to pause here to point out that, from the context and the outcome, Wright J was obviously (trying to) say that Mr Jordan had applied a false trade description to the car through his act of replacing the odometer. Unfortunately, what he is reported as having said was: "It could not … be said … that he had in fact applied a false trade description to the vehicle by the act of replacing the odometer." Either the word "not" has been added in error or there should be a further "not" before the words "in fact". Wright J immediately went on to say: "As it seemed to me there was no question but that that act was done in the course of his accepted trade or business as a vehicle repairer. Even if a false odometer reading is applied to a car, as Mr Jordan asserted, at a time when he has no intention of selling the car on but merely wishes to have it as a family car for his own or his family's use, nevertheless the offence is committed because the mischief against which the [TDA] is directed is to prevent vehicles with odometers so altered ultimately finding their way into the market, as is very likely to happen sooner or later, bearing false readings as to the mileage that the vehicle has in fact covered."
The Divisional Court found that the offence of applying the false description by switching the odometers took place in the course of Mr Jordan's business as a car repairer and hence it was unnecessary to establish, in order to prove that particular offence, that Mr Jordan had supplied the car in the course of trade or business. It did not matter what business, if any, Mr Jordan was in at the time he supplied the car as, by that time, he had already applied the false trade description in the course of trade or business. The instant case appears to establish the principle that any repairs carried out to a car by a person in business as a car repairer are deemed to have been carried out in the course of that business. The Court's reasoning, based on the mischief of the TDA, suggests that it would not have been different if Mr Jordan had worked on the car at his home rather than at his business premises. If the principle is applied widely then it means, for example, that any electrical work undertaken by someone in business as an electrician will be taken to have been done in the course of that business. There may, however, be a qualifying factor to this principle, namely that where the goods worked on by the businessman are his own, the work is only to be regarded as having been done in the course of trade or business if the goods are of a kind which are likely to be the subject of a sale or supply in due course. A motor vehicle may be purchased and repaired for a particular purpose but the chances are that sooner or later it will go back on the market.
The qualification, suggested above, is necessary to bring Jordan into line with those authorities which provide that, for there to be an offence under s 1 of the TDA, the applying of a false trade description must be associated with the sale or supply of goods. That proposition was expounded by Widgery LCJ in Wycombe March Garage Ltd v Fowler [1972] 1 WLR 1156 and was subsequently developed in Hall v Wickens Motors (Gloucester) Ltd [1972] 1 WLR 1418, Fletcher v Sledmore (1973) 71 LGR 179 and Fletcher v Budgen [1974] 1 WLR 1056. It was also followed in Formula One Autocentres Ltd v Birmingham City Council (1999) 163 JP 234, by Mitchell J, albeit that he expressed himself to be "puzzled" by it. There is no reference to any of the above cases in Wright J's judgment in Jordan. Nonetheless, if the authorities are to be read as consistent with one another, Jordan establishes that it is sufficient if the applying of the false trade description took place in relation to goods which were, eventually, likely to become the subject of a sale or supply. Indeed, Wright J said: "Even though Mr Jordan may have had no immediate intention of releasing the car into the market when he changed the odometer on this car that did not prevent what he did being an offence under s 1(1)(a)."
During the course of argument in the Divisional Court, Mr Jordan's counsel conceded that the offence of applying a false trade description by means of the odometer was carried out in the course of trade or business as a car repairer. Wright J had by that time made it clear that he thought that having five charges in respect of a single course of conduct was "questionable" and that "the charge sheet was somewhat overloaded". No doubt conscious of this, counsel for the appellant (the prosecution) accepted that there would be little to be gained by pursuing the appeal in relation to the other four charges. Accordingly, the appeal was only allowed in relation to the first charge, in respect of which the magistrates were directed to convict. It is to be noted that one reason for the large number of informations was that Mr Jordan was charged with offences in relation to both offering to supply the car and with actually supplying it. It would normally suffice for such charges to be laid as alternatives. So far as the supplying was concerned, the prosecution had laid two informations. One alleged that the car was supplied with the false odometer applied to it and the other alleged that it was supplied with the false description "mileage on clock" applied to it by means of the invoice. It is submitted that the actus reus of such offences under s 1(1)(b) of the TDA is the act of supply and, as the car was only supplied once, there could only have been one offence of supplying the falsely described car. Although every application of a false trade description to the same goods can be a separate offence under s 1(1)(a), there can only be one offence of supplying those goods under s 1(1)(b). The appropriate course is to lay a single information, for any one supply, setting out the various ways (if more than one) in which the goods were falsely described. As the offence is the supply, a reference to more than one false application to the supplied goods will not render the information duplicitous. (See, for example, Carrington Carr Ltd v Leicestershire County Council (1994) 158 JP 570.
Wright J was perhaps relieved that the Divisional Court did not have to go on to consider whether the other four alleged offences were carried out in the course of a trade or business. He said: "… it is not now necessary … to consider the interesting and not entirely easy to interpret line of authorities relating to a sale to an independent purchaser of such articles as motor cars when the purchase and sale of motor cars does not form part of the primary business of the seller." This article, however, does go on to speculate as to what the authorities referred to by Wright J might have been and looks at what effect they could have had if they had been applied.
The three categories of trade or business
In Devlin v Hall (1991) 155 JP 20, Alliott J considered that what is done in the course of trade or business fell into one of three categories. Each of those categories he derived from a previous authority and so, before looking at what Alliott J had to say, it is as well to consider each of those authorities in turn.
Havering London Borough v Stevenson [1970] 1 WLR 1375, gave rise to the second of Alliott J's examples of trade or business but it was the first in his trilogy of cases to be decided. The defendant there carried on a car-hire business and it was his regular practice to sell his hire cars once he no longer had use for them. He was not, however, in business as a dealer in motor cars. He was prosecuted in relation to his sale of one such former hire car which had a false recorded mileage. The charge against him, under s 1(1)(b) of the TDA, was dismissed by the magistrates who held that he had not sold the car in the course of his business. On the prosecutor's appeal, Parker LCJ held that: "Once one finds that a car-hire business, as part of its normal practice buys and disposes of cars, it seems to me almost inevitable that the selling of a car and the application of a trade description in the course of that sale, was an integral part of the business carried on as a car-hire firm. … It is not necessary in order that an offence should be established to prove in the present case that [the defendant] was in business or trade as a vendor or a dealer." It emerges, therefore, that the sale of goods as part of a normal practice, albeit not the object of the business, is a sale in the course of trade or business.
Davies v Sumner [1984] 1 WLR 1301, is of particular importance because it is a decision of the House of Lords. In that case, the defendant was a self-employed courier and he transported films and videos for a television company. He sold the car that he had used to carry out his business in part exchange for a new one. To his knowledge the odometer had "gone round the clock" and showed 100,000 miles less than the true mileage. He had not previously sold a car whilst in his courier business. His previous car was one he had rented. The magistrates convicted the courier of applying a false trade description to the car contrary to s 1(1)(a) of the TDA. The defendant's appeal to the Divisional Court was allowed. Robert Goff LJ held that: "… the justices applied the wrong test. They asked themselves not whether the disposal of the car was a transaction which formed an integral part of the defendant's business as a self-employed courier, but simply whether the car was almost exclusively used by the defendant for the purpose of his occupation as a self-employed courier." The prosecutor appealed to the House of Lords where, dismissing the appeal, Lord Keith said: "There can be no doubt that [the defendant] applied a false trade description … the question is whether [it was] 'in the course of a trade or business'. … Havering London Borough v Stevenson vouches the proposition that in certain circumstances the sale of certain goods may … be in the course of a trade or business, notwithstanding that the trade or business of the defendant does not consist in dealing for profit in goods of that, or indeed any other, description. Any disposal of a chattel held for the purposes of a business may, in a certain sense, be said to have been in the course of that business, irrespective of whether the chattel was acquired with a view to resale or for consumption or as a capital asset. But … s 1(1) of the [TDA] is not intended to cast such a wide net as this. The expression 'in the course of a trade or business' in the context of an Act having consumer protection as its primary purpose conveys the concept of some degree of regularity. … The vital feature of the Havering case appears to have been … that the respondent's business as part of its normal practice bought and disposed of cars. The need for some degree of regularity does not, however, involve that a one-off adventure in the nature of trade, carried through with a view to profit, would not fall within s 1(1) because such a transaction would itself constitute a trade. … Where a person carries on the business of hiring out some description of goods to the public and has a practice of selling off those that are no longer in good enough condition, clearly the latter goods are offered or supplied in the course of his business within the meaning of s 1(1). But the occasional sale of some worn out piece of shop equipment would not fall within the enactment." The defendant in Davies v Sumner had not, at the time of the alleged offence, established any regularity in buying and selling cars and neither could the sale of the car in question be regarded as a one-off adventure in the nature of trade.
The third case, both in time and in the order dealt with, in Alliot J's trilogy was R & B Customs Brokers Co Ltd v UDT Ltd [1988] 1 WLR 321. That case is of additional significance because it not concern the TDA but the Unfair Contract Terms Act 1977 ["UCTA"]. Whether a customer was dealing "as a consumer" within the meaning of s 12(1) of the UCTA depended, inter alia, on whether he made the contract "in the course of a business." Dillon LJ reviewed Davies v Sumner and Havering London Borough v Stevenson and derived what was to become Alliot J's third category from a combination of the two decisions. He said: "Lord Keith … held that the requisite degree of regularity had not been established on the facts of Davies v Sumner because a normal practice of buying and disposing of cars had not yet been established at the time of the alleged offence. … [As is the case under the TDA] in the [UCTA] also, the words 'in the course of business' are not used in what Lord Keith called 'the broadest sense'. I also find helpful the phrase used by Lord Parker CJ [in Havering London Borough v Stevenson] and quoted by Lord Keith, 'an integral part of the business carried on'. The reconciliation between that phrase and the need for some degree of regularity is … as follows: there are some transactions which are clearly integral parts of the businesses concerned, and these should be held to have been carried out in the course of those businesses; this would cover, apart from much else, the instance of a one-off adventure in the nature of trade, where the transaction itself would constitute a trade or business. There are other transactions, however, such as the purchase of the car in the present case, which are at highest only incidental to the carrying on of the relevant business; here a degree of regularity is required before it can be said that they are an integral part of the business carried on, and so entered into in the course of the business. Applying the test thus indicated to the facts of the present case, I have no doubt that the requisite degree of regularity is not made out on the facts. [The] evidence that the car was the second or third vehicle acquired on credit terms was … in the context of this case not enough. Accordingly … in entering into the conditional sale agreement with [the defendant] the company was 'dealing as a consumer'."
The defendant in Devlin v Hall, ante, was a self-employed taxi driver. He was convicted by the magistrates under s 1(1) of the TDA of applying a false odometer reading to a Peugeot car and of supplying the car with that false trade description applied to it. He appealed to the Crown Court but his conviction was upheld. He then appealed to the Divisional Court. The facts were that the defendant had sold the Peugeot, which he had used in his business and which he knew to have been clocked. The defendant acquired another car, in part exchange for the Peugeot, which he then sold. He used the proceeds of the two sales to buy a third car which he also sold. In addition, he sold a fourth car regarding which the Crown Court held: "… since it was used solely for private purposes and sold privately it had no relevance to any issue raised in these proceedings." The clocked car was the first he had sold for two years. As evidence of trade or business the prosecution relied on the facts that; 1) the Peugeot was part of the defendant's stock in trade; 2) the defendant had offered another car as well as the Peugeot to the buyer of the Peugeot; 3) he had taken a car in part exchange for the Peugeot and 4) the high mileage resulting from the use of the cars as taxis meant that the defendant would have to try and sell cars regularly. In allowing the appeal, Alliott J adopted the proposition enunciated by the defence that: "What is done in the course of a trade or business for the purposes of s 1(1) of the [TDA] can be: (a) a one-off adventure in the nature of a trade carried through with a view to profit; (b) a transaction which is an integral part of the business carried on, that is to say, part of its normal practice; or (c) a transaction which is merely incidental to the carrying on of the relevant business that is carried on with some degree of regularity." He went on to say: "If this conviction is to stand it must fall within one or other of the three categories. It is common ground that this transaction was not a one-off adventure in the nature of a trade carried through with a view to profit. … The sale of this … Peugeot was the first sale of a motor vehicle by [the defendant] since he took to driving a taxi some two years earlier. That situation was a far cry from the Havering case where each vehicle in a fleet of 24 had been as a regular practice sold after they had run for about two years, or when a decision to run down the numbers in the fleet was taken or the condition of the vehicle warranted it. … We are bound to look at the situation at the time of the alleged offence and it is impossible to say that the first sale established a normal practice. … I regard the sale of this vehicle … as being a transaction incidental to the carrying on of [the defendant's] business, but … even if the two relevant subsequent sales could be taken into consideration, which I do not consider they could be, the number of transactions was still insufficient to establish the necessary regularity." The use of the word "relevant" in the foregoing sentence is significant as it indicates that Alliott J agreed with the Crown Court in its view that the sale of the defendant's private car was irrelevant.
The unresolved appeals in Jordan
It will be recalled that the Divisional Court in the Jordan case held that Mr Jordan had applied a false trade description by replacing the odometer during the course of his business as a car repairer. But, did he apply the false trade description in the sales invoice during the course of a trade or business and did he offer the car for sale and subsequently supply it during the course of a trade or business? As there was but a single transaction and as no part of it (unlike the changing of the odometer) related to Mr Jordan's trade as a car repairer the answer to each question must be the same. Let us consider Alliot J's three categories.
i) Was the transaction a one off adventure in the nature of a trade carried through with a view to profit? This category of trade would suggest that the goods in question are both bought and sold as part of the business venture. As Mr Jordan was not a car dealer and did not buy the car with a view to selling it for profit, it would seem that the requirements of this category are not fulfilled. In Taylor v Good [1974] 1 WLR 556, it was established that where a taxpayer, who was not a dealer in land, purchased property, enhanced its value by obtaining planning permission and disposed of it at a profit, there was no "trade" unless he had the intention of so disposing of it at the time he acquired it. The question, under what was the Income Tax Act 1952, was whether the taxpayer's profit derived from "a trade or an adventure in the nature of a trade". Russell LJ found that the earlier authorities "point strongly against the theory of law that a man who owns or buys without present intention to sell land is engaged in trade if he subsequently, not being himself a developer, merely takes steps to enhance the value of the property in the eyes of a developer who might wish to buy for development."
ii) Was the transaction an integral part of the business carried on, that is to say, part of its normal practice? It is unlikely that even if Mr Jordan bought and sold the occasional car, which he contended was not the case, this could be construed as an integral part of the business of repairing cars.
iii) Was the transaction one which was merely incidental to the carrying on of the relevant business that was carried on with some degree of regularity? Wright J's judgment reveals that "it was [Mr Jordan's] contention that during his 18 months in business [as a car repairer] this was the only car that he had bought and sold." We are also told, however, that it was the "understanding" of Mr Heyes, the purchaser, that Mr Jordan did "occasionally 'do cars up' … for sale." Doing cars up for sale might well be incidental to the business of a car repairer and the word "occasionally" could suggest a degree of regularity. Although it is not expressly stated by Wright J in his judgment, what he did say (below) suggests that the magistrates had in fact acquitted Mr Jordan on a submission of no case to answer. That being so, everything that the magistrates had heard about Mr Jordan's dealings with the car must have been derived from the prosecution's evidence including what he had told the trading standards officer when interviewed. Wright J said that, were it not for the fact that the prosecution had decided not to pursue the unresolved matters, "we would … have had to remit those four informations to the justices with a direction to continue the hearing in order to require Mr Jordan to give his explanation, if he so chose, of the circumstances in which he carried out the sale to Mr Heyes. It would otherwise have seemed, certainly to me, that the evidence … would have given rise to a prima facie case in relation to those four informations also." If Wright J had gone on to consider the "line of authorities", it is probable that he would have arrived at the same conclusion.
It will never be known what Mr Jordan would have said in evidence had the four informations been remitted. If, however, in that event, he stood by what he had told the trading standards officer at interview and he successfully refuted Mr Heyes's evidence that he occasionally did up cars for sale, the magistrates might have decided that the car was akin to that in Davies v Sumner or rather like the fourth car in Devlin v Hall, namely a private car sold privately outside the course of Mr Jordan's trade or business and outside of Alliott J's three categories.
A fourth category?
One of the cases cited in argument before the House of Lords in Davies v Sumner, but not referred to in Lord Keith's judgment, was Corfield v Sevenways Garage Ltd (1984) 148 JP 684. In that case the defendant company was in business as car repairers, petrol sellers and authorised MOT testers. They sold a car which had a false odometer reading. The MOT certificate provided with the car also stated a false mileage. The company was charged with supplying the car with the false odometer reading applied to it and also with applying a false trade description to the car by means of the MOT certificate. The magistrates acquitted the company, in relation to the first matter, on the basis that it was not the defendant's usual business to sell cars and, in relation to the second matter, on the basis that information in an MOT certificate was not capable of being a trade description. On the prosecutor's appeal Mann J said : "[The justices'] conclusion was that it was not part of the 'usual' business of the respondent to sell cars. The word 'usual' is not a qualification which is found in the Act. The word 'business', standing by itself, is a word of great amplitude, particularly when it follows (as it does here) the word 'trade'. Almost any form of activity, apart from one pursued for pleasure or as a hobby, can be described as 'business'. I have no doubt that the sale of the motor car in this case was a sale undertaken by the respondents in the course of their business. That it was not a part of their 'usual' business is in my judgment immaterial. … Having regard to the facts as found, in particular that this was a sale at a profit and that the vehicle was displayed for sale on the company's forecourt … no reasonable bench of justices [could have] reached the conclusion which this bench did." Goff LJ agreed, he said: "The justices' reasoning … that 'it was not part of the usual business of the respondents to sell cars' … shows that [they] were not applying the right test. A supplier of goods may have more than one business. He may have a main-line business, and he may have a side-line business. Indeed, he may only indulge in that side-line business rarely. But, in such circumstances, goods supplied in the course of either part of his business will be supplied in course of a trade or business. … True, the main business of the respondents was selling petrol and repairing motor vehicles, but on occasions it did sell cars, although only rarely. Such sales were, like the present one, for a profit. The authorities show that the word 'business' has a very wide meaning. Here we have a case where there was a direct commercial involvement and, rare though the sales may have been, the fact that the garage forecourt was used for the sale of the car and the fact that the sale was for profit, provide overwhelming evidence that the goods here were supplied by the respondent. in the course of trade or business."
The magistrates thinking, in the Corfield case, that they should look at the "usual" business of the defendant, was based on their interpretation of Havering (L B of) v Stevenson, ante, where Parker LCJ had found that if someone in the car-hire business, as part of his "normal practice", bought and sold cars then it was an integral part of that business. The magistrates appear to have only considered whether the car was sold as an integral part of the company's usual business and they failed to explore whether the company might (as the Divisional Court considered they did) have a side-line business of selling cars. As we have seen, Devlin v Hall sets out three categories of trade or business. One of those, derived from Davies v Sumner, ante, is "a one-off adventure in the nature of a trade carried through with a view to profit". If a business can engage in a one-off business venture, divorced from its normal business, then it must follow that it can engage in a secondary business which is conducted rarely and which is, in effect, a series of one-off adventures. In the instant case, the magistrates had found that the defendant only sold cars when disposing of its directors vehicles. He had sold three cars in the previous four years. The car in question had been purchased at auction and, within two days, had been MOT'd and repaired by the company and then placed on the forecourt for sale. Whether it is proper to regard it as a series of one-off adventures or as a (fourth) category in its own right, it is evident that where a primary business operates a side-line business, its activities in relation to that secondary business are equally subject to legislation such as the TDA.
Although the Divisional Court in the Corfield case allowed the prosecutor's appeal in relation to the clocking charge, its appeal in relation to the MOT was dismissed as, per Mann J, "The expression 'recorded mileage' [in an MOT certificate] indicates to the average man no more and no less than that which it says; that is to say, the recorded mileage at the time of the test."
In reaching his decision, on the question of business, in the Corfield case, Mann J applied London Borough of Southwark v Charlesworth (1983) 2 TR L 95. The defendant in that case had sold an electric fire in his shoe repair shop. The fire was defective and the defendant was charged with six breaches of electrical equipment safety regulations made under, what was, the Consumer Protection Act 1961. There could be no offence under those provisions unless the goods were sold in the course of business. The stipendiary magistrate found that the defendant's primary business was that of a shoe repairer; that he was displaying for sale several secondhand items, other than the normal goods connected with his primary business, including two electric fires with price tickets on them; that there was a notice in the shop referring to electrical items; that the fire in question, which had been purchased by a trading standards officer, had been brought to the shop for sale from the defendant's home where he had no further use for it and that the money received for the fire did not go through the books of the primary business. The magistrate concluded that the sale was not made in the course of a business. On the prosecutor's appeal Robert Goff J (as he then was) said: "I have no doubt that, on [the] findings of fact, the respondent was carrying on a separate business, that being the separate business of selling secondhand goods … not connected with his primary business of shoe repairs. … The sale itself was simply a sale of goods displayed in the shop along with other goods he was selling in the course of his secondary line of business." He went on to say: "I express no opinion as to what would have been the case if, on the facts found, there had been, for example, a notice attached to the goods making it clear that these goods had nothing to do with his business as a dealer in secondhand goods, but had come from his own home and the sale of the goods was to be a private transaction." With the benefit of the subsequent authorities it is clear that the fire, in the hypothetical circumstances described above, would not have been sold in the course of the defendant's primary or secondary business. It would not have come within any of the three categories of trade or business set out in Devlin v Hall, but would have been rather like the private car, referred to in that case, which had been sold privately. Indeed, it would have been like the sale of Mr Jordan's car, should he have been able to show that it was a private sale and that the car was not one of those, it was alleged, he occasionally he did up for sale.
A number of other principles concerning "trade or business" can be derived from the authorities albeit that they would not have been of relevance in Jordan.
Hobbies
We have already seen that in Corfield v Sevenways Garage Ltd, Mann J said that almost any form of activity "apart from one pursued for pleasure or as a hobby" can be described as "business".
In Blakemore v Bellamy (1983) 147 JP 89 the defendant had been a full time postman for some twelve years. He purchased, repaired and sold cars in his spare time. He advertised eight different vehicles for sale in twenty-one advertisements over a period of fifteen months. He was charged with offences of placing advertisements without revealing that he was selling the vehicles in the course of a trade or business, contrary to the Business Advertisements (Disclosure) Order 1977. He was also charged with applying a false odometer reading and another false trade description to a car. The justices dismissed all the informations having concluded that the defendant's "repeated changes of motor cars were a hobby and did not constitute a trade or business as a motor car dealer. He was motivated by his enthusiastic interest in motor cars and not by commercial considerations". They found that he had made a profit on some sales but that he sustained a loss or broke even on others and that overall he had made no significant profits. On appeal Webster J applied the meaning of "business" set out by Lindley LJ in Rolls v Miller, ante, (i.e. "almost anything which is an occupation, as distinguished from a pleasure") taking "pleasure" to be synonymous with "a hobby". On that basis, he held: "If it be the case … that the justices decided that the respondent was carrying on a hobby and he therefore could not have been carrying on a trade or business, it does not seem to me that they misdirected themselves as to the ordinary meaning of the words 'trade or business'. … There was evidence which entitled them to find on the facts that the respondent was not carrying on a trade or business, albeit it might well have been the case that a different bench might have come to a different conclusion on the same facts". It follows that a transaction, undertaken by a defendant as part of what he considers to be a hobby, could in fact be held to have been carried out in the course of a trade or business; it was a matter for the court to determine. The magistrates in the instant case appear to have reached their conclusion that the defendant was engaged in a hobby on the basis of his motivation which they found to be his enthusiasm for cars rather than a desire to make a profit. The fact that the Divisional Court considered that, on the evidence, the magistrates could have convicted, shows that the defendant's motives are not determinative of whether he is acting in the course of business. The prosecution's case would have been stronger had they been able to show that the defendant had realised a profit from his activities in buying and selling cars. Donaldson LJ agreed with Webster J and pointed out that the defendant's conduct could have resulted in his being prosecuted for obtaining property by deception; an offence which would not have required the prosecution to prove that the defendant was acting in the course of trade or business. It is not, now, uncommon for trading standards authorities to lay alternative informations under the Theft Act 1968 so as to avoid having to prove "trade or business" albeit that it becomes necessary to prove dishonesty.
A person's hobby must be clearly distinguishable from his business activities. Mr Jordan, for example, could not have said that he did up cars as a hobby when the doing up of cars was the very nature of his business as a car repairer.
Clubs and non-commercial organisations
In John v Matthews [1970] 2 All ER 643, the defendant was prosecuted under s 29 of the TDA for obstructing an officer by not allowing him entry into a club where he wanted to investigate an alleged offence. Parker LCJ held: "Before it could be said that the inspector here was exercising his power [under s 28] for the purposes of ascertaining whether any offence had been committed, it must first be determined whether in fact any offence could be committed. … I cannot bring myself to think that any of the offences constituted under the [TDA] arise in the case of what I may call domestic bodies or households. The object of the 1968 Act surely is to protect the public, not a husband from his wife, or a club from a member of the club. … It seems to me clear that whatever the word 'supply' means, the Act does not deal with the ordinary members' club, and that it only relates to transactions of a commercial nature."
One of the issues considered in Cahalne v London Borough of Croydon (1985) 149 JP 561, was whether the supply of counterfeit video tapes to members of a club could be carried out in the course of "trade or business" within the meaning of s 1(1) of the TDA. Stephen-Brown LJ said it was argued "that this was not a trade or business dealing with the public, but a club. … It was a colourable device to call it a club. There was no evidence that any committee was involved or that there were any rules or that there was any procedure for joining. All that was being done in terms was to hand over to somebody who came in from the street prepared to pay the necessary fee, the video cassette which they wished to take away on hire. … There was no evidence of the actual existence of anything which could be termed a genuine club which might have had the effect of restricting the distribution of the cassettes to a specified group of persons and not to members of the public generally".
So too, in R v Bow Street Magistrates' Court, ex parte Michael Joseph (1986) 150 JP 650, Stephen Brown LJ said: "The Law Society does not … offer services to the public. In particular, it does not carry on any operation which has a commercial connotation. It does not make contracts or offer to make contracts with members of the public. … There is no basis upon which the Law Society can be considered to be a body which conducts operations or matters in the course of a trade or business."
Auctioneers, agents, vets and professions
In May v Vincent (1990) 154 JP 997, magistrates acquitted an auctioneer, who had applied the false trade description "Turner" to a painting, on the basis, inter alia, that he was merely an agent for the seller and hence did not act in the course of trade or business. Alliott J held: "Nothing in the legislation suggests that auctioneers should not be governed by the legislation like every other trade or business and I have no doubt they are so bound."
In Kirwin v Anderson (1992) 156 JP 301, Nolan LJ held that a supply, for the purposes of the TDA, "is none the less a supply because it earns no commission for the supplier. … Supply covers supply by an agent no less than supply by a principal."
The defendants in Roberts v Leonard (1995) 159 JP 711, were veterinary surgeons who signed export health certificates falsely stating that a certain number of calves had been examined. They argued, when prosecuted under the TDA, that as vets they were not in trade or business and further that the false statements were not connected with the supply of goods. The magistrate acquitted the defendants and the prosecutor appealed.
Simon Brown LJ was unimpressed, he said: "I have not the least doubt that the term 'trade or business' in the 1968 Act is apt to include professions too. The Concise Oxford Dictionary definition of 'business' includes: 'Habitual occupation, profession, trade'. I can see no sufficient reason to exclude professional men from the scope of this legislation." On the question of whether to be caught by the TDA the defendants had to be in the business of supplying the goods to which the false trade description was applied: Simon Brown LJ held: "The provision of the certificates here was an essential, integral and direct part of the export of these consignments of calves. Without the certificates there could have been no supply and that, of course, the respondents knew full well. … There was no need for the respondents themselves to be directly parties to the export – to be, in other words, in the trade or business of exporting calves in order to be guilty of applying a false trade description to the goods."
Concessionary business
One business can operate within the business space of another and make that other equally liable for its consumer offences. In Surrey County Council v Burton Retail Ltd (1998) 96 LGR 262, the defendants, Burton, had a concession area in its store from which Bairds, a separate legal entity, sold suits. Only Bairds staff operated in that area and the suits they sold were Bairds' and not Burton's. Customers, however, would pay for suits at Burton's tills and would be issued with Burton's receipts. The price tickets were in the same style throughout the store. Certain price tickets on Bairds' jackets gave the "total suit price" and yet there was an additional price in respect of the trousers. It was accepted that the price indications were misleading, but Burton maintained that they were the indications of Bairds and not their own. That argument was accepted by the magistrates. On the prosecutor's appeal, Brooke LJ said: "By choosing to operate this business, Burtons accepts responsibility under the criminal law. ... The justices allowed themselves to be distracted by considering on whom, as between Bairds and the defendant, the duty of exercising control over the correct pricing of goods lay, and in considering Bairds' status as a separate legal persona as being determinative of liability instead of fixing on the moment when the relevant consumer saw the relevant misleading price indication on a suit in the shop and asking themselves 'is this misleading indication being given in the course of the defendant's business as well as Bairds?' For that question, there can ... be only one answer, 'yes'." Gage J agreed: "Every indication to the consumer pointed to [the misleading price] indication being given in the course of the defendant's business. ... The business of selling suits made by Bairds was, in these stores, a joint business venture by the defendant and Bairds. ... It matters not that such indications were also given by Bairds. They both gave the misleading price indications."
"Business of his"
In most consumer legislation, it is sufficient if the actus reus is carried out in the course of "a business". Consequently, an employee can commit an offence under the TDA in the course of his employer's trade or business. That is not so, however, in relation to offences of giving misleading price indications contrary to s 20 of the Consumer Protection Act 1987. The distinction arises because s 20(1) refers not to "a business" but to "a business of his", that is to say, a business of the person who gives the price indication. Consequently, in R v Warwickshire County Council Ex parte Johnson [1993] AC 583, Lord Roskill said: "It clearly appeared strange ... that the person actually responsible for what happened … should be immune from conviction. But … the words 'in the course of any business of his' must mean any business of which the defendant is either the owner or in which he has a controlling interest."
The Sale of Goods Act 1979
Section 14(2) of the Sale of Goods Act 1979 ("SGA"), as enacted, provided for an implied condition of "merchantable quality" where goods were sold "in the course of a business". Section 1 of the Sale and Supply of Goods Act 1994 replaced the implied condition of "merchantable quality" with an obligation that the goods supplied be of "satisfactory quality" but the transaction must still be "in the course of a business". In Stevenson and Another v Rogers [1999] QB 1028, the judge at first instance decided that in construing the expression "in the course of a business" he was bound by the decisions in Davies v Sumner, ante, and R & B Customs Brokers Co Ltd v UDT Ltd, ante. Accordingly, he held that where a fisherman sold his only fishing vessel in order to buy another, the sale was not made "in the course of a business". The judge said: "I do not think there was any element here of regularity … which could be said to show that the activity was an integral part of his business as a fisherman. … Going back to the words used by Lord Keith in his speech in Davies v Sumner, I think that this was what might merely be described as 'a sporadic selling of a piece of equipment which was no longer required for the purposes of that business'." The purchaser appealed to the Court of Appeal, which accepted that, if the judge had been bound by the two authorities, his decision would have been right. The Court of Appeal, however, whilst agreeing that the authorities were binding in relation to offences under the TDA and matters under the UCTA, held that, so far as s 14(2) of the SGA was concerned, the words "in the course of a business" should be given a literal construction. Potter LJ said it was clear that the court should construe the words of s 14(2) of the SGA "at their wide face value". He compared the wording of s 14(2) with its predecessor in the Sale of Goods Act 1893 and concluded that there was an intention "to widen the protection afforded to a purchaser by s 14(2) from a situation where the seller was a dealer in the type of goods sold, to one where he simply made a sale 'in the course of a business'; the requirement for regularity of dealing, or indeed any dealing, in the goods was removed. … The wide scope and apparent purpose of the words … is to distinguish between a sale made in the course of a seller's business and a purely private sale of goods outside the confines of the business (if any) carried on by the seller." It followed that the sale of the fishing vessel was a sale in the course of a business for the purposes of giving rise to the implied condition of merchantability (now the implied term of satisfactory quality) under the SGA but, like the sale of the car in Davies v Sumner, would not have been a supply in the course of a trade or business under the TDA.
Potter LJ pointed out that the wide interpretation of "business", which he held to apply to the SGA, furthered the protection of consumer buyers just as the narrow, Davies v Sumner, interpretation did in relation to the UCTA. In that sense, the different interpretations of "business" in the two pieces of civil legislation were in harmony. So far as the TDA was concerned it used the word "trade" and, as a criminal statute, in the event of ambiguity, was required to be construed restrictively.
As broad as it's wide
Wright J, in the Jordan case, was indeed correct to say that the line of authorities, where a transaction is not part of a primary business, are "not entirely easy to interpret". It is hoped, however, that all the cases considered here have been reconciled.
Lord Keith expressed the view in Davies v Sumner, ante, that the expression "trade or business" in the TDA was not used in "the broadest sense". Dillon LJ in R & B Customs Brokers Co Ltd v UDT Ltd, ante, formed the same view in relation to the word "business" in the UCTA. In Corfield v Sevenways Garage Ltd, ante, however, Mann J said that the word "business" particularly when it followed the word "trade" was "of great amplitude" and Robert Goff LJ said that "business" has a "very wide meaning". Can the same expression be "not … the broadest" and yet be "very wide"? The answer is that it can where "broad" is used in a different sense than "wide".
In Davies v Sumner, Lord Keith considered the expression "trade or business" not to be broad in the sense that not every supply of goods held for business purposes could be said to be a disposal in the course of business – there had to be a degree of regularity. The width of the expression "trade or business" referred to in the Corfield case was in the sense that it covered "almost any activity" – it was necessary to look at the commercial involvement. That there is consensus is apparent from Lord Keith's recognition that there can be a one-off adventure in the nature of trade. Applying the expression "trade or business" in "not … the broadest sense" would mean that a one-off transaction was not in the nature of trade if the goods were sold for profit but had not been acquired for re-sale. The wide meaning of business would mean that the buying and selling of goods for profit which are extraneous to the normal business, would nonetheless be a transaction in the course of trade or business.
VICTOR SMITH
See also Gerald Cooper Chemicals Ltd, Re
Related case digests
- Telford & Wrekin Council v Jordan (2001) 165 JP 107 - S 1(1)(a) TDA.
- applying. 1) relevant business is that at time description applied. 2) repairs to own goods may be carried out in course of repairer's repair business.