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False Statements as to Services on Goods: Section 1 TDA and Formula One.

Sometimes a statement as to a service can also be a description applied to goods and, if false, be contrary to more than one statutory provision. First published in the Justice of the Peace (1999) 163 JPN 507.

Trade Descriptions Act and mens rea

The Trade Descriptions Act 1968 (to which all section numbers in this article relate) provides, inter alia, for two seemingly distinct groups of offences in the course of trade or business.  Section 1 creates offences of applying false trade descriptions to goods and supplying or offering to supply goods falsely described.  Section 14 creates offences in relation to the making of false statements as to the provision of services, accommodation or facilities.  To succeed under s 14 the prosecution must prove mens rea; either that the maker of the statement knew it to be false or that he recklessly made the false statement.  Offences under s 1, however, are absolute offences and there is no requirement to prove any knowledge on the part of the offender that the description of the goods was false.  This distinction has been recognised by the House of Lords in Wings Ltd v Ellis [1985] 1 AC 272.  There is therefore a clear advantage to the prosecution if it can frame its information under s 1 rather than s 14.  That advantage can be even greater when the defendant is a company.

Corporate Liability

Where the offence is alleged to have been committed by an individual in his own right then it is not necessarily difficult to prove mens rea.  The task can be much harder, however, where the alleged offender is the proprietor of a business or a company.  Whilst it may be relatively easy to prove the actus reus by an employee it will often be impossible to prove the requisite knowledge by the employing proprietor or corporation.

In Coupe v Guyett [1973] 2 All ER 1058 the proprietor of a car repair business was charged that an offence under s 14, committed by her employee, of making a false statement that a new sill had been welded to a customers car was due to her act or default and hence was also an offence by her under s 23.  Lord Widgery CJ said:  “The making of the statement simpliciter could be attributed to … the principal.  But that is not enough unless one can also attribute to her the state of mind alleged, namely that the statement was made recklessly.  ... A principal is not to be made immediately liable, in an offence involving mens rea, merely because his servant or agent had the necessary mental intent”.  Lord Widgery recognised that the situation might be different where the employer was a company because “the actions and the state of mind of the ruling officers of a company may be attributed to the company”.  No such attribution, however, can be made in the case of an act by a mere employee of a company who cannot be said to be part of its controlling mind.   Thus in Wings Ltd v Ellis [1984] 1 All ER 1046, Mann J, in relation to an alleged offence under s 14(1)(b) said:  “The appellant is a limited company and it is established that, where the commission of an offence under the 1968 Act requires a specific intent, then a corporate defendant is not guilty unless the requisite intent was a state of mind of one or more of those natural persons who constitute the directing mind and will of the company”. 

Many services involve the carrying out of work on goods and hence raises the prospect that, if a false statement is made as to the service, a false trade description may also have been applied to the goods.  Such services will very often be offered by proprietors or companies.  If the offence can be formulated under s 1 then the need to prove mens rea can be avoided.

Formula One

The prosecution, in Formula One Autocentres Limited v Birmingham City Council (1999) 163 JP 234, quite blatantly proceeded under s 1 in order to avoid having to prove mens rea against the defendant company under s 14.  Trading Standards officers had had a car inspected by a consultant engineer who found it to have a number of defects all of which, on the basis of Formula One’s specification for its “Master Service”, should be picked up during such a service.  The car was submitted for the service and was returned with an invoice issued by Formula One indicating that a “Master Service” had been carried out.  On re-examination by the consultant engineer he found that nine of the pre-existing faults remained.  The prosecution alleged that Formula One had in the course of a trade or business , by means of the invoice, applied the false trade description “Formula One Master Service” to goods, namely the car, contrary to s 1(1)(a).  They also alleged that the car had been supplied, with the aforesaid false trade description applied, contrary to s 1(1)(b).  Formula One was convicted.

On appeal, Formula One argued that any prosecution of them should have been brought under s 14 which should be used where the essence of the contract was the provision of services.  Section 1, it was argued, was only appropriate where the essence of the contract was the supply of goods.  Mitchell J, however, held that “ss 1 and 14 are clearly not mutually exclusive”.

The converse situation to that in Formula One arose in Ashley v London Borough of Sutton (1995) 159 JP 631, where the defence argued that any offence there came under s 1 and not s 14.  The defendant had supplied a book (coincidentally called “Formula 2”) setting out a strategy for profiting on fixed odds football pools.  He pleaded guilty to applying a false trade description to the Formula 2 book by claiming that it had been approved by a particular person when it had not.  He pleaded not guilty to making a false statement as to a service, namely that the Formula 2 system had a 90 day money back guarantee.  He was convicted and appealed.  His argument was that he had supplied a book, which was goods, and had not provided a service.  Scott Baker J considered “it was the strategy that was being sold rather than the book”.  By analogy, the purchaser of a railway or theatre ticket is buying the service afforded by the ticket rather than the ticket itself.  The customer was buying the Formula 2 system, “the book itself was of no interest to him.  What he wanted was the information in it.  It may well be that there was a provision of services and goods, but that matters not … for present purposes”.  It did not matter because the appeal only concerned whether there was an offence under s 14.  It did matter, however, to the defendant who having pleaded guilty to an offence under s1 ended up with a conviction under both ss 1 and 14.  There can really be no doubt that a book will always be goods whether or not it also provides a service.  Even in the case of a novel, it might be said that it is bought for the information in it (the story) rather than for the book itself (the paper and ink).

Applying Must be Associated with Supply of Goods

A second argument put forward by Formula One, which was accepted by the prosecution, was that for there to be an offence under either ss 1(1)(a) or (b) the alleged false trade description must have been “applied in a transaction associated with the sale or supply of goods”.  Mitchell J expressed himself to be puzzled by that proposition but, in the absence of argument to the contrary, accepted the “apparently entrenched approach” in the authorities.  Consequently he accepted that “unless the car was supplied the allegation under para (a) as well as that under para (b) must fail”.

In view of Mitchell J’s puzzlement, it is worth looking briefly at the four authorities cited to him.  As well as all being concerned with cars, the four cases were all adjudicated upon by Lord Widgery CJ.

In Wycombe Marsh Garages Ltd v Fowler [1972] 1 WLR 1156, the prosecution alleged that the defendant had applied a trade description to a tyre by means of an MOT failure certificate which falsely described the tyre as suffering from tread lift.  Lord Widgery CJ said:  “I do not believe … Parliament meant to apply the first four sections [of the Trade Descriptions Act 1968] to the description of goods given incidentally in the course of the performance of the service of advising in regard to some matter affecting those goods”.  There was here, he said, “no provision of goods in the course of trade at all”.

Hall v Wickens Motors (Gloucester) Ltd  [1972] 1 WLR 1418, concerned the application of the false description “there is nothing wrong with the car” some 40 days after the car had been sold.  Lord Widgery CJ said:  “It is … rightly submitted, that ever since 1887 the offence of applying a false trade description to any goods has been assumed to be an offence if and only if the application of the false trade description was associated with the sale or supply of the goods, in other words that the simple application of a false trade description unconnected with any transaction for sale is not a matter which was struck at by the earlier legislation, nor should be regarded as struck at by this”.

In Fletcher v Sledmore (1973) 71 LGR 179, the defendant was a car repairer who agreed to sell a car to dealers once he had repaired it.  Whilst the defendant was working on the car the dealers brought along a prospective purchaser. The defendant falsely described the car to the prospective purchaser as having “a good little engine”.  The prospective purchaser subsequently bought the car from the dealer and the engine seized up.  In Eveleigh J’s judgment, with which Lord Widgery CJ agreed, he said:  “In Hall v Wickens Motors (Gloucester) Ltd no contract of sale was contemplated as a result of the representation made; no supply of goods by anyone was contemplated as being affected by such a representation … that case is clearly distinguishable”.

In the fourth case cited in Formula One, namely Fletcher v Budgen [1974] 1 WLR 1056, a false trade description was applied by a car dealer to a car he wished to purchase from a private seller.  Lord Widgery referred back to Wycombe Marsh Garages Ltd v Fowler which he said “is valuable for the proposition that a person who merely makes an inspection of goods as a service to its owner, and who honestly certifies his findings, is not to be convicted of an offence under s 1 because, although he may be said to have applied a trade description to the goods, he has not done so in a transaction associated with sale or supply of the goods”.  Lord Widgery CJ went on to say that “in general we must look at the Act as it stands.  We must look at the language used and we must give it its natural consequences”.  On that basis he held that a buyer conducting a trade or business, who in most cases will be the expert on the subject, could apply a trade description to goods just as a seller could.

It is apparent from the above authorities, in particular Fletcher v Sledmore, that Mitchell J’s conclusion that for there to be an offence the car must have been supplied, whilst probably true on the facts of Formula One, will not always be true.  As a general proposition there does not have to be a supply so long as the false trade description is applied “in contemplation” of a supply.  Were the position to be otherwise then an offence under s 1(1)(b) of offering to supply could never be proved and the deeming provision relating to “offer to supply” in s 6 would be otiose.

Meaning of “Supply”

Mitchell J in Formula One relied on the decision of the House of Lords in R v Maginnis  [1987] 1 AC 303, for the meaning of the word “supply”.  He thought that appropriate since, in the absence of a statutory interpretation, “supply” should be given its ordinary meaning just as it had been in Maginnis .  In that case Lord Keith said:  “The word ‘supply’, in its ordinary natural meaning, conveys the idea of furnishing or providing to another something which is wanted or required in order to meet the wants or requirements of that other.  It connotes more than the mere transfer of physical control of some chattel or object from one person to another.  No one would ordinarily say that to hand over something to a mere custodier was to supply him with it.  The additional concept is that of enabling the recipient to apply the thing handed over to purposes for which he desires or has a duty to apply it.  In my opinion it is not a necessary element in the conception of supply that the provision should be made out of the personal resources of the person who does the supplying”.  Applying Maginnis, Mitchell J concluded that in returning the car Formula One “were doing more than transferring physical control of the car.  To use Lord Keith’s words, the company, by virtue of the transfer of physical control were ‘enabling  the recipient to apply the thing handed over to purposes for which he desires or has a duty to apply it’”.  Accordingly, Formula One supplied the car within the meaning of both ss 1(1)(a) and (b).

 Maginnis was also relied upon by Nolan J as providing a definition of “supply” appropriate to the Trade Descriptions Act in Kirwin v Anderson (1992) 156 JP 301.  That case determined that “a supply … is none the less a supply because it earns no commission for the supplier” and that “supply covers supply by an agent no less than supply by a principal”.

Trade Description?

A trade description is defined in s 2(1) as being “an indication, direct or indirect, and by whatever means given of any of the following matters with respect to any goods or part of goods, that is to say-”   and there then follows a list (a) to (j) including “(d) fitness for purpose, strength, performance, behaviour or accuracy”.  Formula One argued that the description “Master Service” was at its highest no more than an indication that a service had been carried out and not an indication that it had been carried out properly.  For the words to fall within s 2(1)(d) it was contended that they must give a specific description of what the goods will do, e.g. “waterproof”.  Mitchell J rejected these submissions.  He said:  “I have no hesitation in concluding that the term ‘Formula One Master Service’ used in the invoice was a trade description within s 2(1).  It was an indication (whether directly or indirectly), first of performance, in the sense that to the extent of the work carried out within the scope of the Master Service service option, the performance of the vehicle, in those respects, was then, at least reliable … if not actually improved.  I have no doubt whatsoever that the invoice in the form it was presented, represented that the jobs falling within the scope of the Master Service option had been done”.  Mitchell J also considered the invoice to be an indication as to “accuracy”.  There was therefore an indication as to the accuracy of the tyre pressures, yet two tyres which were deflated prior to the service remained so after it.  Accordingly Formula One’s appeal was dismissed.

Comment

The Office of Fair Trading has recorded that in 1998 there were some 27,396 complaints made by consumers to Trading Standards departments about car servicing and repairs.  That figure had more than doubled in a decade; the equivalent figure in 1988 was 13,375.  The Trading Standards investigation in the case of Formula One was but one of many.  There are numerous cases where known faults have not been corrected and even cases where faults have been created during a service.  The safety of consumers and other road users are often compromised, particularly as a consumer who has had his car serviced will not unreasonably assume that its performance will be at its best.  Another fraud perpetrated on unwary consumers is the charging by garages for phantom work and replacement parts which have not in fact been fitted or where second hand parts are fitted but the customer is charged for new ones.  The decision in Formula One will not be welcomed by the unscrupulous or dilatory in the goods servicing industry, but it represents good news for the general public.

Although the concept of applying false trade descriptions to goods dates back to the Merchandise Marks Act 1887, the offence of making a false statements in relation to services was only introduced by the Trade Descriptions Act 1968.  The problem for prosecutors of having to prove mens rea is, therefore, a relatively recent one.  It has none the less taken some 30 years for, what is now, a judicially approved formula to be conceived to avoid the mens rea hurdle in s 14, albeit only in relation to services on goods.  That it has taken so long is not particularly surprising given that the formula involves the not at all obvious proposition that a trader can supply a customer with the customer’s own goods.  Application of the formula (“formula one” as it may be called) could well give rise to a sharp increase in the number of prosecutions of disreputable or poorly managed vehicle servicing companies.  Prosecutors may in some cases lay not only formula one informations under s 1 but also (whether additionally or in the alternative) informations under s 14 as in the Formula 2 case (Ashley v London Borough of Sutton). 

With Trading Standards authorities armed with both formulas one and 2, it will be interesting to see if the rise in consumer complaints can at last be reversed.

VICTOR SMITH

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