Kingston-upon-Hull City Council prosecuted Motor Depot Ltd and its managing director Philip Wilkinson for car ads allegedly breaking unfair commercial practices and consumer credit ad laws. Manana Shrimpling reports the appeal verdict and when personal liability arises for misleading ads.
Topic: Consumer protection
Who: Kingston-upon-Hull City Council vs Motor Depot Ltd and Philip Wilkinson
Where: Administrative Court
When: 23 October 2012
Law as stated at: 1 November 2012
What happened:
Motor Depot Ltd and its managing director were found to be guilty of misleading advertising under the Consumer Protection from Unfair Trading Regulations 2008 ("CPRs") and under consumer credit legislation. Most charges against them were upheld on appeal and the court found that there was sufficient evidence to infer a duty and therefore personal liability on the part of the managing director.
The Facts
Motor Depot Ltd and its managing director, Mr Wilkinson, were alleged to have committed the following offences:
- Motor Depot Ltd was alleged to have acted misleadingly by representing to a purchaser that a vehicle was under warranty when it was not (contrary to Regulation 9 of the CPRs)
- Motor Depot Ltd and Mr Wilkinson were alleged to have misleadingly stated on internet advertisements that finance available on Motor Depot's vehicles was interest free (contrary to Regulation 9 of the CPRs), and published credit advertisements without disclosing certain information required by the Consumer Credit (Advertisements) Regulations 2004
- Mr Wilkinson was alleged to have personal liability for neglecting his duty with regard to the advertising (contrary to Regulation 15 of the CPRs and the Consumer Credit Act 1974)
Motor Depot Ltd and Mr Wilkinson were convicted on all counts. The judge found that the vehicle was not under warranty when Motor Depot Ltd represented that it was to the purchaser and that the interest-free statements on the internet advertisement were misleading so as to confuse the average consumer on how a car's purchase price was calculated. He found that there was a one-page advertisement on the internet and information required by the Consumer Credit (Advertisements) Regulations had not been provided. He also held that inference could be drawn that Mr Wilkinson had a duty to review advertising and that he had neglected that duty.
The Appeal
Motor Depot Ltd and Mr Wilkinson appealed by way of case stated against the various convictions. The Administrative Court held as follows:
1. On the question of whether there was sufficient evidence before the judge to conclude that the vehicle was no longer under warranty when the company had represented this to the purchaser, the court ruled that there was insufficient admissible evidence to sustain the judge's finding. Motor Depot's conviction in that regard was therefore quashed.
2. The judge was entitled to conclude on the evidence that the statements that finance available on the vehicles would be interest-free would have caused the average consumer to take a transactional decision that he would not otherwise have taken, and to think incorrectly that the costs normally borne by the purchaser would be borne by the seller. The advertisements were therefore potentially misleading about how the price was calculated.
3. The judge was correct in his interpretation of the Consumer Credit (Advertisements) Regulations in his finding in respect of the one-page advertisement on the website. The court confirmed that the purpose of the regulations was to ensure that information was kept together and not to allow advertisements to draw in potential purchasers by highlighting favourable elements whilst concealing less favourable factors. It would have been acceptable for the company's webpage to have shown pictures of various cars without any credit information; but it was unacceptable to be selective with the credit information advertised.
4. On the question of whether there was evidence to support the judge's finding in respect of Mr Wilkinson's duty and his neglect of that duty, the court held that there was sufficient evidence for the judge to infer that Mr Wilkinson had responsibility for the drafting and presentation of adverts. The advertisements were central to the business and Mr Wilkinson was treated as the boss – it was therefore appropriate to infer that there was a duty on him in relation to the advertisements and Mr Wilkinson had neglected that duty.
Why this matters:
This is the latest case highlighting the importance of ensuring that advertisements, whether online or otherwise, must include all prescribed and relevant information to ensure that they are not misleading and do not deceive the average consumer, causing them to take a transactional decision which they would not have otherwise taken.
Where an advertisement is misleading and in breach of the CPRs, company officers or senior managers acting in that capacity should be aware that they can have personal liability under the CPRs, in addition to the liability of the company, if the offence was committed with their consent or connivance or was attributable to neglect on their part.
