Law Report: Employee not guilty of misleading price offence: Regina v Warwickshire County Council, Ex parte Johnson - House of Lords (Lord Griffiths, Lord Emslie, Lord Roskill, Lord Ackner and Lord Lowry), 10 December 1992

A person employed as a branch manager who gave a misleading price indication was not acting 'in the course of any business of his' and was therefore not guilty of an offence under section 20(1) of the Consumer Protection Act 1987.

The House of Lords allowed an appeal by the defendant, Mr N K Johnson, from the Queen's Bench Divisional Court's decision that the defendant was guilty of an offence under section 20(1) of the 1987 Act. Section 20 provides: '(1) . . . a person shall be guilty of an offence if, in the course of any business of his, he gives . . . to any consumers an indication which is misleading as to the price at which any goods . . . are available . . .'

The defendant, the manager of the Stratford-upon-Avon branch of Dixons Store Group Ltd, placed a notice outside the branch stating: 'We will beat any TV, Hi- Fi and Video price by pounds 20 on the spot'. A customer saw a television set for sale elsewhere in Stratford- upon-Avon for pounds 159.95 and sought to purchase the set at Dixons for pounds 130.05. The appellant refused to sell it at the reduced price.

The defendant was charged with giving 'in the course of a business of his' an indication by means of the notice which was misleading, contrary to section 20(1) of the 1987 Act. The justices decided that the defendant was acting 'in the course of a business of his' but the notice was not misleading and dismissed the information.

The prosecutor appealed to the Divisional Court who held that the notice was misleading because the defendant refused to honour its terms and that he had been acting 'in the course of any business of his', interpreting that phrase as meaning 'in the course of his business, trade or profession'. The Divisional Court sentenced the defendant to an absolute discharge upon payment by him of the costs of the appeal to the Divisional Court.

Frederick Philpott and Claire Andrews (Edge & Ellison for Edge & Ellison, Birmingham) for the defendant; Maurice Kay QC and David Sanderson (Council Solicitor) for the council.

LORD ROSKILL said that it was argued that because the notice was not misleading on its face it could not subsequently become misleading by a refusal to honour its terms. The notice was a continuing offer and whether it was misleading or not could only be tested by somebody taking up the offer. It was misleading because the defendant did not, in accordance with the terms of the notice, 'beat any TV, Hi-Fi and Video price by pounds 20 on the spot'. To hold otherwise would be seriously to restrict the efficacy of this part of the consumer protection legislation. Seemingly innocent notices could be put up and then when such notices were followed by a refusal to honour them by a person acting in the course of his business no offence would be committed.

Therefore for the purposes of section 20(1) of the 1987 Act a statement, which in itself was not misleading on the face of it, could be rendered misleading by virtue of the fact that, even in the absence of evidence to show a general practice or intention to dishonour the offer contained in it, on one occasion the person making the statement declined to enter into a contract within the terms of the statement.

The question of whether an employed branch manager who failed to comply with a price indication did so 'in the course of any business of his' was more difficult. At first sight the Divisional Court's decision had the appeal of simplicity and common sense: the appellant's business was to manage Dixons' branch, his refusal arose in the course of that business and therefore he was guilty of the offence charged. It did not matter that he had no business of his own.

The question had to be answered by reference to the Act and to its language in various sections. The obscurity of the language in sections 20(1) and 40(1) had puzzled commentators to whom it had seemed odd that when a misleading notice or advertisement was published the person responsible for refusing to honour the advertisement, if an employee and not the owner of the business, was not guilty of an offence against section 20(1). It appeared strange that the person actually responsible for what happened, as the defendant clearly was, should be immune from conviction.

However a study of the legislation had led to the conclusion that the words 'in the course of any business of his' must mean any business of which the defendant was either the owner or in which he had a controlling interest.

It was now, within strictly limited circumstances, permissible to have regard to statements by a minister in Parliament to ascertain the true intention of ambiguous legislation, the interpretation of which had become a matter of controversy: see Pepper v Hart, the Independent, 27 November 1992. At column 1,140 of Hansard vol 485, the minister, Lord Beaverbrook, in reply to a proposed amendment to delete the words 'of his', said on 12 March 1987 that it was right to draft the Bill so that proceedings were directed against employers, that is the body corporate standing behind the misleading price indication, rather than individual employees, and therefore the words 'of his' were included to ensure that individual employees would not be prosecuted.

The answers given by the minister were consistent with the construction his Lordship felt obliged to put on the legislation. Therefore for the purposes of section 20(2)(a) an employed branch manager who failed to comply with a price indication so that it was misleading did not do so 'in the course of any business of his'.

The appeal would be allowed and the conviction set aside.

LORD GRIFFITHS, LORD EMSLIE, LORD ACKNER and LORD LOWRY agreed.