European Commission

 

Case detail

B a c k

Directive article Article 5 1.
Article 5 2.
Article 5 4. (a)
Article 7 1.
Article 8 al1
Article 14 3. al1 al1
Annex I al2 26.
National ID [2011] EWHC 1237 (Ch)
Country United Kingdom Decision date 27/05/2011
Common name The OFT v Ashbourne Management Services & Others Decision type Court decision, first degree
Court High Court of Justice, Chancery Division (Birmingham) Plaintiff(s) Office of Fair Trading
Court translation High Court of Justice, Chancery Division (Birmingham) Defendant(s) Ashbourne Management Services Limited, John Clayton-Wright and Dawne Clayton-Wright
Subject aggressive commercial practices
Keywords black listcontract lawcourtpaymenttelephoneunwanted solicitations

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Headnote

(1) Demanding early repayments under a service contract, where a claim for such repayment is not possible without court order, constitutes an unfair commercial practice.
(2) The threat to report a consumer to a credit agency when sums are not paid, whereas in fact these sums cannot be legally obtained at the trader's discretion, constitutes an unfair commercial practice.
(3) Sending unwanted letters with threats, constitutes an aggressive commercial practice.


 

Facts

The plaintiff was the UK Office of Fair Trading ("OFT") and the defendant was a company and the company's directors.  The defendants' business offered membership management services, which included recruiting new gym members for gym and fitness clubs. This involved providing standard form contracts for the gyms to use and collecting payments from the members under the contracts.
The contracts with the members specified minimum membership periods of 12 to 36 months. If the member cancelled their gym membership before the end of the specified minimum period then the defendants would treat them as "defaulters" and would register or threaten to register their defaults with a credit reference agency.  Legally the defendants were not entitled to early payment without a court order.
The OFT is a UK public body which conducted an investigation into the defendant's business practices following consumer complaints. The OFT claimed four breaches of the UCP Directive:
(1) recommending and enforcing credit agreements;
(2) using unfair standard terms;
(3) reporting consumers to the credit agency; and
(4) sending unwanted letters and using aggressive tactics.
 

Legal issue

(1) Does demanding early repayments under a service contract, where a claim for such repayment is not possible without court order, constitute an unfair commercial practice?
(2) Does the threat to report a consumer to a credit agency when sums are not paid, whereas in fact these sums cannot be legally obtained at the trader's discretion, constitute an unfair commercial practice?
(3) Does the sending of unwanted letters with threats, constitute an aggressive commercial practice?
 

Decision

(1) The court, after having first decided that the contracts were not credit agreements (decided by reference to UK consumer credit law rather than under UCP), decided the defendant had "not acted in accordance with the standard commensurate with honest market practice and have caused consumers to take transactional decisions they would not otherwise have taken, namely to enter into such agreements and make payments under them".
(2) Further, the court ruled that reporting or threatening to report the consumers to a credit reference agency when the payment was not actually owed constitutes an unfair commercial practice, as was demanding payment of a sum when the liability to pay the sum was denied.
(3) Finally, the court ruled that the practice of sending unwanted letters and using aggressive practices were to be addressed under a letter of undertaking from the defendant not to "exaggerate the significance and consequences of reporting to the credit reference agency; threaten to inform and/or inform any credit reference agency  that individuals have failed to make payments without informing the individuals of their right to access records kept about them by credit reference agencies and have incorrect references corrected; and send letters which purport to be from a non-existent 'litigation department'; or otherwise threaten legal proceedings when it has no intention to issue proceedings". There was also referred to the blacklisted provision in item 26 of the Annex I to the UCP Directive.
 

  URL Decision Decision full text
EN http://www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWHC/Ch/2011/1237.html&query=ashbourne&method=boolean

Result

Judgment was passed in the advantage of the plaintiff.  The plaintiff was entitled to declarations and injunctions to reflect the court's findings.

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