THE VALIDITY OF CFAs – THE REQUIREMENT OF CANCELLATION NOTICES – Mrs Ozlem Kupeli and 668 others v Atlasjet Havacilik Anonim Sirketi [2017] EWCA Civ 1037

July 27, 2017

 

THE VALIDITY OF CFAs – THE REQUIREMENT OF CANCELLATION NOTICES

 

In the case of Mrs Ozlem Kupeli and 668 others v Atlasjet Havacilik Anonim Sirketi [2017] EWCA Civ 1037, the Court of Appeal has been considering the application of the Cancellation of Contracts Made in a Consumer’s Home or Place of Work etc. Regulations 2008 and in particular the definition of “an excursion organised by a trader away from his business premises”.

 

Briefly, the case was in relation to complaints by a large number of people that the Defendant had failed to meet its obligations in transporting them to their destinations following the collapse of the airline with which they had originally bought tickets (the Defendant having entered into an arrangement with the relevant government to undertake such obligations). In the SCCO, Master Rowley had found that retainer documentation had been completed during an excursion which fell within the ambit of the Regulations. On appeal, Slade J had come to the opposite view.

 

At Regulation 5, it is provided:

 

“These regulations apply to a contract including a consumer credit agreement between a consumer and a trader which is for the supply of goods or services to the consumer by a trader and which is made:

 

(a) during a visit by the trader to the consumer’s home or place of work, or to the home of another individual;

 

(b) during an excursion organised by the trader away from his business premises; or

 

(c) after an offer made by the consumer during such a visit or excursion.”

 

And Regulation 7 goes on to provide:

 

“(1) A consumer has the right to cancel a contract to which these regulations apply within the cancellation period.

 

(2) The trader must give the consumer a written notice of his right to cancel the contract and such notice must be given at the time the contract is made, except in the case of a contract to which regulation 5(c) applies, in which case the notice must be given at the time the offer is made by the consumer.”

 

A local community committee sought legal advice on behalf of the many of its members who were affected. They advertised a meeting for those members to be held to which the Solicitors they had approached were to be invited. The Solicitors duly attended together with branded banners for the firm which were to be displayed and pro forma CFA documentation ready to sign up potential Claimants.

 

As a matter of fact, Master Rowley found that those Claimants who signed the CFAs at the meeting did so before receiving the client care letter. A second group of Claimants signed a partially completed CFA at the meeting, and they too received the client care letter after the meeting. A third group who had not been at the meeting later attended the Solicitors’ offices where they signed CFAs and were given the client care letter and other relevant documents. Those in the first two groups did not receive notice of their right to cancel the contract at the time of contracting. If, therefore, the Regulations applied it followed that the CFAs signed by members of those two groups are unenforceable. The consequence was that, because of the indemnity principle, AtlasJet would not be not liable to pay their costs.

 

Lewison LJ, giving the lead judgment, considered the EU Directive to which the Regulations gave force in the UK and also its interpretation into other languages to ensure that a purposive construction could be applied. He also considered the dictionary definitions of excursion. His conclusion was:

 

“In my judgment it is that, at the very least, the trip or journey in question is not undertaken for the very purpose of entering into the consumer contract in question. That fits with the purpose of the Directive as explained in the recitals. The recital emphasises that the mischief against which the consumer is to be protected is the element of surprise and unpreparedness which would be occasioned if on such a trip he were to be presented with a legally binding contract to sign. It is that element which also explains why the Directive (although not the Regulations themselves) exempts from its scope a visit to a consumer’s home or place of work which he has himself requested, unless what he is offered is something that he could not reasonably have anticipated…., I would not characterise a consumer’s visit to a community centre for the express purpose of meeting solicitors with a view to instructing them to take on his case as an “excursion”. Nor, in my judgment, does that conflict with the purpose of the Directive. A consumer who attends such a meeting whose purpose has been announced in advance would not be surprised or unprepared to give instructions.”

 

He found that contact with the Solicitors had been initiated by the committee and that the initiative and arrangements for the meeting came from the committee. It was they who issued the invitations both to its members and to the Solicitors. He dismissed the suggestion that the committee were acting as agents for the Solicitors, preferring to find that if they were to be viewed as acting on behalf of anyone than it was on behalf of their members. The simple fact that a consumer travel to meet a trader away from the trader’s business premises did not, without more, mean that this was an excursion and the meeting had clearly been advertised as a place where the Solicitors would be “selling” their services.

 

Thus, the conclusion was that the Regulations did not apply in the sense that the absence of cancellation notices would render the CFA is unenforceable and thus agreed with Slade J in that regard and dismissed the Appeal.

 

Whilst the particular facts of this case may not be extremely common, it does serve as a reminder for Solicitors to ensure that they have “dotted the i’s and crossed the t’s” when completing the retainer documentation. It would be far better to have a Cancellation Notice in place, even if the Regulations do not strictly apply simply to avoid potential arguments and costs further down the line.

 

To discuss any matters arising from this Blog please contact Andrew Jones: 01604 604035.

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