Warwickshire County Council v Johnson [1991] UKHL 11

A shop manager refused to honour a price-matching notice displayed outside Dixon's store. The House of Lords held the notice became misleading when not honoured, but the manager could not be prosecuted under section 20(1) Consumer Protection Act 1987 as he was not conducting 'any business of his' – only business owners could be liable.

Facts

The appellant, Neil Kirk Johnson, was the manager of Dixon’s store in Stratford-upon-Avon. A notice was displayed outside the shop stating ‘We will beat any TV, Hi-Fi and Video price by £20 on the spot’. A customer, Mr Thomas, found an identical television set elsewhere for £159.95 and sought to purchase it from Dixon’s for £139.95 in accordance with the notice. The appellant refused to sell at the reduced price. The appellant was subsequently charged with an offence under section 20(1) of the Consumer Protection Act 1987 for giving a misleading price indication ‘in the course of a business of his’.

Procedural History

The justices dismissed the information, finding the notice was not misleading but holding the appellant was acting in the course of a business of his. The Divisional Court allowed the prosecution’s appeal, holding the notice was misleading and the appellant was acting in the course of business. The appellant appealed to the House of Lords.

Issues

Two certified questions arose:

1. Whether a statement not misleading on its face can become misleading by virtue of a single refusal to honour it.
2. Whether an employed branch manager who fails to comply with a price indication does so ‘in the course of any business of his’ for the purposes of section 20(2)(a) of the Consumer Protection Act 1987.

Judgment

First Issue – Misleading Indication

Lord Roskill, delivering the leading judgment, answered the first question affirmatively. He agreed with the Divisional Court’s reasoning:

“The notice is a continuing offer and whether it is misleading or not can only be tested by somebody taking up the offer. It was misleading because the Respondent [now the appellant] did not in accordance with the terms of the notice ‘beat any TV, Hi-Fi, Video price by £20 on the spot’.”

Lord Roskill emphasised that to hold otherwise would seriously restrict the efficacy of consumer protection legislation, allowing seemingly innocent notices to be displayed then dishonoured without consequence.

Second Issue – ‘In the course of any business of his’

The House of Lords answered the second question in the negative. Lord Roskill concluded:

“I find myself unable to share the view taken by the Divisional Court… the words ‘in the course of any business of his’ must mean any business of which the defendant is either the owner or in which he has a controlling interest.”

The House relied upon Ministerial statements made during the Bill’s passage through Parliament. Lord Beaverbrook had stated:

“It is therefore right so to draft the Bill that proceedings are directed against employers – that is the corporate body standing behind the misleading price indication – rather than individual employees. Accordingly we have included the words ‘of his’ in the Bill to ensure that individual employees will not be prosecuted.”

Implications

This case establishes important principles regarding consumer protection legislation:

• Price indications can become misleading through subsequent conduct, even if not misleading on their face.
• Employees cannot be prosecuted under section 20(1) for misleading price indications as they are not conducting ‘any business of his’ – liability falls upon the corporate employer.
• The case represents a significant application of the Pepper v Hart principle, permitting reference to Parliamentary statements to resolve statutory ambiguity.

The decision highlighted what Lord Roskill described as the ‘obscurity’ of the drafting, with academic commentators finding it ‘quite a startling conclusion’ that employees directly responsible for misleading conduct could escape prosecution.

Verdict: Appeal allowed. The Order of the Divisional Court was set aside and the conviction was quashed. The first certified question was answered in the affirmative (a notice can become misleading through refusal to honour it) and the second certified question was answered in the negative (an employed branch manager does not act ‘in the course of any business of his’).

Source: Warwickshire County Council v Johnson [1991] UKHL 11