Business, Innovation and SkillsWritten evidence submitted by the Construction Industry Council

PRE-LEGISLATIVE SCRUTINY OF THE DRAFT CONSUMER RIGHTS BILL (JUNE 2013 VERSION)

The Construction Industry Council (CIC) is the representative forum for professional bodies, research organisations and specialist business associations within the construction industry. It provides a single voice for professionals in all sectors of the built environment through its collective membership of 500,000 individual professionals and 25,000 firms of construction consultants.

Summary

In general the CIC welcomes the initiative to clarify and consolidate existing legislation and at the same time strengthening consumer rights.

The comments below are on specific points noted in the draft Bill, and set out in order as they appear in the Bill, and not in order of priority. From the CIC’s point of view, the most important matters raised are those in connection with sections 51 and 52, as these will have the greatest impact on its members.

The draft bill covers a wide range of services provided to consumers, from a small plumbing job to the design of a substantial house extension or refurbishment. This submission concentrates largely on the services provided by professional consultants to consumers, which are usually at the higher end of that range.

Comments, Section by Section

1. Section 2(3):

The definitions of consumer and trader are clear, in particular the CIC is pleased to see that the narrower definition of the consumer as an “individual” has been used (in contrast to the wider one of UTCA79 whereby a consumer may in some circumstances include a firm). This will help to avoid confusion for consultants as to when a client is to be treated as a consumer.

2. Section 10(4):

Any information about the goods provided by the trader in accordance with provision giving effect to paragraph 1(a) of Article 5 or 6 of the Consumer Rights Directive (main characteristics of goods) is to be treated as included as a term of the contract.

The CIC feels that this clause is unclear, in particular that cross-referencing is not appropriate for consumer legislation. A consumer will not have ready access to the text of Directives, which are in any case often lengthy and impenetrable for someone without legal training. The clause should set out in full anything that needs to be said.

3. Section 11(2): see the comment on Section 10(4) above.

4. Section 18(7): it is essential that other remedies are retained (amongst other things the right to claim for consequential losses must be preserved) and it is therefore reassuring to have this set out. It will help to clarify the position for the consumer.

5. Section 32(4): the CIC would support the exclusion of arbitration from the restrictions as set out in this clause.

6. Section 51 (1): The CIC has no objection to this clause, which reflects the current position at law.

7. Section 52: Information about the trader or service to be binding

(1)Every contract to provide a service is to be treated as including as a term of the contract (whether or not it does so expressly) anything that:

(a)is spoken or written to the consumer by or on behalf of the trader about the trader or the service, and

(b)is taken into account by the consumer when deciding to enter into the contract or when making any decision about the service after entering into the contract.

We read this clause as meaning that in order for a term to be included, both (a) and (b) must be fulfilled. The CIC would have strong objections if condition (b) alone was sufficient to result in a terms being included.

8. (1)(a) anything…that is spoken or written:

The “spoken” element could create significant problems. Disputes about what was said are often lengthy (as people’s memories invariably differ), and therefore wasteful of the courts’ resources. The provision may also have the unintended effect of discouraging both parties from reducing the likelihood of disputes by committing their agreement to writing. Misrepresentation is the current remedy, which adequately covers deliberate or negligent assertions. The CIC recommends that the clause is limited to written statements made prior to entering into the contract.

9. (1)(b) is taken into account by the consumer when deciding to enter into the contract:

In addition, the CIC recommends that an element of reasonableness is included here, for example the clause is altered to read “is reasonably taken into account by the consumer”. Prior to contracts being agreed on, say, the design of a house extension or a new garage, statements are often included in correspondence regarding the scope or viability of the project which are clearly “ball park” or of an indicative nature, and are often superseded by later statements. It would be unworkable if the consumer had total discretion to later select which of these statements form part of the contract and which do not—this decision would be subjective, and cuts across the normal “objective” approach to formation of contract in English law. Introduction of the term “reasonable” would rein in this latitude and introduce a measure of objectivity.

10. (1)(b) is taken into account by the consumer…when making any decision about the service after entering into the contract:

The purpose of this is unclear. If it is intended to refer to statements made before the contract is formed, then what is taken into account can’t retrospectively affect the contract terms. If it refers to statements made after the contract is formed, this could work against the consumer if these statements reduce their rights under the original contract, and they unknowingly rely on them when making a decision. Agreed changes are covered under (4)—this is sufficient to protect the consumer and it is suggested that the second part of (b) is therefore deleted.

11. Section 52(2): see comment on section 10(4) above.

12. Section 52(3): this is unclear, and appear circular in nature. It would be probably dealt with if the term “reasonable” is introduced into 1(b) as recommended above.

13. Sections 53 and 54: these reflect current law and will therefore have little impact, but are not objectionable.

14. Section 55: we agree that other rules of law and remedies should be preserved (for example the common law rule that a contractor designing and providing a building would be under a strict liability to ensure that it is fit for any purpose made known by the consumer (based on case law) will remain unaffected).

15. Section 56: subject to our comments above and below, we have no objections to this section.

16. Section 57 right to repeat performance:

There are many situations in construction where repeating a service may be technically possible, but extremely inefficient and impractical. An example might be if a building is constructed with a small error near the base of a wall, which does not affect the structural performance. Currently a court would not order a contractor to re-construct the building in such circumstances, therefore it would seem an excessive burden on the industry if a consumer could require this at will. We suggest that the term “feasible” is introduced, ie: “The consumer cannot require repeat performance if completing performance of the service in conformity with the contract is not feasible or is impossible.”

17. Enforcement of the above right, if the trader fails to perform the service again, can only be by way of an order for specific performance, which raises all the difficulties outlined in our submission under Section 62, below.

18. Section 58 Right to price reduction: subject to our comments above, we have no objections to this section.

19. Section 59 Liability that cannot be excluded or restricted: subject to our comments above, we have no objections to this section.

20. Section 59 (6) see comment on section 32(4) above.

21. S62 Specific Performance:

The current wording of this section would fundamentally change the law relating to specific performance. The notes accompanying the draft Bill give no indication that this is the intention of the wording of this section, nor any justification for changing it in relation to consumers and not businesses also. If it is not intended to change the law the section could be misleading to the consumer, who might think on the basis of the wording that they had a remedy where in fact the courts would not provide one. For instance, the current availability of specific performance, which is an equitable remedy and not one which is available as of right, is governed by the following rules:

(a)the court will not grant specific performance where damages are an adequate remedy. This is not reflected in the wording of Section 62. We recommend that Section 62(2) makes it clear that the court will only order specific performance where damages are not an adequate remedy;

(b)being an equitable remedy, the person seeking it must come to the court “with clean hands” ie if they are not 100% innocent, the court will not grant this remedy. For instance, the consumer may have been late in making payments for a service, or have denied access to the trader on occasion to carry out the service, or had heated conversations with his staff etc;

(c)the courts will not give a remedy of specific performance where that remedy would require some supervision by the court, eg where works are to be re-done the court will not order the original contractor to carry them out, because that would require some element of supervision by the court to see that it had been done correctly, which it is not equipped to provide. This also is not reflected in the current wording of Section 62.

22. (S62 Specific Performance continued):

Because specific performance is an equitable remedy, it allows the court flexibility to apply it in appropriate circumstances, to do justice to a particular case, without being bound by strict rules. This concept is captured to some extent in section 62(1)(d) but by making it into a statutory remedy, there is an implication that this is somehow different from the equitable remedy, particularly when different terminology is used from that currently found in the Civil Procedure Rules which govern court procedure. This leads to lack of clarity for the consumer and the trader.

23. Some of the terminology in this section is not the same as that used in the courts; for instance in the English courts an order for specific performance is given rather than a direction or by way of judgment. If the word “decree” is not appropriate for the application of specific implement in Scotland, we recommend that it should be omitted as it is not used any longer in the English court system.

24. In relation to Section 62(3), the Civil Procedure Rules do not permit this kind of application at any time before judgment. There are established rules on the timing of a claim of this nature, in the context of court procedure. It would be oppressive to the trader, and a waste of the court’s time if the application was made, say, after the trial itself and before judgment had been handed down. We support any efforts to make the application of English law easier for the consumer to understand and apply, but we stress that it would be unworkable for the courts if a consumer had a statutory right to make an application for specific performance on an entirely different basis and timescale from that applying to businesses or from that which has developed successfully as a flexible tool to provide for justice in a particular case.

25. If Section 62 is omitted, leaving the consumer with their equitable rights to apply for specific performance, this would not make their position any worse, partly because the remedy would still be there, but also because it is in the nature of consumer disputes that if a matter comes to court, by that time the consumer has lost all confidence in the trader (otherwise some kind of solution would already have been found) and the consumer would normally no longer want specific performance of a service or supply of goods which has been carried out inadequately, in any circumstances.

26. If, despite this, parliament wishes to make this radical change to the law on specific performance, this should be spelled out much more clearly. The change would be so fundamental that it is difficult to give any indication of the impact it might have, but this would be significant and is likely to be adverse to both consumer and trader. Until the wording and intention are clarified, the CIC could not agree to its inclusion.

16 August 2013

Prepared 20th December 2013