In her latest article, Debbie Brogan - Legal Director in MFMac’s Dispute Litigation team and an accredited Debt and Asset Recovery specialist - discusses the court’s decision and why it's important.
The facts
The consumer, Mr Gray, paid a deposit of £99 to reserve a vehicle from RW Motor Company Ltd on 15 December 2024. Seven days later, on 22 December 2024, he decided he no longer wished to go ahead with the purchase after finding out that the road tax for the vehicle was higher than had been advertised by RW Motor Company Ltd. He confirmed this to RW Motor Company Ltd and asked for his deposit back.
He did not receive the deposit back from RW Motor Company Ltd, so he sued them by raising a Simple Procedure claim for return of the £99 deposit.
The Simple Procedure claim
Mr Gray's position was that RW Motor Company Ltd had advertised the deposit as being fully refundable and the road tax had been wrongly advertised by RW Motor Company Ltd, which meant he no longer wished to go ahead with the purchase of the car.
RW Motor Company Ltd's position was that the deposit was non-refundable and, under their terms and conditions, the courts of England and Wales had exclusive jurisdiction in relation to the contract, so no claim could be raised in Scotland. They also maintained that there had been no misrepresentation in respect of the road tax.
Decision of the Sheriff in the Simple Procedure claim
After hearing from both parties, the Sheriff dismissed the claim. The Sheriff did so in terms of Simple Procedure rule 1.8(11), which allows the sheriff to dismiss any claim which obviously has no real prospects of success.
Decision of the Sheriff Appeal Court
Mr Gray appealed the Sheriff's decision to the Sheriff Appeal Court (SAC) and the SAC allowed the appeal for the following reasons:
The SAC held that the evidence provided by Mr Gray warranted further investigation and did not necessarily mean that the claim obviously had no real prospects of success, so it was not competent for the Sheriff to dismiss the claim on this basis;
Mr Gray had rights as a consumer in terms of the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013. Importantly, this meant that the contract between the parties was a distance contract in terms of those regulations and that Mr Gray had 14 days after payment of the deposit to cancel the contract. Mr Gray exercised that right and, in doing so, he argued that he was entitled to a refund of the deposit;
The jurisdiction clause in the contract provided that the courts of England and Wales had exclusive jurisdiction in respect of any claims. On the face of it, this meant that no claim could be raised against RW Motor Company Ltd in Scotland. The SAC considered whether this clause prevented Mr Gray from raising the claim against RW Motor Company Ltd in Scotland. The SAC held that Mr Gray was a consumer in terms of the Civil Jurisdiction and Judgments Act 1982 ("the 1982 Act"). The 1982 Act allows a consumer to bring a claim and be sued in the courts of the jurisdiction in which they are domiciled, and parties can only contract out of that provision in certain circumstances by agreement and after the dispute has arisen. As a result, the SAC held that the exclusive jurisdiction clause relied upon by RW Motor Company Ltd in the contract had no effect and the claim could competently be raised in the Scottish courts.
Due to the low value of the claim and the court time which had already been incurred in considering the claim and clarifying the legal issues raised, the SAC issued a decision on the claim without remitting the claim back to the Sheriff Court.
The SAC decided that, as Mr Gray was a consumer and as the deposit had been paid as part of a distance contract which was then cancelled within 14 days, Mr Gray was entitled to the return of the £99 deposit.
Lessons learned
Whilst the sum in dispute in this case was of low value, the issues raised by the dismissal and subsequent appeal are important and ones which are regularly encountered by practitioners in this area.
As is expected, there continues to be protection for consumers where exclusive jurisdiction clauses are concerned, allowing consumers to sue and be sued in the jurisdiction where they live and therefore often rendering exclusive jurisdiction clauses of no effect.
The case is also an important warning for practitioners and party litigants alike in respect of the use of the Sheriff's power to dismiss on the basis that a claim obviously has no prospects of success, demonstrating that if a party can provide evidence to support the claim, the evidence should be considered by the court before a decision to dismiss is reached. Conversely, this may also result in fewer cases being legitimately dismissed by the court at an early stage, thereby potentially impacting the efficiency of the court process.
