Consumer Rights Act 2015 and Consumer Ombudsman Scheme

The report proposes:

“A robust and accessible ADR system is vital for people who have been unable to resolve their complaint directly with the business concerned.”

It further states:

“Key to a successful system is… fair and enforceable decisions by ADR bodies”.

I fully endorse and agree with those points. The report goes on to address the proposed obligation for an ombudsman scheme to be compulsory, stating that

“an obligation on sectors (particularly where significant or essential purchases are involved)”

should be “part of a scheme”.

My constituents were, therefore, left with no alternative but to raise a court action. R&J Leather did not defend the claim. The sheriff court made an order for payment in Mrs Johnston’s favour on 14 December 2017, some six months after the suite was delivered.

It would be understandable to think that that was the end of a stressful process, but that was not the case. Mr and Mrs Johnston still had possession of the defective suite, which was unused and restricted the use of another room in their home. Mrs Johnston had asked the court to order R&J Leather to remove the suite, but the order made was purely for her to receive a refund of her moneys. Believing that the matter had now ended in her favour, Mrs Johnston gave away the offending suite, so that her home could be restored to its normal living capacity, which I think was a perfectly reasonable position to adopt.

R&J Leather proceeded to lodge an application to recall the order. The order was duly recalled and led to a court hearing that took place over two days spanning June and July 2018. The decision held in favour of the Johnstons. R&J Leather then appealed against the order for payment, based on the point that my constituents no longer had the suite and therefore could not return it. As a result, the company questioned whether Mrs Johnston was entitled to a refund for rejection of the goods.

The subsequent sheriff appeal court hearing took place on 14 December 2018. R&J Leather’s legal representation argued that, based on a proper construction of subsections (5) and (8) of section 20 of the Consumer Rights Act 2015, the buyer was obliged to make the rejected goods available to the seller without limit of time, and that that applies irrespective of any intervening developments or actions of the seller. In other words, it was argued that R&J Leather was not obliged to make a refund if the suite was not available for return.

My constituents argued that they had done everything that they were required to do in exercising their right of rejection and had given R&J Leather many opportunities to uplift the suite. The sheriff appeal court decision refused R&J Leather’s appeal and held in favour of the Johnstons. The ruling stated that having properly exercised their right of rejection, my constituents were entitled to the original order granted by the sheriff, and that that right was not undermined by the unavailability of the suite.

Interestingly, when reaching that decision, the sheriff appeal court made several observations. The first was that the argument that there is an unqualified duty, without limit of time, to retain the goods has a superficial attraction, given the wording of the Act, but such an interpretation has the potential to lead to both unfairness and absurdity. Secondly, when a consumer exercises a right to reject faulty goods, there is no duty for them to return the goods to the seller; all the consumer needs to do is make the goods available to the seller. This imposes an onus on the seller to come and collect the goods. Thirdly, the duty to make the goods available cannot be construed as being without limit of time or unqualified. In considering the nature and extent of the duty to retain goods that have been rejected, the court is entitled to take account of several factors, including the timescale within which rejection was intimated; the nature of the goods; the practicality of providing storage; the nature, extent and frequency of communications sent by the buyer to the seller; any response, or lack of response, by the seller; the length of time for which goods were retained; and whether proceedings have been raised. Perhaps unsurprisingly, the sheriff appeal court judgment remarked that R&J Leather had

“only themselves to blame for their inability to recover the item”.

Even after that court ruling, Mrs Johnston still had to pay for the services of a sheriff officer to obtain a warrant before the money was eventually refunded on 15 February 2019, which was nearly two years after the original purchase was made. No one should have to go through such a long, drawn-out process, which in this case involved spending four separate days in court and the associated stress and expense that that experience involved, and neither should anyone have to go to such lengths to exercise what are their basic consumer rights.

Furthermore, besides the direct financial implications for the consumer and the business involved, this single case used significant public funds—in the form of court facilities, time and staff—over four days. Those costs would not have been required if the Consumer Rights Act 2015 was clear about the consequences of non-compliance.

This single case that I have highlighted shows undeniably that the Consumer Rights Act 2015 does not do enough to protect consumers against rogue traders who do not comply with or seek to obscure the terms of the Act. My constituents were lucky, in so far as they had the intellectual and financial resources to see this matter through to a conclusion that forced R&J Leather to abide by the law. I suspect that many other people would have given up long before then, or would not have had the time available to spend days in court or the money to pursue the action. However, the Johnstons were still out of pocket, due to loss of work and other expenses, such as for the engagement of the sheriff officers. Can the Minister tell me what would happen to other consumers who do not have such assets?

If businesses were obligated to join an ombudsman scheme, the process would be simplified for both consumers and businesses. If that obligation was brought into force, an independent assessment could be made, which could rule in favour of either the consumer or the business, without the stress and the expense that my constituents had to endure to get what they were legally entitled to.

Such cases are brought every day throughout the UK, and the court costs must be astronomical. I do not know what the numbers are, but I dread to think. Yet a simple change to the Consumer Rights Act 2015, with an obligation for a business to participate in an ombudsman scheme, would substantially mitigate the need to bring such cases to court.

Of course, it is fortunate for other consumers that Johnston and Johnston v. R&J Leather (Scotland) Limited [2019] SAC (Civ) 1 is now a case in law and will set a precedent to help other Scottish consumers who find themselves dealing with an uncooperative company. However, my point is that people should not have to go to court in the first place.

I am a Scottish MP and this debate centres on my constituent’s Scottish legal case, which has no binding effect on English claims. However, the Consumer Rights Act 2015 applies throughout the UK, and given that the ultimate decision was made by the Sheriff Appeal Court, this ruling has the potential to be highly persuasive to county court judges in England and Wales, where similar issues are regularly raised.

To summarise, I find it deeply regrettable that the situation that I have highlighted, and the other situations that I have recently been made aware of through the efforts of Parliament’s digital engagement team, clearly indicate that the Consumer Rights Act 2015 is not working fairly for consumers in some markets. Based on the case that I have discussed, I hope that the Minister will agree that the Act needs to be reviewed, due to its legislation being ambiguous and, I believe, unenforceable.