Building disputes: The Consumer Rights Act 2015

It was only on the afternoon of the last day, in closing submissions, that the Consumer Rights Act 2015 (the “Act”) was canvassed at length. In my experience, the Act is a new and powerful weapon – not fully understood by all – that may have profound consequences for the outcome of such disputes.

There are two reasons why the Act is not fully understood. The first reason is that it is relatively new and has received relatively modest judicial attention in the reported authorities. The second reason is that it has limited application in construction contracts, which are usually ‘business to business’ dealings. However, it may apply where the contract relates to private dwelling-house construction, renovation, or modification.

Its application turns on some rather technical definitions, namely whether the contract is between a ‘trader’ and a ‘consumer’:

• A ‘trader’ means “a person acting for purposes relating to that person’s trade, business, craft or profession, whether acting personally or through another person acting in the trader’s name or on the trader’s behalf.”[1] This may be a building contractor, architect, project manager, or surveyor.
• A ‘consumer’ means “an individual acting for purposes that are wholly or mainly outside that individual’s trade, business, craft or profession.”[2] This may be an individual who contracts for the construction, renovation, or modification of a private dwelling-house.

Once the definitions are met, the Act applies. The size of the contract – even if of substantial works and significant value – is irrelevant. By way of example, in Standard Bank of London Ltd v Apostolakis[3], the Act’s predecessor (the Unfair Terms in Consumer Contracts Regulations 1999) was applied to a currency transaction worth some $7 million.

In this short post, I wish to point out three features of the Act.

First, section 69 of the Act applies the contra proferentem rule in favour of the consumer. This can sometimes decisively influence a matter if ambiguity persists after the normal process of analysing the contractual language used in its context to determine whether the parties’ intention has been undertaken.

Second, section 50 of the Act renders “anything that is said or written to the consumer”, and certain categories of information supplied by the trader to the consumer, binding on the trader by way of statutory terms in the contract. This is a section of some complexity, but its potential scope is clear on the face of its language.

Third, section 71 of the Act requires the Court to consider the fairness of a term in legal proceedings even if it is not raised as an issue. Section 62 (inter alia) addresses fairness, and states that “A term is unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer.” This is supplemented by a ‘grey list’ at Schedule 2, and guidance is also provided by the authorities.

This post is not the place for a deep dive of all the relevant provisions of the Act. However, it gives a flavour of its power and relevance to some building disputes, and its ability profoundly to change the outcome of such disputes. Litigants would be well-advised to consider the Act’s applicability at an early stage and factor that into their assessment of the merits.