UK: England and Wales: holding company could be 'trader'

The Court of Appeal gave judgment in Surrey Trading Standards, R (on the application of) v Scottish and Southern Energy Plc [2012] EWCA Crim 539 earlier this month. This is an interesting case in which the court held that a holding company could be regarded as a trader, and therefore liable, in respect of the actions committed by employees in a subsidiary company contrary to regulation 9 of the Consumer Protection from Unfair Trading Regulations 2008. Lord Justice Davis, delivering the court's unanimous opinion, observed (paras. [33] to [35]):

... it is too narrow an approach to the 2008 Regulations to say that because the sales force were directly employed and directly trained by LTD [the subsidiary company] (which had the licence) therefore there could not be any designation of PLC [the holding company] as "trader" under the 2008 Regulations.

It is important to bear in mind that "trader", for the purpose of the 2008 Regulations, extends to any person who in relation to a commercial practice is acting for purposes relating to his business. The words "any", "in relation to", "acting" and "relating to" are all words of width and elasticity. As to the definition of "commercial practice" that is likewise broadly framed. It is amply sufficient to cover involvement in or supervision or control of training, in appropriate circumstances, as being directly connected with the promotion or sale or supply of a product; and it is also to be noted that the definition of "commercial practice" carefully avoids saying that the promotion or sale or supply has to be made by the trader itself.

Given the circumstances of this case, and given the breadth of the definitions of "trader" and "commercial practice", we therefore conclude that the Judge's ruling was a justified one. The evidence was there, in the circumstances of this case, to show that PLC was capable of being a "trader" for the purpose of the 2008 Regulations. Such a conclusion does not ... do a disservice to the language of the 2008 Regulations or drive a coach and horses through conventional corporate structures or wrongly rend corporate veils. On the contrary, it gives effect to the broad wording of, and purposive approach required to be applied to, the 2008 Regulations".

A summary of the decision has been provided by the ICLR as part of its free WLR Daily service: see here.