Considering Taking Personal Trainer to Small Claims?

unholyangel

pmduk wrote: »

I'm sorry, I read it you stated the trainer had wrongfully terminated the contract which of course wasn't the case,

Ah no, I meant the OP had wrongfully terminated.

steampowered wrote: »

I don't think you are legally entitled to a refund Op. Issuing a small claim would probably be throwing good money after bad. Sorry.

I don't think the CMA guidance quoted above is directly relevant. That guidance concerns termination charges - such as where a consumer leaves a broadband contract only. That is not the case here. It seems to me that nobody has terminated the contract and there is no early termination charge. Rather the consumer has prepaid for a service.

Even if the CMA guidance were to apply, it says that traders may withhold their net loss of profit. The net loss of profit for personal training sessions is presumably the entire cost of the sessions. The actual financial cost to the trainer of providing the session would be close to zero, unless the trainer would have needed to pay an hourly rate to the gym for each session.

I don't think it makes sense to talk about the PT "re-selling" sessions. The concept of re-selling sessions to another client would only make sense if the PT has more clients than they can cope with. This is extremely unlikely. Most PTs will sell additional sessions to anyone that wants to buy them.

No it doesn't. Thats a bit like saying the dictionary is a book that tells you what the word "apple" means. It covers a lot more than just termination charges.

They most certainly do apply though - termination charges can be in the way of not refunding repayments. It doesn't have to be an amount that only becomes payable on you exercising a contractual option (and nor can you make a disproportionate sanction fair by including it as a provision).

And unfortunately, the law actually works contrary to what you expect in relation to availability of the services. Take a sofa for example - they could sell as many as their suppliers can handle - but if you cancelled, they'd still be required to take reasonable steps to mitigate their losses - perhaps by selling your sofa at a discount to a customer that they otherwise would have sold a sofa thats not yet built (although you'd be picking up the shortfall so they wouldn't be losing out).

The law doesn't work on what could have happened, only what did happen. If the OP booked specific sessions all reasonably close to one another and cancelled at short notice, then he may have a legitimate claim up to the whole remainder of the contract price. But I would have expected him to say this rather than agreeing to trying to resell if that had been the case.

BorisThomson wrote: »

The trainer has taken reasonable steps to mitigate his losses, he is actively recruiting new clients. He is able to accommodate the OP so not working at full capacity, hence he would still have a loss if he was to refund the cost of the lessons.

If you cancel a generic room at a hotel and they are able to fill that room then a refund would be due. However that room could quite legitimately be the last room they sell, they are entitled to sell their available rooms first. The same applies here - if, despite his best efforts, the trainer still has spare appointments, then he is incurring a loss and is not obliged to refund the OP.

Gyms often aren't operating at full capacity either - however courts will regularly ignore minimum terms and instead award 1-2 months notice (as they deemed that enough time to find another customer) particularly in cases where the person has had to cancel for medical/health reasons.

annandale

Did you sign a contract? If you did, you should have been aware of the notice that the PT wanted if you had to cancel any sessions.

I personally would have refunded in this instance, but I think you need to let this go.

BorisThomson

Gyms often aren't operating at full capacity either - however courts will regularly ignore minimum terms and instead award 1-2 months notice (as they deemed that enough time to find another customer) particularly in cases where the person has had to cancel for medical/health reasons.

Citation please.

I'm aware of courts striking out unfair cancellation terms where gyms have tried to impose lengthy minimum terms, but that is not the case here.

steampowered

unholyangel wrote: »

Take a sofa for example - they could sell as many as their suppliers can handle - but if you cancelled, they'd still be required to take reasonable steps to mitigate their losses

The law on mitigation of loss only applies to claims for damages damages to breach of contract. It doesn't apply to claims for recovery of a debt.

This is why there is so much case law exploring whether particular types of claims are to be characterised as 'debt' or 'damages' claims - see e.g. https://www.blakemorgan.co.uk/news-events/blog/indemnities-debt-or-damages-claim/.

If you agree to buy a widget for £100, the trader is entitled to pursue you for £100. The trader only needs to prove that the price was £100. The trader doesn't need to prove loss and doesn't need to prove mitigation.

unholyangel

BorisThomson wrote: »

Citation please.

I'm aware of courts striking out unfair cancellation terms where gyms have tried to impose lengthy minimum terms, but that is not the case here.

As they've all been dealt with at small claims, what exactly are you asking me to cite?

How about this story?

Notice:

York County Court has now ruled, however, that Roko’s terms and conditions, requiring members to pay the full balance of outstanding fees for 12 months without any discount, were unfair and unenforceable. This was because the requirement was not a genuine pre-estimate of the loss Roko would suffer, and was therefore a penalty. The judge also said Credit Resolution Service’s debt collection charges of £80 levied on consumers were unfair. The Mortons were instructed to pay one month’s membership fees as compensation for breach of contract, which the judge deemed a reasonable amount.

Or if you read the OFT v Ashbourne Management judgement from the high court, you'll see the distinction made by the judge between contracts of 12 months with no right to cancel and contracts of 12 months that do allow cancellation in certain circumstances such as medical reasons, losing your job or moving away (hint, contracts with no right to cancel at all - even with a 12 month minimum term - were found to be in breach as they create a significant imbalance in the rights & obligations of both parties).

steampowered wrote: »

The law on mitigation of loss only applies to claims for damages damages to breach of contract. It doesn't apply to claims for recovery of a debt.

This is why there is so much case law exploring whether particular types of claims are to be characterised as 'debt' or 'damages' claims - see e.g. https://www.blakemorgan.co.uk/news-events/blog/indemnities-debt-or-damages-claim/.

If you agree to buy a widget for £100, the trader is entitled to pursue you for £100. The trader only needs to prove that the price was £100. The trader doesn't need to prove loss and doesn't need to prove mitigation.

We've been over this. The difference in the scenario you describe is that you'd already have the widget. Therefore trader would have a claim for the price agreed. In OP's scenario, the service has not been fully performed yet. A fairer comparison would be where you make an order for goods in instalment and then cancel halfway through.

You clearly don't understand the article you've linked given it relates to indemnity clauses in commercial agreements. You understand what an indemnity is?

steampowered

unholyangel wrote: »

Or if you read the OFT v Ashbourne Management judgement from the high court, you'll see the distinction made by the judge between contracts of 12 months with no right to cancel and contracts of 12 months that do allow cancellation in certain circumstances such as medical reasons, losing your job or moving away (hint, contracts with no right to cancel at all - even with a 12 month minimum term - were found to be in breach as they create a significant imbalance in the rights & obligations of both parties).

You are conflating three completely different legal principles.

The first principle is the idea that a clause which provides for a fixed sum to be payable following a breach of contract is unenforceable if it constitutes a 'penalty clause'.

The second principle is the idea that a party who is claiming damages for breach of contract must mitigate his loss.

The third principle is the statutory provision in s62 of the Consumer Rights Act 2015 which says that an 'unfair term' in a consumer contract is not binding on the consumer; and that a significant imbalance in the rights and obligations of the parties will lead to a term being perceived as unfair.

If you read the OFT v Ashbourne judgment, the reasoning for finding that the minimum terms were not enforceable in some of the contracts was entirely based on the third principle.

Contrary to your statement that "(as they deemed that enough time to find another customer)", on this point the decision had nothing to do with mitigation of loss, and nothing to do with how long it might take the gym to find another customer.

You will note that a minimum 12 month term was upheld in some of the contracts but not others - it was all to do with how fair the minimum term was in the context of the contract as a whole rather than the length of the term.

We've been over this. The difference in the scenario you describe is that you'd already have the widget. Therefore trader would have a claim for the price agreed. In OP's scenario, the service has not been fully performed yet. A fairer comparison would be where you make an order for goods in instalment and then cancel halfway through.

A contract does not need to be fully performed for there to be a debt claim. The trader is entitled to bring a debt claim for the price, if the price has fallen due for payment.

If a consumer agrees to pay £100 by a given date, £100 is what he must pay.

Cancelling a rolling contract before expiry of the minimum term is not the same thing. In this case the price of the good or service never falls due for payment. The contract is brought to an end when the consumer terminates it, and if the consumer terminates early what the trader has is a breach of contract claim against the consumer for wrongfully terminating the contract within the minimum period. This is a breach of contract claim for wrongful termination, not a claim for the price due under the contract. This is why the common law rules on damages for breach of contract (e.g. penalty clauses, mitigation of loss and so on) apply.

In this case we are talking about pre-payment of services. There is no question of anybody having breached the contract or anybody cancelling the contract within a minimum term. The consumer has purchased PT sessions and it is entirely up to him/her whether he/she wants to use them. There is no common law right to get a refund of pre-payments.

You clearly don't understand the article you've linked given it relates to indemnity clauses in commercial agreements. You understand what an indemnity is?

This comment gave me a good chuckle. As it happens I acted on one of the recent court of appeal cases concerning interpretation of an indemnity. I know what an indemnity is, thanks.

The reason why I linked you to the article was that it explains the difference between a 'debt' claim and a 'damages' claim.

unholyangel

steampowered wrote: »

You are conflating three completely different legal principles.

The first principle is the idea that a clause which provides for a fixed sum to be payable following a breach of contract is unenforceable if it constitutes a 'penalty clause'.

The second principle is the idea that a party who is claiming damages for breach of contract must mitigate his loss.

The third principle is the statutory provision in s62 of the Consumer Rights Act 2015 which says that an 'unfair term' in a consumer contract is not binding on the consumer; and that a significant imbalance in the rights and obligations of the parties will lead to a term being perceived as unfair.

If you read the OFT v Ashbourne judgment, the reasoning for finding that the minimum terms were not enforceable in some of the contracts was entirely based on the third principle.

Contrary to your statement that "(as they deemed that enough time to find another customer)", on this point the decision had nothing to do with mitigation of loss, and nothing to do with how long it might take the gym to find another customer.

You will note that a minimum 12 month term was upheld in some of the contracts but not others - it was all to do with how fair the minimum term was in the context of the contract as a whole rather than the length of the term.



A contract does not need to be fully performed for there to be a debt claim. The trader is entitled to bring a debt claim for the price, if the price has fallen due for payment.

If a consumer agrees to pay £100 by a given date, £100 is what he must pay.

Cancelling a rolling contract before expiry of the minimum term is not the same thing. In this case the price of the good or service never falls due for payment. The contract is brought to an end when the consumer terminates it, and if the consumer terminates early what the trader has is a breach of contract claim against the consumer for wrongfully terminating the contract within the minimum period. This is a breach of contract claim for wrongful termination, not a claim for the price due under the contract. This is why the common law rules on damages for breach of contract (e.g. penalty clauses, mitigation of loss and so on) apply.

In this case we are talking about pre-payment of services. There is no question of anybody having breached the contract or anybody cancelling the contract within a minimum term. The consumer has purchased PT sessions and it is entirely up to him/her whether he/she wants to use them. There is no common law right to get a refund of pre-payments.


This comment gave me a good chuckle. As it happens I acted on one of the recent court of appeal cases concerning interpretation of an indemnity. I know what an indemnity is, thanks.

The reason why I linked you to the article was that it explains the difference between a 'debt' claim and a 'damages' claim.

Lets see, where should I start.

The contracts held to be fair by the high court in OFT v Ashbourne were only 12 month contracts that allowed for cancellation in some circumstances - the contracts that were 12 months but did not allow cancellation in some circumstances were found to be unfair. Similarly, contracts of 24 or 36 months were found to be unfair even if they allowed cancellation for medical reasons, losing job etc.

A penalty clause does not require a fixed sum to be payable. Strictly speaking, a penalty clause is a clause which disproportionately sanctions (penalises the party in breach) and is distinguishable from a liquidated damages clause which is a reasonable pre-estimate of loss (to give the injured party restitution).

My comment about courts deeming that long enough to find another customer was made in relation to cases that have been heard through county court rather than in relation to oft v ashbourne (especially given the latter was an enforcement action by oft rather than asking the court to determine what would be a reasonable amount of damages in early/wrongful termination).

I think you need to read the article you linked again. It specifically relates to how a claim for a debt can arise in very limited circumstances if there is a properly drafted indemnity clause in a commercial agreement. Its something which can be drafted into contracts - a liability you can choose to accept - rather than one that is the default rule in law.

Lets just go through the cases mentioned in the links. Royscot v Ismail - where a director of a company provided a personal indemnity in order to secure finance.

Or perhaps ABN AMRO v McGinn, Beattie & Leek - where directors provided personal indemnities to a ABN AMRO in exchange for ABN AMRO buying the debts of their company.

Or The Codemasters Software Co. Ltd v Automobile Club De L'Ouest - where a race organiser provided a computer software company with an indemnity against third party IP claims.

You'll also note the article stresses how drafting is key as only a reimbursement indemnity for a specified sum in certain circumstances will be a debt - if its a reimbursement indemnity for a unspecified sum or a hold harmless clause, its a claim for damages.

Notice the first 2 cases is a claim of personal liability due to the directors giving a personal indemnity in exchange for them providing finance. In other words, they were sued as guarantor/s for an amount they had previously agreed to and already had the benefit of in its entirety. All that was left was the creditors benefit.

In the latter IP case, they specifically had a warranty clause that they had the legal right worldwide to grant the licenses & rights they granted in the contract (and also agreed to an indemnity clause against breach of that warranty). Again, they had already received the benefit of the contract.

So I ask again, do you know what an indemnity is? I don't think you do else you wouldn't be suggesting it applies here.

As for your comment on prepayments, there's no common law right for them to keep your prepayments either - only to be reimbursed for losses that can't be reasonably mitigated.

Rob_LB

I hope you don't mind me jumping on this can someone explain why indemnity was mentioned or referred to, i'm struggling to understand why it applies here?!

Seems like a lot of people speculating saying that Jaqua2 can't get her money back but nobody has gone back to basics and asked the question, what was actually agreed and what terms (if any) were referred to in the facebook conversation?

There is a legally binding contract no two ways about it but what I would want to know is whether the sessions were pre-booked or if the sessions are booked as an when. I also see that Jaqua2 said the PT refused to refund any monies when asked, so the next question I would have is, at any point during that facebook conversation did the PT say that the sessions are non-refundable.

If the answer is no, then arguably Jaqua2 can obtain a refund because there was no term (certainly not brought to her attention) to suggest that there isn't a refund if the sessions can't be used. If there was mention that the sessions were non-refundable then it is possible that the term may be regarded as unfair (not automatically however) and again will come down to whether the sessions were already pre-booked. I would then have to agree with unholyangel on the point about the CMA guidance but also point to the 'Grey List' in the Consumer Rights Act which says that a term may be regarded as unfair if 'where the consumer decides not to conclude or perform the contract, the consumer must pay the trader a disproportionately high sum in compensation or for services which have not been supplied'.

The CMA's most recent guidance suggests that where advance payments have been made, they consider a term to be unfair which allows the trader to keep 100% of the advance payment regardless of the reasons for the customer cancelling. The CMA suggests that the trader should rather ask for a deposit or retain a sum which covers their costs and/or mitigate their losses, otherwise there could be double profit effect which the courts would most definitely not find acceptable.

If the sessions were pre-booked and you gave enough advance notice for the PT to find an alternative customer to book that date then the PT could retain a small sum for administration or other things to cover the costs of having to advertise that session which is available etc. However, if the session wasn't pre-booked then it might be possible to say that actually there is no loss to the PT and no right to simply retain the full amount as it could be deemed as a double recovery.

Just my thoughts

naedanger

Rob_LB wrote: »

I hope you don't mind me jumping on this can someone explain why indemnity was mentioned or referred to, i'm struggling to understand why it applies here?!

I don't think any poster thinks indemnity applies here.

(Indemnities were mentioned in an article that was quoted by one poster but not because it mentioned indemnities but because it explained the difference between a 'debt' claim and a 'damages' claim.)

There is a legally binding contract no two ways about it but what I would want to know is whether the sessions were pre-booked or if the sessions are booked as an when. I also see that Jaqua2 said the PT refused to refund any monies when asked, so the next question I would have is, at any point during that facebook conversation did the PT say that the sessions are non-refundable.

If the answer is no, then arguably Jaqua2 can obtain a refund because there was no term (certainly not brought to her attention) to suggest that there isn't a refund if the sessions can't be used. If there was mention that the sessions were non-refundable then it is possible that the term may be regarded as unfair (not automatically however) and again will come down to whether the sessions were already pre-booked. I would then have to agree with unholyangel on the point about the CMA guidance but also point to the 'Grey List' in the Consumer Rights Act which says that a term may be regarded as unfair if 'where the consumer decides not to conclude or perform the contract, the consumer must pay the trader a disproportionately high sum in compensation or for services which have not been supplied'.

The CMA's most recent guidance suggests that where advance payments have been made, they consider a term to be unfair which allows the trader to keep 100% of the advance payment regardless of the reasons for the customer cancelling. The CMA suggests that the trader should rather ask for a deposit or retain a sum which covers their costs and/or mitigate their losses, otherwise there could be double profit effect which the courts would most definitely not find acceptable.

If the sessions were pre-booked and you gave enough advance notice for the PT to find an alternative customer to book that date then the customer could retain a small sum for administration or other things to cover the costs of having to advertise that session which is available etc. However, if the session wasn't pre-booked then it might be possible to say that actually there is no loss to the PT and no right to simply retain the full amount as it could be deemed as a double recovery.

Just my thoughts

If I was in the op's position I would be arguing along similar lines.

unholyangel

Rob_LB wrote: »

I hope you don't mind me jumping on this can someone explain why indemnity was mentioned or referred to, i'm struggling to understand why it applies here?!

Feel free to jump on - the thread/board doesn't belong to any of us

As for why indemnity has been referred to - you'd have to ask steampowered. He seems to think the article he linked describes the difference between a claim for debt and a claim for damages in general application seemingly unaware that it is instead describing the differences in commercial indemnity clauses which have no relevance here.