Case Summary and Analysis: Longley v PPB Entertainment & Ors
The case concerned the words exchanged between a Paddy Power customer and a telephone betting operator, in which a £1,300 stake was mistakenly increased to £13,000. On 21 September 2019 James Longley telephoned Paddy Power’s betting line to place a bet ‘each way’ of £1,300 on Redemptive at 16/1 in the 19:20 race at Wolverhampton. The size of Mr Longley’s stake meant that he was not allowed to place the bet without human approval – he was put through to an operator based in Malta, Ms Farrugia. Ms Farrugia placed Mr Longley on hold and contacted a trader in Ireland, Mr Heffernan, whose job it was to decide whether to accept the bet as it exceeded the pre-set limit set. Ms Farrugia informed Mr Heffernan that Mr Longley wanted to place a bet of £13,000 each way. Authority was granted by the Racing Risk Manager, Mr McCarthy, which was passed onto Ms Farrugia who informed Mr Longley that she had cleared the bet with the trader.
The key extracts of the recorded transcripts went as follows:
Farrugia: How can I help you Mr Longley?
Longley: Er… Can I have… Wolverhampton… 7.20…
F: Wolverhampton 7.20, yep.
L: Thirteen hundred pounds each way please.
F: Thirteen hundred each way. On what please?
F: Hi, I got that cleared with a trader for you, if you like?
L: Yeah, lovely.
F: Alright, so that's going to be twenty-six thousand coming from Jameslongley1, is that correct?
L: That's it, yeah
F: Set for clearance
L: Thank you
F: And your bet is on fine Mr Longley
Paddy Power’s spreadsheet recorded that Mr Longley had placed a bet that day of £13,000 at 17:36. Before the race, Mr Longley checked his account on the Paddy Power app and noted that £26,000 had been deducted from his account. Redemptive won the race and £286,000 was credited automatically to Mr Longley’s account. On the same day, Mr McCarthy requested that the customer services team amend the bet to £1,300 each way. The bet was subject to ‘resettlement’ and £286,000 was removed from Mr Longley’s account and £28,600 credited back.
Mr Longley’s claim was for the difference between £286,000 and £28,600. The parties’ positions were as follows:
Position for Mr Longley:
- Regardless of his original intention, the agreed bet which Mr Longley placed was £13,000 each way. When Ms Farrugia informed Mr Longley that £26,000 was being taken from his account, this was a counter-offer made to enter into that bet, which Mr Longley accepted by confirming.
- In the alternative, the initial offer made by Mr Longley was to wager a stake of £1,300 each way. Paddy Power’s response was that it would accept a bet of £13,000 each way, upon which Mr Longley made an offer to place a bet in the latter sum and Paddy Power accepted.
- In either event, Paddy Power was in breach of contract by failing to pay Mr Longley the winnings it ought to have from the larger bet.
Position for Paddy Power:
- There was no such contract in place, for the following reasons:
- The proper, objective construction of the second conversation between the parties was not as Mr Longley said.
- In the alternative, either there had been (i) a contract for £1,300 each way, by reason of Paddy Power’s unilateral mistake, or (ii) no contract by reason of the parties’ mutual mistake.
- In the alternative, in the event there had been a concluded contract each way of £13,000, by operation of clause 16 of its standard terms and conditions under which Mr Longley held an account, Paddy Power was not liable to pay any winnings and Mr Longley was obliged to refund any such winnings.
Mr Longley argued that if clause 16 did apply, Paddy Power’s discretion was (i) irrational, capricious or perverse, or (ii) unfair (and therefore unenforceable) under section 62 of the Consumer Rights Act 2015 (the “CRA 2015”).
1. On the proper construction of the words used by Mr Longley and Ms Farrugia, was there a meeting of counter-offer/revised-offer and acceptance and therefore a contract for placing a bet of £13,000 each way?
Mrs Justice Ellenbogen DBE noted that when considering the oral part of the contract between the parties, the words used must be objectively assessed. With regards to the second part of that conversation in which Ms Farrugia’s said, ‘…so that's going to be 26,000 coming from Jameslongley1, is that correct?', Mrs Justice Ellenbogen deemed that it could not sensibly be construed as a counter-offer of a bet of that sum. Mrs Justice Ellenbogen concluded that Ms Farrugia’s words constituted confirmation of the amount which would be debited from Mr Longley’s account. Mrs Justice Ellenbogen additionally noted the context in which the contract took place, namely that bookmakers do not typically counter-offer bets at substantially higher stakes. Absent clear language to that effect, the objective interpretation did not point to a counter-offer. This conclusion disposed of Mr Longley’s claim, but Mrs Justice Ellenbogen also discussed the alternatives.
2. Will constructive knowledge suffice to establish a unilateral mistake?
Mrs Justice Ellenbogen spent some time analysing the relevant case law governing unilateral mistake. It was noted on the facts that to the actual knowledge of Mr Longley, there had been no intention on the part of any employee of Paddy Power to offer or accept a bet at a stake other than that which Mr Longley had requested. Mrs Justice Ellenbogen noted that Mr Longley appreciated that the trader was being asked to approve the stake that the trader thought Mr Longley had requested. It was acknowledged by all parties that the stake itself was a fundamental term of the contract and that if the alleged counter-offer did exist, Mr Longley knew it contained a mistake on this term, which he could not enforce.
3. Was there a finding of mutual mistake?
On the question of mutual or common mistake, Mrs Justice Ellenbogen concluded that as a matter of law, constructive knowledge on the part of a non-mistaken party would not suffice to establish the defence of unilateral mistake and in the context, this defence would not suffice.
4. Was clause 16 in the terms and conditions an unfair term and was clause 16 in any event binding upon Mr Longley?
The relevant clause in the terms and conditions related to ‘Errors & Suspected Errors’ and provided that Paddy Power reserves the right to correct any obvious errors and void any bets placed in such circumstances. The clause held that any monies paid to a consumer as a result of an error are held on trust by the consumer and paid back to Paddy Power when transferred to the consumer’s account.
Mrs Justice Ellenbogen noted that the meaning of clause 16 was clear, encompassing a situation in which human error by Paddy Power led to the incorrect award of winnings, which the betting party agreed to refund. Mrs Justice Ellbogen considered the transparency of the clause:
- Reviewing the location of clause 16 within the terms and conditions, Mrs Justice Ellenbogen considered the content of the term suitably identifiable. Mrs Justice Ellenbogen considered that the provision of a crib sheet, as suggested by counsel for Mr Longley, would simply add further documentation and risk creating confusion between the summary provided and the detail of the clause itself.
- Mrs Justice Ellenbogen recognised that whilst certain aspects of the terms and conditions might benefit from some tidying up, the wording of the clause was legible and its meaning clear.
- The clause was deemed suitably signposted, both in the table of contents and within the body of the terms and conditions. It was considered in a prominent form which any reasonable user of Paddy Power’s services would be aware of its existence and nature and would have a fair opportunity to read it, should they wish to do so.
In the event there had been a contract for an each way bet of £13,000, clause 16 would have applied and it would not have been considered unfair within the meaning of section 62 CRA. Paddy Power would not have been liable to pay the winnings resulting from the error made and Mr Longley would have been obliged to refund any such winnings.
5. Does clause 16 create a significant imbalance in the parties’ rights, to the detriment of the consumer?
Mrs Justice Ellenbogen noted that there was an imbalance in the parties’ rights, to the detriment of the consumer. However, the question was whether that imbalance was significant. Mrs Justice Ellenbogen concluded that it was not – On its proper construction, Mrs Justice Ellenbogen noted clause 16 applied only in limited, defined circumstances in which an error had occurred and did not affect the everyday operation of the contract.
- The decision considered in detail the principles of offer and acceptance for placing bets via a telephone operator. The telephone records and transcripts were reviewed in detail as part of the judgment, alongside the context of telephone betting itself. It appears unlikely in the context of betting that an error made when reading back the intended stake would be considered a counter-offer or an invitation to treat for a new offer capable of being accepted by the consumer. The stake itself was highlighted as being a fundamental element in the construction of the contract, but the question does remain whether Mr Longley could have been found to have accepted such new term if he had expressed his alleged acceptance in a different way.
- The judgment highlighted that when considering unilateral and common mistake, constructive (rather than actual) knowledge is not sufficient to base a defence to a contract claim on unilateral mistake. The offeree would need to be factually aware to lead to a conclusion that the parties’ minds did not meet.
- The judgment made clear that the consideration of the question of fairness and transparency in consumer law terms and conditions is very much dependent on the facts. This aspect of the judgment prompts some recollection of the Green v Betfred case, but Mrs Justice Ellenbogen noted there is only limited assistance to be gained from conclusions in such similar cases. Whilst Mrs Justice Ellenbogen found in favour of Paddy Power in this case, the fundamental elements of fairness and transparency were nonetheless explored. When considering the enforceability of clause 16, Mrs Justice Ellenbogen reviewed the location, prominence, meaning and legibility of the drafting. For a refresher on how to review terms and conditions, see the key takeaways in our Law Now article on Green v Betfred.