James Robert Longley v PPB Entertainment Limited & Ors

In these proceedings, the Claimant, Mr Longley, claims the sum of £257,400, plus statutory interest, arising from an alleged breach of contract by the Maltese-registered Defendant companies, which operate the business of a bookmaker and are licensed to take bets from customers in Great Britain by the Gambling Commission. They trade, collectively, under the name ‘Paddy Power’, which it is convenient to use throughout this judgment.

The majority of the facts giving rise to these proceedings are not in dispute and are summarised below.

Mr Longley has an account, ‘jameslongley1’, with Paddy Power, enabling him to place telephone bets and to receive any winnings. On Saturday, 21 September 2019, Mr Longley telephoned Paddy Power’s telephone betting line, seeking to place an ‘each way’ bet of £1,300 on a horse named Redemptive, at 16/1, in the 19:20 race at Wolverhampton (‘the Race’). In an each way bet, the total stake is double the notional value of the bet. Half of that total stake relates to a bet that the horse will win the race and half to a bet that it will place high in the race (usually, and in this case, within the first three places). If the horse wins, both halves of the bet succeed. If it places, only half of the bet is successful and half of the total stake is lost. The odds offered by bookmakers relate to a win. In this case, Paddy Power’s odds for the placing part of the bet were 4/1.

The Dial-a-Bet operator to whom Mr Longley spoke was Ms Kendra Farrugia, who was based in Malta. The size of the stake was such that the computer system would not allow the bet to be placed without prior human approval. Ms Farrugia placed Mr Longley’s call on hold whilst she contacted a trader in Ireland, Mr Sean Heffernan, whose role it was to decide whether to accept a bet which exceeded the system limit. Ms Farrugia informed Mr Heffernan that Mr Longley was seeking to place a bet of £13,000 each way. Mr Heffernan then sought authority to place such a bet from Mr Aidan McCarthy, Racing Risk Manager. Mr McCarthy granted authority, as requested by Mr Heffernan. Ms Farrugia then informed Mr Longley that she had cleared the bet with a trader. The two parts of their conversation ran as follows:

Paddy Power’s spreadsheet of all bets placed by Mr Longley that day records that an each way bet of £13,000 was placed, at 17:36. Mr McCarthy arranged for some of the liability on the Race to be hedged. Following his discussion with Ms Farrugia, and before the Race, the Claimant checked, via the Paddy Power app, that £26,000 had been deducted from his account. Paddy Power’s log-in records show that he successfully logged-in to his account at 18:08 on that day. Redemptive won the Race and £286,000 was credited, automatically, to Mr Longley’s account, calculated as follows: (£13,000 x 16 = £208,000) + the stake of £13,000 + (£208,000 x 0.25 = £52,000) + the stake of £13,000.

At 19:51 that same day, Mr McCarthy wrote to members of the Racing Leadership Team, under the subject ‘Massive Overlay’:

By e-mail sent at 07:31 on Monday, 23 September 2019, Mr McCarthy asked Customer Services to listen to the call between Ms Farrugia and Mr Longley, chasing for a reply 24 minutes later. At 08:47, Mr Martin Hynes, of Customer Services, replied:

At 08.50 that same day, Mr McCarthy asked the customer services team to amend the bet to £1,300 each way. The bet was subject to ‘resettlement’ at 09:15; the sum of £286,000 was removed from Mr Longley’s account and replaced with a credit of £28,600. Mr Longley’s claim is for the difference between those two sums, together with interest.

At around 15:44 on 23 September 2019, at his earlier request, Mr Longley had a telephone conversation with his Relationship Manager/VIP Relationship Executive, Mr Joseph Burns, whose note records:

At 17:10 that day, Mr Longley sent an e-mail to Mr Burns, requesting a copy of the telephone betting call. He repeated that request by text message sent at 12:08 on 24 September. Mr Burns replied stating that he had already requested a copy and that he would let Mr Longley know as soon as he had received a response. At 15:03, Mr Burns informed Mr Longley that he had managed to get his boss to increase the proposed settlement offer to £3,500 in cash. In the meantime, Mr Burns had received a copy of the digital recording of the telephone call and been advised to play it to Mr Longley over the telephone, rather than provide him with a copy. It was played to Mr Longley, Mr Burns believes ‘at least twice’, by prior arrangement, at 09:30 on 25 September. On 26 September, at 13:20, Mr Longley sent a text message to Mr Burns, stating, ‘The more I think about it the bet should be paid out but let me know what you come up with and we can discuss later.’ Shortly thereafter, Mr Burns telephoned Mr Longley to discuss Paddy Power’s offer of settlement. Mr Longley told him that he had taken advice and was rejecting that offer. Mr Burns sent a summary of their discussion to certain individuals within Paddy Power at 13:34 that day:

On 26 September 2019, Mr Burns telephoned Mr Longley and informed him that Paddy Power’s handling of the error had been correct, that it had been right to resettle the bet at £1,300 each way and that it would not be increasing its settlement offer. On 1 October 2019, he received a copy of Mr Longley’s solicitors’ letter to Paddy Power, after which he had no further dealings with Mr Longley.

Meanwhile, Paddy Power’s senior management had instigated a human resources investigation into Mr McCarthy’s conduct. By e-mail from Mr Séamus Hazlett, Head of Racing Risk, to a Ms Michelle Keegan, sent at 11:09 on 24 September 2019, Mr Hazlett observed that Paddy Power’s ‘lay to lose’ appetite was £3,250 per client and that, ‘the problem here is that we have laid the client a bet 44 (Footnote: ²) times the maximum the system would allow to ordinarily have on.’ Amongst other matters, Ms. Keegan was invited to investigate:

The outcome of the investigation has not been disclosed by Paddy Power and specific disclosure was refused by Master Sullivan on 19 May 2021. Amongst the recitals to her order, dated 19 May 2021, was the following: ‘AND UPON the Defendants confirming that Mr McCarthy’s subjective intention on 21 September 2019 was to approve the stake of £13,000’.

Mr Longley’s position is that, notwithstanding his original intention, the agreed bet which he placed was for £13,000 each way — by informing him that £26,000 was being taken from his account, Ms Farrugia made a counter-offer to enter into that bet, which Mr Longley accepted by confirming that that was the correct amount. Alternatively, so Mr Longley contends, his initial offer was to wager a stake of £1,300 each way, to which Paddy Power responded by indicating that it would accept a bet of £13,000 each way, whereupon he made an offer to place a bet in that latter sum, which Paddy Power accepted. In either event, it is said, Paddy Power is in breach of contract by failing to pay him the winnings which ought to have resulted from the larger bet.

Paddy Power’s position is that there was no such contract, for the following reasons:

Mr Longley disputes that there has been any material mistake and, hence, the application of Clause 16. In any event, he contends that, if the clause does apply, Paddy Power’s exercise of its discretion thereunder was irrational, capricious or perverse. Alternatively, he says, the clause is unenforceable as being unfair, by operation of section 62 of the Consumer Rights Act 2015 (‘the CRA’).

Clause 16 is set out, in full, below, in which the passages underlined are those upon which Paddy Power relies:

It is also convenient to set out here clauses 8.4 and 12.6:

It is common ground that Part 2 of the CRA applies to the contract between Paddy Power, as a trader, and Mr Longley, as a consumer, being a consumer contract within the meaning of section 61(3). The following are the material sections of the CRA:

I received live evidence from Mr Longley, and, on behalf of Paddy Power, from Mr Burns. I also considered the short witness statements of, respectively, Ms Farrugia and Mr McCarthy, each dated 26 March 2021. In a hearsay notice served by Paddy Power on the same date, it was said that it was not proposed to call either of them ‘because it would be disproportionate and unnecessary to call them as witnesses in circumstances where their statements deal with matters which are not understood to be contentious between the parties’. No application for permission to cross-examine either witness, under CPR 33.4, had been made on behalf of Mr Longley.

Mr Longley is a wealthy man, having sold a business in 2018 for £10M, with a further £5M being contingent upon certain targets being met. At the date of trial, all targets had been hit and signed off, such that Mr Longley was to receive the full balance, within a few days. Since selling his business, Mr Longley has invested in a number of other business enterprises. To the best of his recollection, he has had an online account with Paddy Power for at least 10 years. In his own estimation, he is not a particularly successful gambler; he places relatively large bets, for fun, knowing that he need not worry about the effect of any losses on his personal finances. Since 2013, prior to which he had not placed many bets, his account is ‘down’ by £106,000, including £49,000 which he has withdrawn. Most of his betting is on horse-racing. So Mr Longley recalled, during the day prior to the Race he had won £60,000. His opening balance on 21 September 2019 had been £78,785.03. Having placed a number of unsuccessful bets that day, shortly before placing the bet the subject of this claim Mr Longley’s account had stood at £59,335.

Mr Longley’s evidence was that, initially, the operator to whom he had spoken had told him that the maximum stake which Paddy Power would accept was £200. He had had no interest in placing a bet at that level. He had told the operator that he wished to place a bet of £1,300 each way on Redemptive, in the Race, a stake which he had selected at random. Consistent with his experience, the operator had offered to speak to a trader, in order to circumvent the maximum stake; any such approval always being conveyed through the operator. So far as Mr Longley could recall, he had never spoken to a trader.

Mr Longley stated that he had been very confident that Redemptive would, at least, finish the Race in the first three places and that he had considered the odds of 4/1 to have been very generous. He had also considered Redemptive to have had a decent chance of winning the Race. If Redemptive were to place, but not win, on a £13,000 each way bet, he would receive £39,000 (being 4 x £13,000, less half of the stake which related to the bet to win). If it were to win, he would receive £260,000 (being £208,000, plus £52,000 for the place). Whilst a total bet of £26,000 was likely to have been the highest he had ever placed using his Paddy Power account, it had not represented a great deal of money relative to his personal wealth. After the call, but prior to the Race, he had checked the Paddy Power app to ensure that £26,000 had been taken from his account, which had been the case, in line with his expectations. He had assumed that Paddy Power had been happy to take such a large bet on the basis of his losses earlier that day. At paragraph 26 of his witness statement, Mr Longley stated,

Under cross-examination, Mr Longley stated that he had been listening to what the operator had been saying during their telephone call. He had understood that she would be calling the trader to see whether his requested bet of £1,300 each way could be authorised and that it had been that bet to which she had been referring when informing him, ‘I got that cleared with a trader for you, if you like?’ Whilst Paddy Power had never before offered him ten times his suggested stake, he had placed more money on a bet, when his initial stake had been accepted. Mr Longley went on to state that he had placed a bet on many occasions and had known what was coming on the call. Whilst £26,000 had been confirmed as the sum which would be coming out of his account, his understanding had been that Paddy Power had been accepting a bet and that the operator had told him that it would be in the sum of £26,000. At that time, he had had no insight into, nor had he given any thought to, the conversation which had taken place between the operator and the trader. He had had no awareness of how or why they had got to that figure, nevertheless they had done so. His reaction had been one of excitement. Whilst it was possible that he had not known whether the sum of £26,000 had related to an each way bet, or a bet to win, he would always check the app to be sure and he had asked for an each way bet, acknowledging that he had also asked for a stake of £1,300. Had Redemptive lost, he would not have expected to receive his money back. It was put to Mr Longley that, in that event, he could have called customer services to ask for his money. He said that he was unaware of that and thought that such a strategy would have been very dangerous. Mr Longley’s evidence was that in the course of their first conversation on 23 September 2019, he had told Mr Burns that he had asked for a bet of £1,300 each way, but had not told him, as Mr Burns had stated in his witness statement, that it had not been until he had logged in to his online account and noticed that £13,000 each way had been bet that he had decided to let it ride.

In addition to providing some of the material set out under the heading ‘The undisputed facts’, above, Mr Burns told me that he had had no dealings regarding the striking of the bet on 21 September 2019, nor had he listened to the recording of any telephone call before speaking to Mr Longley for the first time on 23 September 2019. Prior to that, he had understood simply that there had been a dispute over a bet. He had also been unaware of the trader’s statement that he had ‘massively overlayed’ a horse; the first occasion on which he had seen Mr McCarthy’s email to that effect had been during cross-examination. Mr Burns’ evidence, at paragraph 6 of his witness statement, was as follows:

In her witness statement, Ms Farrugia stated that she is a native English speaker who had started working for Paddy Power in May 2019, as a dial-a-bet telephone agent. In that role, she would speak with customers on the telephone, typically handling around 200 calls per day, each of which lasting approximately two to three minutes. The balance of her statement essentially referred to the matters which are evident from the transcripts of her conversations.

In his witness statement, Mr McCarthy stated that he had worked for Paddy Power since 1992. On 21 September 2019, Sean Heffernan had asked for his opinion as to whether they could accept a bet of £13,000 each way from Mr Longley: ‘After a quick review of the race details, and Mr Longley’s betting history for the day, I told Sean that we could accept the bet. Sean then relayed this message to Kendra. As my job involves the management of racing risk across all of [Paddy Power’s] brands… I arranged for some of the liability on that race to be hedged. I believe that around €1,000 (Euro) was matched on Redemptive at odds of around 19.’ Mr McCarthy went on to state that, after the Race had taken place, he had noticed that Paddy Power had suffered a loss and had sent the e-mail headed ‘Massive Overlay’ to the Racing Leadership team. At paragraphs 7 to 10 of his witness statement, he said:

On behalf of Mr Longley, Mr James submitted that it was common ground that the words used in the telephone conversation between Mr Longley and Ms Farrugia were to be construed objectively. The precise order of offer and acceptance did not matter in a case in which both parties, subjectively and objectively, had agreed that a bet had been struck for £13,000 each way and a contract had been executed on those terms. Whilst it was accepted that, up to the point at which the alleged counter-offer/invitation to treat had been made, the exchange between Mr Longley and Ms Farrugia had related to a stake of £1,300, the position had changed from then onwards. The issue turned on the proper construction of Ms Farrugia’s words, ‘So that’s going to be 26,000 coming from Jameslongley1, is that correct?’

Clause 12.6 of Paddy Power’s standard terms emphasised that it was for the betting party to confirm the bet and Mr Longley’s confirmation of the sum to be taken from his account had followed the procedure envisaged by that clause, a matter also relevant to Paddy Power’s arguments regarding Clause 16. Mr Longley’s evidence had been that Ms Farrugia’s reference to a different stake had not surprised him; he had had experience of traders offering bets which differed from those which he had sought, albeit no examples of higher bets having been offered, and nothing as large as a tenfold increase. Whilst Paddy Power consistently had sought to avoid, or minimise the relevance of, the inconvenient figure mentioned by Ms Farrugia, all other terms of the bet had been communicated to her before she had contacted the trader. There had been five elements: the horse; the race; the odds; the type of bet (to win/each way); and the stake. The first four of those had already been communicated; the stake had been the only outstanding element. £26,000 had been the figure which Mr McCarthy had thought that he was authorising; there had been either a counter-offer of £13,000 each way, accepted with the words ‘That’s it, yeah’, or an invitation to treat, resulting in a revised offer by Mr Longley, by his use of the same words, which had been accepted with the words, ‘Set for clearance… And your bet is on fine.’ The operator would not have deducted £26,000 from Mr Longley’s account had she not confirmed that that had been the bet which he had struck. It was not necessary for the words used to have been intended as a counter-offer. The only alternative construction can be that there had been no contract at all. That would be a surprising conclusion, where there had been an executed contract, on terms which someone having authority had been prepared to accept on behalf of Paddy Power.

In short, Paddy Power’s approach failed to see the wood for the trees and sought to divorce the relevant wording from its context, submitted Mr James. Should Mr Longley’s evidence be accepted, the issue of unilateral mistake would not arise.

Mr James submitted that a unilateral mistake (so far as relevant to this case) is one in which one party is mistaken as to the terms of the contract. The objective principle of interpretation means that a party is normally bound by what he says or writes, irrespective of whether he in fact intends to convey that which the other contracting party reasonably understands in the circumstances from the words used. Where, however, one party accepts a promise knowing that the terms stated by the other differ from that other’s intention, the mistake may prevent effective acceptance of the words used, taken at face value; either the contract will be on the terms actually intended, or, possibly, the mistake will render the contract void. The interpretation to be applied is not that of an entirely detached observer, but that which would reasonably appear to the other party, in the circumstances.

Here, submitted Mr James, there had been no mistake; Ms Farrugia had not been the decision-maker and her original mistake had ceased to have effect by the time that the bet had been struck, because Mr McCarthy had intended to authorise a bet of £13,000 each way and Mr Longley had understood Paddy Power to have been willing to accept a significantly larger bet than, initially, he had requested and had authorised that bet, in accordance with clause 12.6. There was no question of Mr Longley having attempted to take unfair advantage of Paddy Power by seeking to buy something at a lower price than he knew to have been intended; the chances that Redemptive would win, or place, were unchanged by virtue of the higher bet. Mr Longley stood to win a significantly larger sum, but he also stood to lose a significantly larger sum. Mr McCarthy had been prepared to authorise a bet comprising all five of the elements previously outlined. In Hartog v Colin & Shields [1939] 3 All ER 566, in OT Africa Line Ltd v Vickers Plc [1996] 1 Lloyd’s Rep 700 (on each of which Paddy Power relied), and in Chwee Kin Keong v Digilandmall.com Pte Ltd [2006] 1 LRC 37, upon which Mr Longley relied, the price quoted had been significantly lower than the intended/ordinary retail price, subjectively not intended by the vendor. By contrast, in this case, the bet offered had been that which Paddy Power had intended to authorise. Whilst Paddy Power focused on the source of the information which led to the bargain struck, Mr Longley focused on the bargain itself. In order for Paddy Power to succeed in its defence of unilateral mistake, it would need to establish that Mr Longley had known that Paddy Power intended to offer a bet of £13,000 each way only if that were the stake previously sought by Mr Longley. Mr Longley had not been aware of the conversations which had been taking place behind the scenes, which was why the caselaw focused on the nature of the actual mistake, rather than on how it had come to be made, submitted Mr James. Paddy Power’s primary case was that Mr Longley had not heard, or mentally processed, the figure of £26,000 and yet, in order to establish its defence, it needed to demonstrate his positive belief that a mistake had been made.

There was a conceptual distinction between actual and constructive knowledge of the other party’s mistake, albeit often fine, and the two going hand in hand. Frequently, actual belief is tested by the belief which a reasonable man would hold in the same situation. Nevertheless, only actual knowledge suffices for unilateral mistake, submitted Mr James. That is because, on the face of it, there is a contract, but one in which one party has relied upon a known mistake by the other, such that it would be unjust to hold the latter party to the contract as apparently concluded. In Smith v Hughes (1871) LR 6 QB 597, at 608, Blackburn J had focused on the subjective intention of the purchaser, as had Hannen J, at 610. Neither judge had addressed the facts on the basis of constructive knowledge. Whilst Paddy Power relied on the dicta of Cockburn CJ, at 607, that passage related to the objective test for the existence of a contract. In other words, Paddy Power relied on the case for its consideration of whether there is a meeting of offer and acceptance, whilst Mr Longley relied upon it for the ingredients of a unilateral mistake.

The headnote in Hartog indicated that Smith v Hughes had been cited to the court. At 567C, the issue to be decided in Hartog was identified: whether the purchaser had known that a mistake existed and had sought to take advantage of it by ‘snapping up the offer’. At 567H – 568A, reference was made to the position of reasonable person, as part of the judicial fact-finding process, leading to a conclusion that the purchaser ‘must have realised, and did in fact know, that a mistake had occurred’. It is clear, submitted Mr James, that the position of the reasonable person is considered simply as a route by which to reach the court’s conclusion as to the purchaser’s actual knowledge, being the issue before the court. Acknowledging that commentators differ on the relevance of constructive knowledge, Mr James submitted that, in any event, in this case, Mr Longley had in fact formed the view which the reasonable man would have formed in the same circumstances. The actions of the latter person could inform the court as to Mr Longley’s actual belief.

In Centrovincial Estates plc v Merchant Investors Assurance Co Ltd, unreported, 4 March 1983, CA, the plaintiff had proceeded in the way in which Paddy Power submitted that this court should proceed, by considering the issue of the defendant’s constructive knowledge, but had then conceded that that issue could not be addressed on an application for summary judgment, and would need to be resolved at trial. The source of the asserted relevance of constructive knowledge was unclear and, seemingly, no authorities had been cited to the court, which had not considered it to be an appropriate occasion on which to embark upon a lengthy discussion of the law of mistake (per Slade LJ, page 6). Even if the premise that constructive knowledge will suffice had been right, the court appeared to have adopted an estoppel argument, advanced by the plaintiff, in addressing whether a contract had failed for lack of consideration. The doctrine of unilateral mistake had not been an issue before the court; in such a case, there is consideration and the issue is whether a concluded contract can be set aside. The propositions in Centrovincial Estates were relevant to mutual, but not to unilateral, mistake, submitted Mr James. Whilst OT Africa Line had been a unilateral mistake case in which Mance J, citing Centrovincial Estates, had adopted constructive knowledge as an element of the test, his decision had been obiter, first instance and based upon the way in which the applicant had advanced its case (see page 110, second column). The authorities to which reference had been made had been limited and there had been no consideration of authority pointing in a different direction.

In Mr James’ submission, the best summary of the law of unilateral mistake was to be found in Digilandmall.com, at [30] to [53], a case decided by the Singapore Court of Appeal. In that case, at [35], the court had concluded that phrases indicative of the relevance of constructive knowledge, ‘…are really evidential factors or reasoning processes used by the court in finding that the non-mistaken party did, in fact, know of the error made by the mistaken party’, going on to hold, at [41] - [42] and [52] - [53], that:

Mr James further submitted that the approach in Digilandmall.com was consistent with that adopted by Aikens J, in Statoil ASA v Louis Dreyfus Energy Services LP [2008] EWHC 2257 (Comm), who referred to the former case. In Statoil (see [84]), it had been common ground between the parties that, to the knowledge of the defendant at the material time, the relevant employee of the claimant had made a mistake when entering information into a software program in order to calculate the demurrage due from the defendant to the claimant under the terms of the contract. He had mistakenly believed that the vessel had completed its discharge on a date earlier than in fact had been the case. That, in turn, had affected the calculation of the demurrage due. Aikens J had held [93] that the mistake had not been as to a term of the contract and so did not affect the objective agreement between the parties. In setting out the effect at common law of a unilateral mistake, at [87] to [89], he had made reference only to the need for actual knowledge by the non-mistaken party. Having been referred to Digilandmall.com, he had considered [95] the decision in that case to have fallen ‘…squarely within the classic rule. There was a unilateral mistake by the seller about the price …. The buyers knew that the mistake had been made, but went ahead and “snapped up the offer”… Plainly, when the subjective evidence was examined, the parties were not agreed as to the most fundamental term of the contract: the price.’ In Merrill Lynch v Amorim Partners [2014] EWHC 74 (QB), Hamblen J had stated [54] that a contract could be avoided on the grounds of unilateral mistake only where the other contracting party knew of the mistake which had been made. There had been no reference to constructive knowledge and he had then gone on to cite from paragraphs 87, 88 and 96 of Statoil, in support of the proposition that the mistake in question had to be as to the terms of the contract. In neither Statoil nor Merrill Lynch, had anyone contended for a test of constructive knowledge, nor had there been any detailed analysis of the issue by the English courts subsequent to Digilandmall.com.

In this case, submitted Mr James, the consequence in law of any unilateral mistake had been rendered moot by Paddy Power’s acceptance that it should pay out on a £1,300 each way bet, the strategic reasons for which were obvious; it did not wish to be confronted with the legal consequences of its position. Were the court to be driven to an unattractive outcome, so be it, but such a conclusion would go against the grain of previous decisions, in which the court had striven to uphold the bargain struck, so Mr James submitted, such that few cases on mistake succeed.

The requisite elements of common mistake, if it is to avoid a contract, had been recited by Lord Phillips MR in The Great Peace (Great Peace Shipping Ltd v Tsaviliris Salvage (International) Ltd) [2002] EWCA Civ 1407 [76]:

Mr James submitted that any defence based upon common mistake must fail because the first and fifth such elements were not present. As to the latter, the bet was both capable of performance and (initially, at least) had been performed. Insofar as mutual mistake was said to differ from common mistake, the difference(s) had not been identified by Paddy Power, nor had the mistake under which each party was said to have been labouring. At all material times, Mr McCarthy had intended to authorise/accept a bet for £13,000 each way. Paddy Power’s case appeared to be that, nevertheless, Mr Longley’s intention at all times had been to place an each way bet of £1,300. That was incoherent and unreal, submitted Mr James; Paddy Power’s pleaded case was that, by virtue of the parties’ mutual mistake, the bet placed had been void and that Mr Longley had been able to retain £26,800 only through Paddy Power’s ‘honour and good customer service’. That was inconsistent with the full execution of the contract and subsequent adjustment made under Clause 16. Honour and good customer service might be expected to have led to Paddy Power’s payment out of the winnings due on the bet which it had agreed to accept.

Clause 16 was relevant only if the court were to find that a bet for £13,000 each way had been struck. In that event, on its true construction, Clause 16 did not assist Paddy Power, submitted Mr James. At paragraph 21(e)(i) of its defence, Paddy Power had admitted Mr Longley’s pleaded case that ‘the only error made was when the operator sought the authority from the broker’. The error made by Ms Farrugia, when seeking authority from the trader, had been neither material nor ‘obvious’ (the latter term to be objectively construed), within the meaning of Clause 16.1.1. To conclude otherwise would be to adopt an ‘extraordinarily wide’ meaning of Clause 16 and, further, to construe the word ‘error’ to apply only to the result of the error in question. It had been Mr McCarthy who had been the controlling mind of Paddy Power and he had made no error, such that no winnings had been awarded by virtue of any error; Mr Longley had won because he had placed a bet at the odds which had been offered and the horse had won the Race. Accordingly, Clause 16.6 was not engaged either, and it was to be noted that no demand for payment had been made by Paddy Power, prior to removal of the winnings which had been credited automatically. On the face of the standard terms and conditions, the only sub-clause potentially engaged was Clause 16.9 (the language of which did not require the error to have been ‘obvious’), subject to the submissions outlined below. However, submitted Mr James, the court was obliged to adopt the construction most favourable to the consumer and clauses 16.1 and 16.9 were aimed at errors resulting from a mistake made by the trader.

Further, once a causative error has been made, Clause 16 expressly empowers Paddy Power to correct it, but creates no obligation for it to do so. A contractual power which is exercised in a manner which is irrational, capricious, or perverse will not have been exercised lawfully: Braganza v BP Shipping Limited [2015] WLR 1661, SC, submitted Mr James. Albeit that he remained an employee, based in Dublin, and could have given evidence by video-link, Paddy Power had elected to call no evidence from Mr McCarthy, the decision-maker, notwithstanding Mr Longley’s repeated requests that it do so. The plain inference to be drawn was that its intention had been to avoid exposing him to cross-examination. As a consequence, there had been no evidence as to his decision-making process. The court was invited to draw adverse inferences against the Defendant. In particular, based upon (1) the e-mail conveying an apology; (2) the e-mail notifying an investigation; and (3) the three-minute gap between Mr McCarthy’s receipt of the email from Customer Services, dated 21 September 2019, and his actioning of the adjustment without having listened to a recording of the telephone call, the following inferences were invited:

In any event, Mr James submitted that Clause 16 fell within section 62 of the CRA. Paddy Power’s pleaded assertion to the contrary, upon the basis that the clause reflected mandatory statutory or regulatory conditions within section 73(1)(a) of the CRA, was misplaced; the provisions upon which reliance had been placed in the defence (see below) required only that the licensee have rules which cover the circumstances under which the operator will avoid a bet, or deal with errors; they did not require that the relevant provisions take any particular form. Sections 62 and 68 of the CRA require that a term be transparent and fair. Clause 16 is anything but transparent, submitted Mr James; buried, as it is, amongst 34 clauses, extending to 19 pages of text, within a total of 44 pages which, according to the index, apply to ‘online gambling’, rather than telephone betting, in language which is difficult to follow (even for a lawyer) and sub-clauses which are difficult to differentiate from one another.

Transparency is relevant to the issue of fairness, submitted Mr James. Inherent in fairness is the need for openness, requiring that ‘the terms should be expressed fully, clearly and legibly, containing no concealed pitfalls or traps. Appropriate prominence should be given to terms which might operate disadvantageously to the customer.’: Director General of Fair Trading v First National Bank Plc [2002] 1 AC 481, HL, at 494 [17], in particular at letter F. Adopting the definition in section 68 of the CRA, transparency, thus, is a subset of fairness, Mr James submitted; he was not seeking to invoke the separate use of that term relevant to the functions of the Competition and Markets Authority.

Paragraph 17 of Director General of Fair Trading v First National Bank Plc continued:

All such factors are referable to the characteristics of the particular contractual term, not of Mr Longley himself. The unfairness of Clause 16 must be judged by reference to all situations in which it might potentially be applicable, submitted Mr James. In summary, it allows Paddy Power unilaterally to take action to correct a mistake, whilst according no rights to the consumer if that mistake does not favour him or her, and after the outcome of the relevant race is known. Further, Paddy Power can lay off bets, to reduce its risk. It can make a profit on the transaction and still avoid the bet by reason of an error.

In addition, and on the question of transparency, Mr James referred me to:

In Mr James’ contention, whilst each case will turn on its own facts, the conclusions reached in Spreadex and in Green were invited and warranted in the instant case. In order to be enforceable, Clause 16 ought to have been signposted appropriately, in a reasonably short document, using language understandable to a layperson. Instead, it had formed part of a lengthy, poorly drafted document, which had adopted misleading or confusing language. Perhaps a crib document could have been provided. The mere fact that a contract is lengthy will not render it unfair, but the consumer in a consumer contract is not a lawyer, nor, reasonably, can s/he be expected to wade through pages of documents expressed in legalese.

Whilst it was the proper construction of Clause 16 which mattered, the fact that, in practice, it had been exercised unfairly indicated that the latter was not simply a fanciful possibility, contended Mr James. Mr McCarthy had acted capriciously, out of concern for his own position, rather than to correct an obvious error. The relevant factor which he had omitted to consider was the fact that a bet had been offered and accepted at £13,000 each way, circumstantial evidence of which was to be found in his failure to have followed the correct procedure. The Braganza point had not been pleaded because of the timing of relevant disclosure and the implied joinder of issue with the defence. No application to amend the particulars of claim had been made subsequent to Master Sullivan’s order out of a desire not to jeopardise the date of trial. Master Sullivan had refused the disclosure sought on the basis that Mr McCarthy’s e-mail of 21 September 2019 (13:51), entitled ‘Massive Overlay’, sufficed; she had not concluded that no issue had arisen on Mr Longley’s pleaded case. It would have been easy for Paddy Power to have called Mr McCarthy as a witness. It had not done so, resulting in a dearth of evidence as the factors which he had taken into, and left out of, account, when considering whether to invoke Clause 16.

Mr James concluded his submissions by observing that Paddy Power had accepted that damages in the sum claimed, together with statutory interest, would be payable in the event of adverse findings on liability.

Mr Wandowicz submitted that three issues arose for the court’s determination, the second and third of which arising only in the event that the first were determined in Mr Longley’s favour:

Mr Wandowicz submitted that the essential foundation of Mr Longley’s case was that a counter-offer had been made; he acknowledged and had pleaded that his initial request had been to place an each way bet, with a stake of £1,300. The counter-offer, as pleaded, had come in the form of the operator’s question, ‘So that’s going to be twenty-six thousand coming from Jameslongley1, is that correct?’, said to have been accepted by use of the words, ‘Yeah, that’s it.’ Thus, the question for the court was whether a reasonable person in Mr Longley’s position would have understood those words as constituting a counter-offer to place a bet at a stake of £13,000 each way, rather than at £1,300, as had been requested by Mr Longley. The answer, Mr Wandowicz submitted, was ‘no’; objectively construed in their context, the words used by Ms Farrugia had made no reference to the size of the stake and had constituted simple administrative confirmation of the amount to be debited from Mr Longley’s account, after the bet had been agreed. The parties’ use of the word ‘that’, following Mr Longley’s initial request to place a bet at a stake of £1,300, could only have referred to the request made. A counter-offer would have been structured differently. Whilst it could have taken many different forms, it could not have taken the form of the words used, which had not referred to the stake, or the nature of the bet (i.e. to win or each way); simply to the sum to be deducted from his account. Mr Longley’s assumption was that the alleged counter-offer had referred to an each way bet, with a stake of £13,000, because he had previously sought an each way bet, but he had also sought a different stake, meaning that he wished to have his cake and eat it, too. The separate conversations which had taken place between the operator and the trader, and between the two traders, had taken place out of Mr Longley’s earshot, such that the reasonable person in his position could only have understood that his request to place a bet at the lower stake had been approved. Mr Longley’s error, it was submitted, lay in focusing on the figure, above all else. That was a distraction which ignored the inconvenient fact that Paddy Power had only ever intended to accept the bet which he had requested. In order for him to succeed on his pleaded case, the relevant words would need to mean, ‘Scratch what you just said; let’s up the stake by ten times’; a construction which they would not bear.

On Mr Longley’s alternative case, advanced in his skeleton argument but not pleaded, he had made a revised offer, following an invitation to treat made by Paddy Power, in the form of the words pleaded to have constituted a counter-offer. That case suffered from the same difficulties. Mr Longley’s subsequent words, ‘That’s it, yeah’ had not come close to constituting a revised offer, followed by acceptance. The operator’s words, ‘Set for clearance’ meant nothing and her words ‘And your bet is on fine, Mr Longley’ had come later.

Accordingly, and whether the words used by the parties were considered in isolation or in context, there had been no counter-offer, or revised offer, and no bet placed at the higher stake. The claim ought to be dismissed on that basis. Nevertheless, the court was invited to consider the second and third issues, in case the matter went to appeal.

Mr Wandowicz submitted that, should Mr Longley succeed on the first issue, the Court should find, on the evidence, that he had known, or ought to have known, that Paddy Power’s use of the words on which he relied had not signalled its subjective intention to make an offer for a stake of £13,000. In that event, the defence of unilateral mistake would succeed. Alternatively, were the Court to find that Mr Longley had not paid attention to the relevant words, it would follow that, at all material times, he had understood his stake to have been £1,300. In that event, either there had been an each way bet for £1,300, or there had been no bet at all. Whilst there was no unanimous voice emergent from the authorities on the consequence of a unilateral mistake, that did not matter because no claim had been made by Paddy Power to recover the £28,600 resulting from the lower bet.

Mr Wandowicz advanced, as the neatest formulation of the relevant principles, those set out in Lord Burrows’ Restatement of the English Law of Contract, at section 35(4):

The proposition at (b)(i) was consistent with the following extract from Cartwright on Misrepresentation, Mistake and Non-disclosure [13-21 to 13-22]:

Dealing, first, with unilateral mistake, Mr Wandowicz referred to the following passage from Chitty on Contracts, 33^rd Ed [2-004] (Footnote: ³):

As to actual knowledge, Paddy Power relied upon the well-known case of Hartog, in which the court had accepted that no contract had been formed for the sale and purchase of a quantity of hare skins, because, to the knowledge of the plaintiff, the apparent offer had contained a mistake as to terms (price per pound versus price per piece, the latter being three times higher).

As to constructive knowledge, Chitty put the matter too meekly, submitted Mr Wandowicz. In Hartog itself (at page 48F), the court had stated (with emphasis added), ‘…the defendants…have satisfied me that the plaintiff could not reasonably have supposed that that offer contained the offerers’ real intention.’ Furthermore, both the Court of Appeal (obiter) and the High Court (possibly obiter, but in the course of full and careful analysis) have said (not merely ‘suggested’), that constructive knowledge of the mistake will suffice:

Whilst Mr Longley placed reliance upon Digilandmall.com, in which constructive knowledge had been held not to suffice, that had been a decision of the Singapore Court of Appeal, as to the law in Singapore. Even then, paragraph 47 had imported concepts of constructive knowledge into actual knowledge.

Applying the relevant principles to the facts of this case (and assuming that Mr Longley made good his case that he had heard the words used by Ms Farrugia and that the objective interpretation of those words was that a counter-offer to enter into a bet at £13,000 each way had been made), Mr Wandowicz submitted that the questions for the court were whether:

On the evidence, Mr Wandowicz submitted, it should be uncontroversial that Paddy Power had thought that it had been accepting Mr Longley’s requested bet; it was irrelevant which natural person’s intention was attributed to it, because:

Assuming that Mr Longley had heard the relevant words and paid attention to them (and it was Paddy Power’s case that he had not, given the ‘split-second’ timing), he must have realised that Paddy Power’s only intention had been to accept and confirm the bet which he had requested; at the very least, he ought to have realised that, submitted Mr Wandowicz; bookmakers do not, typically, counter-offer a stake, as Mr Longley — a highly intelligent and sophisticated gambler — must have known. Whilst it was not submitted that he was lying, his recollection was unreliable; shaped by his sense of grievance, a phenomenon recognised in Gestmin SGPS SA v Credit Suisse (UK) Limited [2013] EWHC 3560 (Comm) at [15] to [20], per Leggatt J (as he then was). At paragraph 16 of his witness statement, Mr Longley had stated, ‘After a short period of time the Operator came back onto the line and said that the trader she had spoken to had confirmed the bet. She then asked me to confirm that there would be £26,000 coming out of the Account. This corresponded to a £13,000 each way bet rather than a £1,300 each way bet. This was obviously a significantly bigger bet than I had asked for but I was very confident that Redemptive would at least place in the Race and so struck the bet.’ That evidence, submitted Mr Wandowicz, did not fit Mr Longley’s pleaded, or alternative, case: on that evidence, the bet had been confirmed prior to confirmation of the moneys to be deducted from Mr Longley’s account, and so had preceded the alleged counter-offer/revised offer. Furthermore, whilst Mr Longley’s past experience had included Paddy Power’s refusal of the stake sought, he had never experienced an offer to increase the stake, and ten-fold at that.

On the same basis, any reasonable bettor in Mr Longley’s position, would have known that no counter-proposal was being made, whether or not s/he had registered the figure to be deducted, but particularly if s/he had done so.

Any decision taken by Mr Longley after the call, having seen the deduction of £26,000 from his account via the app, had been post-contractual and could have had no effect on his intention during the earlier call. That his decision had been taken at that stage, and not at the time of contracting, was consistent with Mr Burns’ oral evidence and contemporaneous note of their first telephone call on 23 September 2019. Mr Burns was no longer employed by Paddy Power and, accordingly, had no ‘skin in the game’, submitted Mr Wandowicz. He had had no knowledge of the issue before he had spoken to Mr Longley and, thus, had been reliant upon Mr Longley’s account as his source of information. By contrast, Mr Longley had an interest in arguing that the note had been inaccurate.

Here, in addition to Lord Burrows’ proposition, Mr Wandowicz relied upon Chitty [33^rd Ed, 3-019 (Footnote: ⁵)], asserting that the defence would only arise in a discrete factual scenario:

Mr Wandowicz submitted that the question of mutual mistake would arise only if the court were to find that:

Were the Court to find that a contract existed at the higher stake, the application or otherwise of Clause 16 would arise. Mr Wandowicz submitted that, on its plain wording, the clause had been engaged. Mr Longley’s criticism of the wording used at best reflected poor draughtsmanship, but did not undermine its plain meaning; both parties acknowledge that an error had been made, leading to the bet placed (on this hypothesis) — the operator had added an extra zero to the stake, when requesting trader authorisation. Winnings are awarded automatically, by computer. Accordingly, any human error can only occur at an earlier stage. The real questions were whether Clause 16 fell within part 2 of the CRA and, if so, whether it constituted an unfair term.

As to the former question, in Mr Wandowicz’s submission mandatory statutory or regulatory provisions relating to Paddy Power’s standard terms and conditions included the Licence Conditions and Codes of Practice (‘the LCCP’), issued by the Gambling Commission and statutorily forming a part of Paddy Power’s gambling operator licences. Social responsibility code provisions 4.2.6(1)(a) and (b) of the LCCP provided that ‘Licensees must set out within the full rules that they make available the core elements for the acceptance and settlement of bets. These rules must cover: a. the circumstances under which the operator will void a bet; b. treatment of errors, late bets and related contingencies’, a provision which would be rendered meaningless if Paddy Power were not permitted to reverse a bet recorded in error. Clause 16 reflected the relevant provisions of the social responsibility code and, as such, was excluded from an assessment of fairness.

If that submission were rejected, the effect of Clause 16 was simply to correct human errors; it did not give Paddy Power any rights arbitrarily to escape inconvenient bets and a reasonable gambler would not see any difficulty in agreeing to such a term, submitted Mr Wandowicz. That being so, even if a bet had been struck at £13,000, Paddy Power had been entitled, contractually, to make the adjustment which it had made. Nothing in the CRA provided that any lack of transparency would affect the parties’ contractual rights, though it could result in regulatory action by the Competition and Markets Authority; the only relevant issue affecting contractual rights was whether Clause 16 was unfair. Whilst Paddy Power did not seek to suggest that Director General of Fair Trading v First National Bank was bad law, it had been decided in 2001, long before ParkingEye v Beavis [2015] UKSC 67 (see below), which was now the leading case on the test of unfairness (at the time to be found, in like terms, in the UTCCR, which had also contained a provision substantially the same as s.62(5) CRA) and had not been cited to the court in Green v Betfred, submitted Mr Wandowicz.

In ParkingEye, Mr Beavis had been charged £85 for overstaying the permitted period of free parking in a shopping centre. He had contended (so far as material for current purposes) that the contractual provision imposing the charge was unfair. At [105], the Supreme Court applied binding CJEU authority, explaining the position as follows:

By a majority of six to one, the Supreme Court had upheld the £85 charge, holding that, even though it might well have fallen within a list of potentially unfair terms contained in the schedule to the UTCCR (and now in a schedule to CRA), it had not come within the statutory test for unfairness: any imbalance in the parties' rights had not arisen contrary to the requirements of good faith. At [107-108], the Court had stated:

As was clear, from the wording of section 62 and the Supreme Court’s dicta above, there were two elements to the test, submitted Mr Wandowicz: there must be (1) a ‘significant imbalance in the parties' rights and obligations’ which (2) is ‘contrary to the requirement of good faith’. For a clause to be unfair, both elements must be satisfied.

As to that, Mr Wandowicz submitted that, adopting (for these purposes only) the hypothesis that a bet had been struck for £13,000 each way, Paddy Power was content to proceed on the basis that the clause created an imbalance, because the starting point was that Mr Longley could enforce an each way bet in that sum. However, in order to satisfy the first limb of the test, the imbalance must be ‘significant’ and was not, submitted Mr Wandowicz. First, the right to correct arises only in narrow, specified circumstances (where something has gone wrong), leaving everyday betting unaffected. Secondly, it is dependent upon the satisfaction of a specific factual test; whether a human error had occurred in the making of the bet. It would not suffice, for example, for Paddy Power reasonably but incorrectly to believe that a human error had occurred; the clause is drafted in objective terms. It is a safety net which does not affect the everyday operation of the contract. Even if that were not to be accepted, Clause 16 does not contravene the requirement of good faith, submitted Mr Wandowicz. Much like the overstaying fee in ParkingEye v Beavis, it fulfils a legitimate function in ensuring that erroneous bets are corrected. There is nothing punitive about it and, to the extent that it operates to Mr Longley’s detriment, it only does so in the technical sense, in depriving him of a windfall which he would otherwise retain, but would give him exactly that which he had requested.

In Mr Wandowicz’s submission, Clause 16 is also a provision which a reasonable, honest customer would not think twice about accepting in an individually-negotiated contract; no reasonable customer would object to bets being placed on the basis that an error would be corrected. Whilst Mr Longley himself might say that he would not have accepted it, that was nothing to the point — as the Supreme Court had made clear, at [108] of ParkingEye (set out above), the question is not whether Mr Longley himself would have agreed to Clause 16 in a negotiation, but whether a reasonable customer in his position would have done so.

In Mr Wandowicz’s submission, the fact that only Paddy Power can invoke Clause 16 is a function of the way in which the relationship works; it is only the gambler who can win — if s/he loses, Paddy Power simply retains the stake. Thus, Clause 16 is designed to address a situation in which the customer has been paid, to which an error in Paddy Power’s favour would have no relevance. The asserted lack of reciprocity and the scope for invoking Clause 16 after the race has been run were bad points, submitted Mr Wandowicz. Gambling operators’ licences are subject to an obligation to have alternative dispute resolution in place, whereby, at the gambler’s instigation, the dispute is referred to an adjudicator. In any event, the clause under consideration in ParkingEye had operated at the instance of one party only; not every one-way clause is unfair.

In the above circumstances, so Mr Wandowicz submitted, Clause 16 was not unfair, such that Paddy Power had an entitlement to correct the bet as it did. Mr Longley’s claim should be dismissed, whether on the basis of interpretation of the words used, by virtue of mistake, or by operation of Clause 16.

As to Mr Longley’s Braganza submission, the relevant factual premise had not been pleaded, or established. Whilst the amenability of Clause 16 to irrational, capricious or perverse operation, as alleged though not accepted, was relevant to the question of fairness, the court could not make findings as to whether it had in fact been operated in such a way, because that had not been a pleaded issue. Accordingly, it was not open to Mr Longley to invite the adverse inferences sought. Nor could the decision-maker’s motivation in looking into the matter be equated with his reasons for the decision then taken.

It is first necessary to make findings on the material issues of disputed fact.

Mr Longley accepts that his original intention had been to place a bet of £1,300 each way and that, at all times until the point at which he had been informed that £26,000 would be coming out of his account, he had understood that to have been the bet which Paddy Power had been considering and willing to accept. I accept his evidence that he had registered that larger sum when speaking to Ms Farrugia, and had been excited and willing to strike the larger bet because he had been very confident that Redemptive would at least place and believed the odds offered for that event to be very generous. That evidence is consistent with his acknowledgement of the words spoken; the absence of any subsequent attempt to correct/reduce his stake before the Race started; the sums of money which he had gambled within, approximately, the 24 hours which had preceded the Race; the extent of his personal wealth and, in that context, his risk appetite. Whilst Mr Burns’ note of their first telephone call on 23 September 2019 is said to record Mr Longley’s account that he had made a decision to ‘let it ride’, having checked his app online, I am satisfied that, the two positions are not necessarily inconsistent; following his conversation with Ms Farrugia, Mr Longley had checked the app, seen that the larger sum had, indeed, been taken from his account and decided to let matters lie. That does not establish his understanding of Paddy Power’s intention at the time of the call and it is inappropriate to seek to construe his words to Mr Burns as though they were a piece of legislation. Mr Burns’ stated clarity about the content of their conversation appears to rely on the existence of his note, which does not go as far as his stated interpretation of it and is consistent with Mr Longley’s position, as set out at paragraph 26 of his witness statement (Footnote: ⁶).

As to Paddy Power’s intention, there being no dispute that Messrs Heffernan and McCarthy had been asked, and intended, to approve a bet of £13,000 each way, the question arises as to whether, as an issue of fact, that approval had been predicated upon the existence of a prior request by Mr Longley for a bet of that sum. I bear in mind that I have received no oral evidence from Mr McCarthy and that such evidence as he has provided has not been the subject of cross-examination. Nevertheless, his witness statement is clear that Mr Heffernan and he had been considering whether to ‘accept’ a bet as requested by Mr Longley. That is consistent with the transcript of the conversation which took place between Ms Farrugia and Mr Heffernan; the way in which bookmakers typically operate; Mr Longley’s stated personal experience of his past dealings with Paddy Power, over a substantial period; and Mr McCarthy’s candid e-mail to the Racing Leadership team, sent shortly after the Race had concluded — ‘A PP customer James Longley…came on looking for a bet in the 7.20 Wolverhampton with Sean Heffernan £13k EW @16/1 Redemptive…’ (emphasis added).

I accept Mr Wandowicz’s analysis of the factual position as correct: there was a consistent, common intention on the part of Ms Farrugia, Mr Heffernan and Mr McCarthy to consider only the bet which each erroneously understood Mr Longley to have requested. Ms Farrugia’s error in conveying to Mr Heffernan a request for an each way bet of £13,000 led to Messrs Heffernan and McCarthy approving that request. As is clear from the transcript of the conversation between Ms Farrugia and Mr Heffernan, following Ms Farrugia’s statement, ‘… and he’s looking to get thirteen thousand each way, so a total of twenty-six thousand’, the decision made was ‘you can take that bet’. Neither was intending to make a counter-offer. When Ms Farrugia returned to complete her conversation with Mr Longley, she, too, intended to relay the traders’ acceptance of the bet which she and they had understood him to have requested. I am satisfied that, as a question of fact, the traders’ intention, as communicated to and via Ms Farrugia, was that Paddy Power would accept Mr Longley’s requested bet, which they erroneously understood to have been of £13,000 each way.

I am also satisfied that, when hearing Ms Farrugia’s reference to the sum of £26,000, Mr Longley immediately appreciated that the larger stake did not reflect Paddy Power’s true intention. First, as he acknowledged in cross-examination, in his approximately ten years as an account-holder Paddy Power had never offered him a bet at a stake higher than he had requested, let alone one at ten times the latter and, objectively, in such a substantial sum. Mr Longley is an experienced and sophisticated gambler who, I am satisfied, realised at the time, as would have anyone in that position, that a mistake had been made somewhere along the line, particularly as the higher sum in question had come with no discussion or explanation and would have resulted from the simple addition of a further zero to the stake which he had requested. I consider it to be likely that it was for that reason that he checked the amount which had been deducted from his account before the Race began. I reject Mr James’ submission to the effect that, whatever the origins of Paddy Power’s error, its consequential intention was to offer/accept an each way bet of £13,000; that is artificially to sever the figure from its proper and customary context, with which Mr Longley was very familiar.

Human nature being as it is, I am also satisfied that, when Mr McCarthy came to appreciate the extent of the loss which Paddy Power had sustained on the Race, he gave considerable thought to Mr Longley’s bet and the options available at that stage. A person in his position cannot fail to have appreciated that it could only be improved by the resettlement of the sums originally paid out, but that is not necessarily synonymous with an irrational, perverse, or capricious exercise of any discretion for which Paddy Power’s standard terms and conditions provide (assuming such considerations to be in issue at all — see below). His request that the bet be amended had followed confirmation by Paddy Power’s Customer Services Team that the dial-a-bet operator had made a mistake and that the stake in fact requested by the customer had been £1,300 each way. The amendment reflected the bet for which Mr Longley had asked, consistent with the intended basis upon which approval had been given.

The starting point is the proper construction of the words said to constitute (counter-)offer and acceptance and, hence, to constitute the oral part of the contract between the parties. It is common ground that the words used are to be objectively assessed — see, for example, Devani v Wells [2020] AC 129, SC [17].

For ease of reference, I repeat below the two-part exchange which took place between Ms Farrugia and Ms Longley:

On behalf of Mr Longley, it is accepted, properly, that the opening line of the second part of that conversation could only have been and was understood to have referred to his earlier request for an each way bet of £1,300. I accept Mr Wandowicz’s submission that Ms Farrugia’s next words, ‘…so that’s going to be 26,000 coming from Jameslongley1, is that correct?’ cannot sensibly be construed, objectively and in context, as a counter-offer of a bet of that sum. First, they had followed the immediately prior confirmation that Mr Longley’s requested bet had been cleared by a trader. Secondly, the language used made clear that the sum to be deducted from Mr Longley’s account would be deducted in consequence of that bet: ‘….so, that’s going to be…’. Thirdly, and even assuming that all other elements of the bet had, by that stage, no longer been under consideration, such that a £26,000 deduction from Mr Longley’s account could reasonably have been interpreted to refer to a stake of £13,000 each way, the language used had not been structured as a counter-offer, particularly in circumstances in which the stake requested by Mr Longley had been a tenth of the size and the sum of money in question was so substantial. Relevant, as part of the context, is the generally appreciated fact that bookmakers do not typically counter-offer bets at substantially higher stakes, such that, absent clear language communicating an intention to depart from that position, the objective interpretation of the words used would not point in that direction. In my judgment, taken at their highest, Ms Farrugia’s words constituted confirmation of the amount which would be debited from Mr Longley’s account.

Insofar as it is said to constitute relevant context, clause 12.6 of Paddy Power’s standard terms and conditions does not undermine that conclusion. In that clause, the words ‘…At the end of the call you will be asked to confirm that the total stake is correct’ do not establish that Ms Farrugia conducted herself accordingly, or assist in the proper construction of the words which she in fact used, which made no reference to the stake. They cannot operate to distort the meaning of the words used by Ms Farrugia, in the context of her conversation with Mr Longley, considered as a whole.

Thus, Mr Longley’s pleaded case fails. His alternative case, advanced in written and oral argument, and to which Mr Wandowicz, pragmatically, raised no objection, also fails. Here again, the language used by Ms Farrugia did not communicate an invitation to treat by Paddy Power; it sought Mr Longley’s confirmation that the deduction to be made from his account, following the trader’s clearance of his requested bet, was correct. Furthermore, his response, ‘That’s it, yeah’, cannot properly be construed as a revised offer by him — those are words of confirmation, referable to the immediately prior question, hence Ms Farrugia’s reply, ‘Set for clearance.’ In any event, the words ‘Set for clearance’ do not communicate Paddy Power’s acceptance of a revised offer; they refer to the confirmation of the sum to be deducted from Mr Longley’s account which had just been sought. Accordingly, the words ‘And your bet is on fine, Mr Longley’ were themselves referable to the bet which (albeit erroneously) Ms Farrugia had recorded as having been requested by Mr Longley at the outset.

It follows that there had been no meeting of counter-offer/revised offer and acceptance and, hence, no contract for the placing of a bet of £13,000 each way by Mr Longley. The claim fails on that basis. Nevertheless, and as the parties invite me to do lest this matter go further, I consider, below, the various alternative positions which they advance.

It follows from my findings of fact that, to the actual knowledge of Mr Longley at the relevant time, there had been no intention on the part of any relevant employee of Paddy Power to offer or accept a bet at a stake other than that which Mr Longley had requested. In the context of this case, the relevance of constructive knowledge (other than as a means by which to ascertain Mr Longley’s actual knowledge) does not arise. At all times, Mr Longley had appreciated that the decision-maker was the trader, hence the need for Ms Farrugia to have obtained clearance of his desired stake. He had also appreciated that the trader was being asked to approve the stake which (so it was thought) he had requested. Both parties acknowledge that the stake is a fundamental term of the contract. If the alleged counter-offer is indeed to be construed as such, Mr Longley knew it to contain a mistake as to the relevant term and not to reflect Paddy Power’s real intention, but, nevertheless, ‘snapped it up’. Whilst it is right that, in so doing, he exposed himself to greater loss, should Redemptive fail to place, the fact remained that he also acquired the prospect of greater gain, thereby exposing Paddy Power to concomitantly greater loss.

Accordingly, in the event that there was an apparent contract for an each way bet of £13,000 (being the hypothesis to be adopted for these purposes), Mr Longley cannot enforce that contract. Whilst, in a different case, the question might then arise as to whether the apparent contract was void ab initio, or whether there was a contract on the terms intended by the mistaken party, in this case, it does not — whether or not on the cynical basis suggested by Mr James, Paddy Power has paid out on an each way bet of £1,300, and does not seek to recover the moneys paid.

As in this case, the matters which a reasonable person would have known will tend to indicate that which the relevant party actually knew, itself likely to explain the dearth of authority in England and Wales, within the ratio of the decision, as to the relevance of constructive knowledge. In my judgment, the analysis in Digilandmall.com reflects the law of England and Wales — constructive knowledge does not suffice for the purposes of unilateral mistake, for the following reasons:

Whilst, in the course of argument, these terms were used with some fluidity, the essence of Mr Wandowicz’s submission was that, in the event that Paddy Power’s case on interpretation and unilateral mistake were rejected, in the further alternative Mr Longley and Paddy Power had each been labouring under a different mistake. In this scenario, Mr Longley had not registered Ms Farrugia’s reference to £26,000 and considered that he had both sought and received approval of an each way bet in the sum of £1,300; and Paddy Power subjectively intended to counter-offer an each way bet of £13,000, rather than to accept the bet requested by Mr Longley. Thus, the parties had been at cross-purposes as to the subject matter of the contract and neither can establish that the other party should reasonably have understood his/its position.

So described, the assertion is one of mutual mistake. On the facts as undisputed and found, that issue does not arise; at no point did Paddy Power intend to make any counter-offer, or to do other than accept a bet for the stake which Mr Longley had sought, a fact which Mr Longley understood. The parties were not at cross-purposes as to the subject matter of the contract. If engaged at all, this defence fails.

I turn to consider the rival submissions relating to Clause 16, advanced on the hypothesis, which I have rejected, that, notwithstanding the mistake made by Paddy Power, a contract had come into being for an each way bet of £13,000. Mr James acknowledges that sub-clause 16.9 is potentially engaged, but submits that, on their proper construction, sub-clauses 16.1 and 16.6 are not.

In my judgment, subject to the contention that it is an unfair term (considered below), sub-clause 16.9, at least, is engaged on the current hypothesis. I repeat that term below:

As Mr Wandowicz pointed out, winnings are paid automatically, by operation of Paddy Power’s software. Thus, any human error can only occur at an earlier stage. I reject Mr James’ construction of the clause, which focuses, to use the old-fashioned language, on the causa causans, rather than on the causa sine qua non. In my judgment, there is no justification for such a narrow construction. The meaning of the clause is clear and encompasses a situation in which human error by Paddy Power has led to the incorrect award of winnings, which the betting party agrees to refund. There being no ambiguity, the contra proferentem principle (embodied in section 69 of the CRA) is not engaged. In any event, (1) I do not accept that clauses 16.1 and/or 16.6 are aimed at errors resulting from a mistake made by the trader (albeit that they would attach to such an error); and (2) in this case, both traders acted in the mistaken belief that the bet requested had been £13,000 each way.

The Braganza point does not arise; it has not been pleaded, in which circumstances and, whatever the explanation for that position, Mr McCarthy is not to be criticised for failing to have addressed the considerations which it would have engaged, had it been in issue. The implied joinder of issue with the defence does not assist Mr Longley; the defence does not address the matters which had informed Mr McCarthy’s exercise of any discretion. For the same reasons, it is inappropriate to draw adverse inferences from the limits of his evidence and Mr Wandowicz is right to submit that the factual premise of this unpleaded issue has not been established.

I note, in passing, however, the following two points:

Finally, I address Mr Longley’s position that, pursuant to section 62(1) of the CRA, Clause 16 is, in any event, not binding upon him, as being an unfair term of a consumer contract. As to that:

It follows that I reject Mr Longley’s contention that Clause 16 is unfair, within the meaning of section 62 of the CRA, and, hence, that, if engaged, it was not binding upon him.

In summary, in my judgment: