Students as consumers: questions remain in disrupted degree litigation

The first tranche of student claims seeking compensation for the impact of COVID and teaching strikes on the delivery of their education has been settled shortly prior to trial. As has been widely reported, UCL agreed to pay £21million to settle claims by 6,500 students, an average of around £3,250 per claimant. As 35% of compensation was to pay legal fees and funding, the average sum was around £2,000. Predictably, the settlement of these claims prompted letters of claim to a further 36 universities in respect of around 200,000 further students (with in excess of 20,000 students said to have signed up since the reported settlement).

The settlement has deprived universities and their insurers of High Court findings on aspects of the claims which would have been highly relevant to further similar claims, and also to student claims more generally. Notwithstanding the settlement, it is worth reflecting on those aspects, including in view of the case management decisions reported as Hamon v University College London ([2023] EWHC 1812 (KB) (‘the 2023 decision’), and [2024] EWHC 1744 (KB), (‘the 2024 decision’)).

Student-university contracts: It has long been argued that student-university contracts have failed to keep pace with the increasing commercialisation of the sector, leaving students’ rights (and universities’ obligations) unhelpfully vague. We know from the 2023 decision that UCL had 14 different sets of contractual terms across seven academic years, itself a sign of a lack of contractual certainty, and we know that key issues in the case included:

1. Whether UCL owed an express (or implied) contractual duty to provide the claimants with a certain amount of (i) in-person, campus-based tuition and/or (ii) physical access to facilities to support the claimants’ learning.
2. If so, whether UCL breached that duty by cancelling tuition as a result of industrial action;
3. Further if so, whether UCL breached that duty by (a) cancelling teaching because of strikes, (b) moving teaching online, and/or (c) restricting physical access to facilities, during the Covid-19 pandemic?
4. Whether UCL was entitled to rely on any contractual clauses which purported to allow it to take those steps without providing compensation, or whether any such clauses are unenforceable under consumer rights legislation.

Whilst the particular contractual documents would of course have required interpretation and the answers may not have been the same, these issues raise fundamental questions about what students are contracting for, and what a university is obliged to deliver (and how). The range of potential answers to these questions is extremely wide. On the one hand, it might be argued that students are entitled to a competently run degree course, in which case students who complete their course successfully will generally have received what they contracted for. On the other end of the spectrum, students might argue that they have contracted for in-person tuition (lectures and in seminars) for a certain number of hours and across a stated range of subjects. Whilst a Court decision was unlikely to provide easily applicable answers for all cases, the approach of the Court to these issues would have been highly instructive. The OIA’s position in relation to teaching that has moved online is that it is a complaint about the quality of delivery, which is a matter of academic judgment which it is unable to consider.

Similarly, UCL was seeking to rely on various terms that permitted it to make changes to courses. The 2024 decision noted: “the Contract Variation Clause, the Programme Alteration Clause, the Force Majeure Clause and/or the Cooperation Clause”. Whatever the strict wording, the difficult question would have been where the line was drawn as to changes reasonably necessary for the efficient running of courses, and those which would or might permit such changes that they must fall foul of consumer protection legislation.

The arguments would likely have been different as between disruption caused by strikes, and by COVID. The move to online teaching as a result of COVID was ultimately forced by legislation and the pandemic itself was beyond the University’s control in a way that the cancellation of teaching as a result of industrial action was not. That said, the pensions dispute at the heart of industrial action was a dispute between staff and the pension scheme, not with the university directly, so responsibility on the part of the university is less obvious than it may instinctively appear. However, both the Office for Students and the CMA have been clear in their position that the ability of universities to restrict liability for changes due to industrial action by their own staff should be narrowly confined.

It is rare for a student claim against a university not to cite the Consumer Rights Act 2015 (‘the CRA’) either in relation to contract terms or damages. Caselaw in relation to the CRA remains limited and, as perhaps befits consumer legislation, the CRA is broadly worded but in a way that is arguably unhelpful when it comes to interpretation. Section 62 provides that an “unfair” term in a consumer contract is not binding, and an unfair term is one that “contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer”. Whether a term is fair must take into account the subject matter of the contract and all the circumstances at the time of the agreement. As to the latter, it may well be that terms enabling changes as a result of COVID might be more fairly viewed in contracts entered once the potential impact of COVID was known.

Damages: The 2024 decision stated the claimed damages as “i) Performance based damages, based on the difference between the market value of the services promised and the services actually provided; and ii) Damages for distress and disappointment”.

In relation to the former, similar fundamental issues arise as those referred to in the identification of the contract terms. Under the standard assessment of damages for breaches of contract, damages seek to put claimants in the position they would have been in but for the breach, but that would not be a sound basis for any form of refund, and would instead favour an approach which examined whether the degree outcome had been impacted in a way that could be measured in damages.  However, the OIA routinely awards partial fee refunds for inadequate courses, and there is an express right to such damages under s56 of the CRA (at least where the repeat performance of services is impossible or has not been delivered despite requests). The appropriate reduction or refund is of “an appropriate amount”, up to the full amount, so the ambit of the remedy is very wide.

A major complication in the application of this clause to the student-university contract is that the price paid is not reflective (in any real sense) of the actual value of the services being provided. Indeed, most undergraduate courses delivered to domestic students are capped at a figure which bears no resemblance to the usual ‘cost plus profit’ charge that would usually be applied to the provision of a more straightforward consumer service. The present version of the UCL student contract available online contains clauses which make this plain (“You acknowledge that Tuition Fees do not bear a direct relationship to teaching hours, contact hours or other easily measurable services. A wide range of other educational, professional (including, for example, IT, infrastructure and facilities), support and welfare services and other costs …  are taken into account in Tuition Fees”. This clause suggests it would be inappropriate in claims arising from industrial action simply to divide tuition fees by the percentage of teaching cancelled, for example (which was the approach suggested by the OIA in earlier strike claims), as this simple approach would unfairly overcompensate students where only the teaching element of the course had been impacted. The contract also states that “Tuition Fees are primarily linked to UCL having enabled you to achieve the Programme’s learning outcomes rather than the provision of specific services or teaching or contact time” which is clearly an attempt to limit remedies along the lines of traditional contractual principles. However, we suspect that there will be scepticism of any attempt to limit compensation in a way that arguably overlooks the CRA and the OIA’s stated approach, and claimants will undoubtedly highlight the price differential between on campus and online course fees.

Non-pecuniary damages: Compensation for distress and inconvenience is routinely awarded by the OIA. In complaints relating to course changes, the OIA’s position has been that universities cannot avoid paying compensation where they simply adapted courses so that students were not examined on topics or modules that were not taught, as there is an inherent value to students of education that is not reasonably addressed simply by ensuring that the degree outcome is unaffected. Whether a Court would make such a finding appears very much open to question, given that non-pecuniary damages are not generally recoverable for breach of contract at all, save in exceptional categories of cases where a main purpose of the contract was enjoyment (epitomised by holiday cases). Could a student-university contract be an exceptional category? It would be a quite striking development of the law, and there is currently no authority for such a proposition. One intriguing possibility is that the availability of such damages could turn on the nature of the benefit the student sought to derive from the course (and specifically the lost learning); whether it was merely a means to an end or whether the process of  learning was an enjoyable end in itself. Different considerations might apply depending on the nature of the course affected.

Conclusion

The settlement of the first tranche of student claims was not surprising but has deprived stakeholders of greater legal certainty in an area where a number of important issues remain unclear. It remains to be seen whether further tranches of similar litigation may offer additional assistance, but these claims are clearly going to run for some time yet.