Banks’ victory in Supreme Court spurs Foxtons to fight fees ruling

Published 24th Dec 2009

Foxtons is to appeal against a High Court ruling that millions of pounds of fees it has charged landlords are unfair, after the banks’ overdraft charges victory gave the estate agent hope that it could win a renewed legal battle against the Office of Fair Trading.

The decision to appeal means that landlords who were stung by the fees — described as traps and time bombs by Mr Justice Mann in July — now face the possibility that they will not receive any money back. In some cases, landlords had been hoping for refunds of several thousand pounds.

Buy-to-let investors who had been charged similar commission fees by other estate agents could also have their hopes of a refund dashed if an appeal by Foxtons is successful. The ruling against the estate agent had raised the possibility that all landlords who had paid such fees, hidden in the small print of their contracts, would be entitled to a rebate.

Lawyers said that a win for Foxtons could save it millions of pounds in refunds. It charged clients 11 per cent of the rent they received in so-called “renewal” commission, an annual fee that applied if a tenant stayed in a property even after the original lease had ended.

Foxtons told The Times that the Supreme Court ruling in the bank case, in which millions of customers were told they could no longer expect a refund for overdraft charges because they could not be considered unfair, had set a precedent for contract terms and paved the way for its appeal.

A spokesman for Foxtons said: “The judge in the Foxtons test case followed the law as it then was. However, since then, the Supreme Court in the bank charges case has significantly altered the way in which the courts are to approach the unfair terms regulations.”

The agent’s decision to press ahead comes despite a note of caution by the Supreme Court that its bank charge ruling was based on a different point of law and could not necessarily be used as a precedent for a Foxtons appeal.

In the bank case, the Supreme Court ruled that the Office of Fair Trading had no right to look into bank charges, despite decisions in the High Court and the Court of Appeal for the regulator.

Foxtons’ fees were deemed unfair because the terms were not written in plain and intelligible language and were not open to negotiation.

Lawyers said that Foxtons could still win in the Court of Appeal. John Spence, of Thomson Snell & Passmore, a law firm that represents landlords and lettings agents, said: “Foxtons will be arguing that its renewal commission terms were [like bank charges] also part of the overall package they offered to landlords. However, Foxtons will still need to get over the hurdle that their renewal commission terms were also found not to be in ‘plain and intelligible language’, contrary to regulations.”

Lawyers said that landlords would now have to wait longer for a decision on the appeal before they could lodge claims against agents. Mr Spence said: “Any landlords who have issued claims against Foxtons or who are contemplating bringing a claim are likely to have it stayed by the court, at the request of Foxtons, pending the outcome of the Court of Appeal hearing.

“If Foxtons win their appeal, then the judgment of Mr Justice Mann in July will be overturned and this will give Foxtons a very strong defence to any future claims brought against it by landlords looking to recover past renewal commissions.”

Foxtons was last week granted leave to appeal against the High Court decision in July. It must lodge this appeal on fees by January 29.

Foxtons will not challenge rulings against terms requiring landlords to pay commission after the agent has sold a property and requiring commission for a property’s sale to a tenant.

Source: ' Times '

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