The Property Ombudsman is standing by its ruling that an agent is entitled to its fee – even though a court subsequently decided the complete opposite and threw the claim out.
Deputy ombudsman Jane Erskine has written to vendor George Wood to explain why TPO believes its original ruling was right.
In the letter, she gives a new interpretation of ‘introduction’ and the circumstances in which an agent may claim a fee when they did not go on to sell the property.
The concept is that where the eventual buyer found by the first agent did not lose interest, then that agent introduced the buyer to the sale and is entitled to their fee.
TPO says that no viewing is necessary. It is enough for the first agent to have found the buyer via a sales board or a mailshot. TPO says the key is that the first agent sparked the buyer’s interest, which “never wanes”.
This interpretation is very different from the Foxtons case, where the Court of Appeal said that it was not enough for the agent to have introduced the buyer to the property; the agent must have introduced the buyer to the transaction. TPO claims that this does not apply in all cases.
The interpretation is also very different from what preceded the Foxtons case, where agents believed they were entitled to their fee if they had introduced a buyer ready, willing and able to proceed.
TPO’s review does not include looking at a transcript of the latest court case.
EYE makes no apology for the length of this story – it is a crucial one for the industry.
Background
In the case, Mr and Mrs Wood instructed Countrywide brand Palmer Snell to sell their home in Lyme Regis, Dorset.
Palmer Snell told the Woods about a couple, Mr and Mrs Luckraft, but as they still had two properties of their own to sell and were in no position to proceed, the Woods turned down a viewing.
Subsequently the Woods disinstructed Palmer Snell and signed up with Fortnum Smith and Banwell (FSB).
FSB went on to request a viewing for the Luckrafts, explaining that their situation had changed. They had sold one of their properties and were prepared to take out bridging.
The transaction duly went through and the Woods paid FSB their fee. Afterwards, Palmer Snell (PS) requested a payment of £7,935 through Sinclair Taylor, an estate agency fee-finder business.
The Woods went to TPO, which rejected their complaint.
Sinclair Taylor then took the couple to Weymouth County Court in an attempt to claim the fee plus costs, but the judge threw it out, citing the precedent involving Foxtons and Hamptons.
Internal review
As a result of the court ruling, EYE asked TPO whether there would be a review of its own ruling.
We received this reply from Jane Erskine: “TPO came to a decision based on the evidence provided by both parties and therefore do not share the view that the decision was wrong.
“However, TPO will undertake an internal review of the case file and study the transcript before coming to an informed view.”
Deputy Ombudsman: Ruling was correct
In her new letter to Mr Wood, Ms Erskine says TPO’s original ruling was right.
She says: “It is important to us that every decision we make is correct. We have not seen a court transcript so do not know what evidence was presented to the court, but accept that it is unlikely to be different from that provided to us by both yourselves and PS for our adjudication.”
She says that the agreement the Woods signed with PS said: “The Seller will be liable to pay the Commission Fee to the Agent . . . if unconditional contracts for the sale of the property are exchanged after the expiry of the period during which the Countrywide Agency is in force but to a Buyer who was introduced to the Seller during that period or with whom the Agent had negotiations about the property during that period.”
The letter says: “This was the clause that PS were seeking to rely on when claiming a fee and this is the clause that TPO considered.”
Counsel’s opinion
Ms Erskine says in her letter that following the Foxtons case, TPO had taken Counsel’s opinion and received the advice: “If the purchaser’s interest is sparked and never wanes, that should be enough [to constitute an introduction].”
Counsel said there was no need for a viewing, says the letter: “…the introduction by a for sale board or a mail shot would be enough if that is the essential part in introducing the purchaser to the deal”.
The deputy ombudsman says in her letter that the Foxtons’ case was different. Foxtons had shown a couple round a property, but the woman had no interest in it and the viewing was not completed. Hamptons had gone on to sell the property to the same couple.
“The purchase of the property was not brought about in any way by the actions of Foxtons and hence we would not consider it fair or reasonable for that agent to claim a fee,” says the letter.
Ms Erskine goes on to claim that in the Woods’ case, “it was the marketing material of PS that first brought the property to the attention of the buyers.”
She says that by disinstructing PS, the firm “were denied the opportunity to maintain contact with the buyers. . . . FSB negotiated the sale but, as we did state, our view was that PS introduced the buyers . . .
“We remain of the view that PS introduced the buyers to the purchase of the property.”
Ms Erskine says PS were thus entitled to a commission fee, and adds: “While we realise the court came to a different view, we do not consider that we were wrong.”
Effective cause of the sale
Ms Erskine in the letter appears to backtrack on a crucial part of the original ruling.
She tells Mr Wood: “I do agree with you that the wording . . . that they [FSB] were the effective cause of the sale was not helpful or correct; FSB negotiated the sale but . . . PS introduced the buyers.”
The letter concludes: “We will continue to educate agents in the light of your experience and will remind both agents and consumers that the Foxtons case is applicable to a specific set of circumstances; it is not applicable in all cases.”
Complainant’s response
Mr Wood has written back to Ms Erskine, suggesting that she obtain a transcript of the court case.
He says that the judge “articulated the difference between an introduction to the property and an introduction to the purchase”.
He also questions the statement that by disinstructing PS, the firm was denied the opportunity to maintain contact with the buyers.
He says: “I really don’t see the logic in this statement. PS decided not to maintain contact with the buyers, it had nothing to do with us.
“I have stated more than once that even in the weeks when they were still instructed PS made no contact whatsoever with Reverend Ian Luckraft (the buyer).
“[He] confirmed this fact in his witness statement to the court . . .
“I would therefore suggest that on this point alone, your decision to support PS was wrong.”
He says: “. . . You now retract your original statement that FSB were the effective cause of the sale as being incorrect. You now state that FSB negotiated the sale and PS introduced the buyers.
“So TPO reasoning is that the agent who physically did nothing to make the sale happen is due exactly the same fee as the agent who did all the work.
“Even worse is that TPO are relaxed about the consumer picking up the bill for this. I don’t think that I have ever come across such illogical muddled thinking.
“If that is what TPO consider fair and reasonable then I really do despair.”
Out of pocket
Mr and Mrs Wood do not have to pay a fee to PS after the county court ruling, but are out of pocket because of legal costs.
Mr Wood yesterday told EYE: “I assume that this [Jane Erskine’s letter] is their review of our case, but all it is really is a playback of their original decision. If they were to carry out a proper review, I would have thought that they would review the court transcript and would also want to see all of the witness statements.
“They are not prepared to learn any lessons from our case, and have not expressed an opinion on why they think Judge Williams’s judgement was wrong and they are right.
“PS did not do a viewing, did not provide documentary evidence that they were the effective cause of the sale and did not maintain contact with the prospective buyers when still instructed.
“We really have been robbed of our money because of a poor TPO decision.”
Comments (25)
Never let a case go to any Ombudman/Redress Scheme. They are all useless at making decisions in my opinion.
If a tenant or vendor tries to make a claim, best to make a counter claim if you know you in right via the courts. This way the redress scheme will not take the claim on and a proper decision will be made (Hopefully).
If you follow protocol you will not be in breach of schemes rules of conduct.
Erskine is a fool to try and trump the Court of Appeal. It shows a dreadful lack of judgement. Quite why she thinks we should all consider people’s continuing “thoughts” about any subject matter is a puzzle. Crystal ball. Tea leaves anyone?
The TPO cant win if someone with money wants to take it to a higher authority to get the decision they want.
No I dont agree with the original agents behaviour but I cant help conclude that given the evidence presented to them the TPO made the right decision. The judges in my mind are on balance taking the easy route of following precedent, when actually the precedent is not identical. Stand firm TPO.
And now its time to drop it Mr vendor, if you’re not careful there could be an appeal……..
Hmmm….
Call me schitzy – but I both agree and disagree with this whole sorry piece of industry *********** (credit: Jonnie)
The first Agency did “introduce” the eventual buyers to the property – I think that can safely be classed as a given. They had “negotiations” with the people in that they requested a viewing appointment with the vendors on their behalf – which the vendors declined – no fault of the Agent.
TPO make it clear (to a point) in their Code – 5(r) to 5(s) – as to what is required to avoid issues with Commission/Fee eligibility in relation to such circumstances.
As BOTH Agents are TPO Members, the vendor will have had to agree TWICE to Ts&Cs in the Agents’ Agreements which should clearly and unambiguously detail Fee entitlement and “Dual-Fee Liability” situations.
I’m almost sorry that the ‘Dislike’ button is apparently on holiday – because I reckon I would have scored a record when I say that in my opinion, PS were entitled to ask for their Fee. And should have been paid it – or at least a reasonable proportion of it.
BUT… before we all get our handbags out – note I say “ask”. NOT “hound”. NOT “instruct an ambulance-chaser”… ‘cos that’s where they hit a tree. They have ignored the TPO Code in respect of reasonable steps – 5(s) and 5(t). Although it’s not a killer blow to their case it makes them look the bad boys in this and of course the sellers will use whatever they can to avoid stumping up.
Lesson to be learned – don’t hand someone who is going to cry “victim” their sympathy card.
Interestingly, the thorny subject – different circumstances, of course – has raised its’ head over in The Arena recently:
http://www.propertyindustryeye.com/forums/topic/potential-loss-of-fee/
Now that I’ve got that out of the way, I will add without a shred of apology that The Ombudsman have handled this appallingly and I believe will have lost any confidence that ‘Member’ firms may have ever had in their ability to be anywhere near fit for purpose.
Looking forward to debating, folks…
Hi Schitzy 🙂
We can argue all day long about whether asking if a “carpet treader” can view constitutes “negotiations” but it all boils down to whether we can trust TPoS, or other redress schemes, to use their common sense and not make us look like a bunch of charlatans.
The exploitation of the rules by NSNF ambulance chasers should not be tolerated by TPoS (i.e. ban any agent resorting to such tactics).
If you agree that TPoS is not fit for purpose – Maybe we can replace it with online complaints handling process.
Simply post the complaint and evidence(redacted for names/addresses) to a secure site and let PIE readers decide with a thumbs up or down – a modern version of the Coliseum !
“We can argue all day long about whether asking if a “carpet treader” can view constitutes “negotiations”…”
…but we won’t – because it is irrelevant. I would suggest that your example is “an introduction” – which would entitle that Agent to a Fee IF we could trust the rulings of TPOS/other Redress Schemes… which as you say is the actual point of debate.
But here’s the thing. Where did the TPOs Code come from? Who approved it?
AND WHY DID SO MANY SIGN UP TO IT AND OTHER (NIGH-IDENTICAL) SCHEMES?
A long time ago in a far off land (London) a negotiator of mine was completing a show over of a very expensive empty property when he came across a delightful couple who were waiting (for some time) outside for another local agent to show them the house. (It was a multi-agency listing)
The local agent had patently forgotten his arrangement and since no mobile contact device had yet been invented there was no way for them to vent their frustration at his incompetence at not honouring the appointment.
In the interest of altruism and world peace my guy offers to end their agony and with supreme effort gets the keys out again and shows them the property to avoid yet another case of anti-estatesgentism and win (if they had it at that time) the “Crumble District Times award for Estate Agent Of The Year” .
Not only did they love the house but inevitably they also fell in love with my guy not only wanting him as a son in law but also as the sole negotiator of their proposed purchase of the property. They certainly didn’t want to deal with the agent that offered them the property but couldn’t be bothered to turn up to show it to them.
So as history would have it this turned out to be the smoothest transaction in the history of residential real estate and the matter proceeded to completion and we received a substantial fee from a very happy vendor who was totally unaware of the circumstances that led to the sale.
Then “Rip Van Winkle” woke up and suddenly remembered his failed appointment from 3 months previously (applicant check?) and made a claim for the commission. This would have been to the vendor who, of course, had already paid us.
We had obviously discussed internally the circumstances surrounding our negotiator’s Samaritan actions and I, following my “bucket half empty” management style, queried whether showing a property was an “effective” introduction when we hadn’t offered it in the first place and obviously since the eventual purchasers had turned up for the appointment the “chain” of their interest had not “waned”, regardless of the failure of the other agent to turn up and show the property.
We took advice and after visualising the potential court case I came to the usual conclusion that any court would dispense the law ahead of any justice in the matter.
We duly sent the full fee to the effective “introducing” agent but only after achieving the “Pyrrhic” victory of getting them (with huge difficulty) to pay my guy his personal 10% commission.
What would I do today? Probably the same. The Ombudsman seems to be moving into the world of existentialism and the courts seem to uphold my remaining view that you have to do something “effective”. As ever all cases are different and decided on merit but I’m not sure much has changed.
I think the TPO are sometimes on a different planet to reality.
A consumer would be better using small claims than this shower IMHO
I think the Ombudsman have themselves in a real hole here. The normal advice is to stop digging but they seem unable to back down and admit their decision is embarrassingly farcical.
So now according to them anyone who shows a positive interest while in my sole agency, even if I don’t arrange a viewing constitutes an effective introduction.
Fabulous, I have just lost a property we couldn’t sell so my letter to the vendor goes as follows:
“I am sorry to have lost your business however can I just confirm that should any of the 65 Million that currently reside in the UK and who may have viewed your property online proceeds to a purchase in the next 6 months then my fee will become due”. Yours sincerely Real Agent
“Oh sorry I forgot to add, should anyone that has driven by your property and thought, I really like that house, and of course continued to think that without that view waning at all, I will also be entitled to a fee”
“Gosh I am really sorry about this, but I should also tell you that we have 14,000 buyers on our database that we emailed particulars of your home, so should any of them proceed to a purchase, you will owe us as well” All the best now, Real Agent.
Until English law confirms the deputy ombudsman to be a higher authority than the court system it might be wise just to follow established precedent, a bit like the judge did!
If everybody took that approach then you would never have decisions overturned in the higher courts. This is exactly what the appeals process is for.
“This interpretation is very different from the Foxtons case, where the Court of Appeal said that it was not enough for the agent to have introduced the buyer to the property; the agent must have introduced the buyer to the transaction. TPO claims that this does not apply in all cases.”
Was this difference pointed out in the County Court? That’s the first thing to find out. Precedent is only binding when circumstances are similar.
TPoS is a redress scheme – not a regulator.
Many industries have such schemes – their decisions have no legal standing.
>TPoS is a redress scheme – not a regulator.
I’m not sure what difference that makes to what I was suggesting. If the court were presented with an argument and you think their decision was wrong on a point of law then you can ask for leave to appeal.
However if the argument that the Foxtons case had material differences wasn’t presented in the County Court case then there are no grounds for appeal because you can’t bring in new evidence or arguments.
For all future disputes like this it needs to be noted that cases in the County Court are not considered to set binding precedent so if a case has different circumstances to the Foxtons one then a case can still be brought and it be argued that there is a difference to the Foxtons case. If the County Court Judge takes the safe option and rules against you then you have grounds to ask for leave to appeal. This is how the appeals process works.
What you are suggesting is that those with the deepest pockets can take members of the public to court, or threaten to, in order to extract a commission to which they are not entitled.
Agents sign up to a redress scheme and agree to abide by it’s rules -in this case TPoS got it wrong. Their rules (heavily influenced by corporates) should protect the public from having to pay twice for the same service – clearly they don’t and are not fit for purpose.
“Their rules (heavily influenced by corporates) should protect the public from having to pay twice for the same service – clearly they don’t and are not fit for purpose.”
Should and do are two completely different things – in pretty much every industry (and also in life in general).
But in fairness, TPO “rules” set out the Agent’s responsibilty to clearly provide their client with their Terms and Conditions of Service including Fee entitlement – incuding the strict requirement to provide warning of potential Dual Fee Liability.
Whether Agents comply is another thing entirely.
But if they don’t – even if the potential entitlement would have been justified – then any claim they could have had is voided. Simple as.
Of course the Courts & Ombudsman could both be right. In a court case the Judge’s role is to listen to the arguments made and the evidence presented and come to a decision. In a small County Court case you essentially point the Judge to the evidence, they don’t have any obligation to review beforehand.
Then of course it’s also possible the Court’s decision is wrong.
Perhaps getting hold of the transcript and considering an appeal is worthwhile for the Agent.
My Barrister sums it up perfectly (that’s his job I guess so he should!)…
“In Court you don’t get justice.
You get a decision.”
“Perhaps getting hold of the transcript and considering an appeal is worthwhile for the Agent.”
Why? they already have a copy as they took the case to court.
You should be aware that TPoS is a redress scheme – not a regulator. The Property Ombudsman is actually a limited company not a Government appointed Ombudsman.
>Why? they already have a copy as they took the case to court.
No, you have to go through an authorized third party who (for a fee) apply to the Court for tapes and transcribe what was said by everybody.
Where’s that like button when you want it??
What a ruddy mess this industry is in. A collection of regulators, associations and NGOs’ who won’t, can’t, or don’t appear to know how to carry out the roles they are paid for.
Seems like the intention is to create an artificial crisis out of which a lucrative pheonix can be formed.
TPoS is heavily influenced by the corporates, as they have the time and resources to help formulate the rules.
They also are able to exploit those rules and intimidate vendors/smaller agents into paying fees for “introducing” buyers who may not even have viewed the property.
“the Woods received a request for a payment of £7,935 from a firm called Sinclair Taylor, an estate agency fee-finder business that operates on a no win, no fee basis.”
Shameful that TPoS condone this sort of behaviour by ambulance chasers. They are a redress scheme and should have recognised that the Woods have paid commission to one agent for the sale of their home and should not be subject to harrassment by a debt collector acting for another agent.
The ruling in such cases should be to order the agents to split the commission – in this instance 99% to Fortnum,Smith & Banwell and 1% to Palmer Snell – with publication of their decision to shame the cowboys!
TPO was of course ‘born’ from OCEA, which was supposedly the Corporates’ way of differentiating and justifying themselves from the established independents (those that they hadn’t managed to buy out) – but in reality it was born out of necessity due to the practices of many of its’ Members.
Really good to know the the ombudsman, the supposed fountain of correct knowledge in our industry has no clue what they are talking about. We as agents cannot rely on their guidance as it is not supported by the law of the land once tested in court.
Bottom line here fellow agents, if you want to claim a buyer, arrange a viewing, get them to make an offer and get the ball rolling on a sale, anything beyond that is a complete gamble. Alternatively, charge upfront and then it doesnt matter either way.