March 23, 2017

Exit fees court battle fails … but it cost Fairhold thousands and Carlex now has its legal argument why it believes the contract terms are fair

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Susan Wood failed in her court struggle earlier this week to be reimbursed the £1,150 in exit fees paid when her late father’s flat was sold in 2010.

Wood argued that as the fee was for a service that was not carried out – ostensibly to vet the capability of the flat’s purchaser for “independent living” – she should receive the money back.

The issue was heard in the small claims division of Sheffield County Court, but Fairhold, a freehold owning company within the Tchenguiz Family Trust, was taking no chances.

Paul Letman ... has form with lay applicants

Barrister Paul Letman

Barrister Paul Letman was sent up from London to fight the case, which may have cost many times more than the sum disputed.

Wood gave a polished outline of her case, which rested on the simple point that she had been charged for something that had not, in fact, been done. Only if this argument failed did she ask the court to rule that the transfer fee represented an “unfair term” under consumer contract legislation.

But Letman successfully argued on points of law that the lease did not say that the transfer fee was a fee for a service, nor did this represent an unfair contract term.

Wood could have refused to accept Fairhold’s last minute complex legal argument that had not been outlined before the day of the hearing. The judge asked whether she wanted an adjournment, but Wood declined.

As a result, the case went ahead and she lost.

But the positive news is that any future litigant can be informed, via Carlex, of the landlord’s legal arguments on exit fees.

“This is very far from being a disaster,” said Wood. “Mine was a simple argument. But I was not legally represented and I cannot dispute a point of law. There is also a limit to how much time I can spend on this issue.

“I am delighted to have brought this case. From the start, Fairhold tried to delay proceedings. However, the court rejected all their attempts. The most serious issue was when they tried to have the case moved to a higher court, which would have put me at risk of being responsible for their costs had I lost. But the court agreed with me that it should properly be heard as a small claim,” said Wood.

Small Claims Courts are designed for ordinary people to have their cases heard in a comparatively informal environment, where legal costs are not usually awarded. The judge made it clear that the case was reasonable, and Fairhold did not, in fact, ask for costs.

Wood made a strategic mistake in not accepting the judge’s offer of an adjournment. Far too often lay representatives just want to get on with the case, for which they have prepared for months.

It’s also far too common for landlords’ barristers to present information at the very last stage, although this is frowned on in the Civil Procedure Rules.

But once you have “accepted” a document it is as if it were never late and is given equal weight to other evidence.

“The good news is that we now have all the legal arguments used by the landlord in this case,” said Wood. “Anyone planning to mount a similar challenge over exit fees can be provided with the full bundle of Fairhold’s arguments.

“Although I lost this particular case, it does not create a legal precedent for any future challenges. I do hope many more people will now be encouraged to take similar action against these pernicious fees.

“A Small Claims Court is the ideal forum. I had a fighting chance of winning, otherwise Fairhold would not have expended so much effort and money on its defence.”

Carlex sends congratulations to Sue for having the courage to bring the first case on exit fees.

Here is to many, many more!

Comments

  1. I would like to give my warmest personal thanks to everyone who gave me support and suggestions for this case. I do not regret for one moment taking this greedy company on. Let this be the first case of many!

  2. It is frustrating that Fairhold used tactics to delay Susan’s case and also trying to move the case from a small claims court to a higher court is a sickening tactic —- knowing they have almost endless cash flow and trying to put Susan in a position where she may not be able to proceed in the case seems very cynical indeed, and just underlines the fact why UK government must bring changes in order to stop leaseholders being exploited.

  3. MICHAEL HOLLANDS says:

    A few weeks ago when I heard that Susan was challenging Fairhold I asked the OFT if they would be offering any assistance, bearing in mind that they say they regard this fee as being unfair. Did they offer any assistance and if not will they help with any future challenges.
    If they refuse any help then I regard their Inquiry into Exit Fees as a complete waste of time. With some minor limitations they have given their approval to Fairhold to continue charging these fees. In fact in recent replies to my questions Fairhold use the OFT`s decision as a badge of approval. The Inquiry seems to be a three and a half years waste of time and public money.

    • Thank you, Michael.

      The OFT didn’t offer any assistance, and I’ve no idea how they would respond to future requests. When I was preparing my case, I wanted information, and used the Freedom of Information Act 2000 to ask: ” … the OFT’s reasoning behind the section in the undertaking to do with Fairhold not giving any implication in the future that the transfer fee is in any respect a ‘fee for a service’. Specifically, did (they) include this because (they) had evidence that Fairhold had, in the past, given such an impression?”

      The OFT responded: ” … I can confirm that the OFT had concerns about wording used in certain Purchaser Information Packs provided to prospective purchasers of retirement home properties (for which Fairhold Homes Limited and associated group companies (‘Fairhold’) owned the freeholds) concerning the one per cent transfer fee. The OFT was concerned that there may have been potential for consumers to be given an impression that the transfer fee was to cover administration costs or the provision of services by the landlord in relation to the transfer.
      In so far as consumers might query it, the OFT considered that it might be potentially misleading if Fairhold or their representatives were to give an impression that the transfer fee was payable as an administration fee or for a service, if Fairhold did not regard this to be the case.
      The OFT sought undertakings for this purpose to eliminate the potential for consumers to misunderstand the nature of the transfer fee in future. Fairhold voluntarily agreed to sign undertakings to this effect, but without any admission of any breach of the law.”

      So, I wasn’t the only one to have been misled by information supplied at the time we bought the flat, and I used this as part of my evidence to the Court.

      The beauty of Freedom of Information requests is that the organisation must respond within 20 working days, though they aren’t legally obliged to release everything you’ve asked for. Perhaps it would be worth asking your question again – at least you’d be assured of an answer, even if they refuse to release the information you’re requesting!

  4. Did Susan point the Court Judge to clauses 3.35 & 3.36 under the OFT report to show the exit fee is an unfair term ? :

    http://www.oft.gov.uk/shared_oft/reports/unfair_contract_terms/oft356.pdf

    What is the proper name of the freeholder company ? There are many “Fairhold” companies.

    • Thank-you ollie for this – I didn’t know about the OFT Report, and I’m sure it will be valuable to the next person to take on Fairhold.

      The specific company within the Group that I was claiming against was Fairhold (no 6) Ltd, but they are all bound by the OFT undertakings.

      • Correction: It was Fairhold Homes (No 6) Ltd.

        I’ve now looked at this OFT reference. In fact, it’s all about protection for tenants (who are renting), not leaseholders. It’s confusing that the word ‘landlord’ is used in both situations. And it looks as if the OFT has put in more protection for tenants than it seems prepared to do for leaseholders – even though leases are really nothing more than long-term renting.

        There is an intriguing statement in the OFT document about insurance:

        “4.4
        …….. compulsory insurance – we object in particular to terms requiring tenants to purchase specific insurance, or insurance provided by an insurer specified by the landlord or agent. This may provide the landlord or agent with additional income by way of commission at the expense of the tenant having to pay higher premiums than on the open market. In such circumstances this is effectively a disguised addition to rent and, in the absence of market forces, the tenant will have no protection against unreasonable premium increases ……”

        Time for the OFT to extend their investigations into the Great Leasehold Insurance Scam!

  5. Legal Beagle says:

    JUSTICE DENIED ON A POINT OF LAW !

    A lesson for all future claimants – Quick summary:

    Ma’am (the Judge) stated that the case was of sufficient legal merit to be heard. However, there was a contract; even though its terms were complex, advice could have been secured as to its meaning. The contract therefore had force.
    No costs could be awarded against the claimant, even though her claim was dismissed.