The OFT commenced High Court proceedings against Foxtons in February 2008 seeking an injunction under the UTCCRs preventing the estate agency using terms, considered by the OFT to be unfair, in its lettings agreements with landlords.
During the preliminary stages of these proceedings the OFT appealed against a ruling by Mr Justice Morgan which accepted arguments from Foxtons that any injunction on unfair terms could only apply to future contracts, rather than preventing the use or enforcement of unfair terms in existing ones.
Yesterday, the Court of Appeal overturned this ruling, confirming the OFT's long-held view that it can take enforcement action under the UTCCRs to protect consumers in relation to both existing and future contracts. The Court of Appeal stated that the UTCCRs aim to protect consumers, and were of the view that traders should not have the freedom to pursue existing customers without restriction, in correspondence or by litigation, in order to enforce contractual terms that have been found to be unfair.
The fairness of the terms in any Foxtons' contract themselves have not yet been considered and this will form the substantive case listed in the High Court during the week commencing 27 April.
The Foxtons' terms on which the OFT has sought an injunction can potentially require landlords to pay Foxtons substantial sums in commission, where a tenant continues to occupy the landlord's property after the initial fixed period of the tenancy has expired when Foxtons plays no part in persuading the tenant to stay, and no longer collects the rent or manages the property. The OFT has also objected to Foxtons' terms that require a landlord to pay these sums after they have sold the property. Foxtons contends that such terms with landlords are not unfair.
