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Agent who refuses to pay redress award for legal reasons faces possibility of going out of business

SDL MANAGEMENT NS

A long-running dispute that started with a complaint to Ombudsman Services Property over two years ago means that an agent may have to close down as it could be unable to trade legally.

The agent, Enviro Estates – now known as EEUK Limited in Altrincham – says that because of the dispute, its membership has been suspended by Ombudsman Services, and no other redress scheme will accept it.

Enviro Estates claims that Ombudsman Services Property has made a flawed decision based on inaccurate information.

For example, it says that it did not even manage the property at the centre of the dispute.

It also says the ruling was accepted by the landlord outside the time period – something that Ombudsman Services disputes.

Enviro Estates also says the service is relying on the agreement between the redress schemes to reject any agent that has not paid an award as directed by one of them. Without redress, a letting firm cannot legally continue in business.

Enviro Estates believes that Ombudsman Services is confident that such a threat will make it pay up.

The service ordered the agent to refund the complainant a £420 fee and pay £558 towards third party costs.

However, the agent says that it cannot pay the latter, as third party costs have already been determined under an order of Manchester County Court.

The firm has received legal advice – which EYE has seen – that it should not pay the amount a second time as this would amount to double recovery.

The £558 amount was then described as a goodwill gesture.

While the case began as a complaint by a landlord against an agent, the dispute is now between Enviro Estates and Ombudsman Services.

Legal letters have flown back and forth, with Enviro Estates now threatening to take Ombudsman Services to court and apply for an injunction to desist its actions in preventing the company from joining a redress scheme.

Enviro Estates also says that there appears to be nowhere to go if agents challenge an ombudsman’s decision.

It has complained, without success, to the industry regulator NTSEAT, and to DCLG, which is responsible for appointing property redress schemes. Both have declined to get involved.

This week, Ombudsman Services Property was sticking to its guns, saying that Enviro Services should implement the remedies ordered.

How it began

The extraordinary case began in May 2015, when Ombudsman Services received the complaint from a landlord whose property had been let “and managed” by Enviro Estates since 2011.

However, Enviro Estates proved it never managed the property.

It has told Ombudsman Services that it did have an arrangement with a law firm to refer any legal matters relating to eviction.

According to Ombudsman Services, the landlord had not received rent from 2013 onwards and wanted to evict the tenant.

In June 2014, the landlord paid Enviro Estates £420 to prepare and administer an accelerated possession order.

While there is no argument that this payment was made, Enviro Estates insists that it was not until 2015 that the landlord considered formal eviction, and instructed a separate company, Landlord Action.

By the time the landlord complained to Ombudsman Services, the tenant was still in the property.

The landlord told Ombudsman Services they had tried to contact Enviro Estates for an explanation, and asking for various documents including proof that the tenant’s deposit had been secured.

Ombudsman Services considered the complaint and issued an initial decision in August 2015. Enviro Estates rejected this decision, and the case was re-examined by the Ombudsman.

The following April, in 2016, Ombudsman Services issued its final decision, directing Enviro Estates to provide a number of documents including information as to where the tenant’s deposit was held, refund the £420, and provide £558 towards the landlord’s third party costs.

Ombudsman Services insisted that the £558 did not “duplicate the award provided” by Manchester County Court (in some correspondence seen by EYE, described as Manchester Crown Court).

Instead, it went on to say the £558 that it ordered was to provide “a goodwill gesture”.

Legal advice that Enviro Estates took, and which EYE has seen, said that the firm would comply with everything that Ombudsman Services had ordered. However, it could not comply with the order to produce documentation regarding the deposit, as the agent no longer had this. The firm produced a signed declaration from the landlord to prove that Enviro Estates had already transferred the deposit to the landlord in 2015 and that he had received the same.

The lawyer said that were his clients to pay the £558 a second time, this would amount to “double recovery” and “unjust enrichment”.

In another twist, Enviro Estates says that Ombudsman Services made its final decision on April 26, 2016, and gave the landlord 28 days in which to accept or decline. This deadline was extended to June 28. The landlord did not accept the decision until August 4, 2016.

Enviro Estates says that in Ombudsman Services’ own terms and confirmed in writing from the OSP on April 16, 2016: “If the complainant does not accept or decline the decision within the accepted period, then Enviro Estates are no longer binding by the decision made.”

Nowhere to go?

One aspect of this case is that there appears to be no independent mechanism that can step in where an agent disagrees with an ombudsman’s decision for serious reasons, such as legal grounds.

Attempts by Enviro Estates to challenge Ombudsman Services’ ruling have not been successful.

NTSEAT has said the matter is outside its remit, and DCLG has said that while it authorised Ombudsman Services to provide redress, it cannot get involved in complaints.

Response from Ombudsman Services Property

EYE asked why the redress service first ordered the £558 payment as being towards the complainant’s costs, then described it as a gesture of goodwill.

Ombudsman Services said that its original wording “could have been more explicitly stated and the purpose has been clarified”.

We also asked why the service allowed the complainant so much time to accept the final ruling.

Ombudsman Services told us that under its terms of reference, the “acceptance period can be extended to what the Ombudsman considers to be reasonable”.

In addition: “The Ombudsman has discretion to accept, or continue to handle, a complaint made outside of any time limit . . . if satisfied there are exceptional reasons to justify the delay.”

In this case, the Ombudsman was satisfied that the delay was justified.

EYE asked why Ombudsman Services will not agree to a meeting with Enviro Estates to discuss the matter.

We were told that in correspondence last month, “Ombudsman Services stated that this is our final position and that we do not intend to respond to any further correspondence from Enviro Estates until we receive confirmation that the remedies have been actioned”.

We also asked if Lewis Shand Smith, who is Ombudsman at Ombudsman Services Property, is aware of this particular case.

We were told: “Ombudsman Services has responded to this case in line with due process.”

Invited to comment further, EYE was told: “We wish only for Enviro Estates to implement the remedies set out by OS Property for the benefit of the complainant.”

Linda Coombs, director of Enviro Estates, told EYE yesterday: “For the last two years, OSP have always said that the company should pay a gesture of goodwill payment of £100 and that the payment of £558 was in relation to third party costs.

“They only recently changed their stance following receipt of a letter from our solicitors stating the request of £558 is paramount to double recovery. The remedy then changed to £558 goodwill payment but no mention of the £100.”

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Source:: Agent who refuses to pay redress award for legal reasons faces possibility of going out of business