The Office of Fair Trading (OFT) has accused Foxtons of overstatement and “unsubstantiated speculation” in the opening day of their High Court case concerning so-called “money-for-nothing fees”.
Nicholas Green QC, counsel for the OFT, was responding to the witness statements of Foxtons CEO Michael Brown and chief operating officer Nicholas Budden as to the potential effect on the industry should the court find that the fee terms in Foxtons’ letting contracts are so unfair or in such unintelligible language that they are void and unenforceable.
The OFT and Foxtons will dispute whether Mann J should grant injunctions and/or declarations in respect of three types of clauses concerning fees on renewals, third-party renewals and sales.
In written submissions before the judge, Green dismissed Foxtons’ arguments that the loss of renewal commission in particular would gravely affect the economics of its business model and lead to industry-wide “significant upward pressure” on commission levels.
Green said that Foxtons had not cited any evidence to support its suspicion and argued that even if there were such industry-wide effects they were “greatly overstated” and “irrelevant to the question of whether the renewal commission clause is unfair”.
He added that to compensate for the lost revenue from renewal commission Foxtons would merely have to raise the fee for its lettings service from 11% to 11.484%, which “cannot possibly be characterised as ‘significant upward pressure on fee levels’”.
Lambasting the parts of Brown’s and Budden’s witness statements dealing with practical consequences to the industry, Green said that their comments were “unsubstantiated speculation and expressions of opinion”, which were also “unrealistic”.
The case continues.
