As readers
will by now surely know all too well, section 1 of the Property Misdescriptions
Act 1991 provides that ‘Where a false or misleading statement about a
prescribed matter is made in the course of an estate agency business or a
property development business, otherwise than in providing conveyancing
services, the person by whom the business is carried on shall be guilty of an
offence’. That provision, which effectively came into force on April 4 1993
(when the Property Misdescriptions (Specified Matters) Order 1992 (SI 1992 no
2834) became operative), has taken a mere six months to show its teeth. And
very sharp teeth they are too, as an examination of the first recorded
prosecution and conviction under the Act, in the case of Norfolk County
Council Trading Standards Department v Sinclair, reveals.
Ian Sinclair,
the estate agent unfortunate enough to have become the first well-publicised
victim of the new legislation, practised as a sole principal in Gorleston,
Norfolk. By an ironic twist of fate, he set up his firm on April 4 1993 (the
very date on which the Property Misdescriptions Act became effective) following
his retirement from a position of senior partner with a larger firm of agents.
The present
proceedings arose out of the marketing by the defendant’s firm of a modest
house in Gorleston, which was put on the defendant’s books on July 1. The
vendor originally instructed the defendant to put the property on the market at
£22,500; a few days later, however, he decided that the asking price should be
£25,000, in order to leave room for negotiation down to £22,500 (which is the
price at which he was prepared to sell). On July 6 the vendor accordingly faxed
to the defendant a copy of the latter’s letter confirming his instructions,
having amended the asking price quoted in that letter. By this time sale
particulars and a window display card had already been prepared showing the
lower price and an advertisement had been placed with a local newspaper. Upon
receiving the client’s amended instructions, the defendant told his
receptionist (who had joined the firm only some 10 days previously) to make the
necessary alterations; she duly produced a new set of particulars but,
apparently through simple forgetfulness, unfortunately failed to deal with
either the window card or the newspaper.
On July 8 a
Miss Austin saw the newspaper advertisement and, concluding that the house was
within her price range, went the following day to the defendant’s premises to
seek further information. On being given particulars of the property, she
naturally drew attention to the discrepancy in the quoted price and was told
that the vendor had raised his price the previous day. Miss Austin thereupon
complained to her local trading standards department which, the following
Monday, sent one of its officers (posing as a prospective purchaser) to inquire
about the same house. This officer noticed that the window card, like the
newspaper advertisement, still contained a lower price than the sale
particulars but, without apparently drawing this discrepancy to the attention
of any of the staff, simply returned the next day to seize the window card as
potential evidence.
The
remainder of the story can briefly be told. The Norfolk Trading Standards
Department decided that Mr Sinclair should be prosecuted; he duly appeared
before the magistrates at Great Yarmouth on October 13, where he pleaded guilty
to an offence under section 1 of the Property Misdescriptions Act in respect of
the window card (the prosecution having at the last minute withdrawn a similar
charge in respect of the newspaper advertisement). Despite an eloquent plea in
mitigation on the part of his solicitor, Mr Sinclair was fined £500 (against a
maximum fine on summary conviction of £5,000) and achieved a place in the
history of estate agency, which he would no doubt have been extremely happy to
forego.
So much for
the tale of woe. What remains is to consider whether the case reveals any
points of legal importance concerning the new legislation, or any lessons for
those practitioners who are subjected to its rigours.
of ‘price’
Given that Mr
Sinclair pleaded guilty in this case, there is little room for debate as to
whether the Act was indeed contravened. However, one might at least raise for
future consideration the question of what exactly is meant by the ‘price’ of a
property and what amounts to a ‘misdescription’ of that price. After all, the
vendor in this case was prepared to, and in fact did, sell the house within a
few days at £22,500, the price which was quoted in Mr Sinclair’s window. No
doubt the vendor would have been equally prepared (not to say delighted) to
sell it for £30,000 if anyone had turned up and expressed willingness to pay
that much for the property. So what, then, was this property’s ‘price’? It is to be noted that the Property
Misdescriptions (Specified Matters) Order (which defines the matters about
which false or misleading statements must not be made) does not say ‘asking
price’, but rather ‘price’, and a future defendant might well wish to open up a
debate over the meaning of that word.
unpalatable truth
As to whether
the plight of the unfortunate Mr Sinclair contains any practical lessons for
his fellow agents, it may be said that the case undoubtedly drives home at
least three crucial aspects of the Property Misdescriptions Act which, though
they have always been known, may just have been conveniently pushed to the back
of practitioners’ minds:
(1) Liability under this Act is strict.
The prosecution is not required to prove that the defendant had a dishonest
intention, nor even that he was negligent. True, the defence may be able to
escape conviction by showing ‘due diligence’, but this is always likely to be
an uphill task and the defendant here did not even attempt to pursue this
route.
(2) Liability attaches primarily to ‘the person
by whom the business is carried on’. The firm’s principal, or its partners, may
thus be put at risk of a criminal record by the careless slips of junior staff
(and, as the Sinclair case emphasises, this is not limited to sales
negotiators, nor even to those whose primary function is dealing with
prospective purchasers).
(3) Although the main thrust of this legislation
is consumer protection, liability does not depend upon anyone having
suffered as a result of the misdescription in question. Indeed, Mr Sinclair
would in theory have been just as guilty in this case if the complainant had
actually purchased the house for £22,500 (though presumably there would then
have been no complaint and thus no prosecution)!
These home
truths aside, and with the caveat that there may well be background information
to this case which has not been made public, a number of factors appear to
suggest that Mr Sinclair can count himself very unfortunate to have been
prosecuted at all, let alone fined £500. First, there was no suggestion of any
intent on his part to deceive prospective purchasers (indeed, the prosecution
went out of its way to deny any such implication). Second, there was no
suggestion that this was merely one example of consistently sloppy practice in
the defendant’s office, or that his advertisements and window displays in fact
contained a host of similar errors. Third, the defendant himself was far
removed from the ‘cowboy fringe’ by which the image of estate agency has always
been tarnished; he was professionally qualified (FRICS and FRVA) and had an
unblemished record within the profession of some 30 years at all levels up to
senior partner. Finally, there was no suggestion in the evidence that the
trading standards officers had in fact warned either the defendant or any of
his employees of the offence and that they had resorted to prosecution only
when they could see that no steps had been taken to put right the error.
All in all,
it is not very easy to see why this prosecution was brought, unless it was
‘pour encourager les autres’. However, brought it was, and there is no reason
to suppose that others will not follow. All that can be said is that the
Property Misdescriptions Act is clear enough, and has received enough
publicity, for agents to know what is required of them. Any houses not already
in order should therefore be put so — and quickly!