Estate Agents (Undesirable Practices) (No. 2) Order-1991 (Hansard, 10 May 1991)

§ Lord Williams of Elvel
My Lords, the House will be grateful to the noble Lord for introducing the two orders. Like him, I shall deal with them together. Section 3(1) (d) of the Estate Agents Act 1979 to which the noble Lord referred confers the power on the Director General of Fair Trading to make an order under the section with respect to any person who has been, as has been said, convicted of various offences and discrimination and who, has engaged in a practice which, in relation to estate agency work, has been declared undesirable by an order made by the Secretary of State". We believe that the extension of what is undesirable is right and proper. We are happy to support the Government in these orders.
However, I wish to raise two points. First, the Explanatory Note to the Estate Agents (Undesirable Practices) (No. 2) Order 1991 seems to imply that, the Director General of Fair Trading can, if satisfied that a person has engaged in it"— an undesirable practice— and is unfit to carry on estate agency work, make an order prohibiting that person from carrying on estate agency work". To my mind that does not seem to accord, although I am open to being convinced, with the provisions of the Act itself which would imply that for the "and" we should read "or". In other words, it is a clear power under the Act for the Director General of Fair Trading to disbar anyone who has engaged in a practice whether or not he is declared subsequently to be unfit for estate agency work. I should be grateful if the noble Lord could confirm that "and" should read "or". If I am wrong perhaps he can clarify exactly what the Estate Agents Act 1979 provides.
My second difficulty with the order—these are relatively minor difficulties—relates to Schedule 3 where the expression "recklessly" is used and to a certain extent is defined. In Scotland, where this legislation applies, the courts have taken a different view of the word "recklessly" from the courts in England and Wales. It is a matter for discussion as to whether the Scottish courts will interpret the word "recklessly" in their own manner. Will they interpret it differently from the way the English and Welsh courts have interpreted it? If so, what is the resolution? If this is meant to be a United Kingdom provision, who will win—other than eventually the Judicial Committee of your Lordships' House?
It is made all the more important by the fact, as the Minister will be aware, that the estate agency business in Scotland is quite different in structure from the estate agency business in England and Wales. The estate agency business in Scotland is largely—I do not 1329 say wholly—conducted by solicitors, whereas the estate agency business in England and Wales is largely conducted either by independent firms acting in their own right as estate agents or, more recently, by large banks and insurance companies. They bought estate agencies and, as we have learnt recently, some have now sold them at something of a loss.
The structure of the business in Scotland is quite different from the structure of the business in England and Wales. If I use the interpretation of the word "recklessly" in the Scottish courts as an example of this, I just wish to be satisfied that the Scottish Office has been fully consulted and is fully aware that things which may appear to the Minister who signed the order, the Parliamentary Under-Secretary of State at the Department of Trade and Industry, as being perfectly adequate for England and Wales are also applicable, properly applicable and applicable pari passu, in Scotland as well.
In general we welcome the orders. They may well give rise to problems but we certainly do not wish to oppose them.

§ Lord Cavendish of Furness
My Lords, I am grateful to the noble Lord, Lord Williams, for the welcome that he has given to the orders. House purchases and sales involve large financial commitments and the public have a right to expect high standards of conduct from people who act as intermediaries in property transactions. That is the purpose of the orders.
The orders apply to Scotland, as the noble Lord said, where matters are handled rather differently. They only cover estate agency and to that extent they do not apply to solicitors. It may be that they do not cover the bulk of purchases. One would need to examine other measures to cover Scotland fully. The orders apply to Scotland in so far as there are estate agents in Scotland.

§ Lord Williams of Elvel
My Lords, I am sorry to intervene and no doubt the noble Lord will take advice on this as I speak. As I understand the Estate Agents Act 1979, it is the activity of estate agency. What is referred to in Section 3 is "estate agency work". It is not a matter of who is or who is not an estate agent by any definition, it is who does or does not engage in estate agency work. This seems to be an important distinction.
If I am right in thinking that the 1979 Act applies to those engaged in estate agency work, it would cover the Prudential Assurance Company which has just sold its estate agencies, to Lloyds Bank, and anyone else who is engaged in estate agency work. A fortiori, it would cover solicitors in Scotland who engage in what any court or any sensible human being would call estate agency work. With great respect to the noble Lord, it does not seem to be enough to say that the Act only applies to people who call themselves estate agents. I may be wrong and I am quite prepared to be corrected if the noble Lord receives advice to that effect.
While I am on the subject of estate agency work, are we quite clear that the courts have defined what estate 1330 agency work really is? Have there been any cases where an operation has been deemed by the court not to be estate agency work but something else? Are we clear that there was a substantive definition under the 1979 Act?
I hope that the noble Lord will soon be in a position to respond to my inquiry. It seems to me that a whole series of supplementary questions is raised if my contention is right and that of the noble Lord is wrong.

§ Lord Cavendish of Furness
My Lords, I am grateful to the noble Lord apart from anything else for allowing time for me to obtain advice. Perhaps it would help if I told him that Section 1(2) disapplies the Act to, things done in the course of [a solicitor's] profession". On the technical matter of drafting, the noble Lord asked whether the word "and" is correct, The Director General has to be satisfied as to the undesirability of the evidence before him. Section 3(2) requires the director to be satisfied of the agent's unfitness. To that extent, I am advised that the word "and" is therefore correct.
The word "recklessly" is defined in Schedule 3 of the order on undesirable practices as follows: misrepresentation is 'recklessly' made if it is made regardless of whether it is true or false, whether or not the estate agent had reasons for believing that it might be false". The intention is that the word should have the same meaning in England as in Scotland.
The noble Lord asked whether the Scottish Office and the DTI's solicitor for Scotland had been consulted and are content. I can assure the noble Lord that they are. I hope that I have dealt with the questions raised by the noble Lord.

§ Lord Williams of Elvel
My Lords, I am not sure whether the noble Lord has dealt entirely with the questions I raised. I believe there may be further information available shortly. I am afraid my reading of Section 3(1) of the Estate Agents Act 1979 is different to that of the Minister. Section 3(1) quite clearly states: The power of the Director General of Fair Trading … to make an order under this section with respect to any person shall not be exercisable unless the Director is satisfied on a number of matters. If he is so satisfied, he can make an order.
Section 3(2) states: Subject to subsection (1) above, if the Director is satisfied that any person is unfit to carry on estate agency work generally he can also make an order. On a layman's reading of the Act it seems to me—I do not wish to quarrel with the noble Lord—that the Director-General of Fair Trading is perfectly entitled to make an order either if someone has committed an undesirable act or if he is considered unfit generally to carry on estate agency work.

§ Lord Cavendish of Furness
My Lords, I cannot give the definitive answer to that point. As regards the definition of estate agency work—the noble Lord asked about that earlier—there have been no court cases on the meaning of estate agency work. Therefore it is as defined in Section 1(1) of the Act. There are 1331 some outstanding matters to be resolved if the noble Lord is to be entirely satisfied. I hope he will allow me to look into those matters and write to him.