Letting Agent Gone Out Of Business?

June 03, 2014 tags: Blog

If a letting agent defaults on obligations to pay rents collected on behalf of landlords or to protect deposits held for tenants then its directors may be held personally liable, even if their company is insolvent and/or ceases trading.

Many advisers, including the police and other regulators, often advise victims this is a civil matter that if a company is in liquidation or receivership nothing further can be done. However, that isn’t necessarily the case.

A little known fact is that victims can bring private criminal prosecutions against the owners of businesses and that any limited liability status of a company does not shield them from this. At Cotswold Barristers we provide victims with an opportunity to obtain justice and, unlike conventional litigation, there is no time limit upon which criminal prosecutions can be brought. There may be an opportunity for victims to open a private criminal prosection on the following grounds:-

Fraudulent trading, where the agent is a company that trades/traded with the intention of defrauding creditors or for any fraudulent purposes. The case is brought in a personal capacity against a person in management or control of the company.  This applies whether the company is trading, has ceased trading or is in the process of being wound up.
Fraud by abuse of position, where the agent abuses/abused their position of trust regarding financial dealings for financial gain for himself
Theft. Simply stealing money belonging to someone else. This can include ‘borrowing’ where there is no real prospect of repayment.


Mark Smith, Head of Chambers at Cotswold Barristers commented “Many are shocked at how little it costs to instruct a Direct Access Barrister like me to instigate a private criminal prosecution. If affected landlords and tenants were to form an action group, with each member contributing say £200, enough money would soon be raised to gather evidence, witness statements and have a case in front of a judge very shortly thereafter. Once the court accepts a case as fairly brought, even if no conviction results, the costs of investigation and prosecution are paid by the State, as indeed are the defence costs, and the initial payments made by the victims would be refunded.” Carla Morris-Papps, Chief Executive at Cotswold Barristers said “we endeavour to assist groups affected to attract media coverage for this purpose. It only takes one victim to get a case started and with the right level of media attention other victims soon tend to make themselves known.”

Private prosecutions are not reliant on the financially pressurised police or other government agencies. Numerous viable prosecutions are not pursued by the State because of financial or resource limitations in these austere times. If found guilty the offender would be punished by the Court, and compensation to their victims would only be limited by the value of assets that the offender has. In most cases the agent cannot hide behind the lack of assets of a failed limited company; the orders are made against the offender personally. Criminal prosecutions have higher profile, are far speedier than civil cases, and are often the cheapest and most effective way to secure proper recompense from dishonest agents.

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