Fresh £8M Legal Row Puts Purplebricks' Strike Deal on the Line

If selling your business for a measly £1 wasn't enough, Purplebricks' efforts to end its misery face yet another hurdle after it emerged a Group Litigation Order will be served against the troubled agent as early as this week.

In a major blow to its plans to disappear as quietly as possible, Contractors for Justics (C4J) has outlined its plans to ramp up a Group Litigation Order against Purplebricks in pursuit of unpaid earnings for nearly 200 self-employed agents. This move will undoubtedly blockade Strike's intended purchase of Purplebricks and at worst add another hefty chunk of debt to the penniless portal.

C4J asserts that 192 Purplebricks' agents, despite being labelled as self-employed, were actually employees of Purplebricks and therefore deserving of compensation including pension contributions and holiday pay up to 20.7% of each person's total earnings—in excess of £8M.

C4J has compiled two letters; one to Purplebricks CEO Helena Marston stating that Purplebricks has been given until midday, 1 June 2023 to begin settlement negotiations with C4J on behalf of 192 claimants, valued at £8,439,673 (including interest).

The letter explains that despite the self-employed moniker, these agents were legally employees of Purplebricks and entitled to holiday pay, car allowances and pension contributions. C4J also said it will issue proceedings to the High Court independent of Purplebricks' response (or lack thereof).

The second letter has been sent to the Takeover Panel requesting it to delay Purplebricks' imminent sale to Strike while the settlement proceedings progress.

The full transcripts of the letters are below. They first appeared in Property Industry Eye last Friday, 26 May 2023.

Purplebricks has faced criticism since its inception for the employment status of its agents, which the agent has always asserted are self-employed. It has faced further criticism for its business model which paid its agents a commission for winning listings on Purplebricks' portal but not for completing sales. In other words, agents were incentivised to win as many listings as possible but had no financial incentive to actually sell the property—which meant vendors were paying agents a flat fee simply for their property to appear on Purplebricks' portal without a realistic chance of the property ever being sold.

Lauded as being a cheaper alternative to traditional agency fees, Purplebricks' reputation soon fell through the floor as vendors realised that listing with Purplebricks and selling with Purplebricks were significantly different experiences, with many having to pivot back to a traditional sale and having to write off their investment in Purplebricks.

Letter 1

Helena Marston
CEO
Purple Bricks PLC Cranmore Place Cranmore Drive Shirley
Solihull
West Midlands B90 4RZ

26May 2023

Purple Bricks PLC

You will be aware, from previous correspondence and legal action, that this Firm acts for current and former employees of your Company. Please receive this missive as a formal Letter Before Claim.
We represent some 192 individuals who, we believe, have throughout their careers been employees, and not self-employed. We note that, following a report from HMRC, you have applied PAYE from September 2021 to your workforce, but that does not obviate your responsibilities from 2015 and all accrued claims from that date.

For the avoidance of doubt, the claims which we are bringing against your company deal with failure to pay Holiday pay, Car Allowances and Pension. In total these claims amount to £6,000,237.83 which, together with accrued interest of £2,439,436.05 totals £8,439,673.88, as at 25 May 2023.

It is our intention to issue proceedings in the High Court against your company without delay.

However, we wish to extend you the courtesy of availing yourself of an opportunity to settle this matter, especially in view of your current sales negotiations. That being said, we have no intention prejudicing our own client’s position be delaying unnecessarily. You are well aware of our interest, and of the terms of our claim, not least from recent litigation. Therefore we give you six days from today’s date to agree to settlement negotiations, failing which we shall proceed without further reference to you.

We appreciate that this is less than the general minimum specified under the CPR of 14 days, but in these exceptional circumstances of your prior knowledge and the danger of our clients being disenfranchised by your sale, we are relaxed that the Court will accede.
Please therefore agree to settlement by 1200 on 1 June, failing which we shall issue proceedings without further reference to you.

Aidan Loy

Legal Director

C4J

Letter 2

The Takeover Panel One Angel Court London

26 May 2023

Dear Sirs

Purple Bricks PLC and Strike Ltd. {Co. No: 07622707)

We write with respect to the proposed sale of Purple Bricks PLC to Strike Ltd. (above). It is our understanding that this potentiality is to be put to the shareholders of Purple Bricks PLC at an EGM on, we believe, 2 June.

We should point out that we are not a party to this transaction. However, we represent some 192 clients in dispute over their employment status with a claim worth £8,439,673.88 due to failure to pay Holiday Pay and other statutory requisites throughout their workforce from 2015.

Our concern is that our clients may be disenfranchised via this sale.

We therefore advert you to your own Takeover Code, especially at Section 2, and especially at Section 2.8. It is our understanding from that document that a declaration on 10 May from Strike triggered Code Section 2.8 in that no other could be made within six months. And yet here we are.

We should therefore ask, as an officious bystander, if the Panel believes that all is in order, and that therefore our clients’ position has been protected.

We look forward to your response, and place ourselves at your disposal should you need anything else from us.

Yours sincerely

Aidan Loy

Legal Director

C4J