All mimsy were the borogoves

The Jabberwock of the tenancy deposit scheme came whiffling again, in the tulgey wood of Northampton County Court. This time it was the clause that catch to beware of. And there’s a disrepair claim in there too.

Paula O’Brien v Jacqueline Jones & Andrew Alexander (T/A Belvoir Huntingdon). Claim No 9KG00335 12/02/2010 [On Lawtel for some reason]

Ms O’B (hereafter B) was the assured shorthold tenant of Ms J (hereafter J), whose managing agent was Mr A (T/A BH) (hereafter ‘the agent’). The tenancy was ended by agreement on 19 December 2008. B had withheld the last two months rent due to her concerns about the condition of the property.

At the time of hearing, and after some amended pleadings, the position was that B claimed against J under s.11 Landlord and Tenant Act 1985 for disrepair. B claimed against J and the agent for an order under s.214(3) Housing Act 2004 for the deposit of £950 and the 3 x payment. J counterclaimed for the last two months rent, which was not opposed by B, save for a set off.

No dispute was raised by J or the agent as to whether the deposit was returnable, save for a set off against the rent claim. The Agent also conceded that any order under s.214(3) could be against landlord and agent (although the Court took the view that such liability for the agent was far from clear).

The deposit was protected with The Dispute Service and had been protected by the agent within 14 days of receipt.

What was at issue and formed the basis of B’s claim under s.214 was that the information provided by the landlord did not meet the requirements of s.213(5); and/or that the landlord had not complied with the initial requirements of The Dispute Service under s.213(3).

Under s.213(5), B argued that the landlord had failed to provide a personal address and telephone number under the prescribed information. The landlord had provided an address and phone number in the tenancy agreement, pursuant to s.48 Landlord and Tenant Act 1987. The address was the agent’s address. B argued that the Housing (Tenancy Deposits)(Prescribed Information) Order 2007 required a personal address for the landlord. The landlord had in fact provided a personal address before B made her application, and, in agreement with HHJ Bullimore in Harvey v Bamforth (our report here), there is no breach where the prescribed information is provided after 14 days but before and application was made by the tenant. But in any event, it was not found that a failure to provide a personal address rather than an agent’s or business address was a breach. The Order did not provide that it must be a residential address if that is different to an address for notice and service under s.48(1) L&T 1987.

Under s.213(3), B argued that the tenancy agreement did not comply with the initial requirements of the TDS scheme in that the TDS required their ‘members’ to include certain specified clauses (the ‘G Clauses’) and these were not in her tenancy agreement.

J and the agent argued that including the clauses, or the information they contained, in other documentation was sufficient. B had had the tenancy agreement, inventory, prescribed information and a leaflet called ‘What is the Tenancy Deposit Scheme’, (this leaflet was unfortunately not in the evidence). B had also requested from TDS the content of the G Clauses and had been provided with them by TDS.

The Court found that the information that had been provided was also to be provided under the TDS initial requirements, so seemed unlikely to by itself remedy the lack of the G Clauses. The provisions on the G Clauses in the TDS rules of membership were clear – the clauses were to be included in the tenancy agreement and their wording was not to be changed or amended. TDS had apparently confirmed in correspondence with J and the agent that they considered that the tenancy agreement was in breach of their conditions, although they did protect the deposit. It was not clear, as argued by J and the agent, that the issue was a mere technicality and didn’t prejudice B, as the G Clauses did contain significant information and further, the TDS had stated that due to the breach, their arbitration service would not be available.

S.214(2) was engaged. Contrary to the argument of J and the agent that the words ‘as the court thinks fit’ in s.214(3) meant a discretion as to whether to make any order at all, the only alternatives were to order return or protection of the deposit. The deposit had been registered, but could not be dealt with under the TDS dispute resolution scheme. Ordering the return of the deposit was the only viable option. Having made such an order under s.214(3) an order for the 3 x penalty must be made under s.214(4) – so the order was for a payment of £3,800 to B.

On the disrepair, the items complained of that engaged s.11 Landlord and Tenant Act 1985 and that had caused loss of enjoyment and inconvenience were:

  • Rising damp to one wall of the dining room with raised wallpaper and some damp spotting, sufficiently serious to require remedial action. Complained of in August 2008, should have been remedied by October 2008 at the latest, so damages for a period of two months, albeit that the inconvenience was relatively minor.
  • No hot water due to a defective boiler following a leak. The boiler was off for a week and should have been repaired within 4 days, so damages for the remaining 3 days.
  • Kitchen floor, damaged in the boiler leak. Part of the kitchen floor was removed and not replaced in early October 2008. J and the agent argued that the delay in repairing was due to difficulties with the insurers, who would not authorise works for over a month. This was not a valid reason for delay. It was not reasonable to wait for the insurers to deal with the claim. Damages for a period of 7 weeks.
  • Kitchen door – the frame was pushed out of the wall by the expanding floor boards due to the boiler leak, leaving a gap between frame and wall. There were no drafts or water penetration, so the inconvenience was solely not being able to use the door, which was a minor inconvenience as there was another door to the garden. 7 weeks damages.
  • Boiler and wiring left exposed after works. J’s enjoyment affected as she had to take care to ensure the safety of her children while in the kitchen.
  • Boiler debris and loose decking. Boiler parts were left on the outside decking and a piece of decking had been left out of place. Both were at best minor inconveniences. The boiler parts could have been moved by B.

All together, damages for disrepair assessed at £500. Rent was £950 per month and the longest period of damages – the damp – was two months.

The remainder of the items claimed by B were either not capable of being disrepair under s.11, had not been reported and/or had caused no inconvenience.

The set off of £1700 in unpaid rent against the awards to the tenant had been agreed by the parties.

Comment
Apart from the disrepair claim being an illustration of how tenants tend to routinely over value claims – B’s view was the withholding the last two months rent was an appropriate recompense for her inconvenience – this is an interesting (although County Court DJ and non-binding) decision on the meaning of ‘complying with the initial requirements of the scheme’. While Harvey v Bamforth on late compliance in providing the prescribed information is expressly agreed with, it appears in this case that a breach of a Scheme’s requirements for something like the terms of a tenancy agreement could fall foul of ‘the initial requirements of the scheme’ and be non-remediable at a later point.

However, how such a breach is to be discovered is another matter. B’s evidence, entirely reasonably, was that she was unaware that there had been such a breach. Unless the other documentation provided to the tenant sets out the requirements of the Scheme for its members, or the required inclusions such as the G Clauses here, how is the tenant to realise that there has been a breach, unless or until the Scheme refuses to provide the arbitration? B apparently discovered the omission only at the end of the tenancy when she approached the TDS about their dispute resolution scheme, only to be told that the omission meant TDS could not deal with the dispute.

In short, what this looks like raising is a form of breach with is both irremediable by the landlord and unlikely to be discovered by the tenant until the Scheme refuses to provide arbitration services – at or after the end of the tenancy. So, yet another Jubjub bird to beware of in the Housing Act 2004 provisions, or is it a frumious Bandersnatch to shun?

(I do wonder why the landlord didn’t simply return the deposit in full and then seek to argue that no order under s.214(3) could be made, so no award under s.214(4), but perhaps the TDS would not allow that once proceedings had begun.)

For all tenancy deposit scheme posts, click here.

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Posted in Assured Shorthold tenancy, Deposits, Disrepair, FLW case note, Housing law - All and tagged , , , , .

About Giles Peaker

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts, and still is Nearly Legal on Google +

15 Comments

  1. rather like the decision – seems to focus on what actually matters and disregard the rest.

    on a pedantry point, the mimsy things were ‘borogoves’. no extra r. you can ask me about the implication of ‘wabe’ as opposed to ‘wade’ if you want to see just how sad i am. it’s all about mome raths.
    (the answer is: ‘potentially a lot of money’)….

    • Sorted – I have a cold, which is limiting functional thought, and apparently a hitherto unacknowledged obsession with Bromsgrove.

  2. Now that is a legally nerdy joke. The only thing more nerdy than making the joke is laughing at it *cough*

  3. So, I wonder how many Section 21 notices can be challenged on that basis?
    Granted the notice can be served once the breach has been corrected but it makes for an interesting argument to try.

    • Chris

      If the breach is, as here, failure to include clauses required by the scheme in the tenancy agreement, the breach can’t be corrected. And yes, it would invalidate a s.21 notice. The problem is finding out what the requirements of the scheme are (or were at the time of sign up – there were two versions in this case, but both had the same result).

  4. I suppose TDS (or the other schemes for that matter) should amend their rules and require landlords or agents to jump through three pink hoops 1m in diameter and evidence must be uploaded onto youtube within 14 days as part of their initial requirements! This would ensure that never again would they have to spend money on dispute resolution according to this decision!

    I don’t think the lack of ability to use the free dispute resolution is a valid argument as long as the agent or landlord always makes it clear he does not wish to use it as allowed by para. 10 of sch. 10.

    Also, I’m not entirely sure the rule requiring TDS G clauses can be an “initial requirement”. Rather, I would submit this requirement is a mere scheme rule, a breach of which could be exclusion from the scheme? (Despite what the scheme rules might say, see Draycott for example).

    Initial requirements are defined as “such requirements imposed by the scheme as fall to be complied with by a landlord on receiving such a tenancy deposit”. This imposes nothing prior to the receiving of a deposit and has nothing to do with the commencement of a tenancy. It only includes the schemes requirements “on” receiving a deposit. Therefore, if a tenancy has been granted sometime before the deposit was received, I don’t see how a rule requiring certain inclusions in the tenancy agreement can be an “initial requirement” as defined by section 213(4)?

    Just a thought anyway … I feel an article coming on …

    Many thanks

    Adrian

    • Adrian
      The lack of availability of the free dispute resolution is clearly prejudicial to the tenant and as such that point seems valid to me, but I wouldn’t wholly disagree with your point on the tenancy agreement clauses. That said, if having a compliant tenancy agreement is a requirement of the LL’s/Agent’s membership of the scheme, it is clearly a precondition which must be satisfied at the time the deposit is received (if the deposit is received at the same time or after signing the TA), and thus an initial requirement which must (have already been) complied with.

      I spent a little time earlier this evening browsing the landlordzone forums and it was helpful as a reminder of exactly why the regulations were brought in (and of the truly terrifying level of ignorance of little things like when an eviction is illegal and repairing liabilities). So, while I’d agree that the current position is a mess for all concerned, it will take a bit to convince me that LLs are being needlessly wrapped in red tape…

  5. I would agree with the judgement, and I have been warning of the draconian rules of this scheme since it was introduced.

    Follow the implications through and failure to include this wording or any other similar “initial requirements” breach and you can never serve a section 21 notice. Also, as this case points out, once the 14 days are missed for an initial requirement it can never be remedied. The confusion here is that this case is about the initial requirements, not the statutorily prescribed “prescribed information”. Hannell would say the prescribed information can be remedied, as it does not state the penalty as relating to the 14 days, only to not doing it. The problem with TDS rules is that they then make it a clearly specified “initial Requirement” to do things in 14 days, leaving no rectification route. If the law did not (on the initial requirements or the prescribed information) see fit to link the penalty to the 14 days, then the scheme are guilty of making it more difficult than the law requires.

    • David, I agree that a failure to meet the ‘initial requirements of the scheme’ is incapable of remedy if the scheme requires this to be done within the 14 days. I also agree that this would mean a s.21 cannot be served.

      However, I think you’re not quite right about Hannells. The point in Hannells was the the initial requirements of the scheme – in that instance DPS – did not precisely require compliance within 14 days. (DPS has since amended its requirements, I understand).

      There is perhaps a certain karmic justice – the ‘initial requirements’ point having been used to support late compliance and now turning out to potentially bite on exactly that issue. I don’t see ‘Draconian’, myself. 14 days is plenty of time to comply. But I would agree that it is daft that whether a LL can get away with late compliance or not is entirely down to which scheme they used.

      I also don’t follow the ‘more difficult than the law requires’ point. Not only does the law require compliance with the initial requirements of the scheme, it gives a clear statement (if, possibly accidentally, unenforceable) that this should be within 14 days.

  6. In practice, landlords frequently grant new tenancies to existing tenants, so “never” become “not until the tenants take a new tenancy”. Not all that drastic, unless you’ve really upset your tenants, and they still don’t want to move out.

  7. I certainly think this makes for an interesting discussion if nothing else!

    For the avoidance of doubt, I don’t necessarily disagree with the theory behind deposit schemes and I agree that if a landlord (or agent) follows the procedure properly, the paperwork can be made relatively simple with standard forms and the like.

    However, perhaps if I may elaborate a little more on this case and in particular the TDS refusing to adjudicate because of the landlords failure to incorporate TDS G clauses.

    My last reply was an attempt to keep things short so I apologise if I go on a little :-)

    Rule 11.1 of the dispute service rules (materially the same as in this case I believe) states “The following constitute relevant obligations. The Board may terminate a Membership if, in its reasonable opinion, the Member has: … 11.1.3 failed to supply the information prescribed by statute or required by the Scheme”.

    Also, rule 9.3, states: “The ICE may at his discretion award the disputed deposit to the tenant without formal adjudication [where]… 9.3.7 The information prescribed in paragraph 14.2-3 has not been given to the tenant.” (14.2-3 is the G clauses)

    The TDS should therefore have either, ceased membership under rule 11.1 or awarded the tenant the full amount under rule 9.3. There is no power in the rules to disallow a tenant adjudication on the basis of the landlord failing to include the G clauses.

    It is my opinion that the argument about the tenant being prejudiced by the TDS refusing to adjudicate was influential in this case. If you then take out that argument, there could have been a different outcome.

    Also, in order to back up my theory that the G clauses cannot be “initial requirements”, the penalty should be that the deposit was never deemed to be protected. Instead, the scheme rules suggest that despite G clauses missing, the deposit is indeed still protected (and therefore the initial requirements must have been complied with).

    Rule 11.1 allows membership to be terminated by the scheme as discussed above. Rule 12.1 which explains what happens when a membership is to be terminated states: If … the Membership is cancelled as a result of termination or withdrawal, the protection afforded to deposits collected and registered under the scheme will continue, including access to the ICE for dispute resolution:…”

    How can the protection afforded to the deposit “continue” if the initial requirements have not been complied with? The implication of a failure to comply with initial requirements is that the deposit is not protected. (Also note that it states access to the ICE continues)

    If we take rule 9.3 which allows the ICE to award the whole deposit to the tenant without adjudication, again how can the deposit not be protected if the ICE has power to adjudicate over the protected deposit?

    I therefore submit that although the requirement of G clauses is under the heading “initial requirements” in fact the requirement is nothing more than one of the several rules and it is not a rule that affects whether the deposit is protected or not. It therefore follows (it is submitted) that the initial requirements have indeed been complied with and the deposit was protected throughout.

    Sorry for the reply being so long and it’s all off my chest now!

    Many thanks

    Adrian

    • Adrian, no need to apologise for length when it is interesting!

      I’m not convinced, though. Firstly rule 11.1 and 9.3 are permissive, not prescriptive (May not Shall), and in the case of 9.3 expressly permits the exercise of a discretion. Your argument that the TDS ‘should therefore have either ceased membership or awarded T the full amount’ does not follow. TDS could have done either, but it is a discretionary power in each case. I can understand why the TDS did not return the full deposit to T when court proceedings where underway on the issue, but in any event, there is no requirement for it to do so. Further, I can see nothing in the judgment to indicate that LL/Agent’s membership was terminated, either.

      Secondly, there is no problem with protection and ‘compliance with initial requirements’ being separate matters. They are under HA 2004 in any event. A LL who had protected the deposit but failed to provide the required information to T would still have protected the deposit, but be in breach of the HA 2004 requirements. In this case it was accepted by all parties and the court that the deposit was protected. That was not at issue.

      So, while your edifice is ingeniously wrought, my view is it doesn’t stand by itself.

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