Tag Archive for 'Tenancy Deposit Scheme'

Two weeks, three months, whatever. TDS in the High Court.

Published
by
NL
on 12/02/2010
in Assured Shorthold tenancy, FLW case note and Housing law - All
. 16 Comments

Draycott & Draycott -v- Hannells Letting Limited [2010] EWHC 217 (QB)

This is the first High Court judgment on the tenancy deposit scheme element of the Housing Act 2004 and thus the first that is binding on all lower (County) Courts. This is therefore a significant decision.

This was an appeal by Hannells from a Circuit Judge decision. The Draycotts had entered into a 12 month AST with Derby Build Ltd (the landlords) on 28 February 2008. A deposit of £2,700 was paid to the agents, Hannells, who, according to the tenancy agreement, were to hold the deposit as stakeholder. The deposit was credited on 4 March 2008. The deposit was not registered with the DPS until 19 May 2008 and the Draycotts informed of the details on 21 May 2008. On 27 November 2008, the Draycotts brought a claim under s.214 Housing Act 2004 on the basis that the deposit had not being registered and information given within 14 days of it being received. The claim was brought against the agents.

At first instance, the Circuit Judge held that the claim could be brought against the agents on the basis that the definition in s.212(9) ‘references to a landlord include references to a person or persons acting on his or their behalf in relation to the tenancies’ [my paraphrase] applied to s.214(4), the requirement to pay three times the deposit. The Circuit Judge also held that s.213 meant that the deposit had ‘to be dealt with in accordance with an authorised scheme from the time it was first received’ and s.213(3) did impose a 14 day requirement. Accordingly he awarded the 3x penalty, observing that to do otherwise would permit an unscrupulous landlord to simply avoid a scheme until a claim was made, then comply, ‘driving a coach and horses’ through the Act.

On appeal, there were two main issues:

i) Whether an agent can be pursued for the 3 x deposit penalty under s214 due to the deposit being unregistered; and

ii) Whether the penalties under s214 take effect after a failure to comply with the 14 days requirement or only if the deposit is unregistered when the claim comes to court.

Mr Justice Tugendhat held:

On i) the words of s.219(9) are clear and unambiguous, with no need to consider extraneous material. The words ‘the person who appears to the court to be holding the deposit’ in s.214(3)(a) are not otiose, but rather limit the scope of a possible order to the person holding the deposit and exclude anyone else who might be defined as falling under the term ‘landlord’. S.214(4) has no such limitation, it is penal and the penalty is imposed on the person who is responsible for the failure to comply with s.213 and protect the deposit. Where the failure was the agent’s, there was no reason why they should not have a s.214(4) claim brought against them.

On ii) while a failure to pay a deposit into a scheme is certainly a breach of s.213(4), it cannot simply be equated with the requirement to protect the deposit within 14 days of receipt.

“The requirement that there be payment into the Scheme is the initial requirement of the the Scheme, and not the requirement that it be done within 14 days. The time limit of 14 days is a requirement of s.213(3)”.

For s.214 to bite, the requirement is that ‘the initial requirements of the Scheme’ have not been complied with, so the breach is governed by s.213(4), which states

For the purposes of this section “the initial requirements of an authorised scheme are such requirements imposed by the scheme as fall to be complied with by a landlord on receiving such a tenancy deposit.

So ‘initial requirements’ do not necessarily include the 14 days unless required by the Scheme itself, and the DPS scheme, at this time, did not impose a 14 day requirement, although it did state that the landlord or agent was responsible for ensuring that the deposit was submitted for protection within 14 days of receipt.

Once a deposit had been lodged with the Scheme, and, on the basis above, the initial requirements complied with at least before the hearing of a claim, the Court could not make an order under s.214(4).

S.214(2)(a) states that an order under s.214(3) and (4) is triggered if ‘the court is satisfied that [the initial] requirements [of an authorised scheme] have not … been complied with in relation to the deposit’. Accordingly, if the deposit can be and is protected in accordance with the initial requirements at any point before the hearing of the claim, the claim under s.214(4) must fail, although if the deposit was unprotected at issue of the claim the landlord faces an order for those costs. [para 51]

To the objection that this leaves the unscrupulous landlord free of penalty, there is the counter view that s.215 is untouched. It is not possible for the landlord to serve a valid s.21 Notice until the deposit is protected.

Appeal allowed on this issue.

Where does this leave us?

Firstly, the agent point is quite clear and I’d say, entirely correct in terms of the meaning of s.212(9). Agents are potentially liable if they are the ones handling the deposit and who failed to put it in a scheme.

The late compliance point is not as straightforward as it looks at first reading. The finding here is that there is no requirement within the terms of the Housing Act 2004 itself that the deposit must be protected within 14 days of receipt that will incur the 3 x penalty. Thus, in terms of the Housing Act 2004 by itself, late compliance up to the very doors of court is possible and will allow the landlord to avoid a 3 x deposit penalty.

But does this mean that landlords (and agents) are home free on the late compliance point? No. While there is no 14 day requirement in the Act, the requirement is to comply with the initial requirements of an authorised scheme. Failure to do that may well trigger the 3 x penalty. The question then is what are the initial requirements of the scheme?

The initial requirements of the specific scheme in this case – the DPS scheme in March to May 2008 – did not include a requirement for submission within 14 days of receipt by the landlord/agent. But what if the specific scheme that was used did include such a requirement at the time the deposit was received? On the analysis here, s.214(4) might be be triggered by any delay over 14 days. Or is it the requirements in force for a scheme when the deposit is submitted to it? After all, when a deposit is not being paid into a scheme, which of the schemes’ requirements are potentially not being complied with?

Compliance with a scheme’s requirements is one of the issues at stake in the Tiensia case [reports here and here] which is due to be heard in the Court of Appeal next month.

We may have had clarity on one point, only to open up a new layer of complexity. What were the specific initial requirements of the authorised scheme at the time? And is that the time the deposit was received or submitted to the scheme? And if received, then the requirements of which scheme?

In the meantime, this has made s.214(4) 3 x deposit claims very difficult for tenants – if late compliance is enough to defeat the claim under the Housing Act 2004 – and, for the moment at least, any legal representation for the claimant tenant will have to be paid in full, because a CFA on a claim that can be defeated at the landlord’s whim is a non-starter.

By the way, Painsmiths acted for the appellant and we have had good reason to link to Painsmith’s blog often in the past.

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Tenancy Deposit – renewal of tenancy again

Published
by
NL
on 01/02/2010
in Assured Shorthold tenancy, FLW case note and Housing law - All
. 2 Comments

Bihari v House Trader (UK ) Limited. 14 January 2010, Central London County Court

While we wait for the forthcoming High Court and Court of Appeal decisions in tenancy deposit cases, here is a tenancy deposit appeal, but, alas, only to a Circuit Judge, so not binding.

Mr B rented a two bed property from September 2006 and paid the deposit of £850.00 in respect of that AST in September 2006. The AST was renewed in September 2007 and the landlord/agent House Trader (UK) Limited did not protect the deposit after renewing the tenancy. The landlord rejected Mr B’s representations that it should be protected and the claim came to Uxbridge County Court. At first instance, the District Judge accepted the landlord’s argument that s.212-214 Housing Act 2004 did not apply to renewed tenancies where the deposit had initally been paid before April 2007.

HHJ Faber at Central London County Court allowed the tenant’s appeal, apparently on the basis that there was a deposit paid in relation to the premises and there was a post April 2007 tenancy agreement stating that a deposit had been paid in respect of that tenancy. The landlord was ordered to pay £3400, being the deposit and 3 x penalty.

Mr B was not legally represented, the appeal being conducted with help from a housing support worker, citing previous circuit Judge decisions in Saad v Hogan, Brentford County Court 16 February 2009, and Coutinho v Atkinson, April 2009, Clerkenwell & Shoreditch County Court. Good work there, and thanks to Diana Ambrusne-Szoke for the details.

Now we wait eagerly to see what a higher court or two makes of the issues.

[For all tenancy deposit case posts click here]

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Tenancy Deposit Protection on Sale and Leaseback

Published
by
David Smith
on 29/01/2010
in Assured Shorthold tenancy, FLW case note and Possession
. 5 Comments

UK Housing Alliance (North West) Ltd v Michael John Francis, Grimsby County Court, 18 June 2009, unreported

An interesting case this involving issues of tenancy deposit protection, contractual penalties and the Unfair Terms in Consumer Contract Regulations 1999.

UK purchased a house in Grimsby from F in October 2007. They let it back to him on an Assured Shorthold Tenancy for a term of ten years at a rental of £520.83 pcm with annual increases of 5%. The purchase price was £125,000 to be paid in two tranches – the first, in the sum of £87,500 to be paid on completion while the second, of £37,500, on the giving up of possession at the end of the 10 year term. F would not receive the final payment if UK terminated the tenancy under their rights to do so or if he terminated it himself during the first 6 years. If F terminated after that point he would receive a percentage of the final sum on a sliding scale. F fell into arrears and possession proceedings were taken under the usual grounds as set out in Schedule II of the Housing Act 1988. After several adjournments the matter eventually came before Ms Recorder Stocken.

F, through Counsel, advanced three arguments:

  1. The final payment constituted a tenancy deposit as defined by s213 of the Housing Act 2004.
  2. The ability to withhold the final payment was a contractual penalty and was therefore unenforceable under the principles laid down in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1914] UKHL 1.
  3. The provisions of the agreement were unfair pursuant to the Unfair Terms in Consumer Contracts Regulations 1999

To work in reverse order. The Recorder was satisfied that all the terms of the agreement were in plain language and further found that F had been legally represented at the time of entering into the agreement. She was not, therefore, prepared to find the agreement to be unfair.
The Recorder also did not accept that the power to withhold the final payment constituted an unenforceable penalty. She found that the amount of the final payment was similar to the rent that would have been payable in the last four years of the tenancy and therefore found the final payment to be a reasonable estimate of loss and not a penalty.
Turning to the deposit point. The Recorder considered the wording of s212 and particularly the definition of a deposit as:

money intended to be held (by the landlord or otherwise) as security for—
(a) the performance of any obligations of the tenant, or
(b) the discharge of any liability of his

F argued that the deposit was paid in ‘money’s worth’ by the holding back of the final payment and that this final payment was designed as security for the tenant paying his rent and keeping to the terms of the tenancy. The Recorder did not accept this. She found that the final payment could be lost not just through failure to keep to the terms of the tenancy but also by the agreed right of F to terminate the lease after 6 years. After that date the deposit would also, in effect, change in value as F became entitled to receive more of it after termination. Further, the agreement contained no mention of the deposit. Finally sections 213 and 214 of the Act make mention of the deposit having been paid and repaid. The Recorder was not prepared to accept that monies had, in fact, been paid and considered that the attempt to define the final payment in this way was a “strain of the language”.

F accordingly had a possession order made against him. However, permission to appeal was granted and we understand that this matter is to come before the Court of Appeal on the 8th or 9th of February 2010 making it the first tenancy deposit matter to reach that Court.

[by NL - our thanks to Neil Wylie, Counsel for the Defendant/Appellant for letting us know about this case.]

[For all tenancy deposit case posts click here]

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Catching up with LAG

Published
by
NL
on 16/01/2010
in Assured Shorthold tenancy, Disrepair, FLW case note, Housing law - All, Introductory and Demoted tenancies, Unlawful eviction and harassment and assured-tenancy
. 6 Comments

The January 2010 Housing updates in Legal Action have some County Court case reports that hadn’t reached us. You will naturally have already read them in Legal Action, but for our archives…

Tenancy Deposits
O’Brien v Hill Barnet County Court 22/09/2009
Mr O’Brien granted Mr Hill a 12 month AST on 9 June 2008. He served a s.21 Notice on 12 June 2008. On 2 July 2008, the landlord received the payment of the deposit from Barnet Council, which had agreed to pay the deposit on Mr Hill’s behalf, and the deposit was protected on 7 July 2008. Some time later Mr O’Brien brought accelerated possession proceedings relying on the June 2008 s.21. Mr Hill defended on the basis that the s.21 was invalid as at the time it was served there had not been compliance with s.213 Housing Act 2004.

DJ Silverman ordered that the claim be struck out on the basis that the s.21 was invalid, but gave the Claimant permission to restore the claim if he thought that the order should not have been made (!). Unsurprisingly, Mr O’Brien did apply to restore the claim and this time DJ Silverman made a possession order, accepting that no deposit had been received at the time of service of the s.21 and that therefore s.213 did not apply.

This surely has to be the right decision and the first strike out order is frankly a bit odd. It appears DJ Silverman wasn’t entirely happy with it at the time either.

Harassment and Unlawful Eviction Quantum
Odera v Iqbal Luton County Court 3 September 2009
The Claimant had an AST of a room in a three bedroom house with shared facilities, where she lived with her 11 year old daughter. The landlord allegedly harassed her throughout the tenancy by entering without warning. In January 2008, he gave her a defective Notice. The Claimant began looking for alternative accommodation. On 17 February, she backed her belongings and told the Defendant landlord she was on her way to pick up keys for new accommodation. The new landlord refused to give her the keys unless she handed over the full deposit. She returned to the premises. Later that evening, the Defendant and another man removed her belongings and put them outside the property. The Defendant dragged the Claimant and her daughter out of the bedroom, down the stairs and out the property. The police were called but accepted the Defendants word that the Claimant had no right to remain. The police asked the Defendant to store the Claimant’s belongings until the next day (Top work there, Luton constabulary). The Claimant stayed in emergency accommodation, then for 3 days with her sister in Watford. When she returned to pick up her belongings, she found them discarded in the back garden, soaked and rain damaged.

At trial, the Claimant’s evidence was accepted. Damages:
£500 for breach of covenant of quiet enjoyment and trespass for the two weeks prior to the eviction.
£1000 for the assault and method of eviction.
£1500 aggravated damages, particularly in view of Claimant’s daughter witnessing the assault and being assaulted.
£1000 exemplary damages as the landlord sought to increase his income by letting the property as a whole.
An inquiry into special damages – later settled at £750.

Cashmere v Walsh, Downing and Veale Central London County Court 27 October 2009
The Claimant had an assured tenancy of a flat in Docklands from 1990. In 2000, Downing bought the flat as bare trustee for Walsh. Veale was Downing’s mother and a business associate of Walsh.

Between 2000 and 2003 there was minor disrepair at the flat (defective light fitting, non functioning storage heater). There was further disrepair from 2003 onwards – a further non-functioning heater, broken handle on the toilet cistern following a refurbishment of the bathroom, and poor floor covering in the bathroom. The Claimant began spending more time at his girlfriend’s home. Downing and Veal promised to carry out repairs. In December 2007 they asked the Claimant to move out for the duration of works. The Claimant moved out and allowed the landlord to clear the flat of his belongings which were piled in the corridor. The works were completed in a week, including a new front door and lock. When the Claimant asked for a copy of the key he was told he could not have it because there were rent arrears. After being turned away by the Defendants on several occasions, the Claimant engaged solicitors. Pre-action letters received a response from Walsh saying that he was now the owner of the flat and had a new tenant in. On this basis an application for re-entry was not made. The annual rent was £10,920

On a claim for damages, the Court acknowledged that there were ‘historic’ rent arrears of about £7,000 and that the Claimant had caused noise nuisance to his neighbours, but neither of these were the reason for the eviction. The Defendants had chased housing benefit, it was not until the locks had been changed that they demanded payment from the Claimant personally. The true reason for the eviction was the desire to sell the flat, which was achieved after the eviction. Damages under s.27 and s.28 Housing Act 1988 were appropriate, without deduction under s.27(7)(a). Damages on this head £47,000 against Walsh.
Disrepair – £9,200 (4% of rent for the first 3 years; 15% of rent for the next 5 years).
£8,000 against Downing and Veal for their part in the deception and the refusal to hand over keys, which amounted to trespass. The Claimant had taken over 18 months to find suitable alternative accommodation.
£500 for failure to return a deposit.
£6,515 against Walsh and Downing for the loss of the Claimant’s belongings, which were never recovered.
Aggravated damages of £10,000 against all three Defendants. The Claimant had been duped into handing over the keys, even assisting in the removal of his belongings. His belongings had been dumped and the Defendants never told the Claimant where they were. The Defendants has lied about the whereabouts of the belongings to the Claimant’s solicitors, had denied the eviction and denied control over the flat at the relevant time. They had also lied about a new tenant being in place.

Introductory Tenancies
Plymouth City Council v Hill Exeter County Court, 6 November 2009
Mr & Mrs Hill were introductory tenants. Following a valid s.128 Housing Act 1996 notice on grounds of rent arrears, a possession order was made. Plymouth applied for a warrant and a bailiff’s appointment was set. The Hill’s sought further time to pay the arrears and applied to suspend the warrant. A DJ ordered the warrant to lie on the file, as an administrative act. There were two further applications for bailiff’s appointments, two further applications to suspend and two further orders that the warrant lie on the file. At a further hearing, some 5 months after the date of possession, the DJ ordered that the warrant lie on the file for 21 days pursuant to his powers under s.123 County Courts Act 1984. Plymouth appealed on the basis that the power to order the warrant lie on file did not exist, or if it did, the DJ could not suspend execution of the warrant beyond the 6 week period specified in s.89 Housing Act 1980.

Held by the Circuit Judge:
The Court could hear the appeal although the outcome was now academic.
The DJ was exercising a judicial power, not an administrative one.
The power to order that the warrant lie on file in this case did not exist.
The correct power was the one to suspend and this was limited to being up to 6 weeks under s.89 HA 1980 and there was no judicial or administrative power to delay it after that time.

As ever, thanks to Jan Luba QC and HHJ Madge for the updates.

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Tenancy Deposit – Tiensia revisited

Published
by
NL
on 22/11/2009
in Assured Shorthold tenancy, FLW case note and Housing law - All
. 9 Comments

We reported the County Court hearing of Universal Estates v Tiensia in this post. Since then we have heard of developments in this case, with a tantalising hint of a higher court judgment in the offing.

Tiensia at County Court first instance found that late compliance in protecting the deposit and sending the required information was not ‘complying with the initial requirements of the scheme’ (s.213 HA 2004) because the requirements of the scheme itself, Tenancy Deposit Solutions Limited, required this to be done within 14 days of receiving the deposit (and, apparently, also so did s.213).

Now it turns out that Universal Estates appealed, presumably to the Circuit Judge. The appeal was granted on the basis that the sanctions in s.214(3) and (4) don’t apply where the landlord has complied with the requirements of the scheme, and provided the information to the tenant, by the date of the hearing of the HA 2004 claim.

Apparently the Court of Appeal has granted permission for a second appeal. This means this issue might finally get in front of a court of record.

I know nothing further, so all information gratefully received.

[For all tenancy deposit case posts click here]

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Tenancy deposit – late compliance again

Published
by
NL
on 07/11/2009
in Assured Shorthold tenancy, FLW case note and Housing law - All
. 20 Comments

Da Costa v Pinter Bromley County Court April 2008

With thanks to the November Legal Action housing updates. This was a tenancy deposit and 3 x deposit penalty claim. The rent was £1,950 a month. The tenancy agreement also stated ‘Payment required in advance of £4,200′. The invoice from the landlords agents said that of this, £2,250 was ‘a deposit’.

At the end of the tenancy, the deposit was requested by the tenant, but not returned. There was also no trace that the deposit had been protected in one of the schemes. The tenant brought a claim for deposit and the penalty. After the issue of proceedings, but before the hearing, the deposit was put into one of the schemes and details provided to the tenant.

DJ Burn ordered return of the deposit and the 3 x penalty. The DJ stated:

The purpose of the Act is to try to ensure that landlords secure tenancy deposits in a recognised deposit scheme at the start of the tenancy, so that the deposit can be returned to tenants quickly when the tenancy ends, and that disputes about the deposit can be resolved under the schemes’ procedures without the need for court proceedings.

Landlords who describe a deposit as something else, who do not secure it promptly in a deposit scheme as required by the Act, then fail to return the deposit when the tenant leaves (especially if this is without good cause, thereby forcing the tenant to start court proceedings to recover the money) but who then at the last minute after the tenant issues proceedings, pay the deposit into a scheme, are clearly flouting the spirit of the legislation and, on my interpretation, the letter also.

If the s213 and s214 remedies are not applied in a case such as the instant one, the Act would be rendered virtually toothless when landlords flout its provisions.

We are, of course, still in the land of the County Court lottery on the late compliance issue. None of these cases are binding on other courts. Harvey v Bamforth went one way and other cases, including this one, have gone the other. There does seem to be a distinct view on the spirit and purpose of the legislation emerging, through which the, to put it charitably, ambiguities of the Housing Act 2004 are viewed. But until we have a higher court judgment on the issue, there is no certainty.

[For all tenancy deposit case posts click here]

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Bits from August LAG 1: Tenancy Deposits

Published
by
NL
on 11/08/2009
in Assured Shorthold tenancy, FLW case note and Housing law - All
. 26 Comments

As ever, the lovely Legal Action housing updates have some interesting County Court cases that hadn’t reached us. A couple in the August edition concern tenancy deposit cases. Nothing binding (and when will some of these cases reach a higher court?), but interesting.

Woods v Harrington, Haverfordwest County Court. 19 May 2009. Ms Woods had a 12 month AST from May 2008. The tenancy agreement stated that there was a £600 deposit ‘as security for the faithful performance of the terms of the lease’. The deposit was not paid into a scheme. During the 12 month term, Ms Harrington, the landlord agreed to accept notice to terminate the tenancy early and possession was given in March 2009. The deposit was not returned. After two weeks, Ms Woods issued proceedings for the return of the deposit, without warning. Ms Harrington counterclaimed for damage and paid the deposit into a scheme in April 2009. At trial, the DJ noted that the requirements of s.213 Housing Act 2004 had not been met during the life of the tenancy. The late payment was made in the hope of avoiding the repercussions of s.214. This was not only contrary to the letter of the law but its spirit and the public policy it embodied. Parliament could not have intended that a landlord could ignore the legislation then avoid its effects by late compliance after the end of the tenancy. Return of the deposit and 3 times deposit payment ordered and directions given on landlord’s counterclaim.

This is one of a number of cases now where the County Court judges have taken the view that late compliance is not sufficient, in this case specifically compliance after the end of the tenancy. It is still a lottery, of course.

Delicata v Sandberg, Central London County Court. 2 June 2009. Ms Sandberg was granted a 12 month AST in July 2007. The deposit was not protected until August 2007. The landlord had served a s.21 notice on the same day the tenancy agreement was signed. In April 2008, Ms Sandberg was sent to prison. She had notified the landlord in advance. While she was in prison and without warning to her, the landlord issued accelerated possession proceedings relying on the s.21 notice from July 2007. A possession order was obtained and then in April 2009 a warrant of possession, both while Ms Sandberg was in prison and without her having been served with papers there. She returned to the flat on her release in May 2009. The landlord applied for a warrant of restitution. At court, the DJ accepted that the possession order should be set aside. The landlord could not rely on a s.21 notice served while the deposit was not protected – s.215(1) Housing Act 2004 – as it was invalid.

This may be quite an extreme case, but confirms what we have always said. A s.21 notice served with the tenancy agreement is invalid unless the deposit has been received and protected beforehand, which is unusual.

[For all tenancy deposit posts, click here.]

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Tenancy deposit alert

Published
by
NL
on 06/06/2009
in Assured Shorthold tenancy and Housing law - All
. 0 Comments

Mydeposits.co.uk, which is one of the approved TDS schemes, has issued a press release warning about mytenancydeposits.co.uk, whose site purports to be that of an approved TDS custodial scheme. It isn’t. Any landlord whose deposit is with mytenancydeposits.co.uk has not complied with the requirements of the scheme and may face the 3x penalty.

mytenancydeposits.co.uk is run by a company called MTD Secure Limited. They claim to be “administering a tenancy deposit protection scheme by Tenancy Deposit Solutions Limited under contract from Communities & Local Government”. This is not true.

Now, if they are going to lie about that, it would probably not be a good idea to hand them any money at all and certainly not a tenancy deposit. mydeposits.co.uk say that they have informed the relevant authorities.

Landlords, agents and tenants beware! There are only three approved schemes:

  • Tenancy Deposit Solutions Limited trading as mydeposits.co.uk
  • The Dispute Service, also known as the Tenancy Deposit Scheme (www.thedisputeservice.co.uk)
  • The Deposit Protection Service (www.depositprotection.com)

    • If it isn’t one of those, it isn’t legitimate for the purposes of the Housing Act 2004.

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    Tenancy Deposit – variations on a theme

    Published
    by
    NL
    on 17/05/2009
    in Assured Shorthold tenancy, FLW case note, Housing law - All and Possession
    . 19 Comments

    Legal Action May 09 housing updates contain a few tenancy deposit cases, which further muddy the waters…

    Seghier v Rollings, Bow County Court, 6 March 2009. An assured shorthold beginning in May 2007. A deposit was paid by Mr Seghier to the letting agent before the start of the tenancy. It was not protected, nor the required information given. Ms Rollings was apparently unaware of the existence of the deposit scheme. The deposit remained unprotected until shortly before the initial hearing of Mr Seghier’s claim in June 2008. At the hearing Ms Rollings gave a copy of the certificate of deposit to Mr Seghier, but the prescribed information was not provided then or subsequently. At trial, Mr Seghier sought an order that the deposit either be repaid or paid into a designated scheme account and the 3 x deposit be paid to him. HHJ Redgrave distinguished Harvey v Bamforth on the basis that Ms Rollings had still not complied with s213(6)(a). The phrase ‘as it thinks fit’ in s.214(3) meant the court must order either return of deposit (s.214(3)(a)) or deposit to be put in a scheme (s.214(3)(b)). Payment of 3 x deposit within 14 days. Clearly the Court was untroubled by the late compliance argument or the s.214 ‘must also’ point, assuming that either were raised.

    Beal v McCartney, Plymouth County Court, 12 March 2009. Ms McCartney granted Mr Beale a 6 month AST in March 2008. The tenancy agreement said that the deposit would be protected. It wasn’t. In September 2008, Mr Beal received a letter from the landlord’s mortgage lender informing him that a warrant of eviction was being applied for. The eviction took place on 22 October. Mr Beal made a claim for the deposit, 3 x deposit award and breach of quiet enjoyment. The Court awarded all this, with £500 for breach of quiet enjoyment. The Court observed that it was ‘quite clear’ that s.214(3) meant it must award the 3 x deposit and that ‘it is very silly of landlords’ if they don’t take notice. Interesting in that this appears to be a retrospective claim, rather than made during the course of the tenancy.

    Universal Estates v Tiensia, Croydon County Court, 23 February 2009. Ms Tiensia was granted an AST on 19 May 2008 by UE. The rent was £2400 per month. A deposit of £2400 was paid in installments, with the last on 4 June. Ms Teinsia was in rent arrears from the start due to HB problems and the landlord served notice relying on grounds 8, 10 and 11 immediately after the second month’s rent was due. Ms Tiensia defended the possession claim and counterclaimed for the deposit and 3 x payment. The landlord registered the deposit with Tenancy Deposit Solutions Limited and faxed the certificate to Ms Tiensia.

    The terms of the TDS Ltd scheme stated that the deposit must be protected within 14 days of being received from the tenant and details provided. On application for summary judgment, the DDJ held that the ‘initial requirements’ of the scheme itself (as well as s.213) required the deposit to be protected within 14 days. This requirement could not be satisfied once the 14 days had passed. 3 x deposit ordered.

    Depending on the wording of the terms of the particular tenancy deposit scheme (and I believe that they are broadly similar on this point), this is a good counter argument on the late compliance point. If the landlord has not protected the deposit within 14 days of receipt and the terms of the scheme are that they must, then they quite simply cannot comply with the ‘initial requirements of an authorised scheme’ as per s.214(1)(a) and (2)(a). The details of the scheme itself are therefore important to check.

    [For all tenancy deposit case posts click here]

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    Tenancy Deposit – it gets worse

    Published
    by
    NL
    on 29/04/2009
    in Assured Shorthold tenancy and Housing law - All
    . 0 Comments

    Hat tip to Tessa at Landlord Law for this. There are reports on various tenant/landlord forums of tenants losing Housing Act 2004 claims for 3x deposit on unprotected deposit/lack of notification cases where the landlord has returned the deposit to the tenant prior to hearing. Here’s an example.

    This approach relies on the wording of s.214, specifically:

    (2) Subsections (3) and (4) apply if on such an application the court—
    (a) is satisfied that those requirements have not, or section 213(6)(a) has not, been complied with in relation to the deposit, or
    (b) is not satisfied that the deposit is being held in accordance with an authorised scheme,
    as the case may be.

    (3) The court must, as it thinks fit, either—
    (a) order the person who appears to the court to be holding the deposit to repay it to the applicant, or
    (b) order that person to pay the deposit into the designated account held by the scheme administrator under an authorised custodial scheme,
    within the period of 14 days beginning with the date of the making of the order.
    (4) The court must also order the landlord to pay to the applicant a sum of money equal to three times the amount of the deposit within the period of 14 days beginning with the date of the making of the order.

    [My emphasis]
    The issue is the ‘must also’ at (4). The argument runs that if the court cannot order either (3)(a) or (3)(b), because the deposit has already been returned to the tenant, that ‘also’ means that (4) cannot follow or be ordered separately.

    That is quite a nifty argument, at least on the strict construction of the Act, although it runs against the purpose. It has clearly had some successes, again all at County Court level, so no binding precedent. And it leaves the landlord able to avoid penalty by returning the deposit at any point up to the door of court.

    But – in strictly thinking aloud terms – I’m not so sure it is so clear cut, at least assuming that the tenancy is still in existence.

    What if the tenancy agreement specifies a deposit? Or even where, if the deposit was taken as a condition for granting the tenancy agreement, there is arguably an implied term that there is to be a deposit? The tenant would be in a position to argue that the return of the deposit is not the correct result and that the deposit – which is a contractual requirement of the tenancy – should be protected. It would be open to the tenant to refuse the ‘return’ of the deposit as a breach of contract. After all, a deposit is arguably in the tenant’s interests as well as the landlord’s.

    On this line of thought, the tenant should tactically claim for an order that the deposit be protected, not return of the deposit, and claim for the 3x penalty, and then refuse any ‘offers’ by the landlord to return the deposit.

    If the landlord then does protect the deposit, the case faces the lottery by District/Circuit Judge of whether late compliance avoids the penalty. Some say it does, some say it doesn’t.

    Or are these just the fevered imaginings of a broken mind? It has been a trying couple of days.

    For a piece of statute supposedly aimed at lay people, these parts of the HA 2004 must now be in the running for the worst drafted in recent times. We need appeals on all these issues, and soon. High Court or preferably Court of Appeal.

    [For all tenancy deposit case posts click here]

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