Nearly Legal » Tenancy Deposit Scheme

Tenancy deposit penalties awarded!

NL — Mon, 01 Aug 2011 20:44:54 +0000

There are two appeals on cases involving claims for the return of deposits and the three times penalty in both of which – astonishingly, given the recent history of High Court and Court of Appeal decisions – the tenant was awarded the penalty. We have said before that it would now be a somewhat incompetent landlord who would be caught by a claim. You can draw your own conclusions from the facts of these cases. The way in which Hashemi is distinguished in the first of these cases is interesting, but perhaps unlikely to be of general application

First, in the High Court:
Suurpere v Nice & Anor [2011] EWHC 2003 (QB)

Ms Suupere was an assured shorthold tenant of the Defendant, of part of a house. The tenancy began on 6 January 2009. Rent was £300 per month, with a deposit of £500 paid to the landlord. The landlord was described by the Judge as ‘inexperienced’.

Relations between Ms S, other tenants and the landlord became difficult. On 11 May 2009, Mr N served a ‘notice to quit’ on Ms S. This was invalid, not being in the prescribed s.21 form or providing two months notice. On 18 May 2009 a further notice was served, giving two months, but back dated to 11 May 2009. On 12 June 2009, Mr N fixed a ‘notice of eviction’ to the front door, which was, of course, no such thing. On 15 July 2009, Mr N brought possession proceedings in Guilford County Court, relying on the backdated notice. This claim was later stayed.

On 20 July 2009, following a letter from the CAB, Mr N transferred the deposit to the DPS scheme, but no prescribed information was sent to the tenant (nor was the need to do so mentioned in the CAB letter). Ms S did receive information from the DPS about the deposit having been protected.

On 10 August 2009, Ms S issued proceedings claiming for return of the deposit and the 3 x penalty, as well as, later, unlawful eviction (unsuccessful) and breach of quiet enjoyment (successful). On 14 August, she left the property, allegedly after harassment. The deposit was returned to her in full on 1 September 2009. Mr N defended the claim saying that the deposit was protected and ‘required information provided’ once they had been told about the requirements of the scheme by Guildford BC. The deposit had been returned in full and there was only ‘an innocent technical breach’.

At the hearing in June 2010, the Circuit Judge relied on Draycott & Draycott v. Hannells Letting Limited (trading as Hannells Letting Agents) [2010] EWHC 217(QB) and found that, as the deposit had been protected prior to the commencement of proceedings, s.214(4) Housing Act 2004 penalties did not apply.

On appeal, Ms S argued that, while the deposit was protected prior to the issue of proceedings, the prescribed information which was required to be provided under s.213(5) & (6)(a) had not been complied with prior to issue or before the hearing of the claim. The Claimant’s claim raised non compliance with s.213(6)(a) so s.214 was enagegd and the penalty order should have been made. Tiensia v. Vision Enterprises Limited(Trading as Universal Estates): Honeysuckle Properties v. Fletcher and Others [2010] EWCA Civ. 1224 relied upon – para 37.

The Respondents argued that:

they transferred the deposit on 20 July 2009; that they gave the Appellant full details of registration of the deposit on 21 July, confirming the deposit reference number and providing details of the DPS website; and that they had complied with their duty to provide information as required by the Act and the 2007 Order. Alternatively, if they are wrong about that and they did not comply, then they contend that they were not required to supply the Appellant with the prescribed information after they had returned the deposit to her on 1 September. They state that the purpose of these statutory provisions is to protect tenants from unscrupulous landlords. They argue that a tenant who has had information provided about the deposit and has then had the deposit returned in full does not require protection. It would have been futile for them to have given particulars of the scheme to the Appellant between 1 September 2009 and 1 June 2010, the date of the hearing of the Appellant’s claim under s. 214, by which time the deposit was no longer in the scheme.

The High Court, Mrs Justice Cox DBE, held:

Following Sharp J in Potts v Densley and Pays [2011] EWHC 1144 (QB), it will make no difference to the landlord’s statutory obligation to provide the prescribed information if, by the date of the hearing, the tenant’s deposit has been repaid.

The letter from the DPS that the claimant/appellant had received did not provide all the information required by the 2007 prescribed information order and it was not enough for the Defendants to say that the information was available on the DPS site. The landlord was obliged personally under the Housing Act 2004 to provide the information.

On representations made after the hearing but once Gladehurst Properties Ltd v Farid Hashemi (on behalf of himself and Matthew Johnson [2011] EWCA Civ 604 had been handed down, the Defendants/Respondents argued that the tenancy had ended when Ms S left the property on 14 August 2009, so, following Hashemi, it was not open to the Court to make an order under s.214.

However, it was not at all clear that the tenancy had ended at that time [paras 61-62]:

there is no evidence to support the submission that the tenancy came to an end when the Appellant left. It was not in dispute in Gladehurst that the tenancy had terminated. However, the Appellant in the present case did not accept that her tenancy had been determined because she brought a claim for wrongful eviction, claiming that she was forced to vacate as a result of the Respondents’ harassment.
Nor is there any evidence to show that she had surrendered the tenancy. The Respondents issued and pursued a claim for possession, which was stayed by Judge Reid pending determination of the Appellant’s claim for damages, and which therefore remained outstanding as at the date of the hearing. In fact, Judge Reid found that the Notice to Quit was defective in this case because it did not provide the Appellant with two months’ notice, as required by s.21(1) of the Housing Act 1988. It is perhaps unfortunate in the circumstances that he did not deal with both claims together and decide the issue of determination of the tenancy before going on to consider the Appellant’s claim in respect of the deposit.

In short, the Appellant’s tenancy had not been lawfully determined as at the date of the hearing. So Hashemi did not apply.

The Judge below should have ordered the payment of the 3 x penalty under s.214(4). Payment of £1,500 ordered.

We only have a short note from the Garden Court Housing Bulletin on the second case, which was a refusal of permission to appeal to the Court of Appeal. I’ve not been able to find a transcript.

Owolabi v Bello [2011] EWCA Civ 881
29 June 2011

The claimant landlady sought possession and arrears of rent. The defendant assured shorthold tenant counterclaimed for damages for unlawful eviction and harassment and for a penalty of three times the deposit (which had not been protected). At trial the judge gave judgment for £2500 rent arrears but on the counterclaim awarded £13,000 damages and repayment of the deposit (£220) and a penalty of three times that amount (£660). The Court of Appeal dismissed the landlady’s renewed application for permission to appeal because it simply amounted to an attack on the judge’s findings of fact based on his having taken a dim view of the landlady’s credibility.

Tenancy Deposits Back in the Localism Bill

David Smith — Tue, 21 Jun 2011 20:35:04 +0000

We have previously posted on amendments to the Localism Bill tabled in Commons committee which would have had the effect of rewriting the tenancy deposit protection provisions in the Housing Act 2004.

The changes were designed to reset the position back to that which was set out by the government when it originally put the provisions forward and before the legislation was undermined by a number of Court of Appeal decisions.

The amendments were not supported by the Government in Commons committee and were withdrawn on the basis that an alternative would be put in place. However, there has been no alternative forthcoming thus far and time is getting short.

Enter Lord Best. He has reintroduced the same amendments in the Lords. The ball is now back in the Government’s court. What happens next is anyone’s guess.

Eviscerated? Now also Drawn and Quartered

David Smith — Thu, 19 May 2011 15:01:24 +0000

Gladehurst Properties Ltd v Hashemi [2011] EWCA Civ 604 (Not on BAILII at time of writing)
UPDATE: Transcript now available on BAILII

In Tiensia LJ Sedley said that the decision of the majority ‘eviscerated’ the tenancy deposit protection legislation. The Court of Appeal has now returned to complete the job with a hanging by the neck until almost dead followed by a quartering with the body parts to be distributed throughout the kingdom.

The facts were relatively simple. Mr Hashemi was a tenant, along with a Mr Johnson, of Gladehurst Properties. The tenancy deposit of some £6,240 was never protected by G. Much of that deposit (less a deduction of £1,123.99) was returned to the tenants after the tenancy. Mr Hashemi then brought a claim against Gladhurst for the return of the rest of the deposit and for the usual three times penalty with the name of Mr Johnson on the claim form but apparently without his permission. After a number of hearings the case eventually came before the Court of Appeal.

Mr Hashemi had by the time of the hearing obtained a witness statement and written confirmation from Mr Johnson that he was aware of the proceedings, assented to them, and was happy for Mr Hashemi to pursue the appeal on his behalf. This was considered to be important by the Court of Appeal as they held that joint tenants must take a tenancy deposit claim jointly and cannot act alone. This was one of the issues which remained uncertain in the legislation.

The case ultimately turned on the wording of s214(3) and 214(4) of the Act which set out the penalty component of the legislation. S213(3) states that the Court must make an order either returning the deposit or that it be paid to the custodial scheme while section 214(4) states that the court must also order payment of three times the deposit to the tenant. These clauses have caused controversy, particularly in situations where the landlord has returned some or all of the deposit to the tenant and/or the tenancy has ended. How can the Court order the deposit to be returned to the tenant if it already has been and how can the court order the deposit to be paid into the custodial scheme if the tenancy has ended. In short, the Court of Appeal has resolved these disputes in a radical way. They have ruled that s213(3) can only make sense if both options (return of the deposit or its payment into a scheme) are available to the Court and this can only be the case where the tenancy is still ongoing. Therefore the Court has held that the monetary penalties for non-protection of the deposit are not available to the tenant when the tenancy has come to an end. In other words tenants cannot make claims against their landlords for three times the deposit at any point once the tenancy is over.

The decision is pretty surprising. It seems that the Court of Appeal wanted to avoid tenants taking claims for the penalty a substantial time after the end of their tenancy. Personally, I always though that this is what the Limitation Act was for and that if Parliament wanted to have a claims limit that was different to that then they should legislate for it but clearly the Court did not agree. However, in a time where there are complaints about judges overriding the will of Parliament this would seem to be an unwise decision. I am looking forward to the Daily Mail highlighting this case as an example of the problem in the next few days.

To be blunt, I think the Court of Appeal has got this one wrong. Sorry chaps (and Mrs Justice Baron of course) but there you are.

One of the main places in which they seem to have led themselves into error was their apparent belief that the Act says that the Court must order the landlord to repay the deposit or to pay it inot a custodial scheme. It is this fairly common error which has led to the whole discussion about the Court ordering landlords to pay back monies they do not actually have. In fact, the Act requires that the person who appears to the court to be holding the deposit should pay it back to the tenant. If the landord has returned the money to the tenant then this section drops neatly away as the tenant would only be ordered to pay it back to himself. It was in seeking to avoid the issue of ordering landlords who have already paid the deposit back to do so again, which led the Court to come up with their new limitation on claims. I see no reason why both alternatives set out in s213(3) have to be available to the Court for s213(3) to operate. In fact, it was the very fact that both alternatives would not be available that must have been in the mind of the drafter when he placed at the start of s213(3) the qualification “as it thinks fit” and thereby gave the Court the power to choose which of the two options was suitable in the circumstances before it.

The other area in which I take issue with the reasoning of the Court is when they try to justify their decision by suggesting that s214(1) should have extra text added to it so that it reads that the necessary obligations have not been complied with and are still capable of being complied with. I just don’t see the purpose in adding in this sort of text when it has no real value. If the Court really wanted to save Gladehurst from the fire they could have simply read the phrase “must also” in s214(4) in a very narrow manner and ruled that this meant that if the deposit had been returned apart from legitimate agreed deductions (which would probably count as returned anyway as they were agreed) then the three times the deposit penalty could not be applied.

Finally, as my fellow blogger, Dave, has highlighted the Court has erred by agreeing with the Court in Tiensia that the purpose of the legislation was not to punish landlords. It was. The government was crystal clear that it intended the penalties to be there to punish bad landlords. By trying so hard to avoid this scenario the Court of Appeal has now successfully destroyed the legislation in two straight decisions.

One of the new issues raised by the decision is what is the position if a tenant does what is required by the Court and starts a claim during the tenancy which the landlord ignores and then, as often happens, the tenancy ends before the issue finally appears before a Court. Following the decision in Tiensia the Court should consider the position as at the day the matter comes before them, conclude that the tenant cannot make the claim, and would then presumably strike out the tenant’s case. I am not sure if the Court would award the tenant costs in this scenario. This would be a totally ludicrous outcome. In fact the only really solid way I can think of to actually claim the penalties is as a counterclaim to a possession action based on rent arrears.

The government has hinted again that it will use the Localism Bill to amend the tenancy deposit legislation to deal with these issues. If that is the case then one wonders why they objected to the amendments already tabled by Shelter and NACAB which were perfectly suitable. If they are planning to use the Localism Bill to sort this out then they had better hurry as it had its 3rd reading yesterday. In the meantime the only real penalty for a landlord who does not protect a deposit is that they cannot serve a section 21 notice.

Not So Protected

David Smith — Sun, 08 May 2011 14:54:28 +0000

Potts v Densley & Anor [2011] EWHC 1144 (QB)

Another case on tenancy deposit protection has hit the High Court, with a rather strange outcome.

P was the tenant of D and another party. The deposit was not protected during the tenancy. This was raised by P towards the end of the tenancy and D apparently offered to return the money to her. She declined and insisted it was protected. The tenancy was then ended by notice from P and she vacated the property. The deposit money was then placed with the DPS but the prescribed information was never served on P. In fact, it seems that DPS had not really protected the deposit at all and had placed it in a ‘suspense’ account as it was given to them after the end of the tenancy. At first instance HHJ Hallon found that there had been a technical breach of the legislation but refused to make the usual award of 3 times the deposit as she felt it unjust to do so. At this stage P obtained representation and appealed to the High Court. At the High Court both sides were represented.

On appeal 2 contentions were advanced for P:

That having found the deposit was not properly protected it was not open to HHJ Hallon to refuse to make the award of the usual penalties; and
HHJ Hallon did not deal properly with the issue raised before her of the failure to provide prescribed information, had she done so she would have been compelled to find in favour of P and make the appropriate award.

However, in between the first instance hearing and the appeal the Court of Appeal had produced its decision in Tiensia v Vision Enterprises. Accordingly, D responded to the first ground of appeal by seeking to support HHJ Hallon’s decision on the basis that the deposit had been protected prior to the hearing of the claim and therefore, following Tiensia, it was properly protected. On the second ground it was said for D that the issue of the prescribed information was not raised at first instance and that it was not possible to raise it on appeal.

The Court agreed that if HHJ Hallon had found the deposit was unprotected then she could not refuse to make the order for the penalties. However, the Court did not accept the argument for P that Tiensia was distinguishable on the facts because the tenancy was over before the deposit was protected. The Court held that the legislation clearly used the terms “Landlord” and “Tenant” to refer both to the parties both during and after the tenancy and therefore it was not possible to distinguish the decision in Tiensia on this basis. Accordingly, the first ground of appeal was dismissed.

On the second ground the Court did not accept that the issue of the missing prescribed information had been pleased in the initial claim form and held that the passing reference to it made in P’s witness statement was insufficient to bring it before HHJ Hallon. Therefore it could not be raised on appeal.

Accordingly, appeal dismissed.

One of the factors in this case was the decision in Tiensia. Leaving aside the rightness of that decision which we have previously discussed this appeal really turned on the basis of a somewhat throwaway remark made by LJ Rimer near the end of his decision (at para 45) in which he said that in the

overwhelming majority of cases the net result will be that the legislation will have achieved its primary objective, that of the due protection of the tenant’s deposit. What more can reasonably be asked of it?

This phrase has become a touchstone for landlords who have failed to properly fulfil their obligations in all aspects of tenancy deposit protection and is now the primary line in all defences to tenant’s claims where the landlord can show that they have fixed things by either protecting the deposit or giving it back. This from of ‘no harm, no foul’ defence is fair enough in that the tenant does have their money back but it was manifestly not what the government intended and it does little to improve the confidence of tenants in the Private Rented Sector that was the real intention of the legislation to begin with (see Dave’s post on this issue).

This case precedes the upcoming decision of the court of Appeal in Hashemi v Gladehurst which covers some of the same issues. This may well undo the decisions reached here. Unfortunately we are not sure when this decision will appear (although we would be grateful for an indication). The case also did not deal at all, because it was not pleaded at first instance and so could not be argued on appeal, of whether the landlord had breached an actual or implied requirement of the DPS scheme by seeking to register the deposit after the end of the tenancy. It may well be the case that the schemes will seek to intervene if they can find a suitable case to do so as the suggestion that deposits can be registered with them after the end of a tenancy and still be protected places them in a somewhat complex business position which they may find unsatisfactory. On the other hand the ruling by the Court that the terms “landlord” and “tenant” are used in the legislation to refer to the relationship both during and after the tenancy will dispose of a line of defence advanced by some landlord’s that the tenant cannot bring a claim after the end of the tenancy because they are no longer a tenant.

With thanks to PainSmith Solicitors (who acted for Potts) who pointed this one out to us although we were rather slow to actually get on with posting it (entirely my fault I hasten to add).

Tenancy Deposits in the Localism Bill?

David Smith — Mon, 28 Feb 2011 23:25:19 +0000

A brief note to highlight some unexpected amendments that have been tabled to the Localism Bill. The latest marshalled list includes new sections which are designed to make amendments to the Housing Act 2004 and specifically to the tenancy deposit protection provisions.

The changes dispose of the unclear concept of ‘initial requirements’ and remove the late protection loophole revealed by cases such as Draycott v Hannells and Tiensia v Univeresal Estates. They also remove the loophole utilised by some landlords of returning the deposit to the tenant and then asserting that s214(4) only requires that they pay the three times penalty if they have also been ordered to pay the deposit back. This will mean that tenants will find it far easier to pursue landlords or agents who have failed to protect their deposits and landlords will not be able to rush deposits into schemes after the 14 day period and thereby avoid penalties. The changes also clear up other areas of uncertainty, such as the status of multiple tenants, which have not yet come before the higher Courts.

From the landlords point of view the changes are an improvement because they do away with the fixed penalty of three times the deposit for failure to protect and, instead, create a variable penalty ranging from the value of the deposit up to three times the value of the deposit. In other words the tenant will get their deposit back or have it paid into the custodial scheme and will also receive a further sum of money equivalent to not less than the deposit and not more than three times the deposit. In considering the exact amount to award the Court will consider why the landlord did not protect the deposit, what the landlord knew or should have known about his obligations, and how quickly he resolved the situation. This will mean that ignorant landlords will still be penalised but they should be able to bring the size of the penalty down to a more manageable level.

It is by no means certain that the amendments will survive into the final version of the legislation but, given that CLG is rumoured to be consulting with its own lawyers on how best to deal with the problems thrown up by the various court cases, it is likely that the amendments will receive government backing in which case they will probably become law.

Distinguishing Tiensia

David Smith — Tue, 01 Feb 2011 06:05:39 +0000

Gemma Shepley v Majid Yassen, Tameside County Court, Thursday 13th January 2011 (Unreported)

The above case on the, increasingly litigated, tenancy deposit protection provisions was brought to our attention and is of particular interest as it specifically distinguishes itself from the Court of Appeal decision in Tiensia (reported on here).

In this case the tenant was granted a 12 month assured shorthold tenancy in late November 2007. This was renewed for a further 12 months on expiry and then continued on a periodic basis until February 2010 when the tenant vacated the premises and the tenancy came to an end. The tenant was informed that most of their deposit would be retained and after taking advice sent a letter before action in early April 2010 for a failure to protect the deposit and seeking the usual remedies. No response was received and part 8 proceedings were commenced in the Court at the beginning of May. The deposit was finally protected on 3 August 2010 with the DPS but none of the prescribed information was ever served on the tenant.

The case then came before DJ Stockton and was heard on two occasions concluding on 13 January 2011.

The Court found as a fact that the deposit had not been protected at the time the tenancy ended. DJ Stockton could probably have then found for the tenant on the basis that the prescribed information had not been served. However, he actually elected to follow the same line of reasoning as DJ Goodwins in Woods v Harrington (reported by us here) and held that protection after the end of the tenancy was not acceptable. He specifically distinguished Draycott and Tiensia on the basis that these two cases were concerned with deposits that had been protected late but were still placed into schemes before the tenancy ended.

This seems to be absolutely correct. If a landlord can put the deposit into protection after the tenancy has ended then it makes a total nonsense of the legislation and almost encourages a “wait and see” attitude. The senior courts have been reluctant to make any findings as to the implied or actual ‘initial requirements’ of a scheme, which must be complied with to avoid the penalties, but it would seem to be an absolute requirement of those schemes that there is at least a tenancy in place to which the deposit they are being asked to deal with relates. Leaving aside the legal arguments, to allow monies to be placed with schemes for non-existent tenancies would risk making them unviable as business entities, especially the two insured schemes which have to obtain insurance for the deposits they protect on a commercial market.

This case also acts as a small curtain raiser for the senior courts. An appeal with similar facts (Potts v Densley) is on the warned list in the High Court in the week commencing 7 February and Hashemi v Gladehurst which also has this point as an issue is listed for a hearing before the Court of Appeal on 22 or 23 March.

With thanks to Andrew Mills at Shelter.

Mr Pickles is unlawful and other bits

NL — Wed, 10 Nov 2010 20:19:37 +0000

Cala Homes (South) Ltd v Secretary of State for Communities & Local Government & Anor [2010] EWHC 2866 (Admin) found Eric Pickles, SoS at DCLG, acted unlawfully in scrapping the Regional Strategies for housing development, which also, lest we forget, included requirements for local authorities to identify and develop sites for travellers and gypsys. Mr Pickles had announced the decision to scrap the strategies under s79(6) of the Local Democracy Economic Development and Construction Act 2009.

Alas for Mr Pickles, this has turned out to be unlawful because:
a) the decision involved using that power for an improper purpose by “undermining the policy of the LDEDCA 2009 that there should – ordinarily at least – be Regional Strategies in place for each region”, contrary to the principle in Padfield v Minister of Agriculture, Fisheries and Foods [1968] AC 997 that a “discretionary power conferred by a statute is impliedly limited in some respect by reference to the policy and objects of that statute”, depending on construction.
And b) due to the failure to carry out a detailed environmental assessment prior to reaching the decision, contrary to the requirements of the Environmental Assessment of Plans and Programmes Regulations 2004 (“the 2004 Regulations”), which give effect in domestic law to Directive 2001/42/EC.

Mr Pickles will now have to consider primary legislation to accomplish his stated end.

In other news..

Brightlingsea Haven v Morris (our last report) – on whether a seasonal caravan site was protected under Mobile Homes Act 1983 – was due in the Court of Appeal today. We are reliably informed that the case had settled before being heard, leaving the question undetermined by the Court of Appeal.

Quadrant Brownswood Tenant Cooperative Limited v White (HC 09 C 03494) – an Art 8 challenge to a housing co-op possession claim – was due to be heard on 9 November 2010, but has been adjourned to some date after 4 January 2011. We understand the tenant was in person on 9 November, so, given the issues involved, this may not be as much of a case to watch as we thought.

But, while on Co-ops, and potentially a very important case for co-op tenants, we’ve learnt that Ms Berrisford in Berrisford v Mexfield has been given permission to appeal to the Supreme Court. Our report on the Court of Appeal hearing is here.

And the Court of Appeal judgements in Universal Estates v Tiensia and Honeysuckle Properties v Fletcher – the tenancy deposit cases we have all been waiting (and waiting) for are apparently to be handed down tomorrow (or today if you are reading this on 11 November). We’re on it.

When more means less

NL — Wed, 15 Sep 2010 20:21:32 +0000

Green v Sinclair Investments Limited Clerkenwell and Shoreditch County Court. 11 June 2010

This is a County Court and non-binding tenancy deposit case reported in September 2010 Legal Action ‘Recent Developments’. But it is interesting and harks back to a problem we discussed a while ago, the meaning of ‘must also’ in s.214(4) Housing Act 2004.

In this case, there was a one year assured shorthold tenancy, with a deposit of £2100. The deposit was not protected. The tenancy ended after 7 months by surrender, in July 2009. The former tenant send a letter of claim in September for the return of the deposit and the 3x deposit penalty. The former Landlord sent a cheque for the full deposit only to the former tenant’s solicitors, which was received just after the claim was issued. The solicitors returned the cheque.

In February 2010, the former landlords paid the deposit amount directly into the former tenant’s bank account. The former tenant did not reject or return the money.

At hearing of the claim, the former Landlords argued that the Court could not make an order under s.214(3) either for the return of the deposit or its protection, because the tenancy had ended and the deposit had been repaid in full. The Court could not make an order for 3 x the deposit penalty because the ‘must also’ in s.214(4) meant that such an order could only be in addition to an order under s.214(3), not in isolation.

The DJ – DJ Manners – accepted this argument, apparently on the basis that if breaches of s.213 can be remedied by late protection and compliance with information provisions, making reference to Draycott v Hannells Lettings Ltd, then breach could also be remedied by repayment of the whole of the deposit. On such repayment no s.214(3) order could be made and consequently no s.214(4) penalty order. Claim dismissed.

Comment
So the additional ‘must also’ causes the failure of the whole claim.

While the ‘must also’ argument here runs as we thought it might, it is worth noting that it is here simply presumed, apparently on the basis of Draycott, that compliance can be up to the doors of final hearing of the claim. I’m not sure that Draycott is authority for any such thing. An observation to this effect is obiter at best. In this case, I grant that the tenant rather messed things up by accepting the deposit where the solicitors had carefully refused it, but this was well after issue of the claim.

At this rate, the only reliable 3x penalty claim left runnable is where the deposit has been protected but the landlord has failed to serve the prescribed information during the period of the tenancy. That way, the prescribed info can’t be served on the ‘tenant’ and the Scheme will not agree to the release of the deposit without a court order once notified of the claim. Pretty much anything else can be defeated by late compliance (depending on the particular scheme) or return of the deposit in full, potentially at the doors of court on the day of final hearing.

New Tenancy Deposit Cases in Legal Action

David Smith — Fri, 06 Aug 2010 16:40:51 +0000

Our new copy of Legal Action flopped onto the mat here at Nearly Legal Towers this morning. Looking at the reported cases a pair of tenancy deposit matters caught my eye. One of these we have already written about here.

In Baafi v Mapp, Central London County Court, 24 June 2010 a landlord had sought a possession order on the basis of a section 21 notice. The tenant defended the claim on the basis that the landlord had not properly complied with the requirements of the Housing (Tenancy Deposits) (Prescribed Information) Order 2007, he also counter-claimed for the now-customary penalties. The landlord had registered the deposit with the MyDeposits scheme and provided the tenant with their standard form of certificate. This certificate contains a paragraph making clear that the MyDeposits certificate does not, on its own, supply all the information required by the Order. Specifically, it fails to notify the tenant of the procedure to be followed where the landlord or agent cannot be contacted after the end of the tenancy and also fails to inform the tenant of the circumstances under which the landlord will make deductions from the tenancy deposit. Normally, MyDeposits would expect these matters to be dealt with in the tenancy agreement. The landlord was using an agreement which was describe as “archaic” and which failed to address the items missing from the certificate. Surprisingly at first instance DJ Gerlis applied something he described as a ‘purposive approach’. He took the view that as the deposit had been protected the lack of all the prescribed information was not that important. He therefore awarded possession and dismissed the tenant’s claim. On appeal HHJ McMullen QC held that a purposive approach was not required as the statutory framework was clear. He also found that had a purposive approach been required he would have found that the purpose of the regulations was the proper protection of the tenant’s deposit which was not going to occur when the tenant had not been provided with information as to what would happen if the landlord disappeared. Possession order set aside and counter-claim allowed.

It is worrying that some judges are still prepared to exercise some form of ‘discretion’ in a matter where it simply does not exist.

All mimsy were the borogoves

NL — Mon, 28 Jun 2010 08:26:23 +0000

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.