Qurat-Ul-Ain Zia v Mourtada Central London County Court 09/02/2010
This case in Central London County Court has been reported briefly in Legal Action [but we have had the transcript – NL]. While this post makes reference to the Tiensia case this matter actually concerns an issue which will probably not be dealt with by the Court of Appeal. Specifically, it deals with the question of whether a tenancy deposit taken prior to the introduction of the tenancy deposit protection schema should be placed into protection on the renewal of a tenancy.
The facts are simple. A number of consecutive tenancies had been entered into between Q and M, the most recent commencing on 6 December 2008. The tenancy agreement for this tenancy made reference to a deposit of £1400 described in the agreement with the words “Deposit £1,400 (already held)”. A further clause in the agreement made provision for the payment of a deposit by M to Q to hold for the term. This clause apparently was a reference to the deposit already held by Q. M fell into arrears of rent and Q issued a notice under section 8 of the Housing Act 1988 for possession. M counter-claimed for the usual penalties for an unprotected deposit to be offset against the arrears of rent.
The argument revolves around the wording of s213(4) of Housing Act 2004 which states that a tenancy deposit taken in relation to an AST must be dealt with in accordance with the legislation “as from the time it is received”. For M it was contended that the money was received anew each time the tenancy was renewed. Q argued that the word ‘received’ should be given its natural meaning and the deposit monies were not received in December 2008 but much earlier, prior to the introduction of the requirement to protect in April 2007.
The Court was not prepared to follow the arguments advanced for Q. It was held that the deposit, while not physically repaid and paid again at each tenancy renewal was, nonetheless, received anew each time. The Court drew a distinction between the “nature and function” of the monies and the manner in which they had physically been held. Accordingly, it was held that the deposit had been ‘received’ in December 2008, had not been properly protected, and therefore judgement was given for M for the usual penalty of three times the deposit.
With respect to the Court (and possibly courting the opprobrium of he masses) I am going to suggest that this decision is incorrect. If we consider the ruling of Longmore LJ in the Court of Appeal decision in UK Housing Alliance v Francis (which we discussed here) he states that the Act contains a “pervading reference to money ‘paid’ by the tenant to the landlord, ‘received’ by the landlord and ‘repayable’ by the landlord to the tenant”. Admittedly this judgement was given in reference to a situation in which the tenant had never transferred any money to the landlord but had had a sum that was potentially due withheld. However, this reference to payment as highlighted by Longmore LJ would seem to require a transfer of monies at each stage. It is clearly not the case that M paid money to Q on each renewal and therefore I would venture to suggest that the suggestion that there is a form of virtual receipt on each renewal is an overly strained construction.
With thanks to Alan Mullem at Moss Beachley Mullem & Coleman for the copy of the full judgement.