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.