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.