The Deposit Alignment

Johnson v Old, Brighton County Court

We have not yet written about this case even though the first instance decision was reported in Legal Action. As it turns out this has been useful as the original decision, as written up in Legal Action has been set aside on appeal to a circuit judge. While this might appear to be a stunning example of perspicacity it is actually complete luck caused by pressure of work.

In summary the case is one relating to tenancy deposit protection. The definition of a tenancy deposit is given in s212 of the Housing Act 2004 as:

any 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,
arising under or in connection with the tenancy.

This definition is unaffected by the changes made to the tenancy deposit protection regime in s184 of the Localism Act 2011.

In this case the tenancy agreement had been poorly prepared. It stated the rent as being payable both six monthly in advance and had a separate clause stating it was payable monthly. Clearly this was not what had been agreed between the parties and it would not have been possible for the landlord to enforce it. However, at first instance the judge appeared to take the document at face value and held that the rent in advance component was a deposit.

The decision was appealed by the landlord to a circuit judge who has taken the opposing view. He has restored the position on the facts as opposed to the documentary position. However, we understand that the tenant has now sought permission to appeal from the Court of Appeal. This will be a very important decision if it is appealed as it could give some badly needed guidance on what a deposit is and how a court is to decide in more marginal cases.

With thanks to James Browne of Lamb Chambers for filling in some of the gaps.

About D

D is a solicitor specialising in landlord and tenant matters with a London firm.
Posted in Assured Shorthold tenancy, Deposits, Housing law - All and tagged , .

3 Comments

  1. The key to resolving this issue is surely a factual one, that is whether, as the act states ‘any money intended to be held was for the security’ of reasons x, y or z, irrespective of what the contradictory contract stipulated.

    However, to clarify matters for future purpose and avoid the issues of these sort is surely to draft a clause into the tenancy agreement making clear in tick box fashion as to whether the tenancy requires a deposit in which case the landlod has responsibilities under section 212, if the tenancy does not through advanced rental payments then there are no issues.

  2. Permission for a second appeal has been granted by Lewison LJ, largely on the basis that there is no decison of any court of record on what actually constitutes a deposit for the purposes of the statute. It is due to be heard on 6th or 7th March 2013.

Leave a Reply (We can't offer advice on individual issues)

This site uses Akismet to reduce spam. Learn how your comment data is processed.