Our thanks to Guild of Residential Landlords for this note of a county court possession case. It is a counterpoint to an earlier County Court case on a similar issue, Ahmed v Shah, Bradford County Court. June 2015 (link is to our note).
Yeomans v Newell, Canterbury County Court 25 May 2016
An assured tenancy was granted to N by Y in 2011. A deposit of £300 was taken but not protected until November 2015, when it was protected with DPS.
On 22 December 2015, the landlord, Y, authorised the return of the deposit to N with DPS. On 23 December 2015, a s.21 notice was served. N did not actually receive the deposit money via DPS until 19 February 2016.
N defended possession proceedings on the basis that the deposit had not been returned in full when the s.21 notice was served.
Y argued that, by analogy with return of the deposit by cheque even when the cheque hadn’t been cashed (presumably in reference to the principle in Coltrane v Day [2003] EWCA Civ 342 ), the tenant ‘had the ability’ to obtain the deposit money once it had been authorised for full repayment.
The Court agreed, holding that the deposit had been ‘returned in full’ on 22 December 2015 because it was ‘available to the tenant’ from that date, prior to service of the s.21.
Comment
This appears to be the exact opposite of the finding in Ahmed v Shah. Both are county court, so neither binding. That said, in Ahmed, there was no evidence that the tenant had been told by DPS that it was the full deposit that the landlord was seeking to return, nor had the letting agent told the tenant this and the court relied upon that.
Still, I am not convinced by the analogy with a cheque, or that ‘had the ability’ equates to having been returned. While there is plenty of case law (for instance about clearing arrears at court before a possession hearing on ground 8) about payment by cheque being good on receipt of the cheque, a notification that the deposit has been authorised for return is not an equivalent. It isn’t clear if either court heard evidence on, for instance, whether the authorisation could be countermanded, or payment mechanism and timing, and whether this was clear to the tenant.
No doubt some of these issues will end up before a higher court before too long. In the meantime, both landlord and tenant will be taking a lottery punt on which way a county court will go on the issue.