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Now, the question.
I’ve seen a deposit scheme adjudication decision (by the DPS adjudicator, since you ask), which raised an interesting issue.
The landlord had demanded payment of the (fixed) costs of a section 21 based possession claim – £355 – from the deposit. The tenant had objected. The adjudicator found for the landlord and awarded a £355 deduction.
The adjudication decision says:
In accordance with established legal principles, the burden of proof in respect of the claim therefore rests on the Agent to establish on a balance of probabilities that the Tenant was in breach of the obligations under the Tenancy Agreement, and that the sums claimed are reasonable costs incurred or likely to be incurred as a result of the Tenant’s breach.
But it does not go on to say how the possession claim was a result of a breach of tenant’s obligations.
I have not seen the tenancy agreement, but even if there were something in the agreement to the effect that the tenant not leaving at the expiry of a s.21 notice was a breach, I can’t see it being lawful or enforceable as a clause.
The simple legal position is that an assured shorthold tenancy continues until eviction by warrant. There is no obligation on the tenant to leave at the expiry of a s.21 notice, nor can the landlord’s decision to bring possession proceedings via s.21 be seen as being in consequence of anything pursuant to the tenancy agreement.
It follows that I don’t see how the court fee/fixed costs can be said to be in consequence of the tenant’s breach of obligations. If that is what the adjudication decision relies upon, which it appears to be, I think it is wrong in principle.
There may be other arguments about it being a debt owed by tenant to landlord, at least if there was a court order. But I’m struggling to see how even that could be considered to be in relation to the performance of the tenant’s obligations under the tenancy (save any contractual costs of possession provision in the tenancy agreement). But this was not what the adjudication decision set out as its reasoning.
What do people think?
I’m doing a seminar session at the Housing Law 2016 conference tomorrow, 13 December (or today if you are reading this by email update). If you are at the conference, do say hello.
I’m completely perplexed. I could understand it a bit more, perhaps, if the decision followed as consequence of the costs being held to be a tenant liability ‘arising under or in connection with the tenancy’ s.213 (8), and the terms and conditions of the tenancy providing for the recovery of court costs against the deposit, but that doesn’t appear to be the reasoning followed.
Exactly. There may be reasons for it, but the one actually set out doesn’t seem right to me.
Surely s.21 is intrinsically a “no fault” situation (i.e. not requiring a breach of the tenancy)?
Seems an odd logic to say that a s.21 claim originated from a breach of the tenancy – aren’t there other sections of the HA 1988 to cover such situations?!
Exactly
I suppose one possibility might have been that the tenant was in fact in breach of his/her agreement in some way (eg not paying the rent or damaging the premises) and that is what caused the landlord to take possession proceedings, but using the s21 process to make getting possession simple and quick. The adjudicator might then have looked at the reality of the situation and concluded that it was the breach which led to the landlord’s incurring the cost. But without knowing the full facts that’s just speculation.
It is certainly not the reasoning given by the adjudicator. And if there were other breaches (which I happen to know there weren’t) those should have been put forward for deduction and adjudication.
Well, we’re scratching our heads on this one. This is a reasonably common clause in many tenancy agreements. The legislators have made a bit of a mess of the rules by now requiring a bailiff to be called to execute the warrant in order for an AST to be brought to an end. This was not how the legislation was originally drafted. If investor LLs in London got wind of this, many more would surely choose to leave their properties empty – which is not in the public interest.
Can contract override statute here ? – surely it depends on what is said in both the statute and in the tenancy agreement here. The common example is section 11 repairing obligations. It is clear that the TA cannot override or impose an extra repairing burden on the tenant under s.11 because the statute specifically says it cannot.
The other question to be asked (where there is some uncertainty, as here), is what did Parliament intend. I do not think Parliament intended this provision to be used quite in this way for private sector tenancies. If I recall, the provision was added or the statute changed so as to affect probationary tenancies in the social housing sector. My view is that if the court awards the LL possession of the property on a certain date, then the LL is entitled to rely on a contractual provision for any losses due to the tenant ‘overstaying’ beyond this date.
It is Housing Act 1988 in its pretty much original form, as viewed by the House of Lords in Knowsley v White (https://nearlylegal.co.uk/2008/12/knowsley-v-white-etc-in-more-detail/) . Tenancy continues to eviction for assured tenancies (and therefore also ASTs).
As such, I can’t see any contractual provision such as you suggest working. Of course the tenant is still liable for the rent and any other obligations of the tenancy.
Thanks for reminding me – yes s.5 HA88 amended in 2008 by Housing and Regneration Act – ostensibly in response to tolerated trespasser issue at the time. Prior to this time, our understanding is that the tenancy ended when the court said it did – ie on the expiry of the date given in the court possession order – which seems a far more sensible state of affairs. I am certain that there is plenty of uncertainty here! (enough to make me want to wait for a CA decision first !). Happy for u to persuade me otherwise …. Agree, tenant is still responsible for ongoing rent, but many LLs would balk at the costs involved of the simple ending of an AST.
The history of the tolerated trespasser was long and painful enough to make expiry at date of possession not a sensible state of affairs ;-)
But actually would make no difference to the issue on the deposit adjudication, as that tenant had left after the issue of proceedings and what LL was seeking from deposit was issue fee. So no question of ‘costs of staying on after possession order’ at all. My question is still how can the costs of the s.21 possession claim be in consequence of tenant breach of obligation?
Just throwing this into the mix (from 2014) – mydeposits seemed to be fairly definite here that remaining in the property after the issue of a section 8 or 21 notice is a breach of the tenancy! https://www.mydeposits.co.uk/blog/bad-news-landlords-and-tenants-court-fees-possession-rise-60/ Odd. I wonder how TDS deal with these cases?
Perhaps the agreement required the tenant to reimburse the landlord for the legal costs and had failed to do so, and hence was in breach?
Perhaps, but again, not the reason set out in the decision letter.
Is there merit in appealing the adjudicators decision? If so, how?
It can’t be appealed. There may well be a different, valid, reason to make the deduction.