‘Things not to do’ corner – Deposit protection counterclaim edition

Wood v Arkley, County Court at Bradford, 15 March 2018

Our grateful thanks to counsel Vilma Vodanovic and solicitor Nawaz Zeb of Foundation for the note of judgment.

A section 21 possession claim by the landlord Wood was met with a defence and counterclaim on the basis that that the prescribed information had not been provided to ‘a relevant person’ (s.213(10) Housing Act 2004), namely the tenant’s father, who had made the deposit payment.

(We note in passing that there was a factual dispute between the parties as to whether this happened. Which is both relevant and indeed not relevant to what happened next.)

So, a defence – no prescribed information, so no valid s.21 – and a counterclaim under s.214 for breach.

But (and here is the ‘things not to do’ moment), no defence to counterclaim was filed and served.

The defendant applied for default judgment on the counterclaim, and got it – with an amount to be paid to be assessed (ie, the one to three times penalty). At a subsequent directions hearing, the claimant – in person – was recommended to seek legal advice on the issue of the counterclaim judgment and res judicata. But no steps were taken about the default judgment by the claimant.

The possession claim proceeded to hearing. At the hearing, the defendant argued that the judgment on the counterclaim pre-determined the outcome of the possession claim, as the core issue – compliance with s.213 requirements – had already been determined.

The court decided that this was right. Per Goldcrest Distribution Ltd v McCole (2016) EWHC 1571 (Ch), the default judgment on the counterclaim necessarily addressed precisely the issues at stake in the defence – the failure to comply with s.213 HA 2004. Thus

“the entry of judgment in default must have determined the failure to comply with the prescribed information obligations. In light of that, the claim for the termination of the claim would necessarily fail and on the basis of my views and judgment on res judicata arguments, the claim stands dismissed.”

Possession claim dismissed, agreed damages on the counterclaim of £1425, and costs to the defendant, assessed at £11,675.

Comment

Depending on what the actual facts were about providing the prescribed information to the ‘relevant person’ (here the tenant’s father, but might be, say, the council housing options team), this is harsh or not harsh at all on the landlord. But the lesson to any such landlord is  – one that was flagged at directions hearing by the court – do not ignore a counterclaim, do not ignore default judgment and do not ignore a recommendation from a Judge to seek competent legal advice. The situation could have been rescued, at least up to deciding on the facts at a final hearing.

The lesson to everyone else is ‘get default judgment on a deposit counterclaim if it is not defended, as that will see off the s.21 possession claim’.

 

 

 

About Giles Peaker

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts, and still is Nearly Legal on Google +.
Posted in Assured Shorthold tenancy, Deposits, Housing law - All, Possession and tagged , .

13 Comments

  1. Pingback: Landlord Law Blog Roundup from 9th April

  2. I always operated under the impression (clearly a miss-impression) that you couldn’t counterclaim on an s21 inspired process. Is this allowable under case management powers?

    • It has to be related – so usually no. (Eg a disrepair counterclaim has no bearing on s.21 possession claim). But where deposit breach is both defence and counterclaim, I’ve never had any trouble running it.

    • I have had DJs getting themselves in a knot on this. They even on occasion decide the counterclaim for an award of 1-3 times deposit for failure to protect and then feel they can’t assess quantum and want to adjourn to a separate hearing. This means a Tenant waits before they get their money, it is not proportionate for the poor landlord who will inevitably face costs of a further hearing and it wastes a valuable hearing fixture. Only counsel benefits. I have even had to stand there representing a tenant and asking a DJ not to order a further hearing as it is unfair on an unrepresented landlord and a waste of court time as I can – given 5 minutes – guide DJ on points they should consider both for and against the Landlord in deciding quantum. It isn’t rocket science after all.

  3. Thanks Giles. That makes perfect sense. I was looking at Nic Madge’s recent Coppard v. Barrington case on failure to serve prescribed information on all ‘Relevant persons’, which includes, as you allude to above, local authorities paying deposits for tenants in discharge of homelessness duties.

    Loads of LA’s do this now. The difference being paying the deposit on the behalf of or merely lending the money, as is the case with credit union loans

  4. That is actually an interesting point. People working in council teams setting up lettings with their procured landlords often using the words deposit and bond interchangeably and without understanding the crucial difference. Depending on the council some use a mix of the two, causing even more confusion.

    I’ve got two training courses coming up with councils explaining security of tenure and the requirements for setting up different types of letting without them knowing the differences between non secure licenses or ASTs and even less knowledge on how to evict them.

    As the HRA bites down council TA teams are increasingly in the frame

    • That would certainly have helped with some of the cases I have done where we contacted LAs to see whether they had provided money or just a guarantee and they came up with contradictory information – presumably because they didn’t understand the difference.

  5. I would say that would be exactly right. Although procurement teams are based in a homelessness unit, finding properties to discharge their Part VII duties, they are not involved in any kind of housing law. I’ve been asked to untangle all sorts of weird messes they have gotten themselves into. Many local,authorities, realising their staff lack certain skills have taken to employing people from lettings agencies. They certainly know how to best attract and relate to a landlord but fail to understand how a local authority works.

    And dont even get me started on the common practice of procurement teams signing up landlords that the enforcement teams are prosecuting.

    • Ah, that feeling in your gut when a LA procurement officer tells you that actually, they don’t need you to give them a long-winded explanation on tenancies/licences, housing tenure and protection from eviction after all because they’ve decided to just copy a lodger agreement they found on the internet.

  6. Haha If only t’were that benign D Norton. Try giving £10,000 grants to bring a property back into use when the landlord owes £32,000 to council tax, or signing up a landlord to provide nightly paid accommodation for vulnerable people that another arm of the council has prosecuted, essentially for demanding money with menaces…..twice!!!

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