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.
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’.