North v Tyndale. Clerkenwell & Shoreditch County Court (4 October 2018)
(Thanks to Nik Nicol, One Pump Court and Sadikur Rahman, Edwards Duthie for note of decision on which this is based).
So, from the Supreme Court, to a first instance county court decision, but one that raises and probably disposes of, a certain line of argument on deposit protection and validity of s.21 notices.
Ms T was Ms N’s assured shorthold tenant, with a fixed term tenancy starting on 25 July 2013. The tenancy became a statutory periodic on 25 July 2014. An initial deposit of £1300 was taken, but it was not protected until 22 January 2014. When the statutory periodic tenancy began, Ms N did not renew the deposit protection (as then required by MyDeposits) and the deposit ceased to be protected some weeks after the statutory periodic tenancy began. It was not again protected until 23 February 2017. Prescribed information was, in each case, provided to Ms T at about the time of the protection
On 29 November 2017, Ms N served a purported s.21 notice.
Ms T defended on the basis that the s.21 was not valid and also counterclaimed for the deposit protection penalty under s.214, breach of repair covenant and breach of quiet enjoyment.
(If I might be allowed a lengthy parenthesis at this point, I have always taken the view that a counterclaim must be associated with the nature of the defence to the claim. This may well be by way of set off – hence the classic disrepair counterclaims to a claim for possession on rent arrears grounds, they are a set off which will reduce or extinguish the arrears. Now I can see a s.214 deposit penalty claim as sufficiently connected with a ‘failure to comply with s.213 so s.215 engaged’ defence to s.21 possession claim, but a disrepair/breach of quiet enjoyment counterclaim strikes me as wholly unconnected with the grounds of the claim, so should be a separate claim. Just my view, so let’s move on.)
The possession claim was heard as a preliminary issue.
Ms N accepted that the deposit had not initially been protected within 30 days of receipt and that the initial requirements of the scheme had not been complied with (s.213(3) Housing Act 2004), so, absent anything else, s.215(1A) would invalidate the s,21 notice.
But, Ms N argued, s.215B Housing Act 2004 applied.
S.215B provides at 1) and 2):
(1) This section applies where—
(a) on or after 6 April 2007, a tenancy deposit has been received by a landlord in connection with a shorthold tenancy (“the original tenancy”),
(b) the initial requirements of an authorised scheme have been complied with by the landlord in relation to the deposit (ignoring any requirement to take particular steps within any specified period),
(c) the requirements of section 213(5) and (6)(a) have been complied with by the landlord in relation to the deposit when it is held in connection with the original tenancy (ignoring any deemed compliance under section 215A(4)),
(d) a new shorthold tenancy comes into being on the coming to an end of the original tenancy or a tenancy that replaces the original tenancy (directly or indirectly),
(e) the new tenancy replaces the original tenancy (directly or indirectly), and
(f) when the new tenancy comes into being, the deposit continues to be held in connection with the new tenancy, in accordance with the same authorised scheme as when the requirements of section 213(5) and (6)(a) were last complied with by the landlord in relation to the deposit.
(2) In their application to the new tenancy, the requirements of section 213(3), (5) and (6) are treated as if they had been complied with by the landlord in relation to the deposit.
Ms N argued that the deposit had been protected and the prescribed info provided before the statutory periodic tenancy arose, so s.215B(1)(b) meant that the original delay in protecting the deposit was of no effect.
Ms T argued that s.215B(1)(f) meant that this only applied where the deposit had been held continuously in the scheme, so in this case the deposit had not been held in connection with the new tenancy in accordance with the same scheme, as there was a gap between 2014 and 2017.
Ms N’s argued that the deposit had, in accordance with Mydeposit’s rules, remained protected for 30 days from the end of the fixed term tenancy, so was protected when the statutory periodic tenancy arose for the purposes of s.215B(1)(f). This did not succeed. Ms N had failed to take further steps to ensure the deposit continued to be held in accordance with the scheme.
DJ Desai (very experienced in housing matters) held for Ms T. The s.21 notice was invalid. Possession claim dismissed.