Deposits – Better to give than to receive

Sebastiampillai v Parr. Central London County Court, 11 April 2019

(Our thanks to William Ford of Osbornes for note of this case)

Does a change of landlord require provision of fresh prescribed information? How does this operate in view of section 215B Housing Act 2004 (as inserted by the Deregulation Act 2015) and the express over-riding of the requirement to re-serve prescribed information on each replacement tenancy? This was the issue in this county court appeal from a first instance possession order.

Ms P was the assured shorthold tenant of a flat since 2007. The original landlord was a Mr Kadiwar. The sequence of events was:

July 2007 – 12 month AST. Deposit of £1050 taken and protected with DPS. No prescribed information

July 2008 – 12 month AST. Deposit kept with DPS and prescribed information eventually provided in October 2008.

Further fixed terms, culminating in 12 month fixed term from July 2011. Deposit retained throughout.

Statutory periodic July 2012 to May 2014. Further updated prescribed information served March 2014.

May 2014 – 12 month fixed term tenancy. Deposit retained, no further prescribed information.

July 2014 – the Sebastiampillais become the leaseholders of the flat, subject to the tenancy, and so become the landlords. By September 2014, the deposit with DPS has been transferred to an account in the name of the Mr & Mrs S. No prescribed information served.

May 2015 – statutory periodic tenancy arises. No prescribed information served.

March 2018 – Section 21 notice served and possession claim issued, resulting in outright order (Ms P not represented).  Appeal of possession order brought, with Ms P now represented.

Ms P argued that the deposit had been ‘received’ anew by Mr & Mrs S, and as such the requirements of section 213 Housing Act 2004 (protection and provision of prescribed information) arose. This was not avoided by the provisions of Section 215B, which states:

215B Shorthold tenancies: deposit received on or after 6 April 2007
(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.

(3) The condition in subsection (1)(a) may be met in respect of a tenancy even if the tenancy deposit was first received in connection with an earlier tenancy (including where it was first received before 6 April 2007).

(4) For the purposes of this section, a tenancy replaces an earlier tenancy if—
(a) the landlord and tenant immediately before the coming to an end of the earlier tenancy are the same as the landlord and tenant at the start of the new tenancy, and
(b) the premises let under both tenancies are the same or substantially the same.

It was agreed that if Mr Kadiwar had remained the landlord, section 215B would have operated to give deemed compliance with s.213 in respect of tenancies subsequent to that during which Mr K had met the requirements (in this instance, the May 2014 fixed term and subsequent statutory periodic).

Ms P argued that Mr & Mrs S had received the deposit in July 2014, on the purchase of the property, or September 2014, on the transfer of the DPS account to their name, or, in any event, by application of Superstrike Ltd v Rodrigues (our note), on the arising of the statutory periodic tenancy in May 2015.

Mr & Mrs S argued that they had not received the deposit during the 2014/5 fixed term. The deposit had been received at the start of that tenancy by Mr K and was not received again by the change of landlord. However, it was admitted that the deposit was received in May 2015 when the statutory periodic tenancy arose.

However, on the failure to provide prescribed information, Mr & Mrs S argued that Mr K’s compliance with s.213 in the previous tenancies amounted to deemed compliance for them under s.215B.

Ms P argued that s.215B required the landlord to be the same, noting the change from ‘a landlord’ in s.215B(1)(a) to ‘the landlord’ in subsequent subsections. This was in accordance with the purpose of the policy for providing prescribed information, which was that the tenant had all the information necessary to resolve deposit disputes. A change of landlord was a change in that information.

Further, the definition of ‘replacement tenancy’ in s.215B(4) required the landlord and tenant to be the same immediately before the end of the preceding tenancy and the start of the new tenancy in order for the continuity of tenancy and the deemed compliance provision to take effect. That continuity had to remain with the ‘original’ tenancy within which compliance had taken place. In this case, that was clearly not so at the arising of the May 2015 statutory periodic tenancy, which had not replaced any of the previous ‘original’ tenancies within which there had been compliance.

Mr & Mrs S argued that Section 215B(4) invited consideration of whether a ‘tenancy replaces an earlier tenancy’. The use of the phrase ‘earlier tenancy’ – in contrast to ‘original tenancy’ – suggested that the new tenancy might need to be compared with tenancies other than the original tenancy. This could only mean that the ‘new’ tenancy should be compared with every tenancy that came before it, going back to the ‘original’ tenancy. In this case, the landlord at the beginning of each tenancy had been the same as the landlord at the end of the previous one going back to the original tenancy, because the property had changed hands mid-way through a tenancy. Therefore the May 2015 tenancy had replaced the July 2012 statutory periodic tenancy.

HHJ Gerald held that:

The deposit had been received by Mr & Mrs S at least by September 2014 when the DPS account was transferred to their name.

This receipt triggered the s.213 obligations, which had not been complied with as no prescribed information had been served at the time or subsequently.

The previous compliance with the s.213 obligations by Mr K did not amount to deemed compliance by Mr & Mrs S for the purposes of s215B(2). The language of s215B indicates that it is only the landlord who has given the prescribed information who should be treated in future as having complied with that requirement. In addition, in the context of s215B(1)(e), the new tenancy should be compared with the original tenancy and not the intervening tenancies, meaning s215B(1)(e) was not satisfied as the change in landlord meant that the former had not replaced the latter within the meaning of s215B(4) as there had been a change in landlord. This interpretation of the statutory scheme was in accordance with the objective of providing prescribed information, which was that the parties should have the information they needed to contact each other to resolve disputes.

Appeal allowed. The section 21 notice was not valid and the possession order should not have been made.

 

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 , , , .

7 Comments

  1. “the new tenancy should be compared with the original tenancy and not the intervening tenancies,”.

    Does that mean that when a property is sold with sitting tenant the new LL must do all deposit compliance actions at each subsequent renewal or SPT?

  2. Interesting that it was held the deposit had been received by the new landlord “at least” by the time the DPS account was transferred into their name. Would the new landlord have “received” the deposit (triggering the s213 obligations) after purchasing the property but before the DPS account had been transferred?

  3. Pingback: Tenancy Deposit Prescribed Information by New Landlord | GRL Landlord Association

  4. I acted for Mr Kadiwar many years ago in his possession claim against Ms Parr, which was eventually compromised by way of a Tomlin order which included the grant of the May 2014!

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