Deposit penalties. How many breaches is too many?

Howard v Dalton, County Court at Dartford, 7 May 2019 (unreported, note of judgment with grateful thanks to Rea Murray of 4-5 Grays Inn Square).

A quick note, because Rea Murray has done the heavy lifting for me. We’ve seen the ‘claims for multiple deposit breaches’ issues before, although in the guise of whether a claim could be brought for a number of tenancies at once. This was a county court appeal to a circuit judge on exactly what counted as a claimable breach, and how many could be claimed per tenancy.

Ms H was the tenant of Mr D. The first tenancy was in 2007. A deposit of £900 was paid, then on signing the tenancy agreement, a further £845 was paid to Mr D, with a receipt given saying ‘deposit remainer’. There were a further seven tenancy agreements entered into between the parties.

At first instance, it was found as fact that the deposit was not protected in a scheme until 2014, and no prescribed information was ever served.

Ms H brought a claim. Mr D defended, but both parties were unrepresented and Mr D did not attend first instance trial. Ms H’s particulars claimed breaches of Housing Act 2004 s.213(3) (failure to protect) and s.213(6) (failure to provide prescribed information) in respect of eight tenancies, but did not specify a sum.

The first instance district judge held that there had been two breaches (failure to protect and failure to provide prescribed information) for each of the eight tenancies, so 16 breaches. The award was three times the deposit of £1745 for each breach, giving a total of £83,760.

Perhaps unsurprisingly, Mr D appealed.

On appeal, the circuit judge held:

S.214 Housing Act 2004 provided a point of access for damages for either a breach of s.213(3) or s.213(6). A single award of damages was intended regardless of the number of individual breaches.

A failure to protect under s.213(3) would inevitably give rise to a failure to provide prescribed information under s.213(6). It was not Parliament’s intention that damages should be awarded for each breach, rather than only either breach. The requirement to provide prescribed information could not be independent from the requirement to protect.

The penalty was therefore one penalty per tenancy.

Mr D had raised limitation on appeal, and this was valid as the pre-action correspondence had not set out that eight tenancies would be relied upon at trial. 6 years limitation was applied, reducing the tenancies claimable to four.

The second payment of £845 was rent in advance, not a deposit – applying Johnson v Old (2013) EWCA 415 (our report).

The penalty was reduced from three times to two times the deposit, (not entirely clear why).

The deposit penalty payable to Ms H was therefore £7,200.

Comment

While slightly raising an eyebrow that Mr D succeeded on factual points (the rent in advance) on appeal despite not having turned up to trial, the legal points strike me as right.

S.214(1) Housing Act 2004 provides

(1) Where a tenancy deposit has been paid in connection with a shorthold tenancy on or after 6 April 2007 , the tenant or any relevant person (as defined by section 213(10)) may make an application to the county court on the grounds—

(a) that section 213(3) or (6) has not been complied with in relation to the deposit, (…)

So, stated as in the alternative, not additionally. At least per tenancy.

On the other hand, the finding that Superstrike Ltd. v. Rodrigues (2013) EWCA Civ 669 meant that claims for breaches in respect of each subsequent tenancy could be brought in one claim also strikes me as right. (Subject to any limitation defence, of course – 6 years prior to issue of the claim).

The reduction from 3 times penalty to 2 times penalty is also somewhat mysterious, but such is the nature of the court’s discretion in this regard.

The usual caveats apply – this is a county court appeal, so not binding and persuasive at best, save in the CJ’s immediate area. But it makes sense, at least on the number of breaches that can be raised.

 

 

 

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 and tagged , , .

5 Comments

  1. I do not know the full facts of the case and there may be other matters contradicting my thoughts.
    Limitation

    Mr D had raised limitation on appeal, and this was valid as the pre-action correspondence had not set out that eight tenancies would be relied upon at trial. 6 years limitation was applied, reducing the tenancies claimable to four.

    As I read the posting
    1 in pre-action corresp T did not set out that all 8 tenancies would be claimed.
    2 T did claim for 8 tenancies
    3 L did not plead limitation
    4 an award was made for 8
    5 L appealed
    6 the Circuit Judge allowed L to claim limitation for the 1st time on appeal

    As I understand it, limitation has to be pleaded to amount to a defence and that it is too late to raise it for the first time on appeal. Not mentioning it in pre-action correspondence does not seem to me to be a relevant reason to allow it ion appeal, (as opposed to T having been positively misleading)

    • I’d broadly agree. However, it seems that the particulars mentioned 8 tenancies, but the prayer did not set out a specified sum. So it may also be that the pleaded case was not clear on extent of claim.

  2. S214(1)(a): it is my understanding that “or” in English is an inclusive or, not an exclusive or (i.e. at least one of the items, not exactly one).

  3. Pingback: Deposit Penalty – Multiple Breaches and Limitations | GRL Landlord Association

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