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Deposit penalties – factors on culpability. Sort of.


Davies v Scott, 24 October 2019,  Mayors & City County Court . HHJ Saggerson (Unreported, we’ve seen a note of judgment)

This was a county court appeal on a failure to protect deposit claim. We saw the first instance decision on this case here.

This was Mr Scott’s appeal on the award of a three times deposit penalty for failure to protect the deposit. There was no cross-appeal from the claimant on the issue of multiple breaches of deposit protection, so that aspect of the first instance decision was not challenged.

On appeal, HHJ Saggerson found that the District Judge at first instance had erred in the exercise of the penalty discretion.

Although the District Judge had been wholly entitled not to be much impressed with Mr Scott, she had not made a specific finding that he had not made a mistake in not protecting the deposit, and had apparently been prepared to accept that he had made a mistake from the landlord.

Although the landlord had later prevaricated, or as the DJ had found, misled the tenants about the status of the deposit, a mistake was not sufficient to place the case amongst “the worst cases of this sort” so as to merit a 3 x deposit award.

The District Judge had also placed an “inordinate amount of weight” on what was described as “misleading” the tenants. That did not elevate a careless mistake and prevaricating in attempting to brush his (the landlord’s) mistake under the carpet into the level of flagrant breaches of the scheme where funds had been deliberately and dishonestly dissipated.

The focus of the court should be on the culpability of the landlord in the context of the registration and protection of the deposit. The later conduct of the landlord in this case was a inordinate distorting weight on the first instance consideration of that culpability, That said the, at best, unedifying conduct of the landlord was a factor the District Judge was entitled to take into account, as was the landlord’s failure to repay or protect the deposit once the mistake was realised, although the tenancy was practically at an end. But the weight of those factors must be balanced.

The District Judge had also placed undue weight on describing Mr Scott as a ‘professional landlord’. While this may well be a term used to reference levels of experience and so therefore the culpability of a landlord, the District Judge had used that term without an analysis of the landlord’s professionalism, beyond noting the facts that he had let two properties at various times. ‘Professional landlord’ was not a label with any statutory force, and using the term required further analysis of why it was appropriate.

The deposit penalty was re-assessed at 1.5 times the amount of deposit, meaning £6,900, rather than £13,800.


I’m not entirely sure where that gets us, save that the label ‘professional landlord’ does require some analysis and justification in use in a judgment. That, at least, makes sense.

I’m not wholly sure that making a distinction between a ‘mistake’ and a knowing and deliberate failure to protect a deposit is entirely helpful. The evidential burden seems quite extreme – that a tenant must somehow prove the landlord’s intentions and state of mind in failing to protect a deposit. The tenant can’t, practically, know whether the landlord has dissipated the money or not, for example. Unless the landlord has sent an email going ‘Mwah-ha-ha, I’ve blown your deposit on a Caribbean cruise holiday’, they can probably always get away with ‘oops, a mistake’. (Agents, much much less so…)

But there we are. This is what happens with discretions, at first instance and on county court appeal.

Meanwhile the ‘claim for multiple breach’ issue still awaits its higher court resolution in some other matter.



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.


  1. Ngumi

    It seems the punishment should now fit the crime. The 3x penalty only to be used in the most extreme circumstances.

    • Giles Peaker

      I think that is a mis-characterisation. ‘The worst’ is not the same as ‘the most extreme circumstances’. It will, for example, continue to depend on the experience and role of the person/company in breach. I would suggest, for example, that it would be much, much harder for letting agents to rely on the ‘I made a mistake’ defence, as it is their professional role not to.

    • Gordon Kenneth

      To clarify were Anthony Gold acting for the losing party against the litigant in person?”

      • Giles Peaker

        As in winning the claim? Then having the extent of the win adjusted downwards on appeal? Yes.

  2. Bernard Brandon (Solicitor Retired 2010)

    My own unfortunate experience on this and other (simple) L&T points of law was in the Bristol County Court Chancery List. There was quite an upheaval because of a flood at the Bristol Court but the admin managed to find a personal injury District Judge who was clueless about Deposit Protection. At all times my former Landlords and the property had been represented and managed by a “leading Letting Agency ” called Bath Property Lettings . Their web pages claimed professionalism all the way. They were a wholly controlled company owned by the Bath Building Society . Their lawyers dishonestly claimed that these Deposit Protection provisions did not apply because the Defendants were merely Letting Agents.
    Those of you who know this area will of course be aware of the definition of Landlord for these purposes : Chapter 4 of the Housing Act 2004 Section 212 subsection (9) stipulates that
    (a) references to a landlord or landlords in relation to any shorthold tenancy or tenancies include references to a person or persons acting on his or their behalf in relation to the tenancy or tenancies, and…..

    So it was pretty clear – to all but this particualr DJ – that this Deposit of mine had never been protected and that this was a professional landlord’s agent and that 3 times for the 5 tenancies was the prescribed penalty ( £11,250) ? Not for me. I walked out of Court with a Costs of the day order against me for £1,000+ which meant I had to settle which I did vowing that I would never again use the Court system for anything.
    What happened to the original parliamentary intent to avoid litigation by giving a mandatory default penalty of 3 times the Deposit? We all know that was quickly watered down to discretionary and here we have this case of HHJ Saggerson trying to dilute the remedies even further ?
    Well done Mr. Scott but very bad news for any tenants whose deposit has been placed at risk in the Client Account of the Letting Agent.

  3. Spike Norman

    Fair play Mr Mullings has beaten me to this point on twitter, but I do think its worth noting the implications for Welsh landlords, under Housing (Wales) Act part 1. Landlords can do bits themselves (and require a licence to do so), or can engage a ‘licensed agent’ to do them instead. Oddly, taking a deposit seems to be neither considered as a ‘lettings activity’ (section 6) nor a ‘property management activity’ (section 7). Nevertheless one suspects that a landlord who has a licence to do property management or lettings activities themselves, might nevertheless struggle to demonstrate that they should not be treated at the ‘unsympathetic’ end…

  4. Ben Reeve-Lewis

    I’ve honestly never understood the resistance to this. I speak regularly at council run landlord forums and when i step down from the platform at least one landlord will sidle up to me and say “This deposit protection malarkey,,,,,,is there any way around it?” What is so hard? You take a deposit, you protect it. Why would you not?

    The legislation is now getting on for 14 years old. How can anyone, including the most clueless amateur, claim ignorance?

    To my mind the penalty should be mandatory not discretionary

    • Giles Peaker

      In this particular case, it was a tenancy that would not have been an AST but for the rent limit changes (10K to 100K) a year beforehand. So the claimed mistake was as to the rent limit levels, not the deposit rules per se.

  5. kjetilniki

    NB rent limit used to be £25k not £10k

  6. Phil

    Hi GIles

    Is this decision binding in London?

    Do you happen to know the name of the Landlord’s Solicitor

    • Giles Peaker

      There is nothing much to bind. It is, at best, factors to consider on the exercise of the discretion as to penalty amount. The landlord was in person, I believe.

  7. Sara

    Who was acting for the tenants?

    • Giles Peaker

      Anthony Gold – it is in the original post.

  8. Andrew Smiley

    Surely it is not the tenant who has to prove anything about state of mind of another person (nor have they even been asked to do so), but it is the court that is entitled to take this into account — as they do all the time when assessing reasonableness of penalties of all sorts (I failed to pay my taxes because my whole family was murdered by an axe wielding maniac). Why is this at all unusual?

    That is not to say that this particular landlord’s state of mind was in any way creditable.

    Ben’s comment above about penalties being mandatory no matter what the circumstances (I am comatose in hospital) would not make sense under these circumstances or indeed any other.

    • Giles Peaker

      How does one prove (even on the balance of probabilities) a deliberate and dishonest dissipation of funds?

  9. Andrew Smiley

    But they are not. They are assessing the size of a penalty under the circumstances.

    • Giles Peaker

      I would suggest reading the judge’s comments again.

  10. Gordon Kenneth

    Is there a link to the transcript in respect to the Judge’s comments?

    • Giles Peaker

      No. I have seen an unapproved verbatim note of an extempore judgment.


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