Sturgiss & Anor v Boddy & Ors (2021) EW Misc 10 (CC)
It is, as HHJ Luba QC notes in this appeal judgment, far from an uncommon scenario. A group of people, say four of them for neatness, take a joint tenancy of a house or flat. (Neatness because the maximum number of joint tenants is capped at four by s.34(2) Law of Property Act 1925.) They jointly pay a deposit, and each select their room. Each pays a ‘share’ of the rent to the one of them who pays the full rent over to the landlord. Then, sooner or later, one of the tenants wants to leave. They find a replacement, who duly moves in and pays the departing tenant their ‘share’ of the deposit. There may well be some swapping of rooms involved. This happens a number of times, perhaps many times, until none of the original joint tenants remain in occupation and, as HHJ Luba QC puts it, in a moment of waxing lyrical:
The only record of A, B, C or D ever having lived at the property may be the appearance of their names on increasingly dog-eared post in an ever-growing pile in the communal hallway or in a faded copy of their original tenancy agreement held somewhere in the files of the property owner or their agent.
The landlord will know of this churn of tenants. They get the rent and don’t have to go through the hassle of finding new tenants themselves. And so, ad hoc, on it runs. Until it doesn’t. Such was the case here, where an original joint tenancy of a three bedroom house was in 2004. Over the subsequent decades, many tenants had come and gone, the rent had risen, and the original deposit, taken in 2004 (before the Housing Act 2004 provisions came into force in 2007) was unprotected. Departing tenants received their ‘share’ of the deposit from incoming tenants. And then two departing tenants made a claim for a penalty for breach of deposit protection in respect of their ‘shares’, £800 and £1050.
The other three joint tenants from the relevant period were added as parties, as required for a claim by any one or two joint tenants, but played no part in the case
At first instance trial, the Deputy District Judge accepted the landlord’s argument that
a) there was no surrender and regrant of tenancy with each new occupier, as the landlord was not actively consulted about the matter and did not have the opportunity to negotiate new terms
b) anyway, these were not tenants but mere licensees, apparently on the basis of lack of exclusive occupation, and lack of a definable term or notice period; and
c) the deposits had not been paid to the landlord
The claim was dismissed with costs to the landlord of about £6000.
The tenants appealed, arguing all three of these conclusions were incorrect.
HHJ Luba QC held:
Tenancy/licence. On the Street v Mountford characterisation of a tenancy, i) there was rent, ii) there was no evidence that exclusive occupation was not enjoyed by the tenants. There was no suggestion that the landlord could turn up and require the tenants to let him enter and live there. iii) The rent was monthly, so there was a strong reason to believe that there was a monthly term. While the DDJ was influenced by the apparent lack of notice given by tenants, this was when a replacement had been arranged. One of the claimants had not found a replacement and accepted in her communciation to the landlord that a month’s notice (and rent) was required.
So there was exclusive occupation, for a term, for a rent. These were tenancies.
Surrender and regrant. The DDJ had relied heavily on the landlord not participating in the arrival of a new tenant in his judgment. However:
As to the extent to which a landlord needs to know – in advance – that joint tenant X is being replaced by joint tenant Y, Mr Jacob relied on Tower Hamlets v Ayinde [1994] 26 HLR 631. There, on markedly different facts, the Court of Appeal found that having been told that an outgoing tenant had departed and had installed a replacement, a landlord was thereafter fixed, by its conduct, with the new incumbent by surrender and re-grant. The short point is that the landlord’s acceptance of the new set up amounted to a completion of the process of surrender and re-grant even in circumstances where it had not known of the switch of occupiers when or before it took place.
Here, there was in place, as the landlord’s own evidence sets out, a prior arrangement that at the departure of one or more individuals the property would be treated as, in effect, re-let to those remaining and the new arrival(s). The arrangement did not require the landlord to participate in any way at the time or to be informed each time (although the Judge found he was). Given that this was a structure of the landlord’s own making he can hardly be heard to complain if the law gives effect to what has been agreed through the medium of surrender and re-grant.
As explained in QFS (Sable v QFS Scaffolding Ltd (2010) L&TR 30), the authorities on surrender are infused by the concept of estoppel i.e. the landlord who has acted consistently with the termination of a tenancy and the acceptance of a new tenancy cannot later resile. In the current context, it would be absurd to think that the landlord could insist that an individual who was a joint tenant before a ‘churn’, and had left after it, was still a tenant even though he was accepting rent he knew (or can be taken to have known) was being tendered on behalf of a new group.
There was a surrender and regrant of tenancy on the occasion of each ‘churn’
Taking of deposit. It was indeed the case that no funds had been paid directly to the landlord for a deposit since the original tenancy in 2004. However, Superstrike Ltd v Rodrigues (2013) 1 WLR 3848 (our note) was relevant, in particular the Court of Appeal’s view that on a transitional from a fixed term to a statutory periodic tenancy, the landlord took the deposit anew by way of set off:
The tenant should be treated as having paid the amount of the deposit to the landlord in respect of the new tenancy, by way of set-off against the landlord’s obligation to account to the tenant for the deposit in respect of the previous tenancy,
Here, there had been some agreed deductions from the deposit over the years, but the landlord still held the money against the tenants’ performance of their obligations.
It seems to me that where the landlord has entered into a construct by which, at his own design, there is a single initial payment of a deposit and thereafter a churning in the identities of tenants, he must be treated as having been ‘paid’, by each new cohort, the amount held in respect of the original cohort and each subsequent cohort. The alternative is the very artificial notion that Mr Boddy is fixed with an indefinite liability to account to his original (and long gone) 2004 tenants for such sum as is left after proper deduction in respect of acts for which they are not responsible and have assumed no responsibility.
So, there as a new tenancy on each ‘churn’ and the deposit was received by the landlord in respect of each new tenancy. The deposit was not protected on these occasions, therefore the penalty arose.
On the exercise of discretion as to the amount of the penalty:
The landlord contended that the penalty should only be on the amount paid by the claimants specifically as their ‘share’ of the deposit.
I do not consider the liability severable in that way. £1,205 is the deposit to be treated as paid and received for the tenancy of the whole flat by the tenants at each of the three churns with which I am concerned. And it is to that sum that the multiplier falls to be applied. If that is more than equity would suggest should be recovered by these two claimants alone, it has always been open to the other co-tenants to join in the claim. They have elected not to do so.
However, on the multiplier (between one and three times the deposit):
It seems to me that, although I have had regard to all the facts of the case and all the submissions of the parties, the following factors are particularly attracting of weight in this exercise:
(1) The deposit was first taken at a time when deposits did not require protection;
(2) The deposit has been retained and is still available and can now be protected;
(3) The landlord has not subsequently protected it because he believed that the informal nature of the transitions for occupancy of the flat did not require him to do so;
(4) In that view he was supported by his legal advisers and by at least one judge;
(5) Those informal arrangements contained a method of ensuring each outgoing tenant received reimbursement of their ‘share’ of the deposit from their arriving replacement; and
(6) The tenor of Mr Boddy’s evidence, and the undertaking of his counsel to the effect that – if the matter is ruled against him – he will promptly take the steps necessary to protect the deposit which he has held and retained over 15 years.
These features, and the other circumstances of this case, in my judgment put this right at the bottom end of landlord ‘culpability’ for breach of obligations.
A penalty of one times the deposit, £1,205, ordered for each of the three relevant ‘churns’ – surrenders and regrants – for a total of £3615.
Comment
This is surely correct, certainly on the tenancy and Superstrike receipt of deposit points.
On the surrender and regrant point, this is a very attractive and practical approach, and clearly supportable where the landlord has acquiesced in the occupation of the ‘replacement’ tenant without more. And, while this decision will certainly put a number of landlords at risk of deposit penalty claims, it is also a decision that should, in some respects be welcomed by landlords as well.
For example, consider what the position would have been if the landlord wanted to seek possession. Now, even if the surrender and regrant point was wrong (which I don’t think it is), the landlord’s argument that the occupants were simply licensees was also wrong.
The first few ‘replacement’ occupiers would arguably have been licensees (as lodgers) of the original joint tenants (including the departed ones). Once the last of the original joint tenants had left, the occupiers would be the sub-tenants of the original joint tenants, who would retain the tenancy, but not as an assured shorthold tenancy as not occupying as only or principal home.
This would play out again with each further churn of replacements, so that at any one time, the occupiers might be sub-tenants, or sub-sub-tenants, or licensee lodgers of the sub-tenants or sub-sub tenants, and so on, potentially ad infinitum.
However, the only way the landlord could legitimately gain possession would be to serve notice to quit on the original joint tenants. Who in this case had left the property some 15 years ago or more, could well be abroad and in any event would be very difficult to find…
On the basis of the surrender and regrant, the current occupiers are the direct tenants of the landlord, making things straightforward (at least once all the formalities and breaches of the requirement of post 2007 and 2015 assured shorthold tenancies have been sorted out.
I have two comments regarding this case, I will put them in separate posts as they are about different legal aspects.
Giles, thanks for bringing this important claim to our attention.
I think this case should be of grave concern to any Landlord that rents to University Students, as you say “churning “of tenants is not uncommon.
I do not totally agree with you Giles that this outcome is correct in all aspects, particularly Deposit Protection and Tenancy Creation. Obviously the Landlord accepted the new tenants in Surrender and regrant, but I don’t think the churn should create a new tenancy.
First of all the tenancy which started in 2004 will probably have had an initial term which expired years ago and created an SPT or it was a contractual periodic tenancy. Either way when the claimants in this case became a party to the tenancy it was a single tenancy.
I do not see how, in law, the act of swapping a tenant in and out of an existing agreement creates a new tenancy for ALL of the claimants currently parties to the agreement, but only that the person joining the agreement becomes a party to the tenancy.
London Borough of Tower Hamlets v Ayinde is a very different case because the whole tenancy is assigned and most importantly because Council and Housing Association tenancies tend to have a clauses that allow for spouses and family to take over a tenancy.
The Sturgiss & Anor v Boddy & Ors judgement says
“Nevertheless, it seems to me that imposing any multiplier more than one times the deposit would be unjust.
There shall be judgment for the claimants in the sum of a total £3,615 (i.e. £1,205 in respect of each of the three relevant churns which produced a new tenancy to which they were in turn either or both parties).”
This cannot be right, to my mind there were 2 claimants with a single tenancy of 5 parties or 8 parties if you count the initial couple that left and the latest new incumbent.
If HHJ Luba QC does indeed feel that imposing any multiplier more than one times the deposit would be unjust then surely the calculations should have been as follows:
£1205 divided by 5 parties equals £241 per tenant, 3 of the parties have sought not to seek remedy so their allocation is forfeited, or at best the 2 claimants should not get more than £1205 divided between them (£602.50 each or split as shown below).
Yes in Superstrike
“the Court of Appeal there held, for the reasons set out at [28]-[38] of the judgment, there can be circumstances in which the deposit taken at the inception of an original tenancy is treated as paid (again) and received (again)”
BUT only
“when a new tenancy follows immediately from an earlier one”.
In such cases the tenancy was created in Law as an SPT or by way of formal Contract Renewal and deposits became returned and repaid virtually by these events.
I see nowhere in case law that swapping tenants creates a new tenancy for existing tenants, merely new parties to an existing agreement.
To confirm this let us look at the dates to determine tenancies in this for each of the potential claimants in this case
VIEW BY TENANCY PARTIES
If we are saying the exchange of a Tenant creates an entirely new tenancy, does this also apply to when a tenant leaves but is not replaced, or to tenancies where the parties chose not to bring claim?
Tenancy “O”
15 October 2018 Jordan Ryan and Rebecca Ramsay, Bella Aude, & Braiden Moffat.
Tenancy “P”
17 October 2018 Bella Aude, Braiden Moffat + COURTNEY STURGISS
Tenancy “Q”
5th April 2019 Bella Aude, COURTNEY STURGISS + TANYA GUPTA
Tenancy “R”
15 February 2020 Bella Aude, COURTNEY STURGISS + Elrica Raja
Tenancy “S”
March/May 2020 Bella Aude, Elrica Raja
Tenancy “T”
June 2020 Bella Aude, Elrica Raja + new incumbent
If so, I can see that HHJ Luba QC decided that the three tenancies with a claim would have been Tenancy P, Q & R above with claimant names in capitals, but does that mean COURTNEY STURGISS gets 75% of the claim amount and TANYA GUPTA 25%?
This despite the fact that COURTNEY STURGISS abandoned the property without replacing herself or even cleaning her room and said “keep the bond to pay for the remainder of my rent and for a cleaner to clean my room”, also because Miss Sturgiss sought the sum of £348 said to represent the non-returned element of her deposit. It was not returned AT HER REQUEST in lieu of notice / replacement of tenant and the cleaning of her room and “that she accepted a rental liability up to 15 May 2020”, so a liability of 2 months’ rent (£702 x 2 = £1404)?
So does this mean that because Courtney Sturgiss did not meet her obligations to pay rent or replace tenant as well as clean up her room that Richard Boddy has a counterclaim for this amount against Miss Sturgiss?
Do we at least allow Bella Aude, Braiden Moffat & Elrica Raja have a “virtual” share counted that is calculated but not awarded, why should the claimants benefit from non-claimants not wishing to punish their Landlord? Also what happens when the Landlord has reached a settlement agreement with some of the Tenants where they agree not to be party to a claim?
The other thing that does not add up for me is the deposit amount; it was deemed that the amount of the deposit was £1205 for 3 rooms.
“Miss Sturgiss moved in on 17 October 2018. She paid £1,050 to the outgoing occupiers and thereafter £702 per month towards the overall monthly rent. So her deposit was £348 which multiplied by 3 tenants or 3 rooms still comes to £1044 not £1205
“Miss Gupta paid Mr Moffat the sum of £800 and to Miss Aude her agreed share of the monthly rent at £660”
I have no idea how they got to £800/£660 and can only assume it was for part of the month, although it seems that Miss Gupta got her £800 back in the Ponzi type arrangement.
“Miss Gupta advertised her room on the internet (spareroom dot com) at a rental of £689pcm. Miss Elrica Raja responded. In due course, she paid Miss Gupta £800 and by the next rent date she had moved in. She paid her contribution toward the global rent due on 15 February 2020.”
It concerns me if the reshuffling of rooms was a factor, because student Tenants do this all the time of their own volition and without consultation with the Landlord. They sometimes also allow another person to share the property, are we saying that this too creates a new tenancy. It would be ridiculous.
This case (if not appealed to a higher Court) should be a wakeup call for Landlords to get their act together and not allow this churning, perhaps Landlords could allow any tenant that wants to leave to sublet and take responsibility for the protection of the deposit they take or they have to persuade a lead tenant to take all the liability and again they have to agree to become live in Landlord with lodgers. It would always be messy but as a result of this case university student lets will have to be far less flexible, all because of the greed factor demonstrated in this case (no harm no foul). I will post the other issue later.
Katie, I’m afraid you lost the argument – in law – at the moment you said that the ‘churn’ was indeed a surrender and regrant. That means it is a new tenancy. That is the only meaning of it.
As for the rest, you are, I am afraid, very confused. The deposit penalty claim can only be – as HHJ Luba QC said, for 1 to 3 times the whole deposit. A joint tenancy is a single tenancy, and there is only one deposit. The ‘share’ of deposit of each joint tenant is between the tenants. It has nothing to do with the landlord. Here, the claimants got one times the deposit for each of three breaches. The other tenants were joined as parties but didn’t participate. It isn’t for the court to allocate ‘shares’ in the penalty.
And landlords – any competent landlord – should never have allowed ‘churns’ to happen without their agreement and approval. That has always been the case because these situations cause a complete mess for both landlords and tenants. I mean for heaven’s sake, I was writing about it here back in 2010, and the site only started in 2006.
I’ve no idea what you mean by referring to ‘Ponzi type arrangements’ and so on. You appear to be confused about the ‘deposit share’ payments to the outgoing tenant, and the share of monthly rent payments. In fact you do a lot of supposing and accusing. I can only presume that you might yourself be worried. But this has been on the cards since 2007, 14 years ago…
While on supposing and accusing, Ms Sturgiss didn’t ‘abandon the property’ – as the judgment makes clear, she gave formal notice and accepted her rent liability continued for the month after she had left. She left to get home to Australia at the start of the pandemic.
I’ve also no idea what you mean about a ‘lead tenant to take all the responsibility’. That isn’t how it works. Can I warmly recommend that you get decent legal advice on such arrangements?
Our firm acted for the claimants in this case and as HHJ Luba rightly pointed out, this is an extremely common scenario which needed clarification.
In relation to a couple of your points:
1. The deposit multiplicand: we often get scenarios where say there are two tenants on a joint contract who let’s say each contribute £1,000 each to a joint tenancy deposit of £2,000. If say Tenant 1 were to cause £1,500 worth of damage to the property, would the landlord only deduct £1,000 from the joint tenancy deposit and return the full £1,000 of innocent Tenant 2’s deposit? Absolutely not. The landlord treats both tenants as being jointly and severally liable and likewise with the deposit. It’s interesting then to hear landlords argue the contrary when it comes to the s.214(4) claim if one or more of the joint tenants elects not to be a joint claimant under CPR19.3. As HHJ Luba QC stated: “I do not consider the liability severable in that way.” It cuts both ways.
2. A lot of landlords simply run their properties badly with very little regard to the fact that residential lettings is a regulated industry. If I wanted to earn a few quid selling dodgy electronics at the market, should I then complain when being on the receiving end of a claim if the dodgy products cause injury? If landlords don’t want to comply with their legal obligations they should sell up and leave the industry. Most landlords do things by the book and it’s unfair to compliant landlords seeing rogues and cowboys getting away with it. How hard is it for landlords when there is a change of tenant, draw up a new contract and register the tenants’ deposits? It’s a 15 minute job when they are potentially earning £25k+ in rent in London over the course of the year. Again, if you’re running a business (i.e. being a landlord) you should do your paperwork (and file your tax returns)
https://www.theguardian.com/business/2017/aug/13/half-of-landlords-in-one-london-borough-fail-to-declare-rental-income
Hi Clark
The thing about joint tenants deposits is that all joint tenants have to be a party to a claim. (Not necessarily as a claimant, but a party). A landlord would be well within their rights to defend a claim on the basis that all joint tenants aren’t parties.
Oddly, this has not yet come up on RROs.
How can a tenant be a party without being a claimant? Do you mean being a claimant without being a lead claimant?
What’s interesting is that you do actually see RRO judges dividing up award amounts between jointly/severally liable tenants and discounting certain tenants’ “shares” from the awards where they’ve settled in negotiations with the landlord etc, presumably on the discretionary basis of “fairness and justice” within the greater informality and resulting discretionary ambit in the tribunal setting.
If they aren’t a claimant, they have to be added as a defendant.
Hi Giles,
That’s why in this case D2-D5 were joined as parties as Defendants pursuant to CPR19.3(2).
We often have to deal with this. It is sad for some tenants who simply don’t want to get involved in the claim in any form. We had one woman who was joined as a defendant pursuant to CPR19.3(2) and she phoned our offices saying that since she was in a regulated industry, she had to declare her involvement as a party in litigation even though she didn’t want to be involved and no remedy was sought from her. We asked the judge at the directions hearing to exercise his discretion and remove her as a party to the proceedings but he wasn’t having any of it. She added nothing to disclosure whatsoever. Other judges have readily exercised discretion under r19.3 and removed tenants who didn’t want to be involved in the claim from the proceedings.
Well they shouldn’t. It is wrong in law. ‘Unless the court orders otherwise’ in CPR 19 is not just an issue of ‘I don’t want to be’.
p.s. and no remedy was sought. Perhaps a suggestion changing the rules so that there can be a 3rd type of party i.e. not a claimant or defendant. i.e. neutral: no remedy sought from that party, doesn’t want to make a claim and is consents to be bound by the judgment
Um, what kind of civil claim involves no remedy being sought?
Paragraph of HHJ Luba QC’s judgment states:
“40. In compliance with the procedural rules, Miss Aude, Mr Moffat and Miss Raja were added to the proceedings as parties although they seek no remedy or relief, and none is sought from them.”
In this case the remedy is a payment of 1-3x the deposit under s.214(4) HA 2004. That states that the Landlord must pay. Miss Aude, Mr Moffat and Miss Raja were joint tenants also and as such not liable for the penalty since only the landlord is.
Is there a more just, systematic way of dealing with CPR19.3?
But the others weren’t claimants, although could have been had they chosen to be. But the claim was for a remedy, obviously.
I’m afraid your bewilderment about the situation betrays that you are a non-lawyer director of a law firm.
Slightly off topic, but from your statement “the maximum number of joint tenants is capped at four by s.34(2) Law of Property Act 1925”:
If there are more than 4 people named on a joint tenancy agreement, it is my (unqualified) understanding that only the first 4 named have a legal interest in the property, but they all are party to the contract and hence to the terms of the tenancy,
In this case can the fifth named tenant serve a valid NTQ in a periodic tenancy, or is that restricted to the first 4 named?
Yes all parties to the contract, but the fifth only has an equitable interest in the tenancy, for which the four are trustees (as well as for themselves and each other as joint tenants).
That raises some interesting problems, for exampple if one of the four served notice – would that be a breach of their duty as trustee to the fifth? Possibly so..
No, I don’t think the fifth could serve a valid NTQ. They are not a tenant.
Wouldn’t they be a tenant of an equitable joint tenancy though, which they could presumably end by notice? If I understand ss.34 and 36 of the LPA1925 correctly (I say, not really confident I understand it at all) it envisages that a joint tenancy in law and a joint tenancy in equity exist simultaneously. (And the equitable joint tenancy can be severed leaving a tenancy in common, not that there’s any reason to do that for a short lease.)
Ugh, every time I have to read the Law of Property Act 1925 it leaves me with a headache. So obviously written for a different time, and not really with short leases in mind.
The beneficiary of a trust can’t deal with the legal title of a trust asset. So, no NTQ
Yes, joint tenants can sever the joint tenancy to be tenants in common. This really wouldn’t help or work in the context, and would only woks for the legal tenants, not any equitable tenant.
The bit of this decision I am struggling with is the order made “There shall be judgment for the claimants in the sum of a total £3,615 (i.e. £1,205 in respect of each of the three relevant churns which produced a new tenancy to which they were in turn either or both parties).” It may be that this was made clearer in the actual order made, but how can Miss Gupta be entitled to a penalty payment for a period before she was a tenant and had paid a deposit?
Surely the constitution of the joint tenancy (referred to as the churn in the judgment) and who was deemed to have paid the deposit gets it. If that is right, Gupta is not entitled to a share of £3,615. She is only entitled to a share of £2,410. So two orders: judgment for the first claimant in the sum of £1,205 and then judgment for the claimants in the sum of £2,410.
On the facts of this case, the surrender and re-grant makes sense. Landlord knew who the tenants were at all times and always accepted rent from them and told them that they were tenants. He never entered into a single relationship with the person who actually paid. In other cases, where the landlord has no idea what is going on, it may be more difficult.
Sorry Gupta was only in one churn; not two, but the point is the same.
It was a joint claim, so one sum awarded for all relevant churns. How the claimants divided that up between them was up to them.
I am led to understand that it was common ground that Miss Gupta would not receive any payment in respect of a churn that she was not a party.
Interesting Giles about all tenants having to be a party to a Deposit protection claim ( where is that laid out ? ) and even more interesting as to why that same ‘all parties’ apply to RRO’s ?
CPR 19.3(1) – ” Where a claimant claims a remedy to which some other person is jointly entitled with him, all persons jointly entitled to the remedy must be parties unless the court orders otherwise.”
CPR doesn’t apply to Tribunal proceedings, and Housing and Planning Act 2016 expressly says ‘a tenant’, not ‘the tenants’, so doesn’t have to be a joint claim.
But, isn’t the wording of s214 (1) of interest here, which says “the tenant or any relevant person”, so THE tenant OR means, the lead tenant as identified in the deposit protection certificate, can be a claimant on his own? has this argument tested in court? If not, how does one add other joint tenants as party to an ongoing counterclaim? N244 is strictly needed or just consent from other tenants to the lead tenant’s proceedings would suffice?
No, joint tenants are ‘the tenant’. There is no concept of ‘lead tenant’.
Other parties must either be claimants (so joined as claimants to the counter-claim) or added as defendants.
Wait, so does this mean that a tenant can’t claim without the involvement of a relevant person where a RP featured in the payment of the deposit?
No. But the RP can also claim.
Re: 18/03/23 4:10pm: does this mean that LL may be liable for 3xD to the tenant as well as an additional 3xD to the RP in respect of a single breach? Do you know if there are any precedents/authorities on this doubling of liability? I suppose that as the application may be brought by the tenant “OR” the RP (making them separate entities, rather than as in the other situation wherein the tenants all jointly comprise the single entity of “the tenant”), you’d enable a tenant to prejudice the RP (or the RP to prejudice the tenant) by one of the parties settling with the landlord and thus removing the other (tenant/RP) party’s entitlement to claim without their having any control. So it then has to be that both tenant and RP are each independently entitled to 1-3xD.
Am I thinking along roughly the right lines?
No, is one breach and one penalty. Application could be by tenant or RP, or conceivably by both, but only the one breach. It is not a requirement that both are parties as with joint tenants though.
What was the outcome in terms of the Cost order following the Appeal?
Don’t know, but costs usually follow the event, and can’t see way this would be different. That said, the possession claim is ongoing.
Do you know which firm acted on the Appeal? Would be interested to know how cost were going to be treated given this could be a more important aspect of the decision from a practitioner prospective. Given as you state a possession claim is ongoing, i guess how cost will be determined could be some way off.
Well it is pretty straightforward. If you win an appeal, you get the costs of the appeal, and usually the hearing that gave rise to the order under appeal (subject to assessment). This is standard. The remainder of the costs of the case would fall to be determined by the final decision (or any subsequent appeal).
I suppose there may have been an issue based split on costs, but it doesn’t really look like one of those cases. Practitioners get used to this, surely?
Alternatively, condensed version:
“ in what sense is a contemplation of the nature and functioning of a provision so as to deduce its likely underlying intentions/purpose a “literal reading”?
…
As to the RP potentially having to chase a tenant down for the money, are we not in agreement that a tenant could totally apply alone without the approval or even knowledge of the RP, where an RP was present?
isn’t that sort of the point, that the RP cares sufficiently for the tenant that they are willing to trust them by risking the amount of the deposit to facilitate their accommodation? Even short of any improper conduct by the landlord, the RP is quite decidedly trusting the tenant not to trash the property, or to default on their rent obligations, either of which if the tenant does then the RP will be left chasing after the tenant for the money back in the same way as in which you describe.
…
Again, in which sense does a literal reading (rather than a purposive one) appeal to propositions as to “the point of the provisions,” (rather than grapple as Michael Barnes did on 29/03 with the actual meanings, whether in ordinary english or as legal terms of art, of the words that are used in the provisions’ operative text itself)? To me, a literal reading would reckon, as Michael did on 29/03 here, or as Mr. Ryan Hocking at Gatehouse Chambers did in his blog, with the admittedly slightly ambiguous use of the word “or” at various points throughout S214 (specifically at subsections 214(1) & S214(1)(a)).
…
As an aside, is it safe to say that you are not aware of any authorities that support your interpretation but are basically just applying your (no doubt extremely well -seasoned and -tuned) intuition so say this? (I realise that there have been one or more rejections at the county court level of the double-subsection breach / Hocking multiplier, but am not aware of anything that is more widely binding/authoritative. Was one of them somewhere like Kent/Dartford, and another by HHJ Luba in Central London?)
Tim, enough. This is deeply tedious.
On the double penalty, Ryan – whom I know and have a great deal of time for – says is is a doubtful, albeit arguable, point in his article. He doesn’t really deal with the key point that s.213(3) and 213(6) breaches are not true alternatives (or multipliers), because a s.213(3) breach will also, without exception, include a s.213(6) breach, but a s.213(6) breach may or may not involve a s.213(3) breach. If two penalties were intended, the ‘or’ is meaningless. The Act would say ‘on either of’. Unless you work out that there is a difference between ‘arguable’ and ‘likely to be successful’ you aren’t going anywhere in legal practice. And that discernment is why there are no recorded cases on the point. It will not succeed beyond a fluke at first instance and nobody has taken it further.
Alternatively, look at it this way. “Hi, yes there is an argument that would get you £6000 rather than £3000, but it is very likely to be appealed, and if the appeals go against you, it could cost you £20,000 to £70,000.” Does that sound attractive?
On a literal reading and purpose – a deposit penalty is a) strict liability, b) prescribed in amount, and c) has no relation whatsoever to the tenant’s loss, if any (usually no loss), so is not compensatory. Therefore it is a penalty, because only penalties have those features, not compensatory damages. Of course if you wanted to go to the explanatory notes to the original legislation, let alone Hansard on the debates, that would be abundantly clear, but it is clear on a basic, literal reading of the legislation. If you don’t understand the difference between penalties and damages (as it appears you don’t) please go and do some reading, because teaching basic legal literacy is not our job here.
On the RP – I have no idea what you are on about. Of course the tenant could apply without the RP. Or vice versa. There is no ‘caring’ involved. The RP will often be a local authority.
I think this discussion is now at an end.
Hi Giles, regarding the req. that all tenants needing to be a party in a s214(4) counterclaim (CPR19.3), doesn’t Gladehurst Properties Ltd v Hashemi could be used where the appeal court held that witness statement from other party to carry on their behalf is sufficient ? This means not all tenants need to be party as long as one has other tenants witness statements? or would this still need an N244?
No, CPR requirements are clear on this now. CPR 19.3:
19.3
(1) Where a claimant claims a remedy to which some other person is jointly entitled with him, all persons jointly entitled to the remedy must be parties unless the court orders otherwise.
(2) If any person does not agree to be a claimant, he must be made a defendant, unless the court orders otherwise.
So, unless can persuade court to order otherwise (and there would need to be a very good reason for this), have to be a party.
ok, so then did CPR 19.3 changed after Gladehurst Properties Ltd v Hashemi then? Because, I would have thought the argument on that case is still sound and binding.
No, the provision is the same. The Court of Appeal in Hashemi is not authority that ‘a witness statement is ok’. Here is what the court said:
I think that the effect of Mr Johnson’s evidence was in fact to confirm that he was always a party to the action. He had authorised the commencement of the proceedings in his name and his failure to sign a statement of truth on the claim form or the appellant’s notice does not invalidate that. It was therefore unnecessary for the judge to make a representation order.
The other tenant(s) have to be parties, unless the court orders otherwise.
I wonder first if a relevant person can in fact be said to be “jointly entitled” when s214 connects them to the tenant as alternatives with “or”. In this way it’s not really the same relationship to one another as joint tenants.
I then wonder what the logic is in the provision for would-be joint claimants to be made defendants. How does that make any sense whatsoever?
They have to be a party. If they aren’t a claimant, then can only be added as a defendant. They aren’t defending, obviously.
So is it really just a technicality that doesn’t make any sense on the face of the terms used to describe the parties’ roles?
I mean I gather that their role is simply labelled as that of “defendant” because to be a party to a claim one must be either a defendant or a claimant (though I saw intervenors in Rakusen but that wouldn’t very well describe other tenants either), so they’re just shoved in as a defendant to support and facilitate whatever the real purpose of that CPR is, which is perhaps more accurate in the sense that they’re not actively participating (so much less actively bringing the claim), so they can’t very well be listed as claimants because for whatever reason the drafters of the CPR considered it necessary for justice and transparency etc for all parties to be on the record as duly informed of the fact the proceedings in order to clearly establish that they are waiving their entitlement to bring the claim and thus not cause double jeopardy for the actually-defending defendant?
Intervenor is a very different status. Yes, it is a technicality, but not really about double jeopardy, simply that joint tenants have to all be parties as a requirement.
thanks Giles, but does this and CPR 19.3 apply for Tenants when they counterclaim, i.e if the Landlord starts proceedings against all of the tenants, but only one counterclaims (note, in Gladehurst Properties Ltd v Hashem, it was other way around) ?
Yes. A counterclaim is a claim. But in those circumstances, the other tenants are already parties in proceedings.
Hi Giles, thanks, but just out of curiosity in what other cases, CPR 19.3 would have applied for a counter claim pls?
Yes.
Hi Giles, not sure what question, you answered ‘Yes’ for. My questions was in what other circumstances of a counter claim, the CPR 19.3 will NOT apply. As I would have thought, all joint tenacies, when faced with a claim from the landlord, need not to comply with 19.3 if only one tenants counter claims?
That was your first example. Already answered.
And you asked ‘in what other cases CPR 19.3 would have applied for a counterclaim’. That was the question I answered. Yes, it does apply.
Hi Giles, Could you provide me one example, where the CPR 19.3 would have applied for a counterclaim pls? a scenario perhaps the original claim was against only one of the tenants ? just trying to understand the scope of CPR 19.3 in relation to s214 claims.
Neil, as I have repeatedly said, CPR 19.3 applies to all counterclaims. I don’t know why you keep persisting with the idea that it only applies in certain situations.
Hi Giles, What I was confused about is this: if as you mentioned on your comment on 28/02/2022 at 2:57 pm, that CPR 19.3 does not apply when even only one of the tenant counterclaim for a claim brought by landlord against all tenants, under what circumstances would CPR 19.3 apply for a counterclaim ? (if you can provide one example it would clear things up) Thanks
Neil, no, I absolutely didn’t say that. Of course CPR 19.3 applies. It is just that in that situation, the other tenants are already parties as defendants to the claim. They must also be either counter-claimants or defendants to the counterclaim, but they don’t need to be added as a new party, because they are already parties to the proceedings.
One more time, CPR 19.3 applies to all counterclaims.
Thanks Giles. that clears this up..cheers.
Re: 3:49pm,
Okay, so it seems to me there are several potential “multipliers” of S214 quanta that one may consider.
The first is to count multiple successive penalty-worthy breaches for requirements arising out of each successive/replacement tenancy, and this seems to be well and rather uncontroversially settled by the courts, which was then implicitly understood to have been accepted by Parliament when it revisited the situation, and took an opportunity to adjust part of that situation while leaving the opportunity to adjust another part of it on the table. (The “successive tenancies multiplier”.)
Second there seems to be a question as to whether cases where S213(3) and S213(6) are simultaneously both breached. (Let’s call this the double subsection breach multiplier.) I understand you to be of the opinion that this is also a non-starter not worth seeking to raise controversy about, an understanding which I think is shared and presumed by most of the L&T field, whether we are considering those on the tenants’ or on the LL’s side of things, but which, as I have previously pointed out, the barrister Ryan Hocking has observed, in an article published by Gatehouse chambers, some ambiguity lurking in the underlying provisions of. I understand that there has yet been no binding authority above county court level, partly because everyone in the field seems to take it as such a foregone conclusion, unworthy of being even put to the test. I gather that in the minds of most they just assume that it’s a settled question simply because that’s just the way they’ve always seen everyone else do it, and I suspect that for this reason it is never tested and addressed in the courts. I suppose that you likely have some more insightful basis for taking this understanding of the issue, but it seems so consequential to me that it seems to be well worth putting to the test. The question here is only whether doing so would be likely to sway/jeopardise judicial sympathy when it comes to the more purely-discretionary quanta, due to a perception of avarice in going against the grain by seeking to test such an unorthodox and perhaps seemingly cheeky interpretation of the law. (Ie, okay, you have successfully persuaded the court that its discretion must be between a 2-6xD penalty for each tenancy, rather than a 1-3xD penalty, but out of spite for your perceived cheekiness in doing so, it will only award you the minimum of 2xD in discretionarily determining it when it may otherwise have been minded to award the maximum of 3xD…. Certainly if it was in central London CC and at risk of being heard by HHJ Luba, I’d be reluctant…) Other than this there would seem no reason that I could think of not to try, but in any event I would personally love to see some explicit authoritative clarity on this. But never mind…
Third we have the question of the multiple-eligible-claimant multiplier, which is here in question: where there has been a deposit paid by a relevant person, then S214 provides how the court is to deal with applications made by the tenant “or” a relevant person. The question here is, are these two potentially eligible claimants mutually exclusive alternatives, or is their eligibility to bring a claim cumulative so that they may both share (in a non-zero-sum sense) in the fun by collectively bringing a total of two claims where either one would only be entitled to bring one?
In other words, suppose a relevant person approaches a LL and initiates a S214 application (without the tenant’s knowledge/consent/involvement, which according to you, they are entirely allowed to do), which is then resolved in court with a 3xD penalty. Or perhaps the LL & the RP settle out of court. (It seems unimportant as to how the RP’s eligibility to claim is resolved.)
Suppose they then mention this to the tenant and the tenant decides they want a piece of this action as well, so the tenant brings their own claim for 3xD. (Let’s keep it simple by not introducing any of the other multiplier-factors here, so let’s suppose that there was only ever a single tenancy, tenant vacated with effluxion of time, no new terms or CPTs/SPTs, and the deposit was in fact protected, just no PI served, so that only one subsection was in fact breached.)
If the culpability of the landlord is the conventionally-principal factor in the exercise of judicial discretion as to quantum, then in respect of the same facts, indeed the very same tenancy, and so needless to say the same defendant-LL, then why, as stare decisis might suggest, should the quantum not be the same (ie, 3xD)?
Okay then the only question is the mutually-cumulative eligibility to claim. If the tenant is eligible to bring a subsequent claim following that of the RP, then the LL’s liability where a RP featured in the case doubles to up to 6xD.
If they are not then the tenant seems prejudiced by their eligibility being nullified by an agreement (or proceedings) between the LL & the RP to which they were not a party.
You have (albeit tersely) suggested that both may claim which I take to understand that their eligibility as claimants is independent of one another’s, i.e. cumulative, so… tough stuff for the LL.
Which is perhaps just, in that where an RP is involved the tenant is more likely to be a naïve and/or vulnerable individual that LLs may rather be tempted to get one in over.
I fear that you had misunderstood my question as to the third (multiple-eligible-claimants) multiplier issue as rather being about the first (“multiple subsection breach”) multiplier issue. Are you saying that where an RP features in a tenancy, a LL’s liability to penalties very well potentially doubles from what it otherwise would be?
As an aside, having read more about the parties and background to the Charterhouse case, and putting aside my perhaps slightly dogmatic pro-tenant sectarian fervour, and taking note that he was also indeed a strong friend of tenants in the above case of Sturgiss, perhaps my resentment of Luba is counterweighed a little. But on the facts and his libertine stretches of the legal position to apply it according to his sympathies, I still have to find his judgment there quite questionable. Also for fear and contempt of its truly dangerous precedent of potentially marking the end of the Ayannuga era of S213 compliance interpretation. But like honestly, since when is secondary legislation seen to be any less binding than primary? Speaking from nearly missed personal experience, breaches of a TfL by-law are no less of an offence than a breach of a law directly drafted by Parliament, and would have landed me with a criminal record just the same, if it had been pursued by the overly spiteful and zealous officer that had been “investigating” my riding of my bike (barely) “inside” the station. Why should LLs then be any less bound by the H(TD)(PI)O 2007 than by HA 2004?
No, there is only one ‘multiplier’ of penalties. That is the number of tenancies and hence breaches involved.
Okay, so then you are saying that if an RP makes a S214 claim in respect of a non-compliant tenancy, and the tenant was neither a party to the proceedings nor aware, then a tenant cannot subsequently bring a further claim in respect of the same non-compliant tenancy?
But then, a) how is that fair for the tenant? And, b) what was meant by this? “ Application could be by tenant or RP, or conceivably by both, but only the one breach. It is not a requirement that both are parties as with joint tenants though.”
Yes, exactly that.
The point of the legislation is to penalise the landlord, not reward the tenant.
Re. 2:41pm (no reply button once again),
But are there any authorities to suggest that the courts are to favour this purposive reading rather than a possible literal interpretation that has the different result?
We know from both Superstrike and (now) Rakusen that the courts must uphold the legislation as it was enacted by Parliament, even if it gives rise to unintended “mischief,” at least until the remedies to the unintended “mischief” are provided by further acts of Parliament. If not authorities, then may I just ask why this interpretation is so clearly in your mind what will be judicially upheld?
I am stating a literal reading. It is a penalty – a defined amount (1-3 times deposit) and strict liability – not compensation or damages. The tenant has quite probably suffered no loss at all.
On the RP, think about it – the only reason someone is an RP is that they have paid all or part of the deposit for the tenant. The court must or may order the return of the deposit. Who to? The applicant. So, either the RP will have to pursue the tenant for their money back if the tenant is the only applicant, or be a part of the claim.
If the point of the provisions is the protection of the deposit, and that deposit is the RP’s money, why should the tenant get the penalty, not the RP?
Obviously, the court can’t order the return of the deposit twice, which is a still further reason your idea of separate claims by tenant and RP, and double penalties fails.
You appear to be considering “or” to be an “exclusive or”.
In normal usage “or” is an “inclusive or”. Thus A or B can be any of “A and not B”, “B and not A”, “A and B”.
Hi Michael, Are you writing mainly in reference to what I deemed above as the “multiple eligible claimant multiplier,” or what I deemed as the “double subsection breach multiplier”? I think this is the exact issue that Giles has so far not confronted in his argument, despite describing his approach as a literal reading. Cheers
Both.
In both cases the legislation uses the word “or”.
Hi Giles (re. 25/03.4:20pm),
I’m sorry (both perhaps for my persistence and for my delay in replying), but in what sense is a contemplation of the nature and functioning of a provision so as to deduce its likely underlying intentions/purpose a “literal reading”? As far as I can see, nowhere in S214 features the word “penalty,” while S214(4) simply provides for court to order landlords to pay to the applicant “a sum of money.” While you say that the tenant has “quite probably suffered no loss at all,” and I agree that it may well be true, I don’t know if “quite probably” is founded. The truth is they may well have suffered losses because unscrupulous landlords wrongly withholding deposits is of course the whole reason for the legislation. You are yet of course quite right that a tenant may well have suffered no loss in case of a S214-invoking scenario. In less formal contexts, it is very widely referred to as “claiming compensation” (I’m thinking about online articles such as Shelter, CAB, etc.)
My understanding is that common law damages can reflect a claimant’s actual losses (ie general and special damages), but they need not necessarily, and can indeed also be punitive (ie punitive or exemplary damages). So I see no clear basis, much less a literal one, to so plainly say these sums are not to be called compensation or damages.
On the other hand, does S27/28 HA1988 not set out defined amounts (or rather, as with S214HA2004, defined formulae, if we are to be legalistically rigourous) in providing for what are very prominently and explicitly called “damages”? Incidentally, illegal eviction, if not in all the related 1977 act offences, can also be strict liability, and yet can apparently also give rise to S27 damages despite being strict liability offences.
As to the RP potentially having to chase a tenant down for the money, are we not in agreement that a tenant could totally apply alone without the approval or even knowledge of the RP, where an RP was present? In any event, suppose that an RP pays a deposit to a LL who then fully complies with both S213(3 & 5/6) so that no proceedings under S214 would be possible. Under these circumstances, at the end of the tenancy, does the DPS not typically release/remit the deposit amount back to the tenant, rather than the RP who may have paid it on their behalf, whether this was the tenant’s mother or their local authority? If I am not wrong that this is the case under normal (non-breaching) circumstances, then is an RP not left having to pursue the tenant for the return of their money even under the best case? And, isn’t that sort of the point, that the RP cares sufficiently for the tenant that they are willing to trust them by risking the amount of the deposit to facilitate their accommodation? Even short of any improper conduct by the landlord, the RP is quite decidedly trusting the tenant not to trash the property, or to default on their rent obligations, either of which if the tenant does then the RP will be left chasing after the tenant for the money back in the same way as in which you describe.
Again, in which sense does a literal reading (rather than a purposive one) appeal to propositions as to “the point of the provisions,” (rather than grapple as Michael Barnes did on 29/03 with the actual meanings, whether in ordinary english or as legal terms of art, of the words that are used in the provisions’ operative text itself)? To me, a literal reading would reckon, as Michael did on 29/03 here, or as Mr. Ryan Hocking at Gatehouse Chambers did in his blog, with the admittedly slightly ambiguous use of the word “or” at various points throughout S214 (specifically at subsections 214(1) & S214(1)(a)).
Due to the arguable ambiguity of the word “or” noted above by Micheal, which you are perhaps not even recognising, I think insofar as one feels that the sense of “or” is ambiguous, reasoning as to purposive interpretation may be appropriate. I’d be inclined to agree with Michael (if only for reasons of wishful thinking, but also for the lack of any appearance of the word “either” which can be used to indicate the sense of “exclusive or”) that “or” is in fact not all that ambiguous and would seem to favour a reading in the sense of the “normal usage” as he calls it (ie that of “inclusive or”). But I simply don’t see the basis for the slam dunk which you appear to be confident of in favour of interpreting it to be an “exclusive or” so as to preclude support in the statute for the other two multiplier-factors. To me, it is arguably ambiguous, though I lean with Michael in favour of the “inclusive or” interpretation as in “normal usage.” But I struggle to see how anyone could view it so unequivocally as a slam dunk for the “exclusive or” interpretation.
As an aside, is it safe to say that you are not aware of any authorities that support your interpretation but are basically just applying your (no doubt extremely well -seasoned and -tuned) intuition so say this? (I realise that there have been one or more rejections at the county court level of the double-subsection breach / Hocking multiplier, but am not aware of anything that is more widely binding/authoritative. Was one of them somewhere like Kent/Dartford, and another by HHJ Luba in Central London?)
Finally, to address your last paragraph and “still further reason” why my idea of … double penalties “fails,” S214(3)(a) gives an option for the court to “order the person who appears to the court to be holding the deposit to repay it to the applicant.” If a tenant has brought a claim previously and then the RP attempts to bring one, or vice versa, then as you point out, this provision is moot, because the deposit obviously cannot be (ordered to be) repaid twice. I would argue then that this is caught by “as [the court] thinks fit” (S214(3)), alone, as well as in tandem with the very language of S214(3)(a) that specifies the order is to be made of “the person who appears to the court to be holding the deposit.” I would think that if it has already been repaid to an RP (pursuant to an order made as a result of an application previously brought by the RP) in the face of a subsequent application brought by a tenant, then there is no longer a deposit being held by anyone, and accordingly no longer any “person who [could possibly appear] to the court to be holding the deposit.” I don’t know how completely this paradox you raise has been addressed/resolved, and how much difficulty it ultimately presents, but it seems to me that at best it sort of counterbalances the definite problem presented by the lack of any “either” to clearly qualify the “or” as an exclusive one to render the ultimate judicial result rather significantly more unpredictable than you seem so keen to suggest.
Regards,
Tim