Gul v Bilal, Stratford Hearing Centre, 18 October 2021 (unreported. We’ve seen a note of hearing).
A County Court decision on a landlord’s application which adds to the not uncomplicated history of decisions on when a tenancy deposit counts as returned to the tenant for the purposes of s.215(2A) Housing Act 2004. (Previous cases here, here, and here). As a County Court decision, this is not binding, of course.
Mr G had brought a possession claim against Mr B in January 2020 on grounds 8, 10 and 11 (rent arrears). This had been met with a defence and counterclaim for, as far as I can tell, disrepair and penalty for breach of deposit requirements – an unprotected deposit. The proceedings had been caught by the PD 55C stay and a reactivation notice was filed in February 2021. The matter was then listed for a directions hearing, which was this hearing.
In the meantime, in June 2021, Mr G served a section 21 notice, and then, just over a week before this hearing (shortly after the expiry of the s.21 notice period), apparently made an application to be able to rely on the section 21 notice for a possession order at this hearing. (Unsurprisingly, the application had not made its way to the Court file.)
In support of the application, and the unsurprisingly contested validity of the section 21 notice, Mr G asserted that the deposit had been repaid to Mr B in January 2020, when he had attended the property with Mr B present and left a cheque for the deposit on the kitchen table. This was common ground, however, Mr B pointed out he had not accepted the cheque, didn’t want the deposit returned and had never cashed it. Mr G accepted that the cheque had never been cashed.
So, the question was did leaving a cheque with the tenant count as returning the deposit?
Mr Gul was represented by an ‘advocate’. It is fair to say he was not ready to engage with this issue (or indeed with anything apart from asking for a possession order, as will become clear).
Mr B’s counsel raised Chalmiston Properties Ltd v Boudia (our note) and Coltrane v Day (2003) EWCA Civ 342 – a ground 8 possession case – to the effect that a) the deposit had to have been received by the tenant before the service of the s.21 notice, and b) that a cheque did not represent payment unless accepted and then not until it was paid (although the payment date would then count as the date the cheque was given). As the cheque had not been accepted and not been paid, the deposit had not been returned.
The DDJ agreed and dismissed the application to amend to include section 21 on the basis that the amended claim had no prospects of success.
The claim was then given directions to trial of claim and counterclaim, on Mr B’s proposed directions, as the ‘advocate’ for Mr G had not prepared any directions.
Costs of the application and of the directions hearing awarded to Mr B, the latter on the basis that Mr G had made a last minute application to amend, failed to consider or agree directions, and failed to attend prepared for anything except a possession order.
Our thanks to Haroon Sarwar of TV Edwards for the note of hearing.
This decision, although non-binding, does rather leave Yeomans v Newell (our note) as something of the outlier on when a deposit is returned to the tenant. The general view appears to be that the deposit must not just be available to the tenant, or ‘on its way’ but received by the tenant before a s.21 can be served, if the deposit was not protected,
That said, Coltrane does raise the possibility that a landlord could hand a tenant a cheque, then serve a section 21, and if the tenant subsequently presented the cheque and it was paid, the s.21 would be valid as payment would count as of the delivering of the cheque. This would, it should go without saying, not be a tactic that any landlord should rely upon…
(Addendum – I’ve been referred to Lingfield Point No 2 Limited v Hodgson, High Court (Queen’s Bench Division), Sheffield District Registry, 30 July 2015. This was a permission to appeal decision refusing permission to appeal from a County Court judgment that delivering a cheque counted as repayment of the deposit, where the deposit had been paid by cheque in the first place. But this was a permission decision, so not in itself an authority for anything, and I can’t see that Coltrane was argued or part of the ratio. So I’m not convinced that goes anywhere except being another counterpoint on an unsettled issue.)