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Return of deposit by cheque – Definitely maybe.


Richworth Ltd v Billingham (2023) EW Misc 8 (CC)

Over the years we’ve seen a number of county court decisions on the issue of when a deposit counts as returned for the purposes of being able to serve a section 21 notice (see here and the links in that report).  A few of these have included the issue of a cheque being given to, or left with the tenant and whether that counts as returned.

Now we have a county court appeal judgment on the issue, from HHJ Luba KC. Still not a binding precedent, but of persuasive value (and will be followed in the London courts).

Before we get to the answer, which is a resounding ‘maybe’, there is quite the rollercoaster ride to follow first. Buckle up.

Mr Billingham had an AST from Richworth Ltd, starting in 2011, on a 12 month term, then a statutory periodic. The deposit was not protected as required. In April 2022, the landlord asked Mr B for his bank details, ‘in case’, then on 26 April sent a letter enclosing a cheque for the deposit. Then, on 5 May 2022, the landlord’s solicitors wrote to Mr B enclosing a section 21 notice and stating ‘we are advised your deposit was returned to you’. This was apparently delivered under the door of the flat by a process server on 6 May.

On 12 August 2022, Richworth Ltd issued a possession claim under the accelerated procedure at Clerkenwell & Shoreditch county court (Clerkenwell has a starring role in what follows). The claim was posted to Mr B by the court about a month later.

Mr B filed a defence straight away. Amongst various other matters (none of relevance here), he said that he did not accept the cheque, did not accept cheques generally due to previous bounced cheques, had not cashed it, and the landlord’s bank account on which it was drawn was in any event now closed.

Mr B did the defence himself. He filed it but did not serve a copy on the landlord. He did not keep a copy for himself. Unfortunately (the first of many ‘unfortunatelys’), the court did not send a copy to the landlord as it should have done.

The claim was listed for a 10 minute hearing on 8 November 2022. On 2 November, Mr B instructed solicitors. But he did not have a copy of the defence for and attachments to give them.

But in the meantime, the landlord’s solicitors had realised that the claim form as filed hadn’t been signed. Rather than seek to amend the issued claim, they sent a new claim to the court, which was issued in September 2022. On receipt of that claim, Mr B had written to the court to say he had already filed a defence and asking the court to confirm it had been received. Mr B did not file a further defence form. Unfortunately, while Clerkenwell & Shoreditch did confirm they had received the first defence, they did not do so until January 2023, two months after the hearing.

So, to first hearing.

Both parties were represented by counsel. Neither counsel had seen the defence filed by Mr B. The judge had a copy of the defence, but copies weren’t given to counsel (who apparently didn’t ask for one.) There were two issued claims, one of which had not had a defence filed, but the judge only had the file for the first claim. Initially, the tenant wasn’t present. The hearing lasted 25 minutes.

The first issue was the unsigned claim form, which took up most time.

The Judge decided to allow the claim to proceed but to direct that the landlord file a signed statement of truth for the first Claim Form, within 7 days. She so ordered. No application was made to vacate the hearing and re-list it after the proceedings had been regularised in that way.

At this point in the hearing, the tenant arrived. His counsel told the Judge that only “one point” of defence was being pursued; namely, that: (a) the deposit had not been protected; (b) in consequence, the prescribed information about deposit protection had not been provided; and (c) the deposit “has not effectively been returned to the defendant”. She explained that any other defences that may have been canvassed – about the How to Rent guide, gas certificates, ‘revenge evictions’, and the like – were not being pursued because the tenancy pre-dated the legislation making those matters available to tenants as defences.

Beyond the unsigned Claim Form and its attachments, and the Defence Form and its attachments (which neither counsel had seen), there was no other evidence before the Court on the question as to whether and when the deposit had been returned to the tenant (or not) before the giving of the section 21 notice. The Judge did not have before her, for example, the letter of 26 April 2022 and accompanying cheque by which it was said that the deposit had been returned.

On the cheque, the landlord argued that giving a cheque was ‘returning’ the deposit, and that to hold otherwise would allow a tenant to ‘ambush’ a landlord by not paying in a cheque and announcing this at the last minute in proceedings. Mr B argued that ‘return’ of the deposit meant when money was actually received.

In a short extempore judgment, the District Judge found for the landlord and made a possession order for 14 days time. The Judge said

“(Counsel for the landlord) takes me to the wording of section 215(2A). He submits the requirement in the Housing Act 2004 is that the deposit is ‘returned’ rather than ‘paid’ to the tenant by the time the section 21 notice is served.

He says that in construing the requirement under subsection (2A) to mean that the tenant actually has to be paid can lead to ambush because a tenant can do what he says the tenant has done in this case, which is simply not to communicate with the landlord that he does not accept the cheque, and to leave it until the eleventh hour and thereby ambush the validly of the section 21 notice, by simply remaining silent.

As I say, his position is that the tenant has done just that. He has not ever intimated, until today, that he was not prepared to accept the cheque or that he was not going to cash the cheque.

I prefer the submissions of the landlord on this point. The Housing Act could very easily have said that the tenant must be paid, but the language of return is used. It is difficult to see that the delivery of a cheque is not returning the deposit. It is entirely within the gift of the tenant whether or not to cash that cheque and it could very easily lead to ambush of the type that the (landlord’s) counsel identifies. It is not clear that the cheque was ever rejected, and I thereby expressly take the view that its delivery, coupled with non-communication of non-acceptance, is sufficient to amount to a return within the meaning of the Housing Act…”

Mr B appealed.

Unfortunately the course of the appeal was also not smooth. At the first hearing date, there was no transcript of the first instance hearing and still neither party had a copy of the defence filed by Mr B, as Clerkenwell hadn’t provided one on request. Clerkenwell hadn’t issued the appellant’s notice for a month, nor transferred it to Central London, despite it seeking a stay on the expired possession order. The hearing was adjourned.

At the next hearing date, there was still no copy of the defence form, After hearing argument the hearing was adjourned while HHJ Luba KC obtained the court files from Clerkenwell and sent copies of the defence form to the parties. There was then an application to add a second ground of appeal by Mr B and a further hearing and submissions.

Mr B was represented by Liz Davies KC and the landlord by Mark Warwick KC, so this was high powered argument…

The original ground of appeal was that the first instance Judge was wrong to find that the tendering of the cheque amounted to return of the deposit where the cheque was not cashed.

The second ground of appeal was that

“The District Judge was wrong to rely on “non-communication of non-acceptance”. “Noncommunication of non-acceptance” is not relevant to whether a deposit has been returned.

Alternatively, if it is relevant, the District Judge failed to identify that any relevant period for “non-communication of non-acceptance” could only be the period between receipt of the cheque and service of the s.21 notice.”

HHJ Luba KC held:

On the first ground of appeal

“Returned’ in section 215 Housing Act 2004 did not have a distinct meaning from ‘repaid’. It means returning the amount of money of the deposit.

Tendering of a cheque can amount to (conditional) payment, if the cheque is honoured (Felix Hadley & Co v Hadley (1898) 2 Ch 681 ), and if so, counts as payment at the date the cheque is tendered (Homes v Smith (2000) Lloyds LR 139 ).  Significantly, in Day v Coltrane [2003] 1 WLR 1379, while finding that tendering of a cheque for rent arrears before a possession hearing counted as payment (on the conditional basis), Tuckey LJ added

“In the absence of express or implied agreement, the landlord is not bound to accept a last-minute cheque. If he is sent a cheque shortly before the hearing which it is not possible to have cleared through the normal clearing system in time for the hearing, he can refuse to accept it. He should obviously do so promptly and return the cheque, otherwise he may be taken to have accepted it.”  (emphasis HHJ Luba KC).

In Marreco v Richardson (1908) 2 KB 584, the Court of Appeal had found

In other words, if a man pays his tailor’s bill by cheque and the cheque is accepted as payment, the tailor cannot sue for his account until the cheque has been presented and dishonoured. And if the receiver of a cheque does not present it for payment within a reasonable time, and the bank upon which the cheque is drawn fails, the loss will fall upon the holder; …payment is made at the time when the cheque is given, and I infer from the judgment of Patteson J. that the giving of a cheque would support a plea of payment. (emphasis HHJ Luba KC)


Drawing the strands together, I am satisfied that these authorities establish that a payment, and to my mind a repayment, may be made by cheque. That may be the result of express agreement to accept payment by cheque or of the imputation of agreement by the absence of rejection within a reasonable time from receipt. Further, that if presented and honoured, the date of payment is the date of delivery of the cheque to the holder. Applying Day v Coltrane, the sum due to be paid or repaid is treated as “paid”, even if the cheque is not yet presented to a bank by the material date on which payment or repayment falls to be tested.


A tenant may or may not be bound to accept a payment tendered by cheque. That depends on the facts. A failure to reject a cheque may be taken as an implied acceptance of satisfaction with payment by it. Whether such time has passed as to amount to implied acceptance will depend on the facts and circumstances.

The repayment date will be the date of delivery of the cheque to the tenant (leaving open a question as to how and when a cheque might reach or be treated as reaching a tenant sufficiently to be treated as having been ‘delivered’). That date will be the date of the ‘return’ of the deposit, if on presentation to a bank the cheque is honoured. If the cheque is presented and not honoured, there will have been no valid repayment or return of the deposit at that earlier date and the landlord will be unable to rely on the section 21 notice.

If the cheque is simply not presented to a bank, that may, at least in my judgment, not disable the landlord from reliance upon it. If a tenant, having expressly or impliedly agreed to accept payment by a cheque, simply tears up one properly tendered or sends it back, that too may, at least in my judgment, not disable the landlord from reliance upon it as having achieved a repayment or ‘return’ of the deposit.

On the new ground of appeal, the judge was wrong to find that ‘non-communication of non-acceptance’ was by itself determinative. It might or might not be, depending on the facts. It was a relevant ingredient, but so too were factors such as the length of time and whether that could amount to implied acceptance. So too were prior dealings and whether payments by cheque had been previously accepted between the parties.

To the extent the Judge here found “non-communication” not only relevant but the sole issue and determinative, she was wrong. The facts as to what happened after the cheque was ‘received’, in the sense of it coming to the notice of the tenant (once that date is established), are certainly material. But so too are any relevant dealings between the parties as to payments, or receipt of monies, prior to the receipt of the cheque.

As to what occurs post-receipt of the cheque, it will not only be a question of whether the recipient can be taken to have accepted payment by cheque. It is also highly material to determine whether the account on which the cheque was drawn was still open and in funds as at the expiry of what would have been a reasonable time for presentation of the cheque to a bank.

On the alternative limb of the new ground, that the Judge was wrong to consider ‘ambush’ because the relevant period of non-acceptance could only be between the tendering of the cheque and the service of the section 21 notice, this was allowed. The finding that there had been a ‘return’ could not stand.

There was no evidence before the Judge as to what had occurred between 27 April 2022 and 6 May 2022 (assuming the asserted dates were correct). When had the tenant first seen the cheque? Was there any other communication between the parties in that period?

Could that period amount to a reasonable time to imply acceptance when it included a weekend and bank holiday? The Judge’s findings on ‘ambush’ were wrong, as the key period was that between tendering of the cheque and service of the section 21 notice.

the Judge also needed to consider whether the reasonable period in which the tenant should have presented an accepted cheque might have extended beyond the date on which the landlord closed the account on which the cheque would have been drawn. But there was no evidence as to that date before the Judge (save that the tenant’s case in the Defence Form was that it had already been closed before the date he signed that form) and nothing in her judgment suggests she was looking to identify or fix that date either.

In this respect, the Judge had been understandably misled by the landlord’s submissions about ‘ambush’ i.e. that the tenant’s rejection of payment by cheque was not known until the date of hearing. There had been no ‘ambush’. The landlord knew, or could have known, by checking with its bank, that the cheque had not been presented to the bank for payment by 5 May 2022, the day the section 21 notice was dated. It nevertheless decided to issue and serve that notice. It knew that only a matter of a few days had passed since delivery of the cheque to the flat and of those days, three had been days on which the banks were closed. It was therefore taking a chance as to whether and when the tenant had discovered the cheque and whether and when he would accept payment by cheque (or would be treated as having done so).

Appeal allowed and possession order set aside.


The simple answer for landlords is ‘don’t repay the deposit by cheque’. The simple answer for tenants finding a cheque for the return of the deposit has been landed on them that they don’t want to accept is to tell the landlord straight away that it is not accepted.

In between, it is a question of fact and degree… Landlords can’t rely 100% on a cheque having been given, tenants can’t rely 100% on the cheque not having been cashed by them. If the landlord serves a s.21 notice too soon after a cheque, their prospects aren’t good, but if a tenant waits until filing a defence to possession to say that they don’t accept the cheque, they may be taken to have impliedly accepted by non-communication in the interim. Fact and degree really means no-one knows where they stand until trial.

On the whole, though, landlords would probably be best advised not to close the bank account that the cheque is drawn on during a potential acceptance period. That would be a fairly clear take away.

This may become academic in the next couple of years, depending on what happens with Renters (Reform) Bill, or it may not. But it is not exactly a position of clarity for either landlords or tenants.

And the backdrop to this is the ongoing collapse of the county courts. Courts not serving would they should serve. Courts not responding to requests or filings until months later, if at all. Courts not transferring files when they should be, or not passing on appeals in timely manner.

On reflection, the deeply worrying part in this judgment is that both parties’ counsel and the District Judge were willing to have a go at an effective first hearing in the absence of key documents and files. This is not a criticism of anyone involved. It is an indicator of how beaten down we have all become by the collapse of the county court system. Any adjournment would have meant a hearing date potentially up to a year later (if not longer), with no guarantee that the position would have improved. That files and docs are missing is so routine as to be something to try to work around, rather than an immediate reason for an adjournment. This absolutely should not be the case, but it is and it is getting worse. (I’ve got a directions hearing at Clerkenwell & Shoreditch in a couple of weeks time, which is over two years after the parties filed directions questionnaires. That’s two years and multiple unanswered complaints. This is not an isolated example.)

We are at or past the point where the underfunding, understaffing, under training and archaic systems of the county courts are causing serious failures of justice. (And no, I don’t think an online Ebay arbitration style scheme will resolve this.)


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. Michael

    Thanks Giles, very interesting case, it reminds me of a case where the Tenant had paid the rent twice because the Landlord had not taken the Direct Debit, when she asked for the return of the overpayment the Landlord did not comply. Four months later later the Landlord returned the overpayment, by then there were fitness for habitation issues and the Tenant started to withhold their rent.

    Eight months later the Landlord issued a Section 21 and tried to allege that the return of the overpayment was the return of the deposit (the amounts were identical). No communication was made to the Tenant about the payment being the return of the deposit until the bundle for the claim arrived.

    The Tenant defended with the failure to protect the deposit along with obvious lack of Prescribed Information and disputed that the deposit was repaid. The Judge asked the Landlord did they have any evidence that they had informed the Tenant these monies were the return of the deposit, they said no and the possession order was not granted.

    The Landlord then paid the Tenant the deposit (even though there were rent arrears) and obtained possession with their next Section 21 nearly 3 months later.

    Regarding the case you are profiling today I think the outcome was appropriate, although I would advise to use bank transfer and to inform the Tenant the payment had been made, what it relates to and include a copy of the transaction from the online banking.

    I am SO pleased you brought up the ongoing collapse of the County Courts which seem to be almost completely dysfunctional, from the automated email saying if you enclosed an attachment that was above 20mb or so many pages it will be ignored, to the simple lack of procedure and paperwork. Judges sometimes have to adjourn several times, recordings and transcripts are another minefield.

    One wonders just how bad it will get before it collapses completely.

    • N R

      An interesting case. The comments on the collapse in the County Court administration only serves as yet another indication that the future of justice may not lie in physical (crumbling) buildings, but in an Online/Hybrid form. “Online Courts and the Future of Justice” is an informative read on the prediction of access to justice in the next generation or two.

      I take the point that NL makes re Ebay online arbitration and it may not be the ultimate answer. The recent move by HMCTS to introduce compulsory mediation for claims under £10,000 suggests that there is scope for another way.

      Time to drop the word “Alternative” from ADR as Sir Geoffrey Vos has long advocated…

      • Giles Peaker

        I am sceptical. Online submissions and files would help to some extent, but the major difficulty is in things actually being done – eg waiting (months) for allocation/directions, drawing of orders, listing of hearings/trials/applications. Hard to see how an online court would change that, as it is a staffing/resources issue.

        Ending up with ADR on the basis that the courts are so poorly funded as to be non-functional is not an attractive argument.

  2. Mandy Thomson

    Thank you for publishing the details of the hearing.

    All the administrative failures at Clerkenwell and Shoreditch CC and other County Courts are certainly cause for concern. I only hope Michael Gove and his department reads this because the Renters Reform Bill proposes to put even more pressure on the County Courts than at present when many possession claims are decided via the accelerated route.

  3. otto

    I concur, I have experienced Shoreditch and Clerkenwell CC myself. The Property Tribunal has similarity.

  4. Mick Beirne

    So it is open to a tenant to reject/return a cheque tendered in repayment of the deposit, but it should be done in a timely manner. Does this indicate that a pre-emptive assertion by a tenant refusing to accept the return of a deposit in general, (eg on grounds that it is a term of the agreement which they will not agree to vary), render the landlord unable to remedy a deposit protection omission?

    • Giles Peaker

      It is always open to the tenant to refuse a return of the deposit. That is why the safest way for landlords who ned to return it are bank transfer or cash – that way deposit has been returned even if tenant doesn’t want it.

  5. Robert Jones

    I’m intrigued by the parathentical comment at paragraph 40 of the judgment “assuming, without deciding, that such a notice [i.e. under s21] may be capable of being ‘given’ by delivery to the premises rather than to the tenant personally”. That must imply that HHJ Luba KC considered there to be some doubt on the point, i.e. that it may be that only personal service will do, which I find a surprising proposition.

    My recollection is that a s21 notice is subject to the same service requirements as a notice to quit, and that that means that actual receipt is the key requirement. I recall having previously advised that a notice could only be served on a tenant in prison by arranging with the governor to serve personally (and certainly not by delivery to the property). Unfortunately I cannot now find either my advice or any authority for either part of my recollection.

    Do you have any idea what HHJ Luba KC had in mind?

    • Giles Peaker

      Receipt is the key requirement. But service on the property is fine if the tenancy agreement expressly allows for it as per s.196 Law of Property Act 1925. However, where it is known that the tenant isn’t at the property and known to be elsewhere – in prison, for instance – it may not be wise to rely on s.196 even if the tenancy agreement expressly allowed for it.

  6. Chris Daniel

    Last paragraph from Giles confirms what everyone knows ( Clerkenwell being particularly renown ) that the Civil Justice system ( which politicians many years ago stated as an aim for it to become ‘self-funding’ ) is so run down to be as inefficient in Not dispensing Justice for ANY of its users, be that Claimant or Respondent.

    The point Mandy makes re Renters reform is valid and expressly justifies concern that the court system is Not ready for possession hearings Under Section 8 alone.

    I don’t think anyone can reasonably argue that the court system ‘ is ‘ ready, or capable of handling the Renters Reform changes. Its Claimants more than respondents that will suffer the most, if nothing other than due to delays. I prefer the term in civil cases, to defendant )
    Justice delayed is justice denied. as Gladstone said. Think on, all those who practice and espouse to pursue that cause.

    • Chris Daniel

      Just sent documents to Peterborough County court, – Automated response ;

      ” Please note that as of w/c 15.04.2024 we have arrears of 33 working days ”

      ( 7 Weeks ! before they even see it, let alone deal with it and respond )



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