Lowe v Governors of Sutton’s Hospital In Charterhouse (2024) EWHC 646 (Ch)

A High Court appeal of a first instance county court judgment by HHJ Luba KC, which we noted here. The claim was for deposit penalties for failure to provide the prescribed information in breach of s.213(6) Housing Act 2004. It was dismissed at first instance on the basis that the requirements had been met.

Mr Lowe appealed just about everything.

i) Was the prescribed information given in full?

The first issue was that the prescribed information given in September 2010 referred to a clause 6 of the tenancy agreement (for conditions under which deductions could be made), where Mr Lowe’s tenancy agreement did not ahve a clause 6 and the relevant clause was 5.3

The High Court held that, following Pease v. Carter (2020) 1 WLR 1459, if a reasonable recipient, reading the notice in context “would appreciate that the notice contained an error, and would in fact appreciate the meaning the notice was intended to convey, then that is how the notice should be interpreted. If the notice, so interpreted, complies with the statutory requirements, then so be it: they are satisfied, despite the error.”

i) A reasonable person in the position of Mr Lowe would have appreciated that the Prescribed Information Document contained an error: and obviously so, because it referred to Clause 6 of a different tenancy agreement altogether than the one he in fact had.

ii) The same reasonable person would have understood what meaning the Prescribed Information Document was in fact intended to convey, which was to say that the required information (as to the circumstances in which the whole or part of the deposit may be retained by the landlord) could be found in a corresponding term in the tenancy agreement he did have. It would not have taken long to find it, in cl. 5.3.

iii) The Prescribed Information Document so construed satisfied the statutory requirement, which was to notify the tenant of the circumstances in which all or part of the deposit might be retained by the landlord. Those circumstances were set out in cl. 5.3, which defined the landlord’s rights to make deductions from the deposit and the tenant’s right to recover it.

On the same issue, the Judge below may have been wrong to consider this fell under ‘words substantially to the same effect’, as that applied to issues of form, not information. However, the relevant part of para 2 of the Prescribed Information Regulations did not require strict compliance:

The right way to look at it is that it is only sub-paragraph 2(1)(g)(vii) needs the flexibility of the saving words (“substantially to the same effect”), because that is the only part of para. 2 which even appears to be require strict compliance. The earlier parts do not. They are not prescriptive as to form, including as to use of any particular phraseology. All they require is the provision of information, in whatever form and however expressed.

The Judge below had clearly come to the view that in substance the information had been provided.

On the issue of whether the prescribed information complied with para 2(1)(g)(vii) – a certificate signed by the landlord, as held below, the information given was annexed to a letter signed by the landlord’s agent. This amounted to a form ‘substantially to the same effect’

It seems to me that it had, because in sending the letter and Prescribed Information Document, what Charterhouse was effectively saying was: Here is the information we are required to give you, and the certificate you are entitled to receive; we are happy to give the certificate in this form, but one thing we need to do is to give you the opportunity to review what we are sending you, so please do so and let us know when it is done; but as far as we are concerned everything is in order and we are happy to give the certificate the 2007 Order requires.

This achieved the statutory purpose.

ii) Was the deposit paid in connection with an original shorthold tenancy?

This was for the purposes of s.215B, such that the first prescribed information could be relied upon for subsequent tenancies and statutory periodic tenancies. Mr Lowe’s argument was that the deposit taken in January 2010 was not for a shorthold tenancy, as it fell over the rent limit until October 2010, when the statutory limit changed. So, on Mr Lowe’s case, it wasn’t until January 2011 when a statutory periodic tenancy first arose that the deposit was received in connection with a shorthold tenancy, and the prescribed information should have been given then, not in September 2010. As s.215B was of no effect, there was a breach for that and each of the subsequent tenancies, 8 in all.

This had been rejected at first instance and the High Court agreed.

The Judge rejected what he described as these “singularly unattractive” submissions in his Judgment at [146], and I think was correct to do so. Section 215B is engaged where, “on or after 6 April 2007, a tenancy deposit has been received by a landlord in connection with a shorthold tenancy” (my emphasis). The words “in connection with”, in my opinion, are sufficiently pliable to cover the situation in which a deposit is paid in respect of something which is not a shorthold tenancy, but which later becomes one by operation of law, as happened here on 1 October 2010. A deposit was certainly received by the landlord. Was it received in connection with a shorthold tenancy? I think it clearly was, because the landlord continued to hold it, and the tenant was content to let the landlord continue holding it, when the original contractual tenancy became a shorthold tenancy. That is more than enough in my view for one to be able to say the deposit was received in connection with the later shorthold tenancy.

The gist of Mr Lowe’s argument as I understand it is that one must stop the clock at the point of receipt – here, January 2010 – and nothing that occurs thereafter is relevant to determining what the receipt was in connection with. But that is quite artificial, as the Judge pointed out, given what he described as the “ambulatory” nature of the regime of assured tenancies under the Housing Act 1988, which means that tenancies can move in and out of assured status and into shorthold status (Judgment at (27) and at (146)). In such an environment, it makes no sense to take such a restrictive approach, and as the Judge put it, to “ossify the treatment of the statutory scheme in its application to a particular tenancy.” I respectfully agree, and therefore also agree with the Judge’s conclusion that Mr Lowe’s deposit, although originally paid in connection with his January 2010 contractual tenancy, can properly be regarded as having been received in connection with either the shorthold tenancy which arose by operation of law in October 2010, or that which arose in January 2011 when the period of the new statutory periodic tenancy commenced. In either case, the prescribed information was provided within the relevant time limit, because it was provided in September 2010, before either of the tenancies commenced and thus before the deposit was received in connection with either of them.

These findings were sufficient to dismiss the appeal.

iii) Limitation period

Mr Lowe had also appealed the first instance finding that the relevant limitation period for a claim was 6 years, not 12. Mr Lowe argued that section 9 Limitation Act 1980 didn’t apply because it addressed ‘recovery’, meaning something already paid by the claimant, which was not the case in a penalty claim. The proper limit was 12 years under s.8 – action on a specialty (including claims under statute).

The Judge rejected this argument. In my opinion he was correct to do so, essentially for the reasons he gave at (35)-(47) of his Judgment. I would put the matter as follows. I think it is artificial to construe the words “recover” and “recoverable” in s.9 Limitation Act 1980 as referring only to the concept of recovery in the sense of claiming back something which was previously in the claimant’s possession. The law often refers to the concept of recovery to describe an entitlement to receive a payment of money in vindication of a legal right. It is not hard to think of examples. A successful claimant in a contract or tort claim will recover damages. A lender will usually have a right to recover interest (s.38(10)(b) of the Limitation Act refers expressly to the recovery of arrears of interest or of damages in respect of arrears of interest). A judgment creditor likewise will have a right to recover interest on a judgment debt. A successful party in litigation will recover its costs (which it may have paid, but to its own advisers, not the defendant). A joint tortfeasor will recover contribution from another tortfeasor in respect of their joint liability to a claimant whom they have both wronged (s.10 Limitation Act 1980 provides a six year limitation period in such cases). None of these examples involves the recovery of something previously paid over to the defendant. Instead, they involve the claimant obtaining recovery in the sense of obtaining a payment of money as a response to a legal entitlement which has arisen in some way and from which he benefits. In my opinion, that is the sense in which the words “recover” and “recoverable” are used in s.9 of the Limitation Act, and the Judge correctly described this at (39) of his Judgment when he said that Mr Lowe was seeking “to establish, by reliance on statute, an entitlement to a sum to be paid to him.”

So limitation was 6 years, which as Mr Lowe’s claim was brought in 2021 would only have encompassed the last of the alleged breaches in 2015.

There were two other issues raised on appeal by Mr Lowe, which the court briefly dealt with.

The Judge’s refusal to make an order under s.214(3) for the return of the deposit.

Mr Lowe had been actively avoiding the landlord’s attempts to return the deposit in order to avoid a section 21 notice being served and had not pleaded its return in the claim. However, he argued that the wording of s.214(3) meant that an order to either return the deposit or protect it was mandatory, it ‘must’ be ordered.

The High Court did not agree.

I find it very hard to think that s.214(3) is to be construed in a manner which afforded HHJ Luba no discretion at all to refuse to make an Order for the return of Mr Lowe’s deposit, which he had not claimed, which he did not want to have, which he knew he would have to return even if it was repaid, and which in any event had been safely held under an appropriately designated scheme for over 10 years. During the hearing of this appeal, I described the position as somewhat unreal. Parliament cannot have intended to straitjacket the Court in a manner compelling it to make Orders which are not required and are likely to be of no practical effect.

It seems to me that the statutory purpose, revealed by a fair reading of s.214(3), is to ensure that in the case of a continuing tenancy, the tenant’s deposit is safe. One of the specified means of ensuring it’s safety (s.214(3)(b)) is to require it to be paid into a properly designated scheme account. The same objective is obviously achieved, in a case where the deposit is already so held, by the Court simply deciding to take no further action. I am not persuaded that in such a case the statutory language requires the Court to make an entirely mechanical election between the two inflexible alternatives, neither of which is appropriate. Indeed, in the present case the alternative Mr Lowe contends for is one which he did not want to happen and which his own later actions have shown would have been pointless. The statutory language must admit of more flexibility than that. I therefore consider the Judge was correct in the conclusion he reached.

A further point – the Judge’s refusal to make a finding as to whether the deposit had been returned or not, there had been no need to consider this by the Judge below, given the finding of no breach, and there was no need to consider it now.

Appeal dismissed.

I somehow suspect that the Court of Appeal may have to consider this one…