The law on tenancy deposits and the three times the deposit penalty for non compliance is a bit up in the air at the moment. There are, I understand, several cases in the pipeline waiting for High Court and (perhaps) Court of Appeal decisions, plus there are the potential changes in the Localism Bill.
However in the meantime, two County Court decisions were reported in the March edition of Legal Action Magazine, one where an awared was refused and another where an award was granted.
Soens-Hughes v. Lewis
22 December 2010, West London County Court
In this case Ms Lewis thought that the deposit had been protected by her agents, but of course it was not (otherwise there wouldn’t have been a case). The deposit was £1,680 and was not protected at any time.
On 30 May 2009 Mr Soens-Hughes left the flat and the tenancy ended. He was paid most of his deposit in July but the landlord withheld £130 for cleaning and other expenses.
In January 2010 Mr Soens-Hughes issued proceedings for a claim for three times the deposit sum on the basis that it had not been protected in accordance with the tenancy deposit regulations. The day before the hearing, Mr Lewis’ solicitors paid the £130 to the bank account of Mr Soens-Hughes solicitors.
This turned out to have been a wise move. The District Judge dismissed the claim saying
- there was no deposit that he could make an order about
- there was no tenancy in existence (as it had ended in May the previous year) in which a tenancy deposit could be paid and could require protection and
- the words ‘must also’, in s 214(4) of the act meant that the award could not be paid if the deposit had been repaid to the tenant in full, you could only make the award for the penalty if you were also making an award in respect of the deposit itself, and
- if the Draycott and Tiensia cases are saying that the penalty can be avoided by late protection, then they can also be avoided by late protection
So if this case is right, then the landlord can quite safely fail to protect the deposit at all, and can avoid the penalty, if challenged, by returning all of it before the hearing.
Boyle v. Musso
25 October 2010, Bristol County Court
This is a horrendous unlawful eviction case. I won’t go into the details because you can read them on the Nearly Legal Blog here, but basically Mr Boyle was attacked by his landlord, who was subsequently convicted in the Bristol Magistrates Court of assault occasioning actual bodily harm. Mr Boyle then brought a civil claim for damages.
Part of this claim was for the tenancy deposit award as, needless to say, the amiable Mr Musso had not protected it nor or repaid any of it. This claim, I am pleased to say was granted. It is good to know that there are at least SOME circumstances where the award will be made.
Just reflecting generally on these two cases, one of the differences that stands out is that Ms Lewis was really an innocent party, whereas Mr Musso was not. It was not Ms Lewis’ fault that her agents failed to protect the deposit, although legally a landlord is liable for the acts of his agent. However, Mr Musso was clearly a nasty piece of work.
One of the main objections that the Judges have always had to this legislation, is that the penalty was intended to be a strict liability one. Payable whether or not there was a reasonable excuse for the landlords failure to protect.
So the same award would be payable (as the legislation was intended to operate) both where the landlord had failed to protect because he had to go into hospital for an accident and therefore protected the deposit one day late, and where the landlord failed to protect it at all.
If you want to force Judges to make awards in circumstances where they do not want to make the award, you need to have watertight drafting in your statute. Clearly this was not the case here, which is why this legislation is now almost unenforceable.
I see that the proposals for the Localism bill amendments include giving the Judges a discretion over the amount of the award that they make, up to a maximum of three times the deposit sum. I suspect that if this comes into force it is much more likely to succeed, because it is more likely to be supported by the Judges.
What do you think?