Tenancy Deposit protection and points from the Khuja v Chowdhury case

Khuja v Chowdhury is a recent case on tenancy deposits from the County Court. It has been published on BAILII so it is likely to be influential.

So you need to know about it.

The case was a claim for possession based on section 21 – you will find the facts of the case on the Nearly Legal Blog.

Here we look at some important points that arise from the case:

Two cases consecutive cases

There had been a previous claim for possession under s21 which had been dismissed because the landlord had not served the prescribed information.

However, this earlier claim did not prevent the defendant from defending as the defence she had raised in that case, was a different one. That had been about the prescribed information, here she was defending on the basis that the deposit was protected late.

Hearing the counterclaim for the penalty at the same time as the claim

The tenant had put in a counterclaim for the penalty for non-protection of the deposit (s214 of the Housing Act 2004).

The landlord said this should not be dealt with at the same time – but this was rejected by the Judge as the arguments are closely connected

Refunding the deposit

The court found that the deposit had not been protected within the required 30 days and the deposit money had not been returned as per s.215(2A)(a).

The landlord said that the tenant was not entitled to rely on this as he had offered to pay the money back to her at the previous hearing and she had refused.

The Judge accepted that this had happened but said that this was not the same as the money being paid back ‘within the meaning of the statute’, particularly as the tenant did not have the benefit of legal advice at that time.

For example, the defendant told the court that had the money been offered again later she would have accepted. However the landlord did not do this, neither did he send her a cheque.

The Judge went on to say

There is no evidence that the Defendant unreasonably refused the money at the hearing, or that that she has since deliberately refused to accept the return of her deposit in order to avoid possession proceedings

Points on refunding the deposit money

Leading on from this, here are a few points we can draw out:

• Just making an offer to refund the money once which is rejected, is not sufficient to comply with the statute
• However if a defendant ‘unreasonably refuses’ to accept the money in order to avoid possession proceedings, this may prevent her from defending on this point
• Sending a cheque to the defendant may be sufficient therefore even if it is never cashed

However notwithstanding this, my view is that the landlord will still need to do all he can to ensure that the money is returned – maybe like the landlord in this post who pushed the cash through the letter box witnessed by the police.

Financial awards in s214 claims

The tenant made a claim for between 1 and 3 times the deposit as per s214 of the Housing ct 2004.

It looks from the decision as if the amount of the award will be assessed as follows:

• The tenant will be awarded 1x the deposit sum in situations where the landlord was not at fault and the time limit has only been missed by a small amount
• The tenant will be awarded 3x the deposit sum if there has been a flagrant disregard for the rules, and the deposit has been dissipated in some way
• In all other cases, where the landlord ‘ought to have known’ that the deposit needed to be protected, an award of 2x the deposit sum is likely.

Note that if the landlord had protected the deposit late but within the initial fixed term, he would have been saved by the Deregulation Act.

Conclusion

This is a useful case and no doubt will be used and cited in many future claims.

It goes to show that landlords need to be careful to comply with the rules and (as this landlord was unrepresented) get proper advice.