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.
This case continues to demonstrate that it is far simpler not to take a deposit.
It is much easier to insist on guarantors, particularly if they are a close relative guarantor.
Who wants to see their mum or dad taken to court for their not paying the rent.
The landlord would not be be accused of harassing a tenant for payment, mum or dad would harass their sibling legally for the landlord.
You try telling a higher earning young professional that you want a guarantor in the form of their parents.
I don’t think you’ll get far.
Hi Tessa
I am a bit confused about your comment ” 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.”. Can you explain how he would have been saved by the Deregulation Act as I cannot see anything in the Act that would save him if he did not protect within 30 days of the start of the tenancy unless that tenancy started pre April 2007?
Wouldn’t mind some clarity please on the section ‘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’ My understanding is that this is true in relation to serving of the s21 but not the ability to claim for late protection? Any views?
The reason I put this is that it appears in the Deregulation Act that where a periodic tenancy is created automatically at the end of a fixed term, the provisions of the tenancy deposit scheme are treated as being complied with by the landlord if they deposit has been protected and the prescribed information served during that fixed term.
So if the landlord had protected the deposit late but during the fixed term, he could have been all right.
He would still be liable for the initial breach, though.
Then he would still have to comply with the scheme’s initial requirements (i.e. Potentially ‘re-protect’) whenever a new tenancy is created.
Glad that Ela and my old friend Romain have made the points they have as that reference to the Deregulation Act confused me too.
If an offence has been committed then an offence has been committed. As Roamin rightly says, and what you I think are getting at Tessa, subsequent tenancies may be OK and automatically protected.
But an initial offence and any others following on from it remain ‘on the books’ as it were, and vulnerable to a s214 financial claim.
In terms of likely awards it has almost always been the case post Localism Act that self managing Landlords get clobbered for less than agents. And that the greater the offence e.g. should have known better, the greater the penalty.
What remains interesting and to which there is still really no answer is whether it is better to front up and register etc late, having committed the initial offence but doing the decent thing. Or whether it is better to keep quiet and hope for the best but aware that the longer registration is delayed, or not done at all, the higher the award may be.