Landlord and tenant — Assured shorthold tenancy — Insured tenancy deposit scheme — Prescribed information Housing Act 2004 — Tenant paying deposit — Deposit lodged in insured tenancy deposit scheme under section 212 of 2004 Act — Landlord failing to provide prescribed information regarding scheme to tenant within required period Information subsequently provided — Sections 213(6) and 214(3) and (4) of 2004 Act — Whether tenant entitled to refund of deposit Whether landlord liable to make penalty payment
In June 2007, the defendant took an assured shorthold tenancy of a property let by the claimant landlord. He paid a deposit of £525, which the claimant lodged in an insured tenancy deposit scheme operated by a dispute service, TDS, under section 212 of the Housing Act 2004. The claimant subsequently issued proceedings for possession of the property on the ground of rent arrears. An issue was raised that the claim could not proceed owing to the claimant’s failure to comply with parts of the 2004 Act and its attendant statutory instrument. The claimant accepted that the information on the deposit scheme prescribed by section 212(5) and (6) had not been given to the defendant within 14 days of receipt of the deposit, as required by section 213(6)(b), although it had been given subsequently in February 2008. The claimant withdrew her possession claim and the proceedings were adjourned while the defendant applied to the court for the return of his deposit and the payment of a penalty by the claimant pursuant to section 214.
Allowing that application, Deputy District Judge Revitt ordered the claimant to refund the deposit, pursuant to section 214(3)(b), and pay £1,575 (namely three times the deposit) by way of penalty pursuant to section 214(4). The claimant appealed. She contended that it had not been open to the judge to order the repayment of the deposit and the payment of a penalty in circumstances where the required information, although not given within the statutory 14-day period, had subsequently been given in writing.
Held: The appeal was allowed.
A distinction must be made between the requirement in section 213(6)(a), to give the required information in the prescribed form or a form substantially to the same effect, and that in section 213(6)(b) regarding the time within which that information must be provided. The provision in section 214 for the repayment of the deposit and the payment of a penalty applies only to breaches of the first requirement. The draftsman, in dealing with proceedings relating to tenancy deposits in section 214, had clearly differentiated between the need to provide the information and that of doing so within a reasonable time. Those provisions contain serious and punitive powers to be exercised against a landlord; it is one thing to deal in such a way with a landlord that has failed to provide the required information and quite another to deal in that way with a landlord that has given the information, albeit outside the short time period laid down by the 2004 Act. It appeared that the district judge had erroneously treated section 213(6)(a) and (b) as being so closely related that they had to be read together. The claimant’s failure had not been a failure to give the prescribed information but to give it within the 14-day period. Therefore, the punitive powers in section 214(3) and (4) did not fall to be exercised.
Per curiam: The court was not satisfied that the manner in which the existing three deposit-taking bodies operated or had set up their operations complied with the provisions of the 2004 Act. Although the government must be aware of what is happening and must be satisfied that the practical arrangements that have been made are working, that still leaves open the possibility that they do not strictly comply with the scheme that parliament has laid down.
No cases are referred to in this report.
This was an appeal by the claimant, Jenny Harvey, from a decision of Deputy District Judge Revitt, sitting in Barnsley County Court, ordering the return of a deposit and the payment of a penalty to the defendant, Andrew Bamforth, on the ground of the claimant’s failure to comply with the provisions of the Housing Act 2004 regarding insured tenancy deposit schemes.
Richard Jones (from the Residential Landlords Association) appeared for the claimant; the defendant did not appear and was not represented.
Giving judgment, HH Judge Bullimore said:
[1] This is an appeal for which the district judge himself gave permission against decisions made by Deputy District Judge Revitt on 14 May. An order was drawn up to give effect to his decision and it reads as follows: “On the 14th of May 2008 Deputy District Judge Revitt of Barnsley County Court” and the address is given “upon hearing the solicitor for the claimant and upon hearing Mr Andrew Bamford in person”; well it appears from the transcript that Mr Bamford was also represented at the hearing, but the order then goes on “it is ordered that pursuant to Section 214(3)(b) of the Housing Act 2004 the claimant pay to the defendant the sum of £525”. I pause to say that was the amount of a deposit that had been received from the defendant tenant when he entered into a tenancy arrangement with the claimant. |page:67|
[2] Paragraph 2 says: “Pursuant to Section 214(4) the claimant pay the defendant the sum of £1,575”, that figure is three times the deposit and, in brief, the deputy district judge decided that various punitive provisions within the Housing Act 2004 (the 2004 Act) fell to be applied. He was in effect ordering the claimant landlord to pay to the defendant that sum. Paragraph 3 says: “setting off 1 and 2 above from the agreed arrears” this is arrears of rent that stood at £2,970. The order then says “the claimant”, who was the landlord, “pay to the defendant the sum of £870 on or before 4.00 pm on the 18th of June 2008”. There is a manifest error there because doing the arithmetic, on the basis of the district judge’s findings, it was the defendant who should pay the claimant the £870. Paragraph 4 stated: “There will be no order as to costs”, and para 5: “Leave to appeal is granted.”
[3] An appeal was mounted by Mr Richard Jones, on behalf of the landlord in this case. His contention was that the deposit should not have been ordered to be repaid to the defendant tenant and that there should have been no order for three times the value of the deposit to be paid by the landlord to the defendant.
[4] The matter has proceeded without the attendance of the tenant or anyone acting on his behalf, and I am indebted to Mr Jones for what is plainly a huge amount of work and preparation that has gone into this appeal. However, it does seem to me, at the end of the day, that it is a relatively simple matter. Mr Jones himself has other interests on behalf of landlords on a far wider basis than simply appearing here to promote Mrs Jenny Harvey’s appeal, and he has been able to give me quite a lot of information about the way that the tenancy deposit scheme provisions, which appear in section 212 and following sections of the 2004 Act, actually have been put into effect and are operating.
[5] I am bound to say, although this has not formed a major part of Mr Jones’ submissions, that I am very far from satisfied that the way the three deposit-taking bodies actually operate, or have set up their operations, comply with the provisions in the 2004 Act. That may well be because these provisions were introduced into the Act very late on, as I understand it, and it may well be that those bodies that have come forward to act as tenancy deposit scheme holders have made out a case for actually departing from the terms of the Act. Doubtless, the government is aware of what is going on and is satisfied that the practical arrangements that have been made are actually working, but that of course still leaves open the possibility that they do not strictly comply with the scheme that parliament has laid down.
[6] Now, if I can turn very briefly to various facts and matters that are not in dispute between the parties. First, the defendant entered into an assured shorthold tenancy with the claimant on 19 June 2007, in respect of premises at 37 Wortley Avenue, Wombwell, near Barnsley. Second, the defendant paid a deposit to the claimant via her agent, Lancasters Property Management, in the sum of £525. Third, the deposit was lodged in a tenancy deposit, being the insured scheme operated by the dispute service TDS I think that it is known as on behalf of the claimant, and it was within 14 days of the beginning of the tenancy. Fourth, the claimant issued proceedings for possession of 37 Wortley Avenue. I understand that was essentially on the basis that substantial arrears of rent had built up and it is agreed, fifth, that the defendant had not made payments towards rent since 19 October 2007.
[7] The proceedings for possession were issued on 18 January 2007, but it was then submitted to the landlord that those proceedings could not go ahead on the basis that there had been a failure to comply with parts of the 2004 Act or the statutory instrument that had been promulgated pursuant to that, and the possession claim was therefore withdrawn on 28 February 2008.
[8] It is accepted on the landlord’s behalf that the prescribed information referred to in section 213(5) and (6) of the 2004 Act had not been given within the required period of 14 days, but this information had been given by a letter sent to the defendant on 22 February 2008. It appears that the course of the proceedings did not go very smoothly after that.
[9] The matter came before the court on 28 February 2008 and was adjourned to give an opportunity to the defendant to take advantage of the provisions under the 2004 Act that allowed for the order for the return of the deposit to him and for a penalty to be paid to him. That application was made on 3 March 2008 and the matter was listed for hearing on 3 April 2008 but had to be adjourned because, for some reason, insufficient time had been given; it had been listed for a five- or 10-minute appointment rather than for a substantive hearing. Finally, on 14 May, the substantive hearing took place and the district judge determined the matter, as I have indicated, in the tenant’s favour.
[10] The provisions that give rise to an order for the return of the deposit and for the penalty to be imposed against the landlord are in section 214. The tenancy deposit scheme provisions really begin at section 212, but I think that the requirements relating to tenancy deposits begin to bite, if I can put it that way, in section 213 “Any tenancy deposit paid to a person in connection with a shorthold tenancy must, as from the time it is received, be dealt with in accordance with an authorised scheme” and for all practical services this scheme run by the dispute service is an authorised scheme.
[11] Subsection 2 states:
No person may require the payment of a tenancy deposit in connection with a shorthold tenancy which is not to be subject to the requirement in sub-section 1.
[12] Subsection 3 says:
Where a landlord receives a tenancy deposit in connection with a shorthold tenancy, the initial requirements of an authorised scheme must be complied with by the landlord in relation to the deposit within the period of 14 days beginning with the date on which it is received.
[13] Subsection 4 states:
For the purposes of this section, “the initial requirements” of an authorised scheme are such requirements imposed by the scheme as fall to be complied by a landlord on receiving such a tenancy deposit.
Mr Jones has submitted that, in effect, in respect of this scheme, that means that you must register the fact that you received a deposit and that can be done online. There is no requirement for money actually to be paid over to the dispute service under the scheme that they have set up, which I am told is mainly used by agents such as Mrs Harvey’s agent, Lancasters, rather than private individuals.
[14] Subsection 5 says:
A landlord who has received such a tenancy deposit must give the tenant and any relevant person such information relating to
(a) the authorised scheme applying to the deposit,
(b) compliance by the landlord with the initial requirements of the scheme in relation to the deposit, and
(c) the operation of provisions of this Chapter in relation to the deposit,
as may be prescribed.
So that is prescribed information, and it is really on that provision that the tenant’s application for return of his deposit and for the penalty to be imposed in his favour were founded. However, Mr Jones makes the important point, and I think that he is right about that, that the giving of prescribed information is a different process under the 2004 Act from complying with the initial requirements, which essentially relate to dealing with the deposit.
[15] Subsection 6 says:
The information required by subsection 5 must be given to the tenant and any relevant person
(a) in the prescribed form or in a form substantially to the same effect, and
(b) within the period of 14 days beginning with the date on which the deposit is received by the landlord.
[16] There are then further provisions to stop people trying to contract out of the effect of the section and to define what “deposit” means, and then subsection 10 says:
In this section “prescribed” means prescribed by an order made by the appropriate national authority.”
There are two further definitions that I do not need to read out. |page:68|
[17] I have seen the statutory instrument here that does set out what information is to be provided to the tenant but, contrary to what is implicit within subsection 6, there is no prescribed form laid down by the statutory instrument in what plainly is an order made by the appropriate national authority; there is simply a list of information that is to be given. So, there are two parts to subsection 6: one is to define, as it were, the information that is to be given to the tenant, and the subsection envisages that there will be a prescribed form that is to be used, or in a form substantially to the same effect; and, then, the second provision (b): “Within the period of 14 beginning with the date on which the deposit is received by the landlord.” Plainly, the 2004 Act envisaged that that information was to be given within a fairly short period of the taking of the deposit so that that information would be available to the tenant for whatever purpose it could be used from very early on.
[18] We then come to section 214. Subsection 1 says:
Where a tenancy deposit has been paid in connection with a shorthold tenancy, the tenant or any relevant person… may make an application to a county court on the grounds
(a) that the initial requirements of an authorised scheme (see section 213(4)) have not, or section 213(6)(a) has not, been complied with in relation to the deposit.
Mr Jones pointed out, and I am sure that he is right in this, that the draftsman has there very clearly drawn a distinction between section 213(6)(a) and 213(6)(b), the latter of which contains the provision concerning the 14 days.
[19] We then go on to subsection 2 of section 214, which says, in subsections 3 and 4:
if on such an application the court
(a) is satisfied that those requirements have not…
that is a reference back to section 213(4)
or section 213(6)(a) has not been complied with in relation to the deposit…
Again, Mr Jones rightly points out that there is a distinction drawn between section 213(6)(a) and, obviously, the time requirement in section 213(6)(b).
[20] If the court comes to that view, that there has been a breach of section 213(6)(a) and that the prescribed information has not been given, then, under subsection 3:
The court must, as it thinks fit, either
(a) order the person who appears to the court to be holding the deposit to repay it to the applicant…
that was what the district judge did here, or
(b) order that person to pay the deposit into the designated account held by the scheme administrator under an authorised custodial scheme, within the period of 14 days beginning
with the date of the making of the order.
As I say, the deputy district judge ordered the landlord to pay the deposit back to the tenant.
[21] Under subsection 4:
The court must also order the landlord to pay to the applicant a sum of money equal to three times the amount of the deposit within the period of 14 days beginning with the date of the making of the order.
That was the other power that the district judge exercised in ordering that that penalty should be made.
[22] The effect of the order plainly was that although it was accepted that rent was in arrears by £2,970, the tenant was effectively being relieved of £2,100 of that because the district judge took the view that there had been a breach of the requirements of section 213(6)(a). That was the only basis, as I see, upon which he could have come to the view that he did.
[23] The failure on the landlord’s part was not that “the prescribed information was not given”, but that it was not given within the 14 days. The district judge, as I read the judgment, took the view that subsections 6(a) and 6(b) were so closely connected that they made sense only if they were read together, but I think that that was an error. I think that the draftsman, in dealing with proceedings relating to tenancy deposits in section 214, was very clear in differentiating between the requirement of giving the information and giving the information within a specified period. After all, they are very serious powers to be exercised against a landlord; doubtless, in some cases, they are well justified, but they are very punitive indeed and one can well see that, in the minds of the legislators, it was one thing to deal in that way with a landlord that had not provided the prescribed information and quite another to deal in that way with a landlord that had provided the prescribed information but had not done so within that short period laid down by the 2004 Act.
[24] I am quite satisfied, in the information that I have been given, that the only failure by the landlord was to not to give the information within the 14 days. It was given by letter on 22 February, obviously out of time, but it was given and it was in fact given before the formal application, which is envisaged by section 214, was made on the tenant’s behalf.
[25] Mr Jones asked me to give some guidance or to offer some comment on what would have happened had the application been made and then the information had been provided; that is not a case that I have to deal with. As I say, there is nobody here to argue the point on the tenant’s behalf, and any observations by me would simply be of no value at all I think on that hypothetical situation. Doubtless, the set of facts that Mr Jones asked me to offer some comment on will arise in due time, and whoever is fortunate enough to be dealing with the matter will be able to come to a view about it and say what needs to be said at that time.
[26] That being so, I am satisfied that the district judge was in error in finding that the situation arose where the punitive powers under section 214(3) and (4) of the 2004 Act fell to be exercised. That being so, the appeal will be allowed and I think that we need to redraw this order accordingly, so:
(1) Appeal allowed.
(2) The order of 14 May 2008 be set aside.
(3) The court being satisfied that the conditions under which the court could order the return of the deposit or order the landlord to pay three times the deposit to the tenant under section 214(1) to (4) were not met.
(4) The tenant will pay the agreed arrears of rent to the landlord in the sum of £2,970 in full without deduction or set-off.
Appeal allowed.
