High Court/Court of Appeal decisions: deposit protection

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  • High Court/Court of Appeal decisions: deposit protection

    The first High Court judgment, therefore binding on lower courts, announced today.

    http://painsmith.wordpress.com/2010/...cision-on-tdp/
    http://nearlylegal.co.uk/blog/2010/0...he-high-court/

    In a nutshell, it's okay to protect a deposit late with the DPS custodial scheme.

    BUT there are some pending appeals so it's not the last word on the issue.

  • #2
    All 'Coronation Street' posts have been eliminated from this RESIDENTIAL LETTINGS version of the thread.
    See the TAKE A BREAK version for them: http://www.landlordzone.co.uk/forums...ad.php?t=26158

    Comment


    • #3
      Sorry, I can't access those websites from my work computer.

      Is the jist of it that:
      a) It's ok to lodge a deposit for protection late, but you may have to suffer a court appearance before you get the all clear?
      or
      b) Submitting a deposit for protection late will incur no procedure/investigation whatsoever? (i.e. as if it had been protected on time)

      thanks

      Comment


      • #4
        Originally posted by moanygit View Post
        Sorry, I can't access those websites from my work computer.

        Is the jist of it that:
        a) It's ok to lodge a deposit for protection late, but you may have to suffer a court appearance before you get the all clear?
        or
        b) Submitting a deposit for protection late will incur no procedure/investigation whatsoever? (i.e. as if it had been protected on time)

        thanks
        Option a). There is nothing to prevent a tenant issuing a claim. They just won't win it if the claim involves late protection with the DPS. Note that this only applies to the DPS - not the other two schemes - and it's still possible there will be an appeal.

        Here's an extract from the first link. The parties were Draycott v Hannells Lettings Ltd.

        Therefore... it was found that [Hannells] late lodging of that deposit with the DPS was not a breach of the Act or of the initial requirements of the DPS scheme and accordingly the appeal was allowed and the judgement against Hannells of the lower Court was set aside.

        Therefore as things currently stand...late registration does not automatically attract the penalties set out in section 214, and the DPS scheme has no initial requirement that the deposit be registered with it within 14 days of being received.

        This is by no means the end of the matter though. This case is still capable of being taken to the Court of Appeal and there are at least two more cases which will see judgements handed down from that Court within the next few months and they could have the effect of altering the position again.

        Comment


        • #5
          Here's the full report of Draycott v Hannells Lettings Ltd.: http://www.bailii.org/cgi-bin/markup...method=boolean

          Note that the defendant which T sued was the Letting Agent, not L.
          JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
          1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
          2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
          3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
          4. *- Contact info: click on my name (blue-highlight link).

          Comment


          • #6
            Draycott v. Hannells (CA): deposit non-protection

            Good day all,

            I hope this has not been posted before, i did a quick search to see - however, this is good news for all Landlords being taken to court by a tenant for not protecting the deposit within 14 days:

            Summary


            If you do not put the deposit into a scheme within 14 days and the T takes you to court, so long as you put the deposit into a scheme by the time you go to court, you will only be liable for the court costs up to the time the deposit is put into the scheme.

            The appeal document has the following details:

            Neutral Citation Number: [2010] EWHC 217 (QB)

            Case Number: IHQ/09/1118

            The Honourable Mr. Justice Tugendhat

            Between:
            Michelle Draycott, Paul Maxwell Draycott (respondents)
            and
            Hannelss Letting Limited (appellant)

            Hearing Date: 25th Janurary 2010

            If anymore details are required, let me know and I will post them from the document I have.

            Thanks

            ice.

            Comment


            • #7
              Having trawled through this and related forum I would like to ask a specfic question regarding tenant's deposit.

              An agent manages my property and hold the tenant's deposit, which was taken in 2006, when the tenancy started. It has subsequently not been protected by the agent when the tenancy was renewed in 2007 and 2008. It is now a perodic tenancy. Am I liable in case of problems with the tenant? What action do I need to take to cover myself?

              I am concerned because I am faced with the situation of evicting a tenant for rent arrears.

              Comment


              • #8
                Originally posted by bsx043 View Post
                Having trawled through this and related forum I would like to ask a specfic question regarding tenant's deposit.

                An agent manages my property and hold the tenant's deposit, which was taken in 2006, when the tenancy started. It has subsequently not been protected by the agent when the tenancy was renewed in 2007 and 2008. It is now a perodic tenancy. Am I liable in case of problems with the tenant? What action do I need to take to cover myself?

                I am concerned because I am faced with the situation of evicting a tenant for rent arrears.
                If the tenancy is an assured shorthold tenancy, in England/Wales, with rent less than £2,083.33 pcm, and you're not a resident LL, then the deposit should be protected.

                Protect it with the DPS, send T the prescribed info with proof of postage, and you are safe from non-compliance claims (in light of the high court case).

                http://www.depositprotection.com/
                https://www.depositprotection.com/pu...agentinfo.aspx

                If you don't do this, you are exposed to a deposit non-compliance claim, and in addition any s.21 notice will not be valid if served before the deposit is protected.

                Comment


                • #9
                  Thanks, Westminster. My agent is clearly negligent here but unfortunately I have to face the buck by protecting the deposit now and issue a new s21 notice.

                  Foolishly, up to now I had thought that the agent should have done this when he renewed the tenancy in 2007. In reality, therefore, he still holds the deposit. I have posted elsewhere on this forum that I realised only last week when I collected all the documents from the agent that he had not protected the deposit. He advises me (verbally) that since the deposit was taken in 2006 it is not necessary to protect it. In fact, he served the Section 21 Notice on the tenant, so technically he is in the wrong here. Thankfully, I have realised just as I was about to submit the claim form N5b (claim for possession under accelerated procedure).

                  However, this leaves me confused about the actual procedure. In Form N5b, it states (7B(d)) that “if your claim for possession is in relation to an Assured Shorthold Tenancy where a deposit was taken after 6 April 2007, you must provide evidence that such deposit is safeguarded with a tenancy deposit scheme (TDS)....”. The agent says that this does not apply in my case, since the deposit was taken before this date and the new tenancy agreement has replaced the first tenancy agreement for the same premises and with the same landlord and tenant (clause 6 of the form applies). As far as I can see, there is nothing in form N5b that seems to indicate that my application would be invalid.

                  My question is: Can I go ahead now to claim possession having already issued Section 21 Notice (with 2 months already served), and also protect the deposit now? Or do I need to serve another s21 Notice (after protecting the deposit) before going ahead?

                  Put slightly differently, where does it say that s21 Notice is invalid without protecting the deposit that was taken before April 2007?

                  Comment


                  • #10
                    Originally posted by bsx043 View Post
                    He advises me (verbally) that since the deposit was taken in 2006 it is not necessary to protect it....

                    ....My question is: Can I go ahead now to claim possession having already issued Section 21 Notice (with 2 months already served), and also protect the deposit now? Or do I need to serve another s21 Notice (after protecting the deposit) before going ahead?

                    Put slightly differently, where does it say that s21 Notice is invalid without protecting the deposit that was taken before April 2007?
                    There is no definitive answer to this because the meaning of "received" in the statute (see s.213 HA2004 for example) is open to interpretation, and there has not yet been a higher court decision on this particular issue.

                    One argument says that the deposit is deemed to have been re-taken/re-received when a new fixed term tenancy is signed. On the other hand, there's your agent's argument, that received means physically received. The statute also talks of deposits "paid" or "given" in connection with a shorthold tenancy. You see the problem.

                    The fact remains that some landlords have been ordered by county courts to pay the 3x penalty when the deposit has not been protected following renewal of a tenancy after 6th April 2007, hence it is advisable to do so. For example:
                    http://nearlylegal.co.uk/blog/2010/0...tenancy-again/

                    I've never had to fill in a form N5b, so can't help you there - but it's possible that the tenant could argue the S.21 notice was invalid at the possession hearing, and I would imagine it's also possible the judge might accept the argument.

                    There is always the s.8 procedure if there are at least two months' rent owing and unpaid... Deposit protection not relevant to this procedure.

                    Comment


                    • #11
                      As long as my application for the accelerated procedure does not get rejected outright, I am prepared to take a chance making a case for possession on the s21 route, since the alternatives are more costly and uncertain. As far as I am aware, there is no hearing on the accelerated s21 route but I am uncertain about whether the defendant can issue a defence. Also, can the application be rejected outright in the light of my remarks above about not protecting the tenant's deposit? Any views on this, please?

                      About pursuing the s8 route, an argument is made in my other posting, also echoed by my agent, that this can be long-winded if T plays it out on financial hardship grounds by making small payments each month, which he has been doing (also his case for HB is now pending, thanks to my agent). There are in fact over four month’s rent now owing and unpaid, so I have a case on the s8 route grounds 8, 10, 11 but a notice has yet to be served and I don’t have all the facts, given my agent’s sloppiness on this matter.

                      My hopes are pinned on reclaiming possession on the s21 route but given the uncertainty wonder whether I can opt for the s8 route if it fails.

                      I have explained on another thread - Sloppy Agent and Troublesome Tenant -my circumstances if it helps – unable to directly post the link somehow.

                      Comment


                      • #12
                        2006 AST, renewed but deposit not protected, s.21 valid?

                        Here's your thread
                        http://www.landlordzone.co.uk/forums...ad.php?t=26639

                        I know very little about possession procedure as I've fortunately never had to evict anyone. Most people on the forum seem to advise serving both a s.21 notice and a s.8 notice. As a s.8 notice on the grounds of 8, 10 & 11 only has to give 14 days notice (so I believe) I imagine you follow the procedure for that one first, then use s.21 as Plan B if that fails.

                        More info here:
                        http://www.letlink.co.uk/letting-fac...-8-notice.html

                        I would guess that even with s.21 accelerated procedure the tenant would have the opportunity to defend it - the notice might, for example, cite the wrong section or give incorrect dates (though maybe the court checks that, not the tenant). Speaking of which, are you certain that the agent got the s.21 notice right; i.e. was it a S.21(4)(a) notice, giving at least two months, and seeking possession after the last day of a rental period (the periods commencing on the day after the last fixed term agreement ended)?

                        I'm going to post the question in nutshell form as most people will miss this thread because they think it's about the high court case. Also bear in mind that the forum is much less active at the weekend.

                        Comment


                        • #13
                          And here's an answer for you.

                          http://www.landlordzone.co.uk/forums...ad.php?t=26660

                          Comment


                          • #14
                            Thanks Westminster for your help and advice. I have been totally reliant on the agent who is adament to follow that S21 route. Do I have a case against the agent for getting me into this difficulty, I wonder? If I halt the agent now, I bear the losses. If I let the agent go ahead, I waste more time. Heads, I lose. Tails, lose.

                            On the techicalities of the s21 notice, seems OK. Perhaps the s8 route offers some comfort for recovery of arrears, and s21 again after protecting the deposit.

                            Comment


                            • #15
                              Draycott v Hannells- any others? When "commence proceedings"?

                              I have a question regarding the meaning of "to commence proceedings" in a TDP case.

                              Draycott v Hannels, Paragraph 54, states that "the outcome of this appeal turns on whether the 14 day requirement is, or is not, a part of the initial requirements of an authorised scheme. If it is not, then when the deposit is paid into the scheme later than 14 days from its receipt by the landlord, but before the tenant commences proceedings, then the court cannot be satisfied under s.214(2)(a), and therefore the court will not be able to make an order under s.214(3) or (4)." (Emphasis added)

                              What does it mean to "commence proceedings"?

                              Section 214 of the Housing Act, entitled "Proceedings relating to tenancy deposits", does not seem to explicitly define when proceedings start, but the first paragraph of this section states that "(1) Where a tenancy deposit has been paid in connection with a shorthold tenancy, the tenant … may make an application to a county court on the grounds...." (Emphasis added)

                              But.... an informal summary of Draycott posted on this forum defines the start the proceedings as the actual hearing date.


                              I am a tenant. In my case,

                              -- my deposit for an AST signed in June 2007 (i.e. after the TDP provisions of the Housing Act took effect, in April 2007) was not protected within 14 days of receipt;

                              -- nor was it protected when I filed my claim with the court in June 2008 (when I first learned about the TDP provisions of the Act);

                              -- nor was it protected when the defendant filed his defence and counterclaim (in which the LL said he would not protect the deposit) that same month.

                              -- nor was it protected when the LL made an additional filing in July 2009;

                              -- nor was it protected by the date of the hearing in September 2009, which the LL did not attend, and at which the judge ruled against the LL, ordering him to protect the deposit, to pay me 3x the amount of the deposit, and to pay costs;

                              -- nor was it protected, after LL failed to comply, when I served an Interim Third Party Debt order in October 2009 (which didn't work as the Landlord's account was overdrawn);

                              -- nor was it protected as of this morning, at a hearing where the Landlord asked to set aside the September 2009 judgement. The Landlord claims he did not attend the September 2009 hearing because he never received a notice of the September 2009 hearing date. The judge accepted that, with the postal service being what it is, this was plausible, and so has granted a new date for the entire case to be reheard in September 2010.

                              When, in this chain of events, for the purpose of Draycott v Hammell, do the "proceedings commence"?

                              To my mind they began when I filed the claim with the county court in June 2008, and if not then, certainly by the time the Landlord filed the Defence and counterclaim that same month.

                              But.... an informal summary of Draycott posted on this forum defines the start the proceedings as the actual hearing date. If this is true, LL might try to claim that proceedings have never commenced, and will only do so in September 2010, and so might try to avoid the penalty by protecting the deposit before the Sept 2010 court date.

                              Or would that be a strained interpretation, given that the LL clearly knew of my claim, and started filing things with the court as early as June 2008?

                              My quite competent solicitor agrees with my definition, but as there is a lot riding on this, I'd appreciate a 2nd opinion.

                              Any advice would be much appreciated.

                              Comment

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