ON APPEAL FROM THE CLERKENWELL AND SHOREDITCH COUNTY COURT
His Honour Judge Cryan
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE PATTEN
MRS JUSTICE BARON
| GLADEHURST PROPERTIES LIMITED
|- and -
|FARID HASHEMI (ON BEHALF OF HIMSELF AND MATTHEW JOHNSON)
Kevin Gannon (instructed by Osbornes Solicitors) for the Respondent
Hearing date : 22nd March 2011
Crown Copyright ©
Lord Justice Patten :
"The Tenant shall pay to the Landlord's Agent as stakeholder on the signing of this Agreement the amount of the Deposit and the first payment of Rent provided always that the Landlord may, at the end of the tenancy, howsoever determined apply to the stakeholder to deduct and pay over from the Deposit whatever monies may be due to him from the Tenant either against the Inventory or by virtue of any breach by the Tenant of any of his obligations under this Agreement including rent owed to the Landlord including rent in advance which has fallen due and any sum expected by the Landlord in remedying any breaches of this Agreement by the Tenant.
As soon as practicable after the determination of the tenancy (howsoever the same may be determined) the Stakeholder shall retain (and account to the Landlord) such part of the Deposit as the Landlord's Agent shall deem necessary to enable the Landlord as at the date of such determination to make good any breach or non-compliance by the Tenant with his obligations hereunder and pay all costs, charges and expenses incurred in connection therewith including the Landlord's Agent's reasonable fees and disbursements and shall account to the Tenant for any balance of such sum. If the deposit shall be insufficient for the purposes aforesaid the Tenant shall pay to the Landlord forthwith on demand such further sum as shall in the opinion of the stakeholder be required for such purposes."
"(1) Any tenancy deposit paid to a person in connection with a shorthold tenancy must, as from the time when it is received, be dealt with in accordance with an authorised scheme.
(2) 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 subsection (1).
(3) 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.
(4) 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 with by a landlord on receiving such a tenancy deposit.
(5) 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.
(6) 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.
(7) No person may, in connection with a shorthold tenancy, require a deposit which consists of property other than money.
(8) In subsection (7) "deposit" means a transfer of property intended to be held (by the landlord or otherwise) as security for—
(a) the performance of any obligations of the tenant, or
(b) the discharge of any liability of his,
arising under or in connection with the tenancy.
(9) The provisions of this section apply despite any agreement to the contrary.
(10) In this section—
"prescribed" means prescribed by an order made by the appropriate national authority;
"property" means moveable property;
"relevant person" means any person who, in accordance with arrangements made with the tenant, paid the deposit on behalf of the tenant."
"The Tenant agrees to pay the Landlord's costs of and in connection with:
(i) The sum of £176.25 being £150 + VAT for the set up costs of this tenancy including the preparation and completion of this contract together with the checking of the said Inventory at the commencement of the tenancy. A further £100 + VAT will become payable if the tenant wishes the Landlord to register the deposit with the government deposit scheme."
"(1) Where a tenancy deposit has been paid in connection with a shorthold tenancy, the tenant or any relevant person (as defined by section 213(10)) 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; or
(b) that he has been notified by the landlord that a particular authorised scheme applies to the deposit but has been unable to obtain confirmation from the scheme administrator that the deposit is being held in accordance with the scheme.
(2) Subsections (3) and (4) apply if on such an application the court—
(a) is satisfied that those requirements have not, or section 213(6)(a) has not, been complied with in relation to the deposit, or
(b) is not satisfied that the deposit is being held in accordance with an authorised scheme,
as the case may be.
(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, 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.
(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.
(5) Where any deposit given in connection with a shorthold tenancy could not be lawfully required as a result of section 213(7), the property in question is recoverable from the person holding it by the person by whom it was given as a deposit.
(6) In subsection (5) "deposit" has the meaning given by section 213(8)."
Authority to sue
Return of the deposit
"the pre-condition of a tenant's application to the court under section 214 is not a failure by the landlord to comply with the 'initial requirements' or the notification thereof to the tenant within the 14-day period specified in section 213. It is the failure to comply with either of those obligations at all. It follows in my judgment that if, therefore, the landlord is late in complying with his dual section 213 obligations, but he nevertheless duly does so before any section 214 proceedings are brought by the tenant, the tenant will have no cause of action under section 214 and any claim he brings under it will fall to be dismissed."
"As I have said, the objective of the legislation is not the punishment of landlords but the achieving of proper protection of tenants' deposits. The legislation should not be interpreted in a sense that implicitly encourages the ambushing of landlords by tenants who have grounds for believing that the landlords have not complied with their section 213 obligations. It should be interpreted in a way that avoids litigation. Litigation will or should be avoided if, following a letter before claim, the landlord promptly puts his house in order. If the landlord declines or fails to do so, then of course it is open to the tenant to pursue his section 214 claim. If the landlord later (before the hearing) repents and remedies his defaults, the claim will still fail, although the tenant will ordinarily recover his costs. He may not recover his full costs, but there is nothing unusual about a claimant not doing so. The tenant will bring his claim knowing of that risk."
"That interpretation of the legislation means that late, but nevertheless due, compliance by the landlord with his dual obligations under section 213(3) and (6) will furnish him with a complete defence to any claim by the tenant under section 214. Such interpretation appears to me to be not only firmly supported by what I would regard as the carefully chosen statutory language, it is also a properly precise, or strict, one to apply to legislation such as section 214 that is manifestly penal in intent. Moreover, it is an interpretation that is consistent with the purpose of the legislation. That purpose is to achieve the due protection of deposits paid by tenants, ideally within the 14-day period but, if not, then later. It cannot be its purpose to punish landlords who may for example, for innocent reasons, be just a day late in securing such protection."
Mrs Justice Baron :
Lord Justice Carnwath :