England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Rolls Building, Fetter Lane, London, EC4A 1NL
		10/04/2014

Mr Justice Hamblen:

1. The claimant seeks judicial review of the decision made by HHJ Oliver on 12^th November 2013 at Reading County Court to refuse to grant the claimant permission to appeal against an order for possession made by DJ Devlin on 1^st October 2013.
2. The Defendant has not served an Acknowledgment of Service or played any part in the proceedings. The Interested Party is the landlord. She has written to the court but did not wish to participate in the hearing.

Factual background

3. On 18^th December 2012, the claimant entered into an assured shorthold tenancy agreement with the landlord in respect of 21 Thamestead Court, London Road, Loudwater, High Wycombe. The tenancy was for an initial fixed term of six months, until June 2013.
4. Paragraph 4 of the tenancy agreement provided:

"The tenant shall pay to the Landlord a deposit of £1,390 (one thousand three hundred and ninety pounds) comprising payment of £695 (six hundred and ninety five pounds) on or before the signing of this agreement and three cheques each to the value of £232 and dated 20/01/13, 20/02/13 and 20/03/12 respectively, and the Landlord will register the deposit with the Tenancy Deposit Solutions within fourteen days of receipt and pay the appropriate protection fee." (emphasis added)

5. Paragraph 11 of the tenancy agreement under the heading "Deposit Information" provided:

"Under the Housing Act 2004, an obligation has been placed on Landlords to safeguard deposits in one of three Government approved schemes, as chosen by the Landlord. Your deposit monies will be protected under our membership with Tenancy Deposit Solutions, 3^rd Floor, Kingmaker House, Station Road, New Barnet, and Hertfordshire, EN5 INZ. Tel 0871 703 0552 and www.mydeposits.co.uk. Effectively this guarantees the safe keeping of your deposit payment throughout the Tenancy..." (emphasis added)

6. On 18th December 2012, the landlord served the claimant with a notice under section 21 of the Housing Act 1988, notifying him that she required possession at the end of the fixed term of the tenancy.
7. In accordance with the tenancy agreement the deposit was registered with mydeposits.co.uk. The Deposit Protection Certificate dated 2^nd January 2013 stated that the tenancy commenced on 20^th December 2012, that the deposit had been received from the claimant on 22^nd December 2012 and that the deposit was protected from 2^nd January 2013.
8. In June 2013, after the fixed term had expired, the landlord commenced proceedings for possession, relying on the section 21 notice served in December 2012.
9. The claimant filed a defence to those proceedings, asserting that the landlord could not rely on the section 21 notice because it had been served at a time when the claimant's deposit was not held in accordance with an authorised scheme. Accordingly, by operation of section 215(1) (a) of the Housing Act 2004 ("the Act"), the landlord could not rely on the notice.
10. The matter came before DJ Devlin on 1^st October 2013. He made an order for possession and struck out the defence. A warrant for possession was obtained and the claimant was notified that it was due to be executed on 12^th November 2013. He applied to set aside the order for possession, which application was struck out on 28^th October 2013 by DJ Parker.
11. The claimant appealed to a Circuit Judge against that order. The matter came before HHJ Oliver at a hearing on 12^th November 2013 at which the claimant was represented by counsel and the landlord appeared in person. The claimant repeated his argument that the section 21 notice was of no effect because it was served at a time when the deposit was not held in accordance with a statutory deposit scheme.
12. HHJ Oliver considered that the deposit had been "held in accordance with an authorised scheme" within the meaning of section 215(1) (a) of the Act at the time when the notice was given and that it could therefore be relied upon. He stated that he was satisfied that the appeal had "no merit" and he refused permission to appeal.
13. The claimant appealed HHJ Oliver's decision to the Court of Appeal. The Court of Appeal pointed out that no appeal lay against a refusal of permission to appeal and that the claimant's only remedy was judicial review.
14. The claim for judicial review was issued on 10^th January 2014. Permission was given by Mrs Justice Lang on 7^th February 2014. The execution of the warrant of possession has been stayed pending the determination of the judicial review claim.

The review threshold

15. The claimant is seeking judicial review of the County Court's refusal of permission to appeal. This is only possible in exceptional circumstances.
16. Section 54(4) of the Access to Justice Act 1999 provides that no appeal may be made against a decision of an appeal court which refuses permission to appeal to itself – see also paragraph 4.8 of the Practice Direction to CPR Pt 52.
17. In Moyse v Regal Mortgages Ltd [2004] EWCA Civ 1269, the Court stated at [31]:

"Parliament has made it absolutely clear by s.54(4) of the Access to Justice Act 1999 that if an appeal court refuses permission to appeal to itself, on the grounds that there is no real prospect of success on the appeal and there is no compelling reason why it should hear the appeal, that is the end of the day. It is Parliament's wish and intention that resources should not be devoted to continuing appeals at higher levels if an appeal fails to cross the threshold test of permission to appeal."

18. The circumstances in which the Administrative Court would exceptionally entertain an application for judicial review of a refusal to grant permission to appeal by the County Court were considered in R (Sivasubramaniam) v Wandsworth County Court [2002] EWCA Civ 1738, [2003] 1 WLR 475. The Court stated as follows in relation to decisions of District Judges in respect of which appeals lie, if permission is granted, to a Circuit Judge:

"53…..There is a right to seek permission to appeal against such decisions, and to renew the application at an oral hearing if it is refused on paper. The decision challenged will, in this way, be open to review by a Judge. That review can consider any challenge that is made to the jurisdiction of the Judge below. It can also consider the merits of any attack that may be made on the conclusions of the Judge below in relation to any matter, be it fact, law or the basis upon which a discretion has been exercised. If grounds for appeal are held to exist, a full appeal will follow.

54. This scheme we consider provides the litigant with fair, adequate and proportionate protection against the risk that the Judge of the lower court may have acted without jurisdiction or fallen into error. The substantive issue will have been considered by a Judge of a court at two levels. On what basis can it be argued that the decision of the Judge of the appeal court should be open to further judicial review? The answer, as a matter of jurisprudential theory is that the Judge in question has limited statutory jurisdiction and that it must be open to the High Court to review whether that jurisdiction has been exceeded. But the possibility that a Circuit Judge may exceed his jurisdiction, in the narrow pre Anisminic sense, where that jurisdiction is the statutory power to determine an application for permission to appeal from the decision of a District Judge, is patently unlikely. In such circumstances an application for judicial review is likely to be founded on the assertion by the litigant that the Circuit Judge was wrong to conclude that the attack on the decision of the District Judge was without merit. The attack is likely to be misconceived, as exemplified by the cases before us. We do not consider that Judges of the Administrative Court should be required to devote time to considering applications for permission to claim judicial review on grounds such as these. They should dismiss them summarily in the exercise of their discretion. The ground for so doing is that Parliament has put in place an adequate system for the reviewing the merits of decisions made by District Judges and it is not appropriate that there should be further review of these by the High Court. This, we believe, reflects the intention of Parliament when enacting s.54 (4) of the 1999 Act. While Parliament did not legislate to remove the jurisdiction of the High Court judicially to review decisions of County Court judges to grant or refuse permission to appeal, we do not believe that Parliament can have anticipated the spate of applications for judicial review that s.54 (4) appears to have spawned.

…..

Exceptional circumstances

56. The possibility remains that there may be very rare cases where a litigant challenges the jurisdiction of a Circuit Judge giving or refusing permission to appeal on the ground of jurisdictional error in the narrow, pre-Anisminic sense, or procedural irregularity of such a kind as to constitute a denial of the applicant's right to a fair hearing. If such grounds are made out we consider that a proper case for judicial review will have been established."

19. Sivasubramaniam's case was considered and applied by the Court of Appeal in Gregory v Turner [2003] EWCA Civ 183, [2003] 1 W.L.R. 114. The Court summarised the position as follows at [39]:

"In Sivasubramaniam, this court was at pains to emphasise the narrowness of the gap left open by its decision. A mere error of law by the circuit judge in the county court would not be sufficient. The possibility was confined to "very rare cases", on the ground of an excess of jurisdiction in "the narrow, pre- Anisminic sense", or the denial of the right to a fair hearing."

20. In R (Cart) v Upper Tribunal [2011] UKSC 28, [2011] 3 WLR 107, the Supreme Court considered the circumstances in which the High Court could entertain an application for judicial review of a refusal of permission to appeal by the Upper Tribunal. It held that the exceptional circumstances approach was not appropriate in relation to specialist tribunals and that a less restrictive approach should be adopted. It held that such claims would only be allowed to proceed if they met the threshold for a second appeal, i.e. that the appeal raised some important point of principle or practice or that there was some other compelling reason for the appellate court to hear the appeal. However, it was not stated or suggested that exceptional circumstances did not remain the appropriate approach in relation to refusals of permission to appeal by a Circuit Judge from a District Judge.
21. It was not submitted that the present case involves excess of jurisdiction. It was, however, contended that it involved procedural error falling within the exceptional category identified in Sivasubramaniam in two respects:

(1) the issues raised were not suitable for summary disposal during a permission hearing - the attempt of the judge to deal with them in that forum was a procedural error which denied the claimant a right to a fair hearing; and,

(2) in so far as the judge was permitted to investigate the merits of the legal arguments in detail, his conclusion was wrong in law, which is of itself a procedural irregularity which denied the claimant a fair trial.

22. In relation to point (2), an error of law is not a procedural irregularity. It is a matter of substance rather than procedure. The claimant's argument was considered, addressed and rejected with relevant and intelligible reasons being given. If the decision was wrong in law that does not create or involve a procedural irregularity. On any view it is not an irregularity which falls within the Sivasubramaniam exceptional circumstances. As the Court of Appeal stated in Gregory v Turner, "a mere error of law by the circuit judge in the county court would not be sufficient" to come within the "narrow gap" left by Sivasubramaniam. As is stated in the Sivasubramaniam case itself, any assertion that "the Circuit Judge was wrong to conclude that the attack on the decision of the District Judge was without merit" is "misconceived" and should be dismissed summarily. That is the assertion made in this case. Even if one accepts the claimant's case that the Circuit Judge's conclusion was obviously wrong and that it related to a point of law of general importance, it makes no difference to the analysis. The attack is still on the substantive legal decision reached rather than matters of procedural irregularity.
23. Point (1) is simply a different way of putting the same case. If the Circuit Judge formed the view, as he did, that the appeal had no merit then he was justified in disposing of the case at the permission stage. In any event there was a fair hearing. The claimant made oral submissions through counsel on what is a short point of statutory interpretation. There has been no suggestion that he was not given a proper opportunity to put forward such arguments as he wished.
24. In my judgment the claimant cannot bring himself within the exceptional circumstances required for this court to judicially review the Circuit Judge's refusal of permission to appeal and the application should therefore be dismissed.

The alleged error

25. Even if that conclusion be incorrect and it is appropriate to consider the substantive merits of the alleged error made, I am not satisfied that it has been shown that HHJ Oliver's decision was wrong.
26. Chapter 4 in Part 6 of the Act introduced "Tenancy deposit schemes" with effect from 6^th April 2007. Various amendments to the Act were made by the Localism Act 2011 with effect from 6^th April 2012.
27. The Act set up tenancy deposit schemes "for the purpose of safeguarding tenancy deposits paid in connection with assured shorthold tenancies" (section 212(1)). It also provided for the imposition of sanctions for failure to comply with the requirements of such schemes and set up structures to facilitate the resolution of disputes in connection with such deposits. The schemes are either custodial or insurance based. A custodial scheme requires a landlord to pay the deposit to a scheme administrator who is required to hold it in a designated account administrator until it falls to be paid (either wholly or in part) back to the landlord or tenant. An insurance scheme allows the landlord to keep the deposit subject to an undertaking to comply with any direction the administrator may give regarding the deposit. Its return is protected by insurance cover maintained by the scheme administrator for a fee. The scheme used in the present case was an insurance scheme.
28. The most relevant provisions of the Act are as follows:

"212 Tenancy deposit schemes

(1) The appropriate national authority must make arrangements for securing that one or more tenancy deposit schemes are available for the purpose of safeguarding tenancy deposits paid in connection with shorthold tenancies.

(2) For the purposes of this Chapter a "tenancy deposit scheme" is a scheme which–

(a) is made for the purpose of safeguarding tenancy deposits paid in connection with shorthold tenancies and facilitating the resolution of disputes arising in connection with such deposits, and

(b) complies with the requirements of Schedule 10.

…..

213 Requirements relating to tenancy deposits

(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 30 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 30 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."

29. Information was prescribed for the purpose of section 212(5) by the Housing (Tenancy Deposits) (Prescribed Information) Order 2007 (SI 2007/797).
30. Sections 214 and 215 are concerned with sanctions for non-compliance. Section 214 enables a tenant to bring proceedings for non-compliance and includes sanctions where the court is "not satisfied that the deposit is being held in accordance with an authorised scheme". The sanctions include a mandatory requirement to order the landlord to pay the tenant a sum of money "not less than the amount of the deposit and not more than three times the amount of the deposit" (section 214(4)). In relation to tenancies which have not ended Section 214 provides that:

"214 Proceedings relating to tenancy deposits

(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 section 213(3) or (6) 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 in the case of an application under subsection (1) if the tenancy has not ended and the court–

(a) is satisfied that section 213(3) or (6) 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 order the landlord to pay to the applicant a sum of money not less than the amount of the deposit and not more than 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)."

31. Further sanctions are provided in section 215, which is the section relied upon in this case. Section 215 provides:

"215 Sanctions for non-compliance

(1) Subject to subsection (2A), if a tenancy deposit has been paid in connection with a shorthold tenancy, no section 21 notice may be given in relation to the tenancy at a time when–

(a) the deposit is not being held in accordance with an authorised scheme, or

(b) section 213(3) has not been complied with in relation to the deposit.

(2) Subject to subsection (2A), if section 213(6) is not complied with in relation to a deposit given in connection with a shorthold tenancy, no section 21 notice may be given in relation to the tenancy until such time as section 213(6)(a) is complied with.

(2A) Subsections (1) and (2) do not apply in a case where—

(a) the deposit has been returned to the tenant in full or with such deductions as are agreed between the landlord and tenant, or

(b) an application to a county court has been made under section 214(1) and has been determined by the court, withdrawn or settled by agreement between the parties.

(3) If any deposit given in connection with a shorthold tenancy could not be lawfully required as a result of section 213(7), no section 21 notice may be given in relation to the tenancy until such time as the property in question is returned to the person by whom it was given as a deposit.

(4) In subsection (3) "deposit"has the meaning given by section 213(8).

(5) In this section a "section 21 notice" means a notice under section 21(1)(b) or (4)(a) of the Housing Act 1988 (recovery of possession on termination of shorthold tenancy)."

32. The claimant's case was that a landlord cannot rely on a section 21 notice which was served at a time when either a deposit was not held in accordance with a scheme (section 215(1)(a)), or the terms of the scheme (the provision of prescribed information) had not been complied with (section 215(2)). He submitted that:

(1) As to section 215(1) (a), the deposit was not protected until 2^nd January 2013. The notice was served on 22^nd December 2012. At that time the deposit was "not held being held in accordance with an authorised scheme" and so no section 21 notice could be served.

(2) As to section 215(2), the prescribed information was not provided until 2^nd January 2013. It follows that section 213(6) was not complied with in relation to the deposit until that time. The section 21 notice was served on 22^nd December 2012. By operation of section 215(2), no section 21 notice could be served until the information was provided.

33. The claimant criticizes the view expressed by HHJ Oliver that it is sufficient to ensure compliance with section 215(1)(a) if the tenancy agreement states what is to happen with the deposit and the landlord has the intention to deal with it in that way. He submitted that this introduces a degree of subjective mens rea into the statutory test and is ripe for abuse: to comply with the statutory requirements, a landlord need only state that he intends to do so; he may hold the deposit for months, maybe years, with that intention and not actually register it. That is contrary to the scheme of the statute which aims to ensure that: "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" (section 213(1)).
34. The claimant's researches did not identify any authority directly on point. However, it was pointed out that the claimant's interpretation is consistent with the view of the editors of the Encyclopaedia of Housing Law and Practice who state in the commentary to section 215 "This provision may well have the effect of ending the practice used by some landlords of serving notice under s.21 at the outset of the tenancy, save in the unlikely event of landlords being able to comply with the deposit requirements before the start of the tenancy." (at paragraph 1-4182.268.2). It was submitted that that is precisely the circumstances of this case - the landlord purported to serve a section 21 notice at the outset of the tenancy but before the deposit had been protected.
35. Whilst there is superficial force in the claimant's case on section 215(1) (a), it is difficult to square with the scheme of the statutory provisions and their stated purpose.
36. Section 215 is headed "Sanctions for non-compliance". However, there has been no non-compliance in this case. The statute requires that the deposit be protected within 30 days (s.213 (3)). This was done. The statute also requires that the prescribed information referred to in s.213 (5) be provided in substantially the prescribed form within 30 days (s213 (6)). This was also done. In so far as there were any other "initial requirements" of the authorised scheme these were complied with within the 30 day period, and indeed by 2^nd January 2013. If there has not been any "non-compliance" it is difficult to see what justification there can be for "sanctions" predicated on there being such "non-compliance".
37. As the landlord explained in an email to the court:

"I take particular pride in ensuring that my obligations as a Landlord are fully complied with in respect of my Tenants. My handling of the Deposit monies taken from the Claimant were administered at all times in accordance with the Scheme Rules of Tenancy Deposit Solutions now known as My Deposits. I attach hereto an e mail from them in respect of my issuing the Section 21 Notice. It is my understanding that under Sections 213-215 of the Housing Act the Deposit must be handled in accordance with the Scheme Rules of the Deposit Protection Scheme. The wording of Section 4 and 11 of the Tenancy Agreement entered into with the Claimant, quite clearly provides him with the information and security that his deposit monies were to be handled in accordance with these rules. I am not legally trained and as a Landlord can only comply with my understanding of the written word as I have set out. In respect of the Tenancy Agreement I entered into with the Claimant I believe that I quite clearly complied with the Scheme Rules 6^th Edition of My Deposits and section 213-215 of the Housing Act."

38. The landlord complied with all statutory and scheme requirements. One can well understand her bewilderment at the suggestion that she should be made subject to "Sanctions for non-compliance".
39. Further, section 215(1) (b) will only be triggered if the landlord has failed to comply with the initial requirements, including protection of the deposit, within the prescribed 30 day period. The clear inference is that unless and until that occurs there is no applicable sanction. However, on the claimant's case there will be. Even though the landlord may have contractually agreed to comply with scheme requirements and to protect the deposit within the requisite time, and done so, on the claimant's case he will still be subject to the "sanction" of s.215 (and indeed s.214) until the protection for the deposit is in place.
40. The claimant submitted that this was consistent with the purpose of ensuring that deposits are protected. However, according to the statute that purpose is met by the requirement that the appropriate steps are taken within 30 days.
41. The claimant further submitted that his interpretation is supported by s.213 (1) which required the deposit to be "dealt with in accordance with an authorised scheme" "from the time when it is received". However, if, as was suggested, this means that it must be protected from that moment (in so far as that is possible) then it is clearly inconsistent with the 30 days allowed under s.213(3).
42. In my judgment the answer to these difficulties on the facts of the present case is that one can "hold" the deposit "in accordance with an authorised scheme" before the deposit is protected. In this case the landlord was contractually bound by the tenancy agreement to protect the deposit under an authorised scheme from the moment of its receipt. From that time she was contractually obliged to deal with the deposit in accordance with an authorised scheme, thereby satisfying the requirements of s.213 (1). In my judgment her obligation so to deal with the deposit also means that from the moment of receipt the deposit was also being "held" in accordance with an authorised scheme. At all times thereafter the money was dealt with in accordance with the scheme requirements.
43. Whilst one can understand the claimant's argument that a subjective intent should not be sufficient, this is not a case of mere subjective intent. It is a case of contractual obligation objectively communicated and agreed. Further, if the landlord failed to protect the deposit as he stated he would then after 30 days he would be liable to face sanctions under sections 214 and 215. Moreover, sanctions under section 214 cannot be avoided by curing the non-compliance after the statutory time limit has expired.
44. As to the claimant's argument based on section 215(2) (which does not appear to have been advanced before HHJ Oliver) the short answer is that there has been no failure to comply with section 213(6). Section 215(2) only applies "if section 213(6) is not complied with". Under section 213(6) the landlord has 30 days for compliance. It is only if he fails to comply within the prescribed 30 day period that there is a non-compliance which may bring section 215(2) into operation. That did not occur in this case.
45. For the reasons outlined above I accordingly conclude that HHJ Oliver's decision was not in error.

Conclusion

46. The claimant's application does not fall within the requisite exceptional circumstances for judicial review of a refusal of permission to appeal by the County Court from the decision of a District Judge. There was no procedural irregularity. Nor was there any error of law. The application for judicial review must accordingly be dismissed.