Hashemi v Gladehurst Properties Ltd
Carnwath and Patten LJJ and Baron J
Assured shorthold tenancy – Deposit – Sections 213 and 214 of Housing Act 2004 – Appellant landlord failing to deal with respondent tenant’s deposit in accordance with authorised scheme – Tenancy ending – Respondent claiming for payment of three times deposit amount for landlord’s failure to comply with obligations under section 213 – Such claim held not to be available to tenant after end of tenancy – Appeal dismissed
The appellant landlord let a flat to the respondent and another on an assured shorthold tenancy commencing in September 2007. The tenants paid an initial deposit of £6,240 on signing the tenancy agreement. That agreement provided that the appellant could, at the end of the tenancy, deduct from the deposit any sums necessary to make good any breach of the tenants’ obligations under the lease. The appellant did not deal with the deposit in accordance with an authorised scheme, as required by section 213 of the Housing Act 2004, but retained it in its own bank account until October 2008, when the tenants vacated the flat. The appellant retained £1,123.99 from the deposit for various breaches of the tenants’ cleaning and repairing covenants and repaid the remainder.
The respondent brought a claim against the appellant for the payment of three times the deposit sum as the sanction, under section 214(4) of the 2004 Act, for its failure to comply with the initial requirements of an authorised deposit scheme. The sum of £618 was also claimed in respect of disputed items for which the appellant had retained sums from the deposit. The other tenant was named in the claim form but did not sign a statement of truth and did not take part in the proceedings.
Assured shorthold tenancy – Deposit – Sections 213 and 214 of Housing Act 2004 – Appellant landlord failing to deal with respondent tenant’s deposit in accordance with authorised scheme – Tenancy ending – Respondent claiming for payment of three times deposit amount for landlord’s failure to comply with obligations under section 213 – Such claim held not to be available to tenant after end of tenancy – Appeal dismissedThe appellant landlord let a flat to the respondent and another on an assured shorthold tenancy commencing in September 2007. The tenants paid an initial deposit of £6,240 on signing the tenancy agreement. That agreement provided that the appellant could, at the end of the tenancy, deduct from the deposit any sums necessary to make good any breach of the tenants’ obligations under the lease. The appellant did not deal with the deposit in accordance with an authorised scheme, as required by section 213 of the Housing Act 2004, but retained it in its own bank account until October 2008, when the tenants vacated the flat. The appellant retained £1,123.99 from the deposit for various breaches of the tenants’ cleaning and repairing covenants and repaid the remainder.The respondent brought a claim against the appellant for the payment of three times the deposit sum as the sanction, under section 214(4) of the 2004 Act, for its failure to comply with the initial requirements of an authorised deposit scheme. The sum of £618 was also claimed in respect of disputed items for which the appellant had retained sums from the deposit. The other tenant was named in the claim form but did not sign a statement of truth and did not take part in the proceedings.A district judge struck out the claim under section 214(4) on the ground that section 214 had ceased to apply once the tenancy came to an end. The respondent’s appeal against that decision was allowed by a judge, who restored the section 214(4) claim, gave permission, under CPR 19.6, for the respondent to continue the proceedings on his own and on the other tenant’s behalf and gave judgment for the tenants for the deposit of £6,240 sum plus three times that sum as the sanctions under section 214(3) and (4) respectively. In respect of the deposit, the order recited the amount that had already been repaid, the amount that was acknowledged to be due to the appellant and that the appellant was to retain the remaining £618 pending the resolution of the claim for that amount.On appeal against that decision, the appellant’s primary ground concerned the proper application of section 214(4).Held: The appeal was allowed. The court’s power to make an order under section 214(3) and (4) was no longer exercisable once the tenancy had terminated. The requirements imposed on the landlord by section 213 of the 2004 Act were enforceable under section 214 at the option of the tenant, who always could secure their enforcement by taking proceedings. It was up to the tenant to make use of the remedy prescribed by section 214. The initial requirements of an authorised scheme were matters to be dealt with at the inception of the lease and not later than the expiry of the term. Any default in that respect could be remedied and, if it were not, the court was required by section 214(3) either to order the repayment of the deposit to the tenant or to order the landlord to pay it into an authorised scheme. For the court to have a genuine discretion to exercise, both alternatives had to be available. Section 214(1)(a) should therefore be read as meaning that the initial requirements of an authorised scheme had not been, but could still be complied with. That was the only meaning that tied in with the two alternatives in section 214(3) continuing to be available. It meant that the grounds for a section 214 application would cease to exist once the lease had expired and, therefore, no order under either section 214(3) or (4) could be made after that date.Laura West (instructed by Bude Nathan Iwanier) appeared for the appellant; Kevin Gannon (instructed by Osbornes Solicitors) appeared for the respondent.Sally Dobson, barrister
