Wednesday, September 16, 2009

DPS - tenant with CCJ unable to claim back tenancy deposit

Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.

A tenant recently wrote to me with a sad story:

"I vacated my property in February 2009, and due to the DPS not returning my deposit I became homeless. As the landlord and I were in dispute over the return of the deposit I had no option that to pursue the claim through the county court.

I did so and on Sept 3rd I attended court and was awarded the claim in my favour. I sent a copy of the General Form of Judgement or Order to the DPS and was advised under their terms and conditions (which I have never seen before) they cannot release the deposit as the order makes no reference to the DPS, but does state the landlords name.

This seems outrageous to say the least, and has caused me to have even more depression and stress. Can these people really hold me to ransom like this. I have been awarded the money and all I want is the return of my deposit.
I am not entirely sure why the lady did not use the free arbitration service provided, but we have always been told that landlords and tenants are free to use the County Court instead of arbitration if they prefer. I have had a look at the DPS terms and conditions though, and they do indeed say at clause 17:
"The DPS will not release any part of the Deposit unless it has: ....
iv. a Court Order which refers specifically to the Deposit and/or the scheme administrator and the amount of the Deposit to be paid out.
"
However it does seem very unfair that this lady should be deprived of her money (and we always have to work from the premise that the deposit is the tenants money) simply because the DPS have put this clause in their terms and condition. How many tenants, who after all are ordinary people and not lawyers, are going to read the detail of the DPS terms and conditions before issuing proceedings? It is not something that would occur to most people.

What do you think about this? Do you have any suggestions as to how this lady can get her deposit returned to her?

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10 comments:

Francis Davey said...

Ghastly. Schedule 10 of the Housing Act 2004 is not very happily drafted but the trigger event is said to be:

"(a) a court has decided that the relevant amount is payable either wholly to one of them or partly to the one and partly to the other, and "

"relevant amount" means:

(7) In this paragraph “the relevant amount”, in relation to a tenancy deposit, means the amount paid into the designated account in respect of the deposit.

(by a complex route that is different for the two types of scheme).

It seems to me that a plain reading of that refers to an amount not the payment of a specific sum held by the scheme. After all money is fungible.

So it seems to me that there is a very good argument that the scheme is in breach of Schedule 10 because it has failed to pay out a sum when it has seen judgment in the tenant's favour.

The scheme rules' interpretation causes difficulty since it implies that the court has a power to order payment of the sum held in the scheme which is rather convoluted since no such power is given by the Housing Act 2004, nor is there any liability to pay prior to the order.

So, I think the DPS have it wrong and that (arguably) they aren't entitled to do what they purport to be doing.

I could be wrong though.

Guild said...

Hello

I read this post with interest and I agree this seems unfair. I haven't pondered this much but my immediate reaction was that the tenant has never agreed to the terms and conditions and therefore is not bound by them. The DPS is a normal company and so bound by normal contract law.

In any event, even if the tenant had agreed the terms, surely this would be an unfair term. This would not be a useful argument for a landlord because in most cases they are a business and so the unfair terms regulations don't apply. However, the tenant would rarely be regarded as a business.

Just a thought and apologies for any typos, I write this from my phone whilst waiting to show a tenant round a flat.

Adrian Thompson
Guild of Residential Landlords
www.all4landlords.com

Guild said...

Just as an addition to my last comment after a little more pondering during my drive back to the office, I was going to mention about Schedule 10 but I see that's been dealt with above.

The simplest realistic way of having this situation resolved is to ask the court to vary the order under Civil Procedure Rule 3.1 which reads: A power of the court under these Rules to make an order includes a power to vary or revoke the order.

Technically, the former tenant should make a formal application with the appropriate fee, however, in my experience a litigant in person can often get away with a polite letter.

In this case, ask the court to vary the order to include that the deposit of [£amount] is repayable from the DPS in accordance with Schedule 10 Housing Act 2004

Adrian

Tessa Shepperson said...

I have just received this information from Kevin Firth of the DPS:

"The DPS deals with tens of thousands of transactions on a monthly basis, therefore it is imperative that we adhere to our published terms and conditions in order to ensure a level playing field.

We publish the following information on our Frequently Asked Questions at www.depositprotection.com as to the requirements for a Court Order to act as a binding repayment instruction:-

If you are seeking a judgment in the county courts against your Landlord/Agent or Tenant, and intend that the deposit held by The DPS be paid to you in satisfaction of the judgment, it is required that you ensure that the final Court Order includes a term which refers to the deposit, or the scheme administrator holding the deposit and a direction as to how much of the deposit/all of the deposit is to be released directly from the scheme administrator to the successful Claimant.
In the event that neither the Claim Form or the Final court order refer to The DPS or the deposit the Claimant may apply to the Court for either an amendment to the Final Order or a Third Party Debt Order which could direct the DPS to pay part or all of the deposit to Claimant.


The legislative basis of the requirements as set out above is Schedule 10 of Housing Act 2004, at paragraph 4 (4-5). This states that where a court has decided on the repayment of the deposit, the scheme administrator must be "satisfied" that

a) A court has decided that the relevant amount is payable either wholly to one of them or partly to the one and partly to the other, and

b) That the decision has become final.

Therefore, we require sight of the final court order, referring to the relevant amount i.e. the deposit sum or directing the scheme administrator to repay.

Without this, as we are not party to the proceedings, it is not clear whether the court intended for the scheme administrator to repay the deposit or whether the court dealt with the matter of the repayment of the deposit.

All that said, we are a human business, and will always try to do everything we can, within our terms and conditions, to make life as easy as possible for both landlords and tenants."

Anonymous said...

The claimant says "I sent a copy of the General Form of Judgement or Order to the DPS and was advised under their terms and conditions (which I have never seen before) they cannot release the deposit as the order makes no reference to the DPS, but does state the landlords name."

It does not appear that the DPS also told her she could apply for an amendment to the order. Which would have been more helpful.

Tessa Shepperson said...

I have had some more feedback from the tenant. She tells me that she had wanted to use the free arbitration service, but the landlord refused to co-operate. Hence her need to get a CCJ.

She says that she is very concerned that she will be out of pocket for the court fees (which she cannot really afford), as although the DPS will (if the order is amended) pay over the deposit, this will presumably not include any element for the court fees.

It does seem as if she has had a very rough deal, through no fault of her own.

Francis Davey said...

I think the DPS are probably wrong and have misunderstood how Schedule 10 works.

What is more it is alarming to hear all this nonsense about third party debt orders and whether or not the court has ordered the scheme administrator to pay the money over.

First a third party debt order would be useless since the DPS do not hold money which they owe to the landlord (ex hypothesi they owe it to the tenant).

Second, schedule 10 most certainly does not require a court order, nor would a court have the power to make such an order because, until judgment, there is no duty on behalf of the DPS to pay the money over. Schedule 10 does not require that the DPS are a party to proceedings, it specifically supposes they are not.

Of course the court could _now_ order DPS to pay money which they now appear to owe to the tenant and to pay the tenant's costs in obtaining that money from them.

The DPS's terms and conditions aren't binding on the tenant because she is not a party to them nor can they be used to override the DPS's duty.

I'd strongly urge (I wonder if you can feed this back) that the DPS take proper legal advice on this point. I have explained clearly why I think that the DPS are wrong. Even if I am wrong on that point, they need to think carefully about it.

David said...

U have seen this problem many many times though always previously from the landlord and agents point of view. I agree with Francis that the law does not require the court to name the DPS (it it was required then the law would say so). To make matters worse I have dealt with cases where the judge has refused to state the DPS must refund them money! Get out of that one. Clearly the scheme rules are flawed, clearly the legislation intended that the "winning" party in court could produce the order to reclaim the money. There may be an argument that a costs order may have to be viewed differently, and obviously so if the full deposit is refunded to the tenant.

Tessa Shepperson said...

Thank you everyone for your comments. I will let you know if I get any more feedback from the tenant, or the DPS.

Tessa Shepperson said...

I have now heard again from the DPS. Their legal department have stated as follows:

“As we have previously set out, Schedule 10 of Housing Act 2004 states that where a court has decided on the repayment of the deposit, the scheme administrator (i.e. the DPS) must be "satisfied" that

a) A court has decided that the relevant amount is payable either wholly to one of them or partly to the one and partly to the other, and

b) That the decision has become final.

The relevant amount is defined as being, “in relation to a tenancy deposit, the amount paid into the designated account in respect of the deposit” i.e. the amount held by the DPS as the deposit.

The DPS considers therefore that the correct legal interpretation of Schedule 10 is that if a Court Order does not refer to the deposit OR the DPS we are legally not entitled to release the deposit.

Without specific reference in a Court Order to the deposit or the DPS it is not clear whether the Court intended the DPS to repay the deposit or whether the Court even considered the issue of who the deposit should be repaid to. This is particularly so because Court proceedings often involve a different monetary amount to the amount of the deposit."


Kevin has added to this:

"As we have already stated, we do try to do everything we can, within our terms and conditions, to make life as easy as possible for both landlords and tenants. Therefore, we do carefully scrutinise all Court Orders and any pleadings provided to us to ascertain whether there is any basis upon which we can pay out. However, we must operate in accordance with the law."