Tuesday, April 28, 2009

More tenancy deposit muddle

One of my clients has drawn my attention to an interesting forum discussion on tenancy deposit claims here.

It seems from this that many Judges (although not all) are taking the view that the fine of three times the deposit amount should not be awarded if the landlord refunds the deposit before the court hearing. The reason for this is the wording of the relevant sections. This is s214 (3) and (4) which say (after the first part of the section says what things trigger a claim):

"(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."

The argument is that the words ‘must also order’ in (4) means that if the award in (3) is not payable because the landlord has returned the deposit, the award in (4) is not payable either. You can only have both or neither.

If a landlord can escape liability by simply handing over a cheque in the court waiting room, five minutes before the hearing, it makes the penalties look ridiculous.

We urgently need a test case to go to the Court of Appeal so we all know where we stand.

Stumble Upon Toolbar

1 comment:

Anonymous said...

If you consider the purpose of the law to be to make sure a tenant gets there deposit back when they should, then the cheque in the waiting room is fine. Remember that there could be damage or arrears and the tenant is still getting his money back. Since the tenant has "suffered no loss", why should they be enriched by a civil penalty?

Also considering the focus on avoiding court actions, this line of approach would seem to be very sensible.

I do see less court actions might be the result and therefore a slight loss of earnings, but it would seem to fit the reason we have the law.