On 11 January 2023, at the County Court of Clerkenwell & Shoreditch, Mrs Alisha Butler, Director of Phoenix Solicitors, before District Judge Sterlini, represented two Claimants in their claims against both the Landlord (Def 2) and the Landlords agent (Def 1) for failing to protect their tenancy deposits.
Background to the Claim
Both the First and Second Claimant rented rooms in a property owned by Mr Mohammed Islam. However, they were provided tenancy agreements naming Roman Lettings Limited as their landlord and were both asked to pay a deposit of £250 and £300 respectively.
The First Claimant took up occupation on or about 6th February 2021 and she was given an Assured Shorthold Tenancy (AST) by Roman Lettings for a period of 2 months. At the end of the 2 month period a further AST was entered in to followed by a further AST. Upon the expiry of the third AST the tenancy became a Statutory Periodical tenancy.
The Second Claimant took up occupation on or about 10th May 2021 and she was given an Assured Shorthold Tenancy by Roman Lettings for a period of 3 months after the expiry of which the tenancy became a Statutory Periodical tenancy.
The claim was issued against the Roman Lettings Limited, named as the Landlord on each of the tenancy agreements given to both Claimants. Roman Lettings acknowledged the claim stating that as the tenancy agreements were renewed and they did not take separate deposits for each tenancy, only one deposit at the outset, there was only one claim for each claimant and that their failure to protect the deposit was a error which they had rectified by protecting the deposit, albeit late.
Shortly after the First Defendant acknowledged the claim, the Claimants received text messages from a company purporting to be the new letting agent and advising them that they were to stop paying rent to Roman Lettings and start paying the rent to them. We advised the Claimants not to do this and to continue to pay their rent to Roman lettings who were, as far as the legally binding tenancy agreements were concerned, the landlord to our tenants.
The Claimants then received letters from a firm of Solicitors advising that they were instructed on behalf of Mr Mohammed Islam, the Landlord, and they wanted copies of the Claimants tenancy agreements. They went on to say that, Mr Mohammed Islam, the landlord, had terminated his agreement with the agents, to act as agents and asked that all rents now be paid to his new agents.
The Claimants, rightly, forwarded the letters and text messages on to us.
We advised the new agents, and the Solicitors, that we required proof that Mr Mohammed Islam was in fact the Landlord. The Solicitors sent to us the land registry title to the property purporting that this was evidence that the alleged landlord was the landlord.
A land registry title to a property does not prove that someone is a landlord, and as our clients had had no previous communication from Mr Mohammed Islam, despite text messages to Roman Lettings asking them for the their landlords details, we advised the solicitors that we needed a signed statement of truth from the alleged Landlord to confirm that he was the Landlord and from what date.
Eventually, this was provided in August 2022 after which time we made an application to join Mr Mohammed Islam into the proceedings as a 2nd Defendant.
Mr Islam’s defence admitted that under the tenancy agreements, annexed to the pleadings, deposits were due but stated he had no knowledge of whether these were paid. His defence went on to say that “It is accepted that it was the Second Defendants responsibility to protect any deposit what was paid…”
The defence further stated that “The Second Defendant will aver that there was a single breach…each subsequent tenancy did not give rise to a further breach”. This is something reiterated in the skeleton argument of his legal counsel and was again submitted in the submissions at the hearing.
In mitigation as to what penalty should be levied against the Second Defendant it went on to say: “The Second Defendant is not an experienced landlord, he suffers from dyslexia and relied upon a property manager to advise him of the necessary requirements”. Mr Islam is a professional landlord who rents out another property, that our client is aware of, and may rent out more that they are not aware of. Again, these points were reiterated in the skeleton argument and submission at the hearing.
Civil Procedure Rules
The claim was issued under Part 8 of the CPR pursuant to s.212-215 Housing Act 2004, and as amended by s.184 Localism Act 2011 and as the claims were Landlord and Tenant claims under CPR 56.1(1)(f), Part 8 was the correct procedure to use for the purposes of issuing the claims (CPR 56 PD para 2.1).
The Housing Act
Who was the landlord and who was the agent, was important to our client’s case, in respect of their tenancy deposit as the Housing Act states that:
s.214(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
However, it goes on to say:
s.214(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.
Case law
When it comes to whether there has been more than one breach of the Housing Act if the deposit has not been protected and there is more than one tenancy agreement, case law was referred to in the form of Superstrike Ltd v Rodrigues [2013] EWCA Civ 669 and LJ Lord states at paragraph 27:
“However, Mr Westgate argued that, when the new statutory periodic tenancy came into being in January 2008, the deposit had to be regarded as being then paid and received in respect of that new tenancy. It is clear from the 1988 Act that what happens at the end of the fixed period tenancy is the creation of a new and distinct statutory tenancy, rather than, for example, the continuation of the tenant’s previous status. I do not see that there can be any doubt as to that”.
In consideration of whether an agent is the application person to be defendant consideration was given to Draycott & Draycott v Hannells Lettings Limited [2010] EWHC 217 (QB) in which the High Court held that an agent could be liable for failing to protect the tenants deposit, they did not hold that in cases such as the index case it would only be the agent that was responsible.
Further consideration was given to Ayannuga v Swindells [2012] EWCA Civ 1789 at [21], [26], [27] and [32] in which the Court of Appeal upheld a fine against the Defendant Landlord where there had been a failure of their agent to abide by the obligations under s.213 Housing Act 2004.
Judgement
District Judge Sterlini found that both the Landlord and Agent were responsible in terms of the agent for not returning the deposit and the landlord for not ensuring that the deposit was protected.
Judgment given as follows:
- Judgments for the 1st Claimant against the 1st Defendant for £250 (being the deposit)
- Judgments for the 1st Claimant against the 2nd Defendant for £3,000
- Judgments for the 2nd Claimant against the 1st Defendant for £300 (being the deposit)
- Judgment for the 2nd Claimant against the 2nd Defendant for £1,800
- All the above sums are to be paid by 4.00pm 25 January 2023
- 1st and 2nd Defendant shall pay the costs of the 1st Claimant and the 2nd Claimant to be subject to detailed assessment if not agreed
As the Claimants beat their own Part 36 offers they were entitled to an uplift and indemnity costs. Costs where to be assessed if not agreed, given the lack of judicial time to assess the same and the arguments in respect of the same.
Costs were eventually agreed and settled.