Superstrike Ltd vs Rodrigues Tenancy Deposit Protection Court of Appeal

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Superstike vs Rodrigues Tenancy Deposit Protection Court of AppealMy reading of a recent Court of Appeal ruling (Superstrike Ltd vs Rodrigues) is that thousands of possession orders may have been granted in error due to lack of clarity in Tenancy Deposit Protection legislation.

What’s worse is that the vast majority of landlords may have inadvertently broken the law and face bankruptcy!

Scary stuff hey?!

So what is it all about?

Well, in the case of Superstrike Ltd vs Rodrigues, a legal argument affecting Tenancy Deposit Protection, the Court of Appeal has held that a Statutory Periodic Tenancy is not in fact a continuation of a fixed term tenancy and is in fact a brand new tenancy. The legal implications are that deposits paid by tenants needed to be re-protected within 30 days of the new statutory periodic tenancy being created.

How many landlords re-protect tenants deposits and re-issue a new tenancy deposit protection certificate and prescribed information within 30 days each time a fixed term AST ends and a Statutory Periodic Tenancy begins?

Very few I suspect.

The ramifications of this ruling are that landlords might be liable to be fined 3X the deposit plus the deposit and be prevented from enforcing a section 21 notice if a deposit was not returned to the tenant before the notice was served.

Getting worried?

You and me both!!!

It is too late to do anything for every tenancy that became statutory periodic more than 30 days ago.

This was not what I wanted to hear so I read the full details of the judgement

PLEASE, don’t shoot the messenger!!!

Hopefully, the legal eagles reading this will be able to pick holes in the legal argument. I’m also hoping a Supreme Court will eventually add the further clarity now required to the Court of Appeal decision or that new emergency legislation will be introduced to prevent the possible collapse of the Private Rented Sector as we know it.

Yes people, it’s that serious!

Can you afford to pay fines of up to four times the value of every deposit you or your letting agent has collected from tenants in the last six years in respect of fixed term tenancies which have become statutory periodic tenancies?

OK, so having now scared the pants off most of the people who read this, let me pose a few questions to the legal eagles and the politicians who are responsible for this mess. We must not forget that all of this has come about as a result of badly drafted legislation which was passed by politicians. Furthermore, it appears that judges may have been making bad decisions on possession cases due to incorrect interpretation for years. If politicians, judges, solicitors and deposit protection schemes have not been able to get clarity on what the law was meant to be then what hope for landlords and letting agents?

If the latest ruling is legally correct, how many possession orders have been granted which should not have been granted? Who is liable for these cock-ups? I suspect many of the people who have lost their homes will want compensation but who will they get it from?

Next question.

Might it be arguable that our tenants did not apply for a refund of their deposit at the end of their tenancy and that no deposit was in fact necessary for the new statutory periodic tenancy? Might this be a viable argument in that it was never written anywhere? If so I can’t see how landlords can be fined on that basis. That doesn’t help the possession argument but it might avoid mass bankruptcies amongst landlords.

Do landlords have any recourse to tenancy deposit protection providers where they have issued advice on forums like this one? The reason I ask this is that I can easily produce evidence to prove that all deposit protection providers interpretations of the law and their advice relating to this issue have clashed with the ruling in this Court of Appeal case.

Perhaps the most worrying aspect of all of this is that one ambulance chasing law firm have already set in place a “no win no fee” opportunity for tenants to begin making claims against their landlords.

Now, given that it will be in ALL landlords interest to unite at this point, please may I remind you of The GOOD Landlords Campaign and your ability to contribute to the work we do here when you become a member of Property118

Please post comments below. Comments from members are easily identifiable.

 

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Comments

  • When things like this pop up, it just highlights how important it is to have positive customer relationships with your tenants. I personally, would just return all deposits the day this was confirmed and take it from there.


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  • In a word, TERRIFYING!!!


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  • David McLennan says:

    Mark,

    Is this applicable in Scotland too…?

    David


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  • A Qualification for sitting in the court of appeal is that you are a wally who has lost touch with reality. Lord Denning – who wasn’t a wally -would have seen the problems and not come to this finding. But then many think he was the greates judge of 20th Century.

    So what do we do? Copy Mark’s article to our MPs verbatim. And point out the decision is not what the experts (The Deposit Protection Scheme) think is the law. They think (with me, for what that’s worth) that the law is the tenancy automatically continues and the deposit does NOT need to be taken back and re-submitted.

    They say (as Mark pointed out earlier) that if a new tenancy is granted you do have to take the deposit back and re-submit.

    The law generally on expiry of tenancies is simple : the tenancy continues after expiry automatically, until terminated by notice by L or T. So shortholds and the periodic tenancy following merely mimic that.

    The only issue is the exact words of the deposit. But don’t rely on the Court of Appeal Judges to get the law right!!


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  • For me this is all getting too much. I’ve had enough of all the stupid changes to the law, some, like this one, which could bring disaster to landlords.
    I’m seriously thinking of just giving notice to all my tenants in all my properties now, and just selling the lot.


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  • i recommend printing out the relevant section from the deposit protection website/s asap as evidence (before its removed). this could well be useful evidence of no wrongdoing and relying on authoritative advice. what are ARLA, NLA and RLA doing about this?


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  • @Andrew Taylor – I agree with Anon. I’ve been trying to work out how many of my tenancies have gone statutory periodic in the last 6 years X the value of the deposits X 3 and the figures are astronomical. The fact that statute of limitations allows tenants who have come and gone during the last 6 to make a claim too seems all the more ridiculous!


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  • Neil says:

    @Anthony …just selling the lot…

    You and me both ! Would have escaped this awful business long ago, if not for negative equity on everything I bought…

    Good luck if you can get out.


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  • Andy says:

    I think it should be made clear in the above article that this judgement only relates to deposits taken before 06/04/2007 which on revertion to a periodic tenancy should then be protected as a new tenancy is created and brings into effect the terms of the Housing Act 2004 which came into force on the above date.

    If you complied after 06/04/2007 these are not under question, please dont scare the living daylights out of us!!!


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  • Dear Mark,
    A very interesting article. The problem could be easily overcome by an amendment to the legislation in terms “that a tenancy shall not be considered as ended for the purpose of the deposit regulations if a statutory periodic tenancy commences at the conclusion of the contractual tenancy”.
    Is it in the interest of either party to have to go through the inventory or tenancy application process to generate a new contractual tenancy that does not provide any additional benefit for the tenant. Such a process is in reality only likely to generate conflicts as to dilapidations and incur costs for both sides.

    The judgement provides a leaglistic view of the relationship of landlord and tenant and only causes problems for both sides. In particular those tenants in breach of their contractual obligations stand to gain the most. It seems that the Court of Appeal has created an artifical situation where those tenants in default stand to gain the most from their actions. Surely consideration should have been given to the operation of the relationship within the interpretation deposit and posession regualtions and not merely the legal technicalities. Genuine tenants gain nothing from this judgement.


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