Superstrike Ltd vs Rodrigues Tenancy Deposit Protection Court of Appeal

Superstrike Ltd vs Rodrigues Tenancy Deposit Protection Court of Appeal

20:45 PM, 16th June 2013, About 9 years ago

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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.

 



Comments

Robert M

21:44 PM, 17th June 2013, About 9 years ago

"@Robert M – 213 (1) says the deposit must be protected on receipt. The Court of Appeal said the deposit was received when the tenancy became a SPT, not because it was returned and paid again (as that was not the case) but by virtue of a new tenancy having been created. Still hoping I’m wrong BTW."

Ahh - but I was answering a question as to when the prescribed information should be provided.

The men in wigs have decided you can notionally receive a deposit that you already hold. We just want them to decide the tenant can notionally receive paperwork they already have!

Robert M

21:46 PM, 17th June 2013, About 9 years ago

"Life has taught me that nothing is ever as bad as it initially seems. The dust needs to settle on this for a week or so, till there is clear direction on what is required."

Well that's probably the most sense that has been posted here today, even if the timescale is a bit optimistic.

"Even in the worst case, I am confident that at least 80% of my tenants would not try and pull a fast one on me just due to a legal loop hole."

Me also, but my agreements should not be affected by this ruling. However, some tenant profiles would jump on the bandwagon straight away – though they may not be the type to have paid deposits in the first place.

"Here is something for the argument; I’m probably being a bit silly, but. I get an eviction order on my tenant via a section 8 during the initial 6 month term, but the eviction is not enforced by a bailiff until a few months after the fixed term has expired (these things take time). Could the tenant not now argue that the fixed term tenancy the S8 eviction was granted on has now expired, that a new tenancy has been created and so I now need to issue a section 21 to end this periodic?"

Wow! I am impressed by the speed. Assuming the tenant paid rent on moving in, it is the start of month 3 before you can issue the section 8 notice. Add 14 days then apply to the court. Get a hearing at least 6 weeks later. I suppose that this can all be achieved in 6 months. I would have thought if you had the order it remains valid unless challenged back in court, so you can carry on with enforcement. I've always thought that section 8 claims were independent of deposit protection anyhow, but may be wrong.

22:06 PM, 17th June 2013, About 9 years ago

I'm afraid this interpretation is quite wrong and seems to be simple scare mongering.

The case simply confirmed that the statutory tenancy which follows the end of a contractual shorthold where the tenant remains in possession with the consent of the landlord (tacit or express) is a new tenancy. It follows that the deposit guarantee scheme, which had come into effect between the start of the contractual term and the start of the statutory scheme applied to the statutory term and the landlord ought to have complied with the scheme.

It is not authority for the argument that whenever a contractual shorthold ends and is replaced by a statutory shorthold the landlord must go through the deposit guarantee procedure all over again.

Andrew Taylor

22:06 PM, 17th June 2013, About 9 years ago

I was not talking about deposits per se, but...

"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."

I had a tenant pay their first months rent and deposit to get the keys, then never paid a penny more, so yes during that process, the fixed tenancy ended and a periodic started. If the periodic is legally a new tenancy agreement, both this and the original fixed term AST would need to be ended by the court to allow legal eviction?

22:17 PM, 17th June 2013, About 9 years ago

I wonder if everyone is over-reacting? This case concerned a landlord who had received a deposit but not complied with the statutory requirements under the tenancy deposit scheme at that time. The argument the landlord raised was that he received the deposit before the statutory requirements came into effect - the Court of Appeal said he couldn't use that argument to avoid the requirements as a new tenancy arose when the statutory tenancy came into being and he would have been caught then. So what happens to Landlords who complied at the outset of the fixed term tenancy? The clue is in paragraphs 37 and 38 of the judgment of LJ Lloyd - its seems to me that this deposit will be treated as being applied to the statutory tenancy.

Robert M

22:18 PM, 17th June 2013, About 9 years ago

"I had a tenant pay their first months rent and deposit to get the keys, then never paid a penny more, so yes during that process, the fixed tenancy ended and a periodic started. If the periodic is legally a new tenancy agreement, both this and the original fixed term AST would need to be ended by the court to allow legal eviction?"

In normal circumstances, a tenant can only have one tenancy of the same property valid at one point in time, so my answer would be no. Surely you just need to end the tenancy in force when your application goes to court.

Mark Alexander - Founder of Property118 View Profile

22:22 PM, 17th June 2013, About 9 years ago

@Simon - please post a link to the LJ Lloyd case you are referencing, I would like to read that.

Steve Masters

22:22 PM, 17th June 2013, About 9 years ago

“Here is something for the argument; I’m probably being a bit silly, but. I get an eviction order on my tenant via a section 8 during the initial 6 month term, but the eviction is not enforced by a bailiff until a few months after the fixed term has expired (these things take time). Could the tenant not now argue that the fixed term tenancy the S8 eviction was granted on has now expired, that a new tenancy has been created and so I now need to issue a section 21 to end this periodic?”

I think there argument won't hold water as a new tenancy requires both parties to agree. In your S8 scenario the court order terminates the tenancy not the eviction by bailiff, so if the tenant stays beyond the end of the tenancy terminated by the court without your agreement, a new contract/tenancy will not have been created by default so long as you do not collect rent in advance. If you collect rent in advance after the court case you are agreeing to a new tenancy by default and all is lost. You can still collect rent in arrears though. Hope I'm right.

Robert M

22:49 PM, 17th June 2013, About 9 years ago

"It is not authority for the argument that whenever a contractual shorthold ends and is replaced by a statutory shorthold the landlord must go through the deposit guarantee procedure all over again."

Absolutely agree.

"The case simply confirmed that the statutory tenancy which follows the end of a contractual shorthold where the tenant remains in possession with the consent of the landlord (tacit or express) is a new tenancy."

I might delete "simply", but let's not be pedantic and say I absolutely agree that is what the judgment states.

However, surely you must agree that if the statutory tenancy which follows the end of a contractual shorthold is a new tenancy, the case introduces some doubt about the correct procedure if the original agreement was entered into after April 2007?

I am happy to fully agree that the judges have not ruled on this latest point and to distinguish on cases where the original agreement was entered into before and after April 2007. However, if a tenant had a fixed period agreement for 2012 and signed a new fixed period agreement for 2013 it is accepted these are two separate agreements and both require separate protections. If a Court has now ruled that a statutory periodic tenancy is a separate agreement but not commented on the difference between pre and post April 2007 questions have to be asked.

Robert M

22:50 PM, 17th June 2013, About 9 years ago

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