Superstrike Ltd vs Rodrigues Tenancy Deposit Protection Court of Appeal

by Mark Alexander

20:45 PM, 16th June 2013
About 7 years ago

Superstrike Ltd vs Rodrigues Tenancy Deposit Protection Court of Appeal

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Superstrike Ltd vs Rodrigues Tenancy Deposit Protection Court of Appeal

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

Robert M

11:20 AM, 18th June 2013
About 7 years ago

“Further to the Court of Appeal ruling in the Superstrike vs Rodrigues case, the law regarding tenancy deposit protection has changed. Now, once a tenancy finishes its fixed term and becomes a periodic tenancy it is considered by law to be a new tenancy. Therefore, I now serve you with the relevant prescribed information relating to your new tenancy, please could you sign and return this as soon as possible”

Translate!

“Further to the Court of Appeal ruling in the Superstrike vs Rodrigues case, the interpretation of the law regarding tenancy deposit protection has changed from what was previously almost universally accepted. Now, once a tenancy finishes its fixed term and becomes a periodic tenancy it is considered by law to be a new tenancy. I believe this may mean I should have re-protected your deposit within 30 days but did not do so. I still have not re-protected your deposit and the deadline has now passed. However, I thought I would write to you anyhow to provide a further copy of the prescribed information that would accompany the new deposit certificate if I had one and highlight the potential deficiency in our procudures. From now on, I will need to serve you a new notice each month so you will hear from me frequently.

If you search the internet you may well find a firm of solicitors willing to take action against me on "no win no fee" basis. Alternatively, if you let me have your bank details I will transfer your deposit back to you with a 100% bonus in full and final settlement of the case that you may or may not have against me. I would prefer to do this rather than wait for this mess to be sorted out."

Note: I am assuming that the prescribed information and any deposit certificate are two different documents to emphasise a point. In reality it is probable that the deposit certificate is part of the prescribed information.

Rob

11:40 AM, 18th June 2013
About 7 years ago

@Robert

Are you suggesting that we tell our tenants what has happened and tell them they can take us to court if they wish and then offer them there deposit x2 back? Have you been drinking?

Robert M

12:12 PM, 18th June 2013
About 7 years ago

I am merely offering a translation of Chris's proposed letter. Have you been reading?

Rob

12:18 PM, 18th June 2013
About 7 years ago

Fair enough, I may still be a little intoxicated,and confused

Vanessa Warwick

12:29 PM, 18th June 2013
About 7 years ago

Letting Agent Today offers this round up of the case:

Broadly, the Court of Appeal has now held that a statutory period tenancy is not a continuation of a fixed term tenancy but a new tenancy.

This means that deposits which have been paid by a tenant must be re-protected each time a fixed tenancy ends and within 30 days of the new statutory periodic tenancy being created.

The greater concern for landlords and agents is that many, including those with ongoing tenancies, will not have re-protected deposits, and not have given the tenants a new deposit protection certificate plus the prescribed information.

The case’s full implications are still being studied by lawyers – and by the tenancy deposit schemes whose rules differ and may now have to be rewritten.

For example, My Deposits has advised that there is no need for new protection when a tenancy becomes statutory periodic. Other schemes simply require that they are informed.

Central to the judgement is that tenants whose deposits were not re-protected when their fixed term tenancy rolled over into a statutory periodic tenancy, may now be able to claim against their landlord. Tenants could argue that any eviction was unlawful, and may also be able to claim back their original deposits plus a penalty.

The Statute of Limitation means that tenants of up to six years ago could make claims.

- See more at: http://www.lettingagenttoday.co.uk/news_features/Shock-waves-from-new-Court-of-Appeal-ruling-on-tenancy-deposit#sthash.s9kUN2Om.dpuf

I think it would be prudent to allow the TDP schemes to release their reaction to this ruling, otherwise everything else is just speculation and may be causing landlords unnecessary worries!

Robert M

14:30 PM, 18th June 2013
About 7 years ago

Here we go again!

"Broadly, the Court of Appeal has now held that a statutory period tenancy is not a continuation of a fixed term tenancy but a new tenancy."

Agreed
____________________________________

"This means that deposits which have been paid by a tenant must be re-protected each time a fixed tenancy ends and within 30 days of the new statutory periodic tenancy being created."

Whoa, stop, steady and halt. The Court of Appeal ruled where the original tenancy was entered into before April 2007 and the deposit had not already been protected. Substitute "must" with "may need to".
____________________________________

"The greater concern for landlords and agents is that many, including those with ongoing tenancies, will not have re-protected deposits, and not have given the tenants a new deposit protection certificate plus the prescribed information."

That may well be a justified concern – the question is whether they need to.
____________________________________

"The case’s full implications are still being studied by lawyers …"

That does not necessarily fill me with confidence. After all the lawyers could not agree and had to go to the Court of Appeal! I suppose it is a necessary evil!
____________________________________

"Central to the judgement is that tenants whose deposits were not re-protected when their fixed term tenancy rolled over into a statutory periodic tenancy, may now be able to claim against their landlord. Tenants could argue that any eviction was unlawful, and may also be able to claim back their original deposits plus a penalty. The Statute of Limitation means that tenants of up to six years ago could make claims. "

Sadly true.
____________________________________

"I think it would be prudent to allow the TDP schemes to release their reaction to this ruling, otherwise everything else is just speculation and may be causing landlords unnecessary worries!"

This sentence is so valuable it would be worth posting alone. I predict that in time we will look back on this thread and marvel at the hysteria.

Rob

16:47 PM, 18th June 2013
About 7 years ago

Well this maybe a touch over cautious but I have just logged into my deposits account and printed off my stp accounts that clearly say (a) statutory periodics and (b) protected! There is also a questions and answers section with the question if a Tenancy continues as a Statutory Periodic what happens to the deposit protection? The answer they have put is a new protection is not required if the original contractual term ast continues as a Statutory Periodic Tenancy. So with the possibility of my deposits removing such content to cover themselves I have printed all this off and in the event of a tenant suing me for there deposit X4 I will be suing my deposits for my loss. You never no!!

Edwin Cowper

16:55 PM, 18th June 2013
About 7 years ago

Lets not forget the facts of this case. There was an unprotected deposit. So when the new tenancy came into effect, any deposit had to be protected. That is not so nowadays. The deposit has to be protected as required by the rules.

The deposit rules were created:

1. To protect the Tenant's deposit (and if that is not done by L then to impose draconian penalties) and

2. To ensure that the Tenant is given certain information about holding of the deposit (with more draconian penalties if that is not done)

If a tenancy is created and the deposit is made with the Tenancy Deposit Scheme and the legal notices given, then I suggest that the creation of a statutory tenancy as a new tenancy and the retention of the deposit will fulfill the intention of the rules and the legislation..

The Judge giving the decision points out himself why the rules were made. He also says:

"How had that come about? It must have been on the basis that the tenant's right to be credited with the deposit at the end of the fixed period tenancy, as well as his obligation to pay, and the landlord's right to receive, an equivalent deposit under the new statutory periodic tenancy, were treated as satisfied by the landlord continuing to hold the same sum of money as before on the same basis as before but by reference to the new tenancy."

This seems to contradict the view of some contributors that there is a new deposit. So I suggest the view taken by the Deposit Protection Scheme is likely to be correct in respect of their deposits ie no new notice required.

But to make it clear beyond any shadow of doubt, the best thing would be for the government to make a simple amendment altering the extension provisions.

The Act would then say that (instead of creating a (new) statutory tenancy as at present), the holding over merely extends the existing shorthold. I suggest that is all that is required. No new schemes, rules or anything

If people agree, I suggest they write to their MPs expressing their concern and ask that the government minister be approached by him/her to male an urgent change to the law.

Robert M

17:23 PM, 18th June 2013
About 7 years ago

Do you want a laugh?

Think about a tenancy that started after April 2007 and was correctly protected, papers served etc.

Now if a cautious landlord had actually re-protected the deposit with mydeposits when the tenancy went periodic he could be stuffed also.

Why I hear you ask? The answer is in s213(1)

"Any tenancy deposit paid to a person in connection with a shorthold tenancy must, as from the time when it is received, be dealt with in accordance with an authorised scheme."

As mydeposits say the deposit does not need to be re-protected the landlord would be in breach of their rules if he did re-protect it.

Thinking about it reacting to the ruling and rushing round issuing papers now could make the position worse for several reasons.

Give up – you can't win!!

0:03 AM, 19th June 2013
About 7 years ago

@Chris Sheldon

In reply, our current process is to register all deposits with DPS - so we have no issues about re-insurance. We also send out the prescribed information and Scheme Terms within 30 days.

Until now, we've not re-sent the Prescribed Information when the tenancy becomes periodic.

Nor do we intend to do so.

Currently the position of what to do when a tenancy becomes periodic is unclear. And to act in haste by sending out new Prescribed Information could simply stir up a hornets nest.

The various deposit providers will be having meetings with the government body responsible for this statute for guidance. No doubt clarification will be given shortly and we'll review then.

We'll wait until then and carry on as normal.

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