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.

 



Comments

Don Holmes

1:30 AM, 19th June 2013
About 7 years ago

I think some are maybe missing the point here, It really doesn’t matter anymore what the DPS/TDS or any other scheme provider guide lines say, I am sure they are as concerned about this silly judgment as we all are, or should be.

When the court makes a decision it over rules the schemes guide lines as they are not statute law. They will have to rewrite the book on this one.

Also don’t be miss lead by some of the confusion being churned up; In this case, the original tenancy predated the deposit protection rules. The tenancy ran statutory periodic after the legislation came into force and they were found guilty of failing to protect the deposit. This meant their section 21 notice was not valid and they became liable of a penalty of up to three times the value of the deposit.

The possession claim from the landlord was also dismissed; the rub here is the original AST was before the law was changed, so no law was broken at that point,

Then if a new tenancy has been created as a result of going SP after the change date, then does this judgment not make it become a fixed term? I accept it moves away from the SP and protection argument, but it could certainly see the death knoll of statutory periodic tenancies as this decision basically kills them off? or certainly the spirit in which we all have dealt with them.

All the other deposit implications has risen since this judgment and I am sure this will rage on until the SC setts the record straight by confirming the original spirit and interpretation of the SP legislation section 21(4)(a)

Just in case you need to drew a line under it follow this link http://www.letlink.co.uk/GeneralInfo/General_possession/S21_4_A.pdf

But most of all in the spirit of war time Britton “Don’t panic Mr Mannering”
Don Holmes

Robert M

7:47 AM, 19th June 2013
About 7 years ago

"I think some are maybe missing the point here, It really doesn’t matter anymore what the DPS/TDS or any other scheme provider guidelines say, I am sure they are as concerned about this silly judgment as we all are, or should be."

The more I read the less I am concerned, not that I have been very worried from the start of this farce.

However, let's get one thing straight, the scheme providers issue rules which must be followed or you are in breach of the legislation. This is why I posted the ridiculous example that if your deposit protection scheme required a donation to UKIP of £5 per deposit and you did not pay, you would be in breach of their scheme rules and would not have complied with 213(4).

In theory there is a vicious circle here. If your scheme provider tells you not to re-register when your tenancy goes periodic you comply with the rules by not re-registering. If the new interpretation of the law tells you a new tenancy is created and you must re-register the deposit then the rules are in conflict with the law. So you comply with the rules, do not re-register and you are therefore in conflict with the law as you have not re-registered. Alternatively, as things currently stand with at least two deposit schemes, you re-register the deposit, you are in breach of the scheme rules, and you are therefore in conflict with the law!

This is all a bit theoretical and academic, a bit like the arguments that created this problem in the Court of Appeal.
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"When the court makes a decision it over rules the schemes guidelines as they are not statute law. They will have to rewrite the book on this one."

True. In time scheme rules will be amended. However, the most important point is that it is likely that new legislation will be required with (unusually) a retrospective effect.

Only a simple change is needed, a new section to the effect that a new tenancy created under section 5 Housing Act 1988 is not a new tenancy for the purposes of deposit protection legislation. An option could be added that this only applies if the deposit should have been protected at the start of the original tenancy and was so protected.

Give me another hour and an MP's consultancy fee and I'll draft the actual legislation if you want.
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"Also don’t be miss lead by some of the confusion being churned up; In this case the original AST was before the law was changed, so no law was broken at that point, Then if a new tenancy has been created as a result of going SP after the change date, then does this judgment not make it become a fixed term? I accept it moves away from the SP and protection argument, but it could certainly see the death knoll of statutory periodic tenancies as this decision basically kills them off? or certainly the spirit in which we all have dealt with them."

With all due respect, I think you are being misled by the confusion being churned up. The law is quite clear that a statutory periodic tenancy comes into force at the end of a fixed term, unless notice is given or a new tenancy is agreed. The only new point is that it has been ruled that the statutory periodic tenancy is a new tenancy, not a continuation of the original fixed term agreement. Are you suggesting that you want the law to create a new statutory fixed term contract? If so, I would be interested to hear your arguments in support of this. How does this ruling abolish statutory periodic tenancies?
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"All the other deposit implications has risen since this judgment and I am sure this will rage on until the SC setts the record straight by confirming the original spirit and interpretation of the SP legislation section 21(4)(a) "

If I remember correctly, the Supreme Court can only look at the judgment and see if there is a mistake in law. In doing so they can look to the intent of the legislation only if the legislation is not clear. This case will only go the Supreme Court if the landlord is feeing rich or covered by insurance, which agrees to carry on paying out. The Supreme Court cannot change the law.

Frankly, I think this matter is far too important to put in front of judges again. What is needed is for government to agree to a change in the law with retrospective effect. So we are in the hands of the politicians. That's OK then. Remind me who introduced these new deposit protection rules in the first place?
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"Just in case you need to drew a line under it follow this link http://www.letlink.co.uk/GeneralInfo/General_possession/S21_4_A.pdf "

I'm not sure I follow your point here. This is just for serving notice under a periodic tenancy?

Mark Alexander

7:52 AM, 19th June 2013
About 7 years ago

I have created a follow up article, please see >>> http://www.property118.com/landlord-power-can-and-will-get-deposit-protection-rules-clarified/40693/

Commenting is now CLOSED on this thread.

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