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

15:13 PM, 17th June 2013, About 9 years ago

Just as i said at 10.45 this morning and few other comments shortly after!!

15:23 PM, 17th June 2013, About 9 years ago

Mark, this cannot be a Supreme Court ruling. The judgement handed down only a few days ago was from the Court of Appeal. It would have been appealed to High Court from County Court and then to Court of Appeal probably. If it had been Supreme Court it would have said so and there would have been considerably more judges ruling on the matter, usually at least 5, unlike the 3. It takes months, if not years to appeal up to the Supreme Court so there is no way that something heard in the Court of Appeal last month could have made it that far. Your source is can only be mistaken.

I don't think you really understand how case law works. Just because a judgement like this has been issued that does not mean it now has blanket application. For a case to be binding on another the material facts must be the same. It won't be enough for someone just to say this is a dispute regarding tenancy deposits therefore this case is authority. A claimant's solicitor would have to demonstrate to the court what the precise ratio in this case was and how it applies. It could well be argued that the ratio here should be interpreted narrowly and that it only applies to tenancies that came into being before the new legislation came into effect in 2008, which means it has limited applicability, or they could construe it widely and say that it does apply to all periodic tenancies. Until someone actually tries to apply this no one will know so it is pointless trying to conjecture how it may or may not apply, and as it is Court of Appeal, it can still be appealed upwards, assuming that the parties involved have the resources to do so. Parliament could also legislate to correct this if they feel that it has gone beyond the bounds of the original legislation on deposits. There are so many possible outcomes from this case that panicking unnecessarily and suggesting that countless landlords could face bankruptcy is simply reckless.

15:32 PM, 17th June 2013, About 9 years ago

Hi Jonathan, exactly what i said at 10.45 just more elequant and factual!

15:38 PM, 17th June 2013, About 9 years ago

I don't think you'll find any factual errors in my post Andy but I am happy to be corrected. I am a lawyer, unlike most people posting on here.

Jan Martin

15:48 PM, 17th June 2013, About 9 years ago

I am not a lawyer like yourself just a landlord but I think Andy was trying to tell you that you have put it in a more eloquent and factual way.

Mark Alexander - Founder of Property118 View Profile

15:56 PM, 17th June 2013, About 9 years ago

@Jonathan - why not get yourself a Member Profile so that we can learn more about you? Please see >>> http://www.property118.com/membership/40048/

16:02 PM, 17th June 2013, About 9 years ago

It was a compliment Jonathan thats a fact!

Thanks Jan x

sam

16:02 PM, 17th June 2013, About 9 years ago

As a general rule, laws cannot be applied retrospectively (although Gordon Brown did make history). So not too sure what you are saying about going back 6 years.

Advices on forums like this are unlikely to be enforceable because we do not have a contractual or professional relationship hence no duty of care.

Not sure where you are coming from about not being able to issue S21 notice though.

Be +ve folks. If this ruling does become law, all you have to do is to stick a clause in your AST to charge the tenant for the pleasure of compliance. Another case of unintended consequence ? Businesses have to make money to survive. If the tenants dont like it, they can come onto the LL side and together we will scream at the politicians and the judges.

Robert M

16:17 PM, 17th June 2013, About 9 years ago

I think the widespread panic may be a little premature here, to say the least. You cannot take a decision in one set of circumstances and automatically apply it to others unless all the facts match.

[Note I have been drafting this for some time in between appointments so by now some of my points may hopefully have picked up by others.]

First of all, the decision relates to a case where the original tenancy started before 6 April 2007. The ruling is that as the periodic tenancy came into place after 6 April 2007 that was a new tenancy and created the obligation to protect the deposit.

Now that is a bit of a bombshell, but we must be talking about a relatively small number of tenancies.

In most cases now the tenancy will have stared after 6 April 2007. Assuming you entered into a new tenancy after 6 April 2007 and complied with the requirements (under the old 14 day rule, the new 30 day rule or the catch up window of opportunity to 6 April 2012) I think the position is a little different.

Why the difference? Well, where you have complied with one version of the legislation if a Court of Appeal judge has decided that there is a notional transfer of the deposit to a new agreement I would seek to argue that I complied six months before I received this new deposit. Read section 213:

213(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.

213(3) Where a landlord receives a tenancy deposit in connection with a shorthold tenancy, the initial requirements of an authorised scheme must be complied with by the landlord in relation to the deposit within the period of [14] days beginning with the date on which it is received.

213(4) For the purposes of this section "the initial requirements" of an authorised scheme are such requirements imposed by the scheme as fall to be complied with by a landlord on receiving such a tenancy deposit.

Well, as far as I am concerned, I have dealt with the law by complying with my scheme's requirements, to the letter with two certificates and the secondary information.

Ironically, the changes introduced by the Localism Act 2011 may have worked in a landlord's favour. Any landlord who entered into a new tenancy after 6 April 2007 that went periodic before 6 April 2012 and was prompted to "catch up" with their paperwork and procedures before this date may well now be protected against Superstike v Rodrigues.

I cannot help but make one observation. All my non-student agreements are for the standard fixed term of six to seven months but contain a provision to the effect that if neither side gives notice the tenancy shall continue (on a periodic basis, but this phrase is not used) until one side gives legal notice. At the moment, I would strongly argue that this is one tenancy agreement. I am feeling slightly smug but not over confident!

Mark Alexander - Founder of Property118 View Profile

16:20 PM, 17th June 2013, About 9 years ago

I Tweeted the Deposit Protection Providers last night. They are calling emergency meetings. See their response below and read their interim press statement. Now tell me there is no need to worry!

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