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

Justin Selig - solicitor

16:28 PM, 17th June 2013, About 9 years ago

I, together with my colleagues at Landlord Action have looked into this in some detail today - we do agree with Mark - this is potentially very serious, but when looked at in detail - it does not make any sense at all.

Firstly, if you are a Landlord and your Tenant occupies your property under an Assured Shorthold Tenancy and you have taken a deposit from your Tenant, then this applies to you. If you have not taken a deposit, then you have nothing to worry about.

If you have taken a deposit at the beginning of the fixed term of the tenancy, and the tenant remains in the property beyond the expiry of the fixed term, then according to this case the periodic tenancy is deemed to be a "new" tenancy. According to the rules relating to deposit protection, a deposit for a new tenancy needs to be protected.

The Court of Appeal ruling states that a deposit is deemed to be received at each renewal - so in the case they were dealing with, the switch from fixed term to periodic meant that a new deposit was deemed to have been received - and because the time it was received was after April 2007 it therefore required protection for that particular tenancy.

I think the arguments as to whether or not this issue applies to deposits received pre or post April 2007 are irrelevant as all deposits being held today (regardless of when they have been received) must be protected by virtue of the Localism Act 2011.

The question is, therefore - where you are holding a protected deposit - do you need to re-protect it each time there is a renewal of a tenancy? At present, I think the answer to that question is, yes - but hopefully I will be proved wrong on this.

Therefore, anyone who is holding a deposit received at the beginning of a fixed term is required to re-protect that deposit when it moves to a periodic. There is a further problem which may hopefully highlight how this does not make sense. A periodic tenancy is deemed to be renewed at the expiry of each period. Therefore, if you follow the argument - this would mean that the deposit would need to be re-protected at the beginning of each period. Most periodic tenancies are monthly - so the deposit would need to be re-protected monthly.

Obviously this does not make sense, nor I am sure is this the intention of the legislation. So how does a Landlord protect himself?

The first thing I would do is to obtain written clarification from the deposit protection company you are using as to their take on the ruling, and comply with their recommendations. Secondly, as a minimum, and you have a fixed term tenancy about to go onto a periodic, you should at least protect your deposit again when it goes periodic. (Personally, I would actually return the deposit to the tenant - but I appreciate that this is not always practical.) Thirdly, and for belt and braces protection - where you are still holding the deposit, you may want to consider not allowing the tenancy to go onto periodic, but to re-issue the tenant with a new fixed term - and re-protecting the deposit for that fixed term.

I hope that the Landlord does decide to appeal this decision and take it to the Supreme Court as some further clarification is definitely needed.

andrew townshend

16:35 PM, 17th June 2013, About 9 years ago

i decided sometime ago that it was now pointless to take a deposit, i increase the rent to help cover future problems.

Rob

17:09 PM, 17th June 2013, About 9 years ago

Surely the blame for this lies with the deposit protection companies not the landlord does it not? Its their job to ensure they are running things according to the law and its up to them to advise us their customer what it is exactly we need to do and not to do when protecting the deposit.

17:14 PM, 17th June 2013, About 9 years ago

Mark I do not have a website.

However I just wanted to say. Is it possible to go straight on to a Periodic tenancy from the start? Then there can only be one tenancy.

Mark Alexander - Founder of Property118 View Profile

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

@Rob - I feel your pain but I think the blame lies firmly at the feet of the solicitors which made such a pigs ear of drafting this legislation in the first place. I suspect that landlords will be held accountable and that landlords will need to prove in Court that their losses are as a result of misleading information being disseminated by the deposit protection providers based on their (the deposit protection providers that is) lack of understanding of the laws. Let's hope I'm wrong on that but so far I think I've been right (admittedly not all) of most of the observations I've made on this thread.

Mark Alexander - Founder of Property118 View Profile

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

@Terry - please read the comment from Justin Selig which implies that if you were to do that you may be required to issue a DPC and PI monthly!!!

Jan Martin

17:35 PM, 17th June 2013, About 9 years ago

I hear what you are saying mark but I am of the same thoughts as Rob. Today the conversation with My Deposits was that this is the way they run the scheme. Landlords are unable to do anything other than what the scheme says ,it is unreasonable for landlords to have to take any blame or have to stand in the courtroom fighting for their rights.

Robert M

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

"I hope that the Landlord does decide to appeal this decision and take it to the Supreme Court as some further clarification is definitely needed."

I'm sure he has full confidence in our legal system and does not believe that the lunatics are in charge of the asylum.

Mark Alexander - Founder of Property118 View Profile

17:41 PM, 17th June 2013, About 9 years ago

@Jan Martin - I completely agree with your sentiments but that's not how the law works. If your tenant takes you to court and wins then you in turn have an option to take another party to Court as a result of the consequential loss. That may be your letting agent or it might be your deposit protection provider if you believe they have mislead you into inadvertently breaking the law. I can assure you that I don't like this any more than you do.

Robert M

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

I have almost full confidence that by the time the deposit protection companies have explained to ministers very clearly the implications of this ruling it will be realised that the legislation will need to be amended .... again.

I only wish I could be employed as a consultant to point out all the other faults.

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