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

Mark Alexander - Founder of Property118 View Profile

18:59 PM, 17th June 2013, About 9 years ago

@Steve Masters - OK, we agree that the ruling is that an SPT is a NEW tenancy I think.

Do we also agree that the law states that a NEW Deposit Protection Certificate must be provided and that new Prescribed Information must be issued when a new tenancy is created?

Have you done that?

Now do you see my point?

Gareth

19:24 PM, 17th June 2013, About 9 years ago

Does this ruling affect you personally Mark? Do you have any tenant deposits on fixed term ASTs that are now running Statutory Periodic? I truly hope so...

If you don't and you're not in the same boat as other (generally) law-abiding landlords it would certainly explain your apparent enjoyment regarding the potential ramifications of this (totally outrageous) court ruling designed to crucify landlords holding deposits. I quote your post below:

"@Steve Masters – OK, we agree that the ruling is that an SPT is a NEW tenancy I think.

Do we also agree that the law states that a NEW Deposit Protection Certificate must be provided and that new Prescribed Information must be issued when a new tenancy is created?

Have you done that?

Now do you see my point?"

Mark Alexander - Founder of Property118 View Profile

19:31 PM, 17th June 2013, About 9 years ago

@Gareth Thomas - what on earth gives you the impression that I am enjoying this? I am scared to death! YES I am affected by this, if every tenancy I've had go SPT over the last years needed to be re-protected and I should have issued a new DPC and prescribed information I am personally screwed and so are all of my family members. The fines I could incur would be horrendous. I am pursuing this passionately in the search for what to do for the best, preferably an alternative to jumping off a bridge!

Please don't try to make this personal, I'm not and I have made the following point more than once "PLEASE DON'T SHOOT THE MESSENGER!"

I created Property118 to share best practice Gareth. Sometimes that means telling people about things they would prefer not to hear.

Steve Masters

19:45 PM, 17th June 2013, About 9 years ago

@Mark - I can't find the definitive source that states when the Prescribed Information needs to be served, is it each time a new Deposit is taken or each time new Deposit Protection is taken out. This is crucial.

So NO, I can't agree that "the law states that a NEW Deposit Protection Certificate must be provided and that new Prescribed Information must be issued when a new tenancy is created?"

You may be right but I haven't seen the proof.

Robert M

20:00 PM, 17th June 2013, About 9 years ago

"OK, we agree that the ruling is that an SPT is a new tenancy I think."

Well that seems to be this week's bit of wisdom from the men in wigs.

"Do we also agree that the law states that a new Deposit Protection Certificate must be provided and that new Prescribed Information must be issued when a new tenancy is created?

Quite possibly. But that is not the full story. The case in question relates to a tenancy that started before 6 April 2007. Therefore, when it went periodic, if we must accept a new tenancy was created the need for protection was, we are now led to believe, triggered.

To come to their opinion the men in wigs had to come to the conclusion that there was a new tenancy AND the landlord was deemed to have received a new deposit with no funds being transferred.

What they did not decide for certain was whether or not the original protection process could be deemed to cover the "second" deemed deposit. The reason they did not rule on this is they did not have to. Judges like to avoid extending their decisions to cover other circumstances. Even if they had commented it may well have not been binding as obiter dicta.

If the landlord can be deemed to have received a second deposit, who is so confident that they can say beyond certainty what the actual ruling would be had the deposit been protected originally? I can see the implication, I understand the new uncertainty. What I do not accept is the certainty implied in certain posts in this thread.

Having said that, I am glad my tenancies are worded with the extension built in. Still feeling slightly smug but not over confident.

Mark Alexander - Founder of Property118 View Profile

20:27 PM, 17th June 2013, About 9 years ago

@Steve Masters - Unlike Mary Latham, Industry Observer and David D'Orton Gibson I'm not good at rattling off the specific clauses, dates and sections of legislation so you may have to bear with me on that unless somebody else wouldn't mind answering your question please.

@Robert M - I now follow your logic and I hope that you are right. It will be people in wigs who will need to clarify the law for us all, yet again! Having spent all weekend researching this and all day reading and responding to comments here I have come to the conclusion that this certainly isn't as cut and dried as I first thought. One thing which is for sure is that I will be reviewing the way I do things when this is all resolved. I have no idea what to do in the meantime 🙁

Steve Masters

20:28 PM, 17th June 2013, About 9 years ago

"What they did not decide for certain was whether or not the original protection process could be deemed to cover the “second” deemed deposit."

@Robert M - Exactly what I meant. If the Protection Providers say protection continues who is to say it doesn't, the Court of Appeal didn't.

Lets see what other have to say on this point.

Robert M

20:49 PM, 17th June 2013, About 9 years ago

"I can’t find the definitive source that states when the Prescribed Information needs to be served, is it each time a new Deposit is taken or each time new Deposit Protection is taken out. This is crucial."

If only I could answer this. The legislation starts off being relatively clear(?)

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 [30] 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.

In other words whether any prescribed information needs to be served depends on the individual deposit scheme rules. 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 so not have complied with 213(4).

I think you will find the schemes require you to serve the prescribed information each time you need to protect a deposit. In other words, I think you will find the scheme rules require the certificate to be passed to the tenant with prescribed information.

Andrew Taylor

20:54 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. 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.

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?

Mark Alexander - Founder of Property118 View Profile

21:31 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.

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