LEGaLlettings
county court ApplicAtions
insurance
Where a deposit has been paid any tenant
or relevant person may apply to the county
Court cases are expensive
court either because the landlord has
(i) failed to take any or sufficient steps If you are taken to court as the letting
to register the deposit, or agent involved in a dispute concerning
(ii) provided some prescribed information the management of a tenant’s deposit,
to the tenant but the scheme administrator the legal costs of defence can be
has not been able to obtain confirm that considerable. However, if the agent should be held
the deposit is protected. liable and required to pay a penalty, such
Where the court is satisfied that the can insurance cover you? as that under s.214(4) detailed above, this
landlord has failed to either protect the PROPERTYdrum asked Jane Venning, is considered to be a fine, penalty or
deposit within 14 days or at all, or, the Divisional Director, Professional Risks punitive damages, which the Brit
prescribed information has not been given Division, Kerry London: Insurance policy excludes. This means that
to the tenant s214(3) and (4), will come “Insurance policies vary so I can it is vital for agents to have Professional
into effect as follows: only comment on the policy that we Indemnity cover to receive assistance with
(3) The court must, as it thinks fit, either– provide, which is underwritten by the defence of any claim against them.
(a) order the person who appears to the Brit Insurance Ltd. Even though the actual penalty or fine is
court to be holding the deposit to repay In this policy, cover will be triggered not covered, with proper legal cover you
it to the applicant, or by action against the insured agent are much less likely to face a penalty and
(b) order that person to pay the deposit and defence costs would be paid the associated costs of defence won’t keep
into the designated account held by the (subject to the application of policy you awake at night.”
scheme administrator under an authorised terms and conditions). www.kerrylondon.co.uk
custodial scheme, within the period of
14 days beginning with the date of the
making of the order. the information to the tenant – as required protected and the prescribed information
(4) The court must also order the landlord under s 213(6)(a) – within 14 days, as supplied to the tenant before the
to pay to the applicant a sum of money required by s 213(6)(b). application was heard by the court.
equal to three times the amount of the Harvey was distinguished in Seghier However, defects in the scheme with the
deposit within the period of 14 days v Rollings, (Bow County Court, March potential to lead to inequitable results have
beginning with the date of the making 2009), where the landlord was found to come to light. One aspect of the legislation
of the order. have failed to provide the prescribed which has proven problematic is the
information, although an unsigned copy of absence of a formal definition of the term
cAses in point the registration certificate had been passed “landlord(s)”, albeit that s212(9)(a) states
A number of straightforward cases show to the tenant following the commencement that the term shall include references to
that the scheme has been put to good of the court proceedings. The landlord was a person or persons acting on his or their
effect by tenants, including Beal v ordered to pay the s214(4) penalty. behalf in relation to a tenancy.
McCartney (Plymouth County Court, Another decision in favour of landlords A case heard in May 2009 in the Central
March 2008), Ferguson v Jones is Anderson v Diamond Properties Leeds London County Court, Jacklin v Fraser
(Birmingham County Court, November Ltd (Leeds County Court, January 2009), Property Management Ltd, T/a Martin
2008) and Universal Estates v Tiensia where the defendant letting agent and Co (Bedford), serves as a cautionary
(Croydon County Court, February 2009). successfully opposed the claim on the tale for agents and tenants. (The claimant,
In all of these cases the landlord failed ground that the deposit had been Jacklin was the tenant).
to protect the deposit within the 14-day
period and the tenant was awarded a sum
As a result of the draftsman’s haste to
equal to three times the deposit.
get this scheme on the statute books,
FAilure to supply the prescribed
inFormAtion
it would seem that this supposedly “no fuss”
Possibly the most widely cited of the
county court decisions, Harvey v Bamforth
mechanism for tenants has run into problems.
(Sheffield County Court, August 2008,
County court judges seem increasingly
cited in the White Book at para
3A–1627.2) gave some comfort to perplexed that they are compelled to make
landlords. The first instance decision
awarding the penalty stipulated in s 214(4)
orders within a rigid system, with the
to the tenant was overturned on appeal by
potential for inequitable and unjust results.
HHJ Bullimore, who found that the
landlord was not liable for the penalty
This is in clear conflict with the original
where he had correctly protected the
deposit but had simply failed to provide aims of the legislation.”
PROPERTYdrum FEBRUARY 2010 49
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