LEGaLlettings
the facts of Jacklin were as follows: to repay it to the applicant (s213(3)(a)) However, more recently in the case of
The defendant, Fraser, entered into an or order that the person pay the Davies v Smith (Tunbridge Wells County
agreement with a landlord to find a tenant deposit into the designated account Court, June 2009) the landlord was
for a vacant property. The agreement held by the scheme administrator permitted to set off a sum for breach of the
clearly stated that the landlord was under an authorised custodial scheme tenancy agreement against the s214(4)
responsible for the registration of the (s 213(3)(b)) within 14 days. Any such penalty (the deposit having been returned).
deposit. However as a result of an order would be completely pointless
administrative error the tenancy in the circumstances since the deposit “Receiving” the depoSit
agreement incorrectly stated that the was already protected in the insurance Finally, in Jacklin the defendant sought
defendant letting agent would be backed scheme. Furthermore, were the to argue that he had not “received” the
responsible for the registration of the deposit protected in a custodial monies within the meaning of s213(3) until
deposit. On discovering that the landlord scheme the court would be compelled he discovered that the landlord had failed
had failed to register the deposit within the to order the return of the deposit to to register the deposit as per their
14-day period the defendant immediately the tenant (even where the landlord agreement, and that until that moment the
registered it. The landlord duly went was entitled to a set off ). However, monies were held on trust for the landlord.
bankrupt. In time, the two joint tenants where the landlord had chosen the The judge declined to rule on this point.
abandoned the property within the fixed insurance scheme (as in Jacklin) the However, it is clear that where a landlord
term of the Assured Shorthold Tenancy court could manipulate the system and tenant enter into two successive
Agreement and stopped paying rent. and merely order the transfer of the tenancy agreements and the landlord
DJ Lightman held that he would be deposit funds from an insurance retains deposit monies from one tenancy
bound to find that the defendant was a backed scheme to a custodial scheme to the next the landlord will be deemed
landlord for the purposes of the scheme pursuant to s.213(3)(b) in order to avoid to have “received” those funds for the
because of the error in the tenancy returning the monies to the tenant. purposes of the scheme and will be liable
agreement. However, the judge found that should he fail to protect them within 14
the proceedings were improperly brought days, even where he seeks to argue that the
by only one of the two joint tenants and monies were retained as rent in advance
therefore no penalty was ordered. (The (see Piggott v Slaven, Grimsby County
claimant had also failed to constitute the Court and Saad v Hogan, Brentford
proceedings properly in citing the name County Court, both February 2009).
of the defendant incorrectly). There is also the outstanding question
The judge went on to highlight the issues of whether a claimant is entitled to receive
with the legislation as he saw them, which the benefit of the legislation after the
would have put him in an impossible tenancy in question has come to an end.
position, had the claim been properly As noted above the legislation fails to
constituted: define the term “tenant” and it is arguable
that the intention of the Act is to protect
•
He found he would have been only current tenants. The conduct of the
compelled to order that the defendant deposit schemes also lends weight to this
pay the penalty despite the clear argument, as they will refuse to accept a
arrangement between the defendant deposit after a tenancy has ended.
and landlord – an unjust result. As a result of the draftsman’s haste to get
The inequity of such a decision would this scheme on the statute books, it would
have been compounded by the fact seem that this supposedly “no fuss”
that the landlord had since gone mechanism for tenants has run into
bankrupt and, had it not been for the Set off problems. County court judges seem
actions of the defendant, the monies While the judge in Jacklin was of the view increasingly perplexed that they are
would have been as good as lost to the that where any set off was possible the compelled to make orders within a rigid
claimant. court should so order, this differs from system, with the potential for inequitable
•
Had he been compelled to order the the earlier case of Stankova v Glassonbury and unjust results. This is in clear conflict
payment of the penalty by either the (Gloucester County Court, March 2008) with the original aims of the legislation.
defendant, or indeed the landlord, the where it appeared that the judge refused In giving his judgement in Jacklin DJ
claimant may well have benefited a set off sought by the landlord to cover Lightman commented that “the sooner
from an enrichment which would have dilapidations, on the basis that had the Parliament looks at this the better”.
been unjust since he had abandoned landlord registered the deposit he would
the tenancy during the fixed term— have been able to raise those issues Laura West, is a barrister at Arden Chambers.
where the landlord did not accept the through the arbitration scheme. In the Marianne Rivett is a solicitor at Kennedys.
abandonment—and ceased to pay rent absence of any provision in the legislation, E-mails: laura.west@ardenchambers.com and
without any legal basis for doing so. DJ Singleton felt he was unable to order m.rivett@kennedys-law.com
•
s213(3) would require the court to any set off against the deposit monies and
either order the person who appears penalty – albeit that the state of affairs
What’s your view of this? Share it:
to the court to be holding the deposit “went against the grain”.
www.propertydrum.com/articles/deposits
50 FEBRUARY 2010 PROPERTYdrum
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