The Court of Appeal has this week imposed the maximum penalty on a residential landlord following a dispute with a tenant over prescribed information under tenancy deposit law. Virtually all of the prescribed information had been supplied and what was omitted was described as 'minor'. After the case, lawyers said the omission could have been put right by giving the tenant a copy of the Scheme's leaflet – something the tenant could have got for themselves.
Landlords (or their agents) have a duty to produce a list of ‘prescribed information’ to all their tenants, covering standard information about how the relevant scheme operates. The exact information required is set out in the Housing (Tenancy Deposits) (Prescribed Information) Order 2007.
In the case of Ayannuga v Swindells, the landlord omitted to provide minor pieces of information listed in the prescribed information.
The case arose after the tenant allegedly fell into rental arrears and the landlord sought possession. The tenant countered, by saying that the landlord had not supplied all the prescribed information. The landlord did not dispute this, but argued that the requirement was largely a procedural one and that the deposit had been protected as the law required. The landlord also said that the tenant could have found out everything he needed from the scheme's administrator.
Thus, at the first hearing, the landlord argued that he had provided most of the information and that the only deficiencies related to the mechanics of the scheme which the tenant could easily have found for himself from the provider of the scheme. The judge agreed and dismissed the claim brought by the tenant for the return of the deposit. The court agreed and dismissed the tenant's claim. The tenant then appealed.
This week the Court of Appeal overturned that decision and awarded the tenant the maximum compensation of three times the tenancy deposit.
Luke Maunder, a property specialist with law firm Barlow Robbins, said: “This case has important implications for residential landlords and residential agents.
"It is not uncommon for minor pieces of information to be omitted from the prescribed information, particularly as the Act allows it to be produced separately from the Tenancy Agreement, and some required items instinctively seem less important as the tenant can find it easily elsewhere.
“In the case of Ayannuga v Swindells, the landlord failed to provide details of the procedures to be followed in certain events. Details of the Tenancy Deposit Scheme had been provided, but the omission of the additional information – potentially as simple as including a leaflet provided by the Scheme – has cost him thousands.
“The maximum fine is three times the deposit, but the landlord also forfeits the original deposit, so in reality it is four times. As a deposit is usually at least a month’s rent, a small error can be very costly."
He advised: “All residential landlords and letting agents need to take note of the important decision in Ayannuga v Swindells and make sure that they provide all the necessary prescribed information, ideally well within the 30 days allowed.”
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Comments
More concerning is the fact I suspect most agents don't issue the prescribed information and wouldn't have a clue what the requirements are. They assume you protect the deposit and that is the end of it (I use 4 different agents and everyone gets this kind of stuff wrong)
So as a landlord paying for a full management service you assume the LA will do their job properly.. Whereas if they don't its the landlord that's end up in court not the LA.
I'm afraid this judgement means lots of landlords being fined due to incompetent LAs then the landlords having to take the LA to small claims court.
It's a mess...and don't even get me started on LA's not realizing a renewed AST needs to have the deposit protected again!
@IndustryObserver
Tenant pays as part of referencing charge for whatever fixed term is offered/agreed.
Costs are similar to major referencing companies. LetsXL invite renewals about 2 months before end of fixed term.
Go to their website for all the info.
Can everyone please stop whingeing about this?
What the Landlord or their agent has to do is very clearly set out - there are even template suggested forms to use on each scheme website.
Is it OK then for the Landlord to have one chair in a mongrel 3 piece suite not compliant?
Or to be one day late with a gas safety record renewal? Or two days - or how many?
Or is it OK if only one child gets carbon monoxide poisoning and not all 3?
For goodness' sake just do the job properly. The problem is that most Landlords do not realise the significance of the PI or even necessarily that they have to do anything about it.
Is that an excuse as well?
I meant which goes to the tenant....
Ok yes the landlrod should have supplied the PRECISE wording etc.
But to charge him 3 months deposit which then goes to the landlord is nonsense by any stretch.
@Stonehenge
Who pays for the warranty?
How Much?
What term does that payment cover?
The solution of course is not to take a deposit which is what I do,and to obtain a warranty from LetsXL for up to 6 weeks equivalent rent.
It's a no-brainer really, and you get possesion without penalty!
Becca of course I mean the tenant.
He didn't so much get excellent advice though as the Landlord lousy. It was clear an offence had been committed. Remember this will be a Part 8 claim under CPR so not exactly unlimited costs but they will have hurt.
Now stop nagging me I can go home to be nagged!!!!
@Jac
The position is very simple. This was a pre LA Act case must have been, or the Appeal Court is showing its displeasure by the award it has made.
Pre Localism Landlords could escape, now they cannot. It is all very simple really just make sure the PI is issued complete and correctly in terms of time and content.
What is actually so difficult about that?
The real nightmare is periodics where the data may have changed. Now thereby possibly hangs another tale!!
@ Becca
it's not the case itself, as soon as the Localism Act was introduced it was worrying, and as I understand it the Act itself can go much further, so a innocent mistake on the information rather than the omitting of giving it can also be held against the landlord.
This article has some very interesting (and worrying!) points and would definitely say it's worth a read:
http://landlordlawblog.co.uk/files/FeatureLocalismActarticle.pdf
Industry observer: you're losing me again. Why would the landlord have wanted a review of the original decision, when it went in his favour? It was the tenant who appealed, not the landlord, and the tenant clearly received excellent legal advice.
As I said earlier, a worrying case, given that a tenant can find such a tiny technicality to resist a straightforward possession after (allegedly) running up rental arrears.
Ray Evans as usual talks great sense.
The award had to be x3 for one of two reasons:-
1. Either the original 'offence' took place pre April 2012
which it almost certainly did
OR
2. The Appeal Court showed its displeasure at an
obviously frivolous appeal by way of the award if
discretionary. This is unlikely though
What is really interesting in this case is that it seems to have been a Deputy District Judge who allowed the appeal.
Why didn't the Landlord simply go immediately for review of the decision to a Circuit Judge who surely would have had more sense and overruled it.
As most of us know the laws and regulations for letting & managing residential properties has become quite onerous. Short cuts can lead to trouble.
During over 35 years in the lettings business and having to comply during that time with dozens of new regulations I put in place very strict administration procedures. One of the most important of these was that EVERYTHING would have to be in place PRIOR to a tenant taking occupation (that is everything, not withstanding the legal time allowed for any individual compliance) To allow time for all to be in place, a minimum of seven working days, two days over a working week, was strictly adhered to before a tenant took occupation. (Longer if there were complications)
Initially it could sound onerous for a tenant/landlord? Possibly, but they are owed a duty of care. Very rarely was there a problem for the firm and I can count on one hand the number of prospective tenants or landlords who did not proceed after the reasons were explained to them.
Estate agents new to lettings should take note. ;>)
@Becca
Yes of course sorry meant to say Landlord was bound to lose. Thank you
Why does everyone think it needs to be a savvy tenant?
I said about three years ago as time went on more tenants would raise disputes as they lost their ADR virginity and realised how ewasy it was for them to raise a dispute at no cost to themselves.
So next tenancy any deposit argument with the LL and they raise a dispute again also learning that if an agent is involved and they claim less than £100 any savvy agent will pay it themselves - especially if a TDS member with its impact on future annual fees.
The scheme stats don't bear this out, because they are getting less disputes. But a major reason for this is agents buying off disputes - and very sensibly too in my view.
So it will be (and in some cases already is) with TDP issues in terms of correct protection and above all, PI information served or more likely, incorrectly served. Tenants will become more aware and so end of tenancy any aggravation from the landlord, and especially if they are in arrears, they will counterclaim for the whole deposit and an award.
The really big danger is on periodic tenancies. Hence my advice to go for overkill and reprotect and above all re-serve PI even if it turns out you didn't need to. Why?
Because post LA 2011 the offence will have been committed and if the eventual binding decision is that the PI needs to be re-served it will be too late and agents and Landlords will be exposed and at risk on every tenancy that has gone periodic since last April.
Prior to LA 2011 you could use one of the escape loopholes - but no longer.
Yes if you cannot buy the item or in any other way obtain the instructions I'd say you could sue - or more likely report the trader to TSO.
simple - dont take deposits therer is a more effective way for lanlords to secure a tenant.
Ajay KIS lettings
Industry observer - I think you mean the case was always going to be won by the tenant on appeal?
Interesting case, and clearly a very savvy tenant. The landlord has not only lost the original deposit plus three times, but also the rent arrears that (allegedly) the tenant had run up. Wonder if there are more cases like this in the pipeline?
Can I sue a shopkeeper who sells me an item but the box omits the instructions (which I can probably get online?)
NO NO NO!!!
Let's have no more posts just bleating on about the Law being an ass when it is very plain and easy to comply with.
The Prescribed Information requirements have always been as important an element of the TDP provisions as the actual money protection itself for one very simple reaso.
The PI tells the tenant where his money is and what to do and where to go if he subsequently has a problem getting it back. The tenancy agreement should also carry such information, though many will not, and so should the T&C issued by the agent, but they don't.
Someone please tell me what bit of what follows is so hard to understand and above all, as professional agents, comply with (as required since April 2007)
This Jac link in his post below
http://nearlylegal.co.uk/blog/2012/11/informing-deposits/
has this paragraph
"A very heavyweight Court of Appeal (Etherton LJ, Lewison LJ) disagreed entirely with L and the lower Court. It held that the information requirement was not merely a minor procedural one. They were of real importance as they told tenants how they could seek to recover their money and how they could dispute deductions without litigation. The Court of Appeal upheld the decision of the High Court on this issue in Suurpere v Nice (our report here). The lower Court had acted outside the bounds of proper judicial evaluation. L was clearly in violation of the order and the penal;ites of s214, Housing Act 2004 applied. Therefore L was ordered to return the deposit plus a penalty equivalent to three times the deposit. "
The first Judge in the Lower Court did not see sense he was completely wrong. This case was always going to be won by the Landlord on appeal. You want the taxpayers money back - I agree, sue the Landlord and his legal team.
Now please can everyone stop moaning and get on instead with complying with the Law - it ain't difficult.
This is definitely another legal aid case. The tenant solicitors will be smiling all the way to the bank at tax payers expense. It a whole load of rubbish. The landlord Ayanuga was made a scape goat by some biased judge.
If the first judge that dealt with the matter saw sense and allowed the case in favour of the landlord, it s very surprising to get a turn around on a mere technical issue on appeal.
The main fact of the case was that the tenant was in arrears and as such the landlord was seeking possession. this seems to have been completely ignored.
......agents and landlords beware of the courts.
@Jac
Appeal where - to the Supreme Court or The Hague?
This Landlord should never have appealed as Suurpere in July 2011 clearly laid down the requirements. That is why in my view the Court went for the maximum - or of course because the pre LA2011 rules applied so if guilty mandatory x3 penalty.
@hmmm
I was done for doing 36 mph in an area I honestly thought was 40mph. Mine was the only car on the road apart from the copper who stopped me. Clear day, fully serviced modern car, no pedestrians in sight and a driver who has averaged 18000 miles a year for the past 30 years.
Was that £60 penalty bang out of order? Or had I broken the Law - you can't be a little bit pregnant my friend.
@JB
Afraid you are the one bang out of order 5read para 2 above and the relevant Statute.
The Landlord has a clear duty to provide this information inconvenient though that may be like much of the Law (in my driving case!!).
While writing may I remind all readers the only safe play at the moment on a tenancy going periodic and until there is a Court of Record decision is to issue fresh PI - because it is a new tenancy (s5 HA 1988)
there is a little bit more information here
http://nearlylegal.co.uk/blog/2012/11/informing-deposits/
and here
http://www.russell-cooke.co.uk/clientUpload/document/file/Recent%20development%20in%20tenancy%20deposit%20legislation%20-%20November%202012.pdf
although doesn't really go into full case details, but the 2nd link seems to suggest they didn't give all the info such as provided in the DPS T&C's print out.
If the tenant knew which scheme the deposit was protected with then yes they should be easily able to find it all out for themselves, but as it stands the burden is currently on the Landlord to provide it. Wonder if they will appeal.
We need to know the full details of this case. Why did the first case ever come to court? Somebody must have been trying to swindle somebody else so what did happen. What was Ayannuga's complaint? Why did the judge react so severely in the appeal. Is the judge a liberal democrat working with Shelter? Could Ayannuga read and speak English?
Please have another go at writing this report for your next edition. It is important because of its ramifications as you wrote. In fact it was the only thing you really wrote.
I wonder if there was a reason the maximum penalty was applied. seems overly harsh on the limited facts of the case as given above.
Claim culture. The tenant knew where his deposit was but too lazy to look on the web IF he needed any further information. Least the lawyers get paid. More red tape.
Bang out of order in my opinion for such a minor mistake