Merryck Lowe v The Governors of Sutton's Hospital in Charterhouse
Jurisdiction | England & Wales |
Judge | Mr Justice Adam Johnson |
Judgment Date | 21 March 2024 |
Neutral Citation | [2024] EWHC 646 (Ch) |
Court | Chancery Division |
Docket Number | Case No: CH-2022-000228 |
[2024] EWHC 646 (Ch)
Mr Justice Adam Johnson
Case No: CH-2022-000228
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
CHANCERY APPEALS (ChD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Tom Morris (instructed by JMW Solicitors LLP) for the Appellant
Shomik Datta (instructed by Stone King LLP) for the Respondent
Hearing dates: 21 February 2024
Approved Judgment
This judgment was handed down at 12pm on Thursday 21 March 2024 by circulation to the parties or their representatives and by release to the National Archives.
What is this Case About?
This case concerns the statutory requirements for the provision of information by landlords to their tenants, where the tenancy is a shorthold tenancy and a deposit is paid by the tenant which is protected under a deposit protection scheme. The issues are whether the landlord in this case complied with certain specific requirements to provide information about when it could retain the deposit paid by the tenant, and to provide confirmation by way of a certificate that the tenant had been given all the information he was entitled to. The case also concerns the consequences if such requirements were not in fact met.
After a trial in the Central London County Court the trial Judge, HHJ Luba KC, decided that the landlord had fully complied with its requirements. The tenant now appeals that decision, and argues that the Judge came to the wrong conclusion; and in consequence he argues that the landlord is liable to pay him a financial penalty (or more accurately a number of such penalties, given that there have been a number of tenancies between the parties since 2010).
I have come to the view that the Judge was correct, and that the appeal must therefore be dismissed, for the detailed reasons set out below.
What is the relevant background?
Charterhouse Square is an historic space in central London, run as a charity. Some properties within it are let as residential dwellings. In January 2010 the Appellant, Mr Lowe, came to be a residential tenant of a flat in the Square, at 2 Preachers Court. He entered into a contractual tenancy with his landlord, which I shall refer to as “ Charterhouse”. He paid a deposit of £3,300. There was a written tenancy agreement dated 24 January 2020. In clause 5.3, this contained provisions about how the deposit was to be held and what it could be used for.
Certain categories of tenancy, referred to as assured shorthold tenancies, qualify for particular protection in law. In January 2010, the contractual tenancy between Mr Lowe and Charterhouse did not qualify as a shorthold tenancy, because the annual rent paid was above the specified limit for such tenancies, which in January 2010 was £25,000. But that was to change as from 1 October 2010, when the relevant limit was increased to £100,000. Mr Lowe's contractual tenancy was automatically transformed into an assured shorthold tenancy as from 1 October, by operation of law.
One of the forms of protection provided in connection with shorthold tenancies concerns protection of tenants' deposits. Relevant provisions are in sections 213–214 of the Housing Act 2004 (extracts are set out in Annex 1 to this Judgment). One aspect of this is the requirement that the deposit be dealt with in accordance with an authorised scheme. There are a number of such schemes available. Another aspect ( Housing Act 2004, s.213(5) and (6)) is that the law requires certain prescribed information to be provided by the landlord to the tenant. This is set out in the Housing (Tenancy Deposits) (Prescribed Information) Order 2007 (SI No. 797) (“ the 2007 Order”), at para. 2(1) (again see Annex 1 to this Judgment). The prescribed information has to be provided within a time-limit, which until 2011 was 14 days but is now 30 days. Part of the prescribed information (para. 2(1)(a)-(f)) is about the authorised deposit scheme being used by the landlord. Other parts though (para. 2(1)(g)) are about such terms of the tenancy itself as relate to the deposit, including the circumstances in which it has to be returned, or those in which it may be retained by the landlord, in whole or in part. The landlord also has to confirm that such information provided about the tenancy is accurate to the best of its knowledge and belief by providing a signed certificate. If these requirements are not complied with, then the law specifies certain consequences: depending on the circumstances, the deposit must be repaid to the tenant or paid into a designated scheme account ( Housing Act 2004, s. 214(3)); and the landlord must pay a penalty, which must be at least the same amount again as the deposit, or up to three times as much ( Housing Act 2004, s.214(4)). In Ayannuga v. Swindells [2012] EWCA Civ. 1789, Lewison LJ said, by reference to Housing Act 2004, s. 212(2), that the purpose of a tenancy deposit scheme is both to safeguard tenancy deposits and to facilitate the resolution of disputes. It seems to me clear that the prescribed information provisions I have referred to are intended to promote this latter purpose, for example by requiring transparency as to the landlord's rights to make use of the deposit and the tenant's right to demand its return.
In this case, in September 2010, anticipating that Mr Lowe's tenancy would become an assured shorthold tenancy as from 1 October, Charterhouse's agents, Daniel Watney, sent him a letter. This had various enclosures. These included the required information about the designated scheme under which the deposit was to be held. There is no issue about that. But it also included a form headed, “ A — Prescribed Information”, designed to include information about the tenancy. I will refer to this as the “ Prescribed Information Document.” It had two features relevant to this Appeal. The first is that, in describing the circumstances in which the deposit would be released or deductions might come to be made from it, it mistakenly referred to “ Clause 6 of the Tenancy Agreement attached.” This was wrong. No Tenancy Agreement was attached, and moreover the provisions about use of the deposit in Mr Lowe's tenancy agreement were not in clause 6 (indeed, that agreement did not even contain a clause 6). They were in clause 5.3. The second issue is that although the letter sent to Mr Lowe by Daniel Watney was signed, and although the Prescribed Information Document contained the wording of an appropriate certificate, the certificate itself was not signed: only the letter was.
Neither point seemed to be a problem at the time. October 2010 came and went. In January 2011 the fixed term of Mr Lowe's original (now shorthold) tenancy expired, but he remained in occupation and, as everyone is agreed, a statutory periodic tenancy – also a shorthold tenancy — then arose by operation of law, which carried on until June 2011.
This was then replaced by another fixed term tenancy for about a year. In fact, between January 2010 and August 2015, there were a total of 8 different tenancy arrangements between Charterhouse and Mr Lowe, either fixed term (arising by agreement), or statutory periodic (arising by operation of law). The final tenancy (no. 8), a statutory periodic tenancy which arose in August 2015, continues today. All were shorthold tenancies. For current purposes it is accepted there was no further attempt, after September 2010, to comply with the requirement that Mr Lowe be provided with prescribed information about his deposit: the only attempt made was that in respect of Mr Lowe's initial tenancy, by means of Daniel Watney's letter, although there were 8 tenancies in all.
In due course of time, unfortunately, Mr Lowe and Charterhouse came to fall out. For some time now they have been engaged in disputes about 2 Preachers Court. The dispute has included failed attempts by Charterhouse to regain possession. The present litigation about the deposit forms part of this overall picture. The deposit was in fact repaid by Charterhouse in early 2023 (although it was then repaid by Mr Lowe, as I will explain further below). Be that as it may, Mr Lowe's present point is that Charterhouse is liable to pay penalties – which have to be paid to him – given its failures properly to handle his deposit.
Three particular complaints are the focus of this Appeal, which arise as follows:
i) The first two points relate to the information supplied in September 2010. Mr Lowe says that the information supplied was deficient. First, that is because of the misleading reference in the Prescribed Information Document to “ Clause 6 of the Tenancy Agreement attached”: Mr Lowe says that did not provide him with the prescribed information about how his deposit might be used. Second, Mr Lowe says the landlord's certificate on the Prescribed Information Document was deficient because it was not signed; only the covering letter was signed. It also purported to certify information which in fact was inaccurate.
ii) Next, Mr Lowe has a technical point, which is about Charterhouse's ability to rely in relation to his later tenancies, on the prescribed information supplied to him in September 2010 in connection with his original tenancy. The point arises because in law, since there were 8 tenancies in all, technically there were also 8 separate deposits paid by him, even though in practice the money stayed in the same place all the time. That is because of the decision of the Court of Appeal in Superstrike v. Rodrigues [2013] EWCA Civ. 669 [2013] 1 WLR 3848, which has the effect that a new obligation to pay a deposit arises on each occasion there is a new tenancy, but is discharged by the landlord offsetting against that new obligation the...
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