Gladehurst Properties Ltd v Hashemi & Anor

The remedies under section 214(3) and (4) of the Housing Act 2004 are unavailable after the relevant tenancy has ended. An application under section 214(1)(a) requires non-compliance with scheme requirements which remains capable of remedy. Both statutory alternatives—repayment of the deposit or payment into an authorised scheme—must remain genuinely available.

For the statutory penalty, the “amount of the deposit” means the deposit originally paid. It does not vary according to the sum retained by the landlord when the claim is heard.

The landlord received a £6,240 deposit under an assured shorthold tenancy but neither registered it nor paid it into an authorised tenancy deposit scheme. After the tenancy ended, the landlord returned most of the deposit and retained sums for admitted and disputed liabilities. The joint tenants then sought repayment and a sum equal to three times the deposit under section 214(4) of the Housing Act 2004.

A district judge rejected the statutory penalty claim. His Honour Judge Cryan allowed the tenants’ appeal, restored that claim and awarded £18,720 together with an order concerning repayment of the deposit. The landlord appealed. The principal issue was whether the court could make orders under section 214(3) and (4) after the tenancy had ended.

1. Appeal allowed. The court’s power to make orders under section 214(3) and (4) of the Housing Act 2004 was no longer exercisable once the tenancy had ended. The district judge had therefore correctly rejected the claim for three times the deposit. The orders requiring repayment of the deposit and payment of £18,720 were set aside (per Patten LJ, Baron J and Carnwath LJ agreeing).

2. Section 214(1)(a) was to be read as referring to initial scheme requirements which had not been, but remained capable of being, complied with. Section 214(3) gives the court a choice between ordering repayment to the applicant and ordering payment into an authorised custodial scheme. Both alternatives must remain genuinely available. Once the tenancy expires, scheme compliance is no longer possible and the grounds for a section 214 application cease to exist. The application then ceases to be an application of the kind described in section 214(2) (paras 37–43).

3. This construction was consistent with Tiensia v Vision Enterprises Ltd [2010] EWCA Civ 1224, which treated the hearing as the cut-off for compliance while compliance remained possible. The statutory machinery protects deposits and permits enforcement at the tenant’s option. The absence of a separate criminal penalty did not justify extending the section 214 remedy beyond the tenancy (paras 26–28, 37–42).

4. The alternative contention that “the amount of the deposit” in section 214(4) meant only the sum still retained was rejected. It meant the deposit originally paid. The fixed penalty does not operate on a sliding scale according to later repayments or deductions (para 33).

5. The remedies belonged to the tenants jointly and both ordinarily had to be parties under CPR 19.3(1). The evidence established that the second tenant had authorised commencement of the proceedings. His failure to sign statements of truth did not invalidate them. The representation order under CPR 19.6 was unnecessary but caused no prejudice and was not set aside (paras 16–20).

1. Court of Appeal (Civil Division): Allowed the landlord’s appeal and set aside the orders for repayment of the deposit and payment of £18,720 under section 214(4) of the Housing Act 2004.

2. Clerkenwell and Shoreditch County Court, His Honour Judge Cryan: Allowed the tenants’ appeal, restored their section 214(4) claim, awarded £18,720 and made an order concerning repayment of the deposit.

3. Clerkenwell and Shoreditch County Court, District Judge Stary: Refused to restore the claim for three times the deposit but allowed the disputed £618 deposit claim to continue as a small claim.

4. Clerkenwell and Shoreditch County Court, District Judge Manners: Struck out the statutory claim because it was brought after the tenancy had ended.