Potts v Densley & Anor

Under sections 213 and 214 of the Housing Act 2004, the statutory penalty for tenancy-deposit non-compliance is mandatory once the court determines at the hearing that the landlord has failed to protect the deposit or provide the prescribed information. However, following Tiensia v Vision Enterprises Ltd, the landlord may remedy either failure at any time before the hearing. Compliance after the tenancy has ended is not necessarily ineffective. The landlord remains the relevant landlord for statutory purposes because that status crystallises when the deposit is received. A claim based on failure to provide prescribed information must be clearly pleaded. A passing reference in evidence is insufficient to require the trial judge to determine it, and the issue cannot ordinarily be raised for the first time on appeal.

The tenant appealed from the Bromley County Court’s dismissal of her application under sections 213 and 214 of the Housing Act 2004. The landlords had received the deposit late, protected it in a custodial scheme after the tenancy ended but before the hearing, and had not provided the prescribed information.

The county court found a technical breach but declined to impose the statutory penalty, considering that result unjust. It did not separately determine the prescribed-information issue. The appeal concerned whether post-termination protection was effective, whether the penalty was discretionary, whether the prescribed-information claim had been raised below, and whether the costs order should be disturbed.

1. The appeal was dismissed. The county court had reached the correct result, although its reasoning that the statutory penalty could be withheld in the interests of justice was wrong.
2. Section 214(4) of the Housing Act 2004 is mandatory. Once, at the hearing, the court is satisfied that the relevant section 213 obligation has not been complied with, it must order payment of three times the deposit. There is no general discretion to decline the order on grounds of fairness.
3. Following Tiensia v Vision Enterprises Ltd and Draycott v Hannells Letting Limited, the relevant date is the hearing of the section 214 application. A landlord may comply with the protection and prescribed-information obligations after the statutory 14-day period and before the hearing. Such compliance provides a complete defence to the penalty claim.
4. The same conclusion applies even though the tenancy had ended before the deposit was protected. The parties’ statutory status as landlord and tenant crystallises when the deposit is received in connection with the shorthold tenancy. The landlord remains subject to the continuing obligation and may still be sanctioned if unable to comply by the hearing. The post-termination provisions in Schedule 10 support that construction.
5. The pleaded claim objectively concerned failure to comply with the scheme’s initial requirements. The reference to not receiving information about which scheme held the deposit did not plead failure to provide the prescribed information under section 213(5). The tenant’s witness statement did not substitute for a properly pleaded claim. It was therefore too late to raise that issue on appeal; the procedure in English v Emery Reimbold & Strick Ltd did not arise.
6. The costs order was a proper exercise of discretion and disclosed no ground for appellate interference.

• High Court (Queen’s Bench Division): appeal from the Bromley County Court dismissed.
• Bromley County Court: Her Honour Judge Hallon dismissed the tenant’s section 214 application on 15 July 2010 and ordered release of the deposit, with no order as to costs.