Merryck Lowe v The Governors of Sutton's Hospital in Charterhouse

Tenancy-deposit information requirements are concerned with substance and statutory purpose, as well as form. An obvious error in prescribed information may be cured where a reasonable recipient would understand the intended meaning and the required information is thereby conveyed.

A certificate requirement may be satisfied by documents read together where the covering letter and enclosure substantially fulfil the statutory purpose. A deposit originally paid under a contractual tenancy may later be treated as received in connection with a shorthold tenancy if the tenancy subsequently acquires that status by operation of law.

For limitation purposes, a statutory penalty is a sum recoverable by virtue of an enactment and is subject to the six-year period in the Limitation Act 1980. The court retains flexibility under section 214(3) of the Housing Act 2004 where neither specified deposit order would serve a practical purpose.

The appellant was a residential tenant of property managed by the respondent. His tenancy initially fell outside the assured shorthold tenancy regime because of the rent level, but became an assured shorthold tenancy when the statutory threshold changed.

The respondent supplied prescribed deposit information in 2010. The document referred incorrectly to a non-existent clause and contained an unsigned landlord’s certificate, although the covering letter was signed. Several later tenancies followed, and the appellant claimed statutory penalties for alleged non-compliance.

The Central London County Court rejected the claim. The appeal concerned the adequacy of the prescribed information and certificate, the operation of section 215B of the Housing Act 2004, the limitation period for penalties, and the court’s powers concerning repayment or re-protection of the deposit.

1. Appeal dismissed. The respondent had substantially complied with the tenancy-deposit information requirements.
2. A statutory notice or prescribed information document containing an obvious error is construed from the perspective of a reasonable recipient reading it in context. If the recipient would recognise the error and understand the intended meaning, the document may comply with the statutory requirement. Here, the reference to clause 6 directed the tenant to the corresponding deposit provision in clause 5.3 of his actual tenancy agreement. The statutory purpose of promoting transparency and avoiding disputes was fulfilled.
3. The phrase “substantially to the same effect” in section 213(6)(a) of the Housing Act 2004 applies to the prescribed certificate requirement. The certificate and covering letter were to be read together. Although the certificate itself was unsigned, the signed covering letter and attached prescribed information substantially fulfilled the purpose of confirming that the landlord was content to provide the required information and certificate. The tenant’s failure to sign did not excuse a landlord’s breach as a general principle, but it was relevant to the factual construction of the documents and to whether the statutory purpose had been achieved.
4. Section 215B applied. A deposit initially paid under a contractual tenancy could be received in connection with a later shorthold tenancy when the contractual tenancy became a shorthold tenancy by operation of law. The phrase “in connection with” was sufficiently flexible to accommodate that development.
5. A penalty under section 214(4) was subject to the six-year limitation period in section 9 of the Limitation Act 1980. “Recover” was not confined to reclaiming money previously possessed by the claimant; it included obtaining payment in vindication of a statutory entitlement.
6. Section 214(3) did not require an entirely mechanical choice between repayment and payment into a designated account where neither order was appropriate. The words “as it thinks fit” gave the court sufficient flexibility, particularly where the deposit was already safely protected and repayment would be futile or contrary to the parties’ continuing obligations.
7. The judge below was not required to determine whether the deposit had in fact been returned, because that issue had no bearing on the outcome once there was no statutory default.

• Central London County Court: HHJ Luba KC dismissed the tenant’s claim in a judgment dated 22 October 2022, finding compliance with the statutory requirements and holding that any penalty claim was subject to a six-year limitation period.
• High Court, Chancery Appeals: The appeal was dismissed by Mr Justice Adam Johnson. The lower court’s reasoning was upheld, subject to correction of the route by which substantial compliance was analysed in relation to the information about retention of the deposit.