Please note: for cases after 6 April / 6 May 2012 this can no longer be relied upon


Nearly Legal have reported an interesting new tenancy deposit case Gemma Shepley v Majid Yassen, Tameside County Court, Thursday 13th January 2011 (Unreported).

As a brief summary of this case, the landlord granted a 12 month assured shorthold tenancy late 2007 and a further renewal was granted for another 12 months. The tenancy then ran periodic until the tenant left in February 2010.

The deposit was not protected so the tenant commenced proceedings after a pre-action letter in May 2010. The deposit was finally protected by the landlord on 3 August 2010 using the DPS. Prescribed information was never given. Therefore, crucially for the purpose of this article, the deposit was protected after the tenancy had ended.

There were a couple of hearings and what seems to be the main trial took place on 13 January 2011.

The court could clearly have ordered repayment of the deposit plus 3 x deposit compensation because the prescribed information was never given, however, District Judge Stockton held that protection after the end of the tenancy was not acceptable. He specifically distinguished Draycott and the Court of Appeal case Tiensia on the basis that these two cases were concerned with deposits that had been protected late but were still placed into schemes before the tenancy ended.

The first thing to note is that I have no objection to the moral outcome of this case. As the Nearly Legal article points out:

If a landlord can put the deposit into protection after the tenancy has ended then it makes a total nonsense of the legislation and almost encourages a “wait and see” attitude.

And continues …

Leaving aside the legal arguments, to allow monies to be placed with schemes for non-existent tenancies would risk making them unviable as business entities, especially the two insured schemes which have to obtain insurance for the deposits they protect on a commercial market.

I’m not sure I agree that landlords would “wait and see” because I think the vast majority of landlords are good landlords and will protect the deposit within the normal 14 days. But, as I say, I do accept entirely the moral point.

(If Nearly Legal is reading this, any chance of not “leaving aside the legal arguments” and consider the usual excellent writing with your thoughts on the legal side?)

However, the question is a legal one and not one of morals, therefore the question arises can a landlord protect a deposit after the tenancy has ended and still avoid penalty? (For the avoidance of doubt when I say protection I also mean the issuing of prescribed information too).

Although I accept that Tiensia can be distinguished because in that case the deposit was protected before the tenancy had ended, I don’t think it can be totally ignored.

In Tiensia, when defining the initial requirements, Lord Justice Rimer said that “a scheme cannot include a reference to any time limit for securing the deposit …” And continued, “The meaning of ‘the initial requirements’ within those sub-sections is therefore necessarily confined to what you have to do in order to protect the deposit, and does not extend to when you have to do it …

Section 213 requires a deposit to be protected when it is in “connection” with a shorthold tenancy. It is submitted where a tenancy has ended, a deposit received is still in “connection” with the tenancy.

I can’t see anything in the legislation that distinguishes between during or after a tenancy although, there a few references to the end of a tenancy in Schedule 10 which could allow a court to argue the point either way I suppose but I won’t go into those now.

Painsmith Solicitors are currently acting for a claimant in the case Potts –v- Densley & Pays which is going to the High Court (so binding) which deals with essentially identical issues as this case so it will be interesting to see the outcome.