Tenancy Deposit Schemes Update - First High Court Judgement

Draycott & Draycott v Hannells Letting Ltd [2001]

This is the first High Court Judgment on the Tenancy Deposit Scheme and was an Appeal by Hannells Letting Ltd from a decision of a Circuit Judge.

On 28th February 2008, Mr and Mrs Draycott had entered into a 12 month Assured Shorthold Tenancy with Derby Build Ltd and paid a £2,700.00 deposit to the agent, Hannells, who held the deposit as Stakeholder.

The deposit was paid on 4th March 2008, but not registered with the DPS until 19th May 2008.

On 27th November 2008, Mr and Mrs Draycott brought a claim under Section 214 of the Housing Act 2004 on the basis that the deposit had not been registered and information given within 14 days of it being received. Interestingly, they brought the claim against the agent rather than against the landlord.

At first instance, the Circuit Judge agreed that the claim could be brought against the agent and also awarded the three times penalty against them.

On appeal, Mr Justice Tugendhat held that where the failure was the agent’s there was no reason why they should not have this type of claim brought against them, therefore agents are potentially liable if they are the ones who handle the deposit and fail to put it into a scheme.

At the time that the deposit should have been paid into the DPS Scheme (March to May 2008) the DPS Scheme did not include a requirement for the deposit to be submitted within 14 days of receipt by the landlord/agent. Mr Justice Tugendhat therefore held that the initial requirements of the Scheme had been complied with as at that time the DPS Scheme did not impose a 14 day requirement.

This still leaves the law in a somewhat uncertain state. Whilst in this case the agent was not required to pay the three times penalty on other facts they may have to and therefore should comply with the Scheme. However, this decision will have made it more difficult for tenants to bring a claim under Section 214 of the Housing Act 2004.

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