By s.214(3), on an application by the tenant, if the county court is satisfied that the deposit is not being held in accordance with an authorised scheme, the court:
“(3) … must, as it thinks fit, either-
(a) order the person who appears to the court to be holding the deposit to repay it to the applicant, or
(b) order that person to pay the deposit into the designated account held by the scheme administrator under an authorised custodial scheme, within the period of 14 days beginning with the date of the making of the order.”
By s.214(4), the court must also order the landlord to pay the tenant “a sum of money equal to three times the amount of the deposit within the period of 14 days beginning with the date of the making of the order”.
In 2007, the appellant granted a joint, assured shorthold tenancy of a flat to the respondent and his co-tenant. The tenants paid a deposit of £6,240 but the landlord did not pay this into an authorised scheme. In 2008, on expiry of the term of the tenancy, the tenants left the flat. An inventory clerk inspected the flat and advised that £1,123.99 of the deposit should be withheld by the landlord because of the flat's condition and missing items. The landlord paid the balance of £5,116.01 into the respondent's nominated bank account.
Some time after his departure from the flat, the respondent issued a claim for three times the amount of the deposit (£18,720) under s.214(4), 2004 Act. Without a hearing, a district judge struck the claim out on the ground that it had been made after the tenancy had come to an end so that the provisions of s.214 no longer applied. The respondent applied to set that order aside. Another district judge dismissed the claim in so far as it related to the claim for three times the deposit but allowed the claim to stand in respect of a disputed sum of £618 out of the £1,123.99 retained by the landlord.
The respondent appealed to the circuit judge who allowed the appeal and, inter alia, gave judgment for the tenants in the sum of £18,720 and ordered the return of the deposit.
The landlord appealed to the Court of Appeal, contending that “tenant” in s.214(1) should be construed to mean a tenant under a subsisting lease. Patten LJ held, at :
“The point is not an easy one but I have come to the conclusion that the power of the Court to make an order under s.214 (3) and (4) is no longer exercisable once the tenancy has come to an end. Although s.213 makes it unlawful for a landlord to require the payment of a deposit which is not to be dealt with in accordance with an authorised scheme and requires that landlord within 14 days of receipt to comply with the initial requirement of such a scheme, it is important to note that no criminal penalty is imposed for non-compliance with these provisions. Instead, they are made enforceable at the option of the tenant under s.214. It is entirely matter for him whether he chooses to take advantage of the provisions in s.213 which were created for his benefit.”
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