Failing to provide Prescribed Information: avoiding a costly penalty

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Our November 2012 blog reported on the case of Ayannuga v Swindells where the Court of Appeal passed judgement on a landlord’s failure to correctly serve prescribed information on their tenant. The landlord was given the penalty of three times the value of the deposit (N.B. this was the pre-Localism Act requirement. The penalty can now vary up to three times the deposit) and was required to return the deposit to the tenant in full.  At the time the transcript of the judgement was not available and we said that we would reflect more on the issue once we had seen it.

The case was an appeal in relation to a case heard in the Woolwich Crown Court, part of which related to Prescribed Information in relation to tenancy deposits.  In the original case it was clear that a deposit of £950 had been paid to the landlord.  The landlord had been forced to let out the family home and the tenancy agreement made it clear that the deposit would be lodged with the custodial scheme (DPS).  The Court was advised that the deposit had indeed been lodged with the DPS.

However the tenant had not been served with the required Prescribed Information nor the Scheme leaflet. Just before the Deputy District Judge gave his judgment the landlord provided more information about the deposit in a document entitled the “Additional Information Document”.  The Deputy District Judge concluded that although the landlord had not complied fully with the precise requirements of the Prescribed Information Order the landlord had done enough to meet them in substance.

However the Court of Appeal took a different view.  Lawyers for the landlord sought to argue that the failure to provide the Prescribed Information and scheme leaflet were “essentially…procedural points” which had left the appellant in “no serious or disadvantaged position”.  The Court of Appeal noted that the landlord had been unrepresented in the original hearing and that it was “not a case of a wealthy landlord seeking to exploit an impecunious tenant”.  However Lord Justice Etherton concluded that the Deputy District Judge had “reached a conclusion in relation to the deposit which was outside a proper exercise of judicial judgement and evaluation”.

The Court of Appeal considered that the landlord had not done enough to meet the following requirements of the Prescribed Information Order:

  • setting out the procedures that apply under the Scheme by which an amount in respect of a deposit may be paid or repaid to a tenant at the end of the shorthold tenancy;
  • detailing the procedures that apply under the Scheme where either the landlord or the tenant is not contactable at the end of the tenancy;
    explaining the procedures that apply under the Scheme where the landlord and the tenant dispute the amount to be paid or repaid to the tenant in respect of the deposit;
  • describing the facilities available under the Scheme for enabling a dispute to be resolved without recourse to litigation.

Although the tenancy agreement and the additional information which the landlord had provided did provide some information about the process to be adopted at the end of the tenancy, it did not meet the requirements of the Prescribed Information Order.  Even worse, the tenancy agreement and the additional information provided said that the deposit was being held by an agent in an insurance scheme when in fact it was taken by the landlord and transferred to the DPS custodial scheme.
The Court referred to the case of Ravenseft Properties Limited v Hall (2001) in which the Court found that substantial compliance with the legal requirements of a Notice ( in this case a s20 Notice) was based on fact and degree.  In the current case the Appeal Court found that the information provided to the tenant in respect of the deposit was not substantially compliant with the Prescribed Information Order.  Reference was also made to Suurpere v Nice (2011) where the Court said that “Parliament regards the landlord’s obligation to provide the prescribed information as being of equal importance to his duty to safeguard the tenant’s deposit”.

As a result the Court of Appeal allowed the tenant’s appeal and required the landlord to pay the deposit of £950 to the tenant and to pay an additional £2,850 to the tenant, being three times the deposit.

It is important to note that this case was based on the law applicable prior to the amendments made in the Localism Act 2011.  If this case had been heard under the present law then the penalty for non-compliance with the Order would have been to repay the deposit and a penalty of up to three times the deposit. 

So the key points here are to make sure that you:

  • serve the Prescribed Information to the tenant within 30 days of receiving the deposit;
  • provide all of the information in the Prescribed Information Order (TDS provides a template for members to do this effectively);
  • set out clearly in your tenancy agreement who is holding the deposit and where it is protected.

  • Posted by Steve Harriott, Chief Executive Officer on 23 January 2013

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