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Ash
Ash, Solicitor
Category: Law
Satisfied Customers: 10916
Experience:  Solicitor with 5+ years experience
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Dear Sir/Madam, From March 2011 to July 2013, I rented my

Resolved Question:

Dear Sir/Madam,

From March 2011 to July 2013, I rented my property at 83 Oak Hill, Woodford Green, IG8 9PG to tenant Yeun Yong.

As of 9 March 2013, the monthly rent was increased from £1750 to £1900, and the deposit from £1750 to £3800 based on an Amendment Agreement signed by by the Tenant and myself as Landlord. The Amendment Agreement determined the deposit to be held by myself. However, as an oversees Landlord, I was not aware of my obligation to protect the deposit under a tenancy deposit scheme.

Subsequently, the Tenant failed to pay rent for the final month 9 June to 8 July. Also, during the inspection of the property, we found several items missing or damaged beyond normal wear ad tear. I assessed the damages and rent arrears to exceed the amount of the deposit and refused to return the deposit on these grounds.

However, in August, the Tenant claimed the refund of the full deposit of £3800, on the grounds that I had failed to protect it under a tenancy deposit scheme. I failed a counterclaim for the unpaid rent and compensation of missing/damaged items.

The hearing took place at Bow County Court (the Court) on 16 December 2013. The court established that:
- I failed to protect the deposit as required by the Housing Act 2004
- the Tenant failed to pay the rent for the final month for £1900
- the damages for missing and damaged inventory amount to £1774 (heavily discounted from replacement value due to the age of the items).

On 27 December 2013, I received a court order dated 16 December 2013, with the order to:
- for me to return the deposit £1900 (I assume this representing the net sum of £3800 deposit minus £1900 unpaid rent?)
- obligation to pay a penalty in the amount of 3 times the deposit, i.e. £5700
The court had, however, agreed to deduct the £1774 damages to the inventory caused by Tenant.
The court dismissed my counterclaim (in spite of having accepted the rent arrears and damages to inventory!) and required me to pay the court fees paid by the Tenant in the amount of £465, increasing the total amount payable by me to £6291.

My questions:
1) If the court established that I owe the Tenant £126 (£3800-£1900-£1774), is it then right that the penalty is applied on the gross deposit rather than the net deposit of £126?
2) Given that the Court ruled in my favour for unpaid rent and damages, how can the Court dismiss my counterclaim and order me to compensate for the legal fees and expenses of the Claimant?
3) Is it right for the Court to apply heavy discounts on the valuation of the inventory (individual items were reduced between 50-100%), rather than replacement value these itmes (which is nearly £4000)?
4) Does the Court have the right to rule way beyond the actual claim of £3800?
5) The Court has refused my application for permission to appeal and stated that I can only appeal if permitted by the Circuit Judge at Central London County Court. Do I have a realistic chance of getting such permission and improve on the ruling?

The judge seemed to be completely unaware of the documents sent to Court by either myself or the Claimant, so that we had to bring our own copies to the judge during the hearing. I handed over my own copy of the Response Pack / Counterclaim to the judge, including the description and photos of the damaged and missing inventory, etc. This document was never returned to me.

In my view, the order against me is out of proportion compared to my failure to put the deposit in a secured scheme. I had moved abroad before the Housing Act 2044 came to force and was unaware of my obligation to secure the deposit. Issuing an order well outside the original claim creates a perverse incentive for tenants to NOT have their deposits secured under relevant tenancy deposit schemes, to be able to claim for penalties as a multiplier of their original deposits. By the virtue of the Amendment to the Tenancy Agreement dated 6 March 2013, the Claimant was well aware of the deposit not being held in the Tenancy deposit scheme and used this to gain a financial benefit in spite of agreeing to it in writing on 6 March 2013.

Thanking you in advance for your kind advice.

Yours sincerely,

André Kuusvek
Postal address: 83 Oak Hill, Woodford Green, Essex IG8 9PG
E-mail: [email protected]
Submitted: 3 years ago.
Category: Law
Expert:  Ash replied 3 years ago.

Alex Watts : Hello my name is XXXXX XXXXX I will help you with this. Please note that I am a working Solicitor and may be on and offline as I have to attend Court and meet with clients, even at weekends. As such you may not get an instant response when you reply as this is not an ‘on demand’ live service, but rest assured I will be giving your question my immediate attention upon return. There is no need to wait here, you will get an email when I reply.
Alex Watts : 1) Yes. The Housing Act is quite clear in that a court can levy a penalty of x3 the unprotected deposit. This is the amount charged and so was reasonable for a court to award that sum
Alex Watts : 2) Because the tenant won the substantive part of the claim, that is the deposit and unprotected element then costs normally follow the event. So if you lost on the main issue of the deposit, and you did, then the judge has power to award costs.
Alex Watts : 3) It is a matter for discretion to a court. I am sure if the value of the times new was £1000 and had a 10 year life span, if it was 2 years from being renewed then only £200 in my example would be due. Not new for old value replacement.
Alex Watts : 4) The court can only award at its highest what has been pleaded and put in the claim form. The court can award am amount up to this amount.
Alex Watts : 5) You can only appeal if there was an error in the court procedure, the judge got the law wrong or the decision was one which no reasonable judge could have made.
Alex Watts : You can not appeal just because you do not like the decision,
Alex Watts : Based on what you have said I think the only prospect of appeal was the judge did not have your documents. Was the decision that unreasonable - probably not. The judge has power to levy x3 penalty plus deposit return was this is contained in the Housing Act 2004 which is the substantive claim
Alex Watts : I realise this may not necessarily be the answer you want and certainly not the one I want to give, but I have a duty to be honest.
Alex Watts : Can I clarify anything for you about this today please?
Customer:

Thank you for prompt response.

Customer:

I need a clarification on point 4. You state that the court can only award at its highest what has been pleaded and put in the claim form. The claim was for £3800 only, however, the court ordered me to pay £5826 + £465 fees of the claimant. This seems to go against what you stated as a response to question 4. Should the maximum order not be £3800 and not £6291? I assume that I can be ordered to pay the fees anyway, so my payment should have been limited to £3800+£465=£4265? What law regulates the fact that the court can only award up to the amount of the claim? Thanks again.

Alex Watts : The court has power under CPR 3 to award what is required under Act of Parliament. Therefore the court can of its own motion aard more if permitted by law, it did because the Housing Act states x3
Alex Watts : Yes fees would be payable.
Alex Watts : But sadly section 214 of the Act states
Alex Watts : The court must also order the landlord to pay to the applicant 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.
Alex Watts : Therefore the court has no choice, it must order x3
Alex Watts : i am sorry
Alex Watts : http://www.legislation.gov.uk/ukpga/2004/34/section/214
Alex Watts : I hope this clarifies.
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