Is it a bird? Is it a plane? No, it’s Superstrike!
The often-argued point of multiple deposit penalties has been considered at various levels of the judicial system throughout the years; most recently by HHJ Johns KC in the case of Szorad & Anor v Kohli (2023) EW Misc 12 (CC).
The tenants signed an Assured Shorthold Tenancy agreement for 12 months which eventually became a statutory periodic until they left. A deposit was paid but it was neither protected by the landlord nor returned to the tenants. A claim was duly brought to recover the deposit and the statutory penalty for breach of the requirements.
The tenants relied upon the case of Superstrike Limited v Rodrigues (2013) EWCA Civ 669, arguing that the landlord should be penalised twice, once for the failure relating to the initial AST and then again for the statutory periodic tenancy. This was because the deposit was, in effect, received again once the statutory periodic tenancy arose.
At the first instance, Deputy District Judge (DDJ) Brooks rejected the tenants’ submissions. Pertinently, at paragraph 8 of his judgment, he stated:
“…In my judgment, although Superstrike is clearly authority for the proposition that it makes… it cannot be used for the purpose of construing the 2004 Act to give rise to what would in effect be the separate and distinct entitlement to another penalty in relation to the non-compliance with the deposit security requirement by reason of the creation of an SPT. In my judgment, although the claimants are entitled, due to the failure to protect, to claim the penalty in relation to that, they are not entitled to claim in relation to the subsequent failure to protect on the creation of the statutory periodic tenancy…”
The award of the Judge was three times a single failure to protect the deposit.
The DDJ's decision was appealed, which was granted by HHJ Johns KC.
Curiously, there was no participation in the appeal hearing from the Respondent landlord, so the Appellant tenants’ submissions were unchallenged.
HHJ Johns KC found that:
- The Appellant tenants were correct that the court should have multiple awards owing to the judgment in Superstrike, the effect of which is not negated by s215B of the Housing Act 2004.
- Section 215B Housing Act 2004 operates by treating the requirement relating to the protection of deposits as having been complied with in relation to the new tenancy, where they had been complied with in connect with the original tenancy. The requirements would recommence at the time of a new tenancy. This is to be read in line with Superstrike.
Accordingly, the Judge found that there should be multiple awards for each failure to protect the tenancy deposit. HHJ Johns KC did reduce the award from three times the deposit to two times the deposit for the second breach, as there had already been an award at the maximum level for the original failure, and it was hard to say the landlord must have appreciated that there was a further failure on commencement of the statutory periodic tenancy.
This decision is a reminder of the importance, for landlords, to protect their tenants’ deposits in a requisite scheme, as there could be a nasty surprise further down the line, should the matter appear before the Court.