Judgment was reported recently on two appeal cases regarding tenancy deposit schemes.

Since the 2004 Housing Act, landlords receiving a tenant's deposit must do the following within 14 days of receiving the deposit.

• take steps to protect the deposit using one of the authorised schemes (for instance the Deposit Protection Service)
• provide information to the tenant

A sanction for failing to do this was that the landlord was ordered to pay the tenant three times the deposit.

The two cases that came before the court concerned when the court should order this payment be made.

The courts had initially concluded that failure to protect the deposit, and to provide the information within 14 days, automatically meant that the sanction should be imposed. It was irrelevant what the landlord did after the 14 days, hence the appeals.

In one of the cases recently considered by the court, Christelle Tiensia v Vision Express Limited, the first judge to consider the case ordered the landlord to pay the tenant a sum equal to three times the tenant's deposit.

The tenancy started in May 2008, but the tenant quickly fell behind with her rent and proceedings were commenced in August 2008 for repossession of the property. Unfortunately, the landlord had failed to comply with the law relating to deposits and admitted it had not taken the steps it was supposed to within the 14 day period.

Indeed, it completely failed to take any steps prior to the commencement of proceedings, only securing the deposit (as it was supposed to) once matters had proceeded to the court; and only taking steps to serve the prescribed information well after proceedings had been started.

In Honeysuckle Properties v Fletcher and Others the court at first instance again ordered the landlord pay the tenant a sum equal to three times the tenant's deposit. Again, this followed the landlord's failure to take steps to secure the deposit well after the 14 day period stipulated, and well into proceedings having been commenced for possession of the property.

In this case the judge simply observed: "The Act clearly provides that if the provisions with regard to the tenancy deposit are not complied with the court must order a sum equivalent to the three times the deposit and must be my order in respect of the tenants. There is no way around that provision. It is mandatory."

Both above cases were taken to appeal.

The initial argument put forward by the tenants – and which was initially successful – turned  on the question of whether it is possible to comply with the rules outside of the 14 days or whether the court has any 'power to waive, vary, or mitigate the consequences of that failure'.

Reaching its conclusion, the court indicated that litigation will or should be avoided if, following correspondence between the parties, a landlord 'puts his house in order'.

The court considered that the objective of legislation is not to punish landlords, but to protect tenants' deposits. The court decided that this was in fact its role and sought to do this by interpreting the Act in this way.

The court did this by looking at what was meant by the period '14 days of the due date'. It concluded the legislation did not mean within 14 days of the tenancy after all, but instead the court felt the hearing date is the 'relevant date'. In coming to this conclusion, they noted that there was nothing in the legislation that points to any date earlier than the hearing date.

The court looked at the tense used in the language of the legislation, and noted the use of 'have not' and 'has not', taking this to mean that as long as the landlord has put his house in order by the time of the hearing date the court should not penalise the landlord.

Therefore the fact that a landlord has not secured a tenancy does not automatically mean the landlord will be open to a course of action equal to three times the tenancy from the tenant.

A landlord can still put his house in order and avoid such a claim even if proceedings are commenced against him. However, if a landlord wishes to evict a tenant he will still have to show a court that the deposit has been properly registered if he wishes to obtain possession of the property.

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