Background
Inner House case relating to a landlords’ failure to comply with the Tenancy Deposit (Scotland) Regulations 2011 in respect of a property at 4/6 Admiralty Street in Edinburgh.

The landlords failed to pay a deposit of £750 into an approved tenancy deposit scheme as required by regulation 3 of the 2011 regulations and made deductions from the deposit before returning it to the tenant at the end of the lease. In terms of regulation 10, where the landlord fails to comply with its duty under regulation 3, (following an application by the tenant) the sheriff must order the landlord to make a payment not exceeding 3 times the deposit to the tenant. Following an application from the tenant, the sheriff ordered the landlord to pay the maximum monetary payment of three times the deposit.

The sheriff principal refused an appeal by the landlords on the basis of technical points relating to the tenants’ pleadings[1] and on the basis that the sheriff had made an error when exercising his discretion to award the maximum penalty (noting that the sheriff had “complete and unfettered discretion” as to the award to make).

Arguments
The landlords appealed to the Inner House which refused the appeal and found no flaws in the decisions of the sheriff and sheriff principal. With regard to the sheriff’s decision to award the maximum penalty, the landlords argued that the sheriff had failed to take into account the fact that the landlords were only in breach of the regulations for 34 days and had placed weight upon the fact that the landlords had held the deposit for several months prior to the tenancy deposit protection deadline. Further, the landlords argued that the sheriff should have taken account of the facts that, at the time of the breach, the regulations were new and complex, that the breach had occurred during the transitional period of the regulations coming into force, and that the breach had occurred during a period in which the tenant had given notice of his intention to vacate the property.

Decision
The Inner House emphasised the limited role which it (as an appellate court) could play in considering an exercise of the sheriff’s discretion noting that it could only interfere where, for example, the sheriff had not exercised his discretion at all, had taken into account irrelevant considerations, or had failed to take into account relevant ones. The sheriff had set out in detail his reasons for awarding the maximum penalty and the Inner house could find no fault with his reasoning:

 “It is plain that he reached the conclusion that the breach by the defenders in this case was indeed a serious one.  There is, in our opinion, no basis upon which we would be entitled to interfere with the decision he reached.  It is not insignificant that the defenders had until 30 November 2012 to register the pursuer’s deposit with one of the approved schemes.  That was over four months after the regulations had first come into force.  They chose not to do so.”

The full judgement is available from Scottish Courts here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

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[1] For which see LKS summary of earlier decision here.