Background
Sheriff Court case concerning a lease of property at Hopetoun Crescent in Edinburgh. The landlord initially failed to pay a deposit (of £1000) into an approved scheme and also failed to provide the tenant with the prescribed information[1] required in terms of Tenancy Deposit Schemes (Scotland) Regulations 2011.
The lease was to run from 1 July 2013 to 31 January 2014 but, despite an unsuccessful attempt to evict the tenant at the end of 2013, continued by tacit relocation until decree for recovery of possession of the property was granted on 27 June 2014. The deposit was paid into an approved scheme on 27 January 2014 (when the landlord became aware of his duties).
Where a landlord has failed to comply with its requirements under the 2011 regulations, regulation 9 provides that the tenant can apply to the sheriff for an award of an amount of money as a sanction against the landlord for its failure to comply with its duties. The question for the sheriff in this case was how much the landlord should have to pay.
Arguments
The tenant argued that he should receive (the maximum award of) three times the deposit contending that the sheriff’s discretion as to the amount of the award was unfettered[2].
The landlord’s solicitor argued that the landlord was not a commercial landlord and was a 30 year old first time amateur landlord who “had made a hash of the let”. He had also paid the deposit into an approved scheme as soon as he had become aware of the requirement and (following a dispute) the deposit had been adjudicated on under the scheme and repaid to the tenant. The landlord also contended that the tenant had been using the threat of sanction under the regulations as a weapon in a dispute over rent arrears (with the suggestion being that judicial sanction regarding the deposit would not be pursued if the landlord were to waive his claim for rent arrears.) In essence the landlord considered that he was being blackmailed by the tenant.
Decision
The sheriff accepted that he had discretion as to the amount of the award but did not agree that the discretion was ‘unfettered’ as it had to be exercised for sound reasons and could not be exercised in a manner which was arbitrary, automatic or capricious. Further, the resulting decision had to be fair and just and could not be disproportionate (in that trivial noncompliance could not result in the maximum penalty).
The sheriff noted that a landlord’s ignorance of the regulations could be no excuse. He also found that there had been no blackmail in this case.
“In my view, the bona fide use, by tenants, of this right as supplementary leverage against landlords, is not illegal and if it becomes widespread, it should further enhance good market practice and regulatory compliance. It is not a bar to sanction against the landlord.”
However, after taking account of the various mitigating factors in favour of the landlord, the sheriff took the view that the award in favour of the tenant should be at the lower end of the scale and awarded the tenant the sum of £333.33 (one third of the deposit).
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] Relating to the safekeeping of the deposit, the status of the landlord as a registered landlord under the scheme and how any future disputes over the money could be resolved.
[2] See summaries of Fraser v Meehan, 2013 S.L.T. (Sh Ct) 119 and Tenzin v Russell, 28 January 2015 (and 19 December 2013 here) in which the sheriff’s discretion was described as ‘unfettered’.
