On 28/02/2018; Mr Faisal Azam (Defendant 1) the landlord alleged that he was unaccountable to the Claimants as Ms Sacha Avis (Defendant 2) was acting as his agent and had received the deposit and that Defendant 2 should be solely held accountable as she had retained the Claimants’ tenancy deposit and had failed to adhere to the tenancy deposit requirements. The Leicester County Court upheld that Defendant 1 was solely accountable to the Claimants in accordance to sections 212 to 215 of and Schedule 10 (as amended) to the Housing Act 2004. The Court upheld the Claimants Part 8 claim for the full refund of their tenancy deposit plus the maximum compensation of 3 times the value of their deposit.  The Court ordered Defendant 1 to pay the Claimants the full refund of their deposit plus the maximum compensation of 3 times the value of their tenancy deposit totalling £3,800.00 PLUS an additional costs award of £4,000.00. The Defendant was ordered to make full payment of £7,800.00 to the Claimants within 28-days of the order.

Full Transcript

MS VICTORIA KIVER appeared on behalf of the Claimants

MR SAGAR appeared on behalf of the First Defendant

THE SECOND DEFENDANT did not attend and was not represented


28th FEBRUARY 2018, 15.35-15.53


  1. This matter comes before the court because of a failure to protect a deposit ARISING FROM A tenancy. The claimants are Oliver and Kelly Whittington.  They were the tenants of the property IN QUESTION at 11 Parham Close, Heathley Park, Leicester.
  2. The claimants entered into an agreement to rent the property and paid a deposit of £950 which is not in dispute. It is also agreed that the deposit was not secured at the time.  The claimants are asking   the court to impose, under the provisions of the Housing Act, the mandatory penalties which must follow.
  3. It is the claimant’s position that the failure spanned a significant period of time. Further, the compliance with the terms of the scheme, in about August 2017, was insufficient because £895 rather than the full amount was secured.
  4. I am told this has now been remedied as the secured amount has been topped up, once the defendant had ascertained the true size of the deposit. I have been provided with confirmation of this by way of a certificate from the relevant tenancy deposit scheme.
  5. The defendant is Mr Faisal Azam. He is the landlord.  He denies liability to pay any penalty.  Initially, and during the course of submissions, he has also denied any liability to repay the deposit.  It is his case that the money held in the tenancy deposit scheme is his money, which he has borrowed, because the money paid by the claimant’s was to his letting agent who has misappropriated it.
  6. I make it very clear that any money paid to the agents in respect of this tenancy was for and on behalf of the landlord. In those circumstances, as a matter of law, the landlord has received the deposit. Whether he has now resorted to friends, family or whatever resource in order to make up the deposit that is currently represented by the funds in the tenancy deposit scheme is immaterial.
  7. The fact of the matter is that the claimants/tenants have paid a deposit and the money in the tenancy deposit scheme represents their deposit. The agent received the deposit and collected the rent but did not pay that in full to the landlord and nor did the agent ensure that the deposit was secured in the relevant deposit scheme.
  8. Clause 6 of the agreement between the landlord and the tenant makes it clear that the deposit will be dealt with in accordance with the legislative framework. I find that the defendant, an inexperienced landlord, relied on what he regarded as being the professional services of an agent to assist him to secure the deposit in line with the prevailing law, but that hasn’t occurred.
  9. The defendant pursues a claim against the agent and he relies on an agreement in October of 2015 appointing the agent and the relevant obligations under it. The fact that the agent was so appointed and was given delegated responsibilities is clear because, for example, the agent, in fact, signed the tenancy agreement on behalf of the landlord. In my view, there can be no dispute on this because the tenancy agreement is here for everyone to inspect.
  10. The defendant says that he is entitled to £4,500 for rent for the period in question, but he only received three payments from the Agent of, £620, £695 and £750. Therefore, his case is that rent is due and owing to him which has been retained and misappropriated by the agent.
  11. The agent, at some point, told the claimants that the deposit had been given back to the defendant. I find that this was not the case. I accept the defendant’s case that he has not received the deposit back from the agent and that the agent was being untruthful. The defendant’s case is supported by his bank statements which show payments received from the letting agent and no such payment is shown. The defendant contends that, in all the circumstances, he is not responsible for the penalty and costs but it is the agent because of the misappropriation.
  12. I have to consider the position with regard to the Part 20 defendant/agent. The claim form has been served on the agent. No acknowledgment of service has been filed.  There was no attendance at the hearing before District Judge Stamenkovich on; two dates have been mentioned, the 22nd of December and the 11th of January.
  13. Whichever it may be, the order in respect of that hearing makes it clear that the Part 20 defendant was aware of the proceedings and she did not attend that hearing either. I find that she is aware of today’s hearing and has chosen not to attend either.  Therefore, I am of the view that this is a situation in which the Part 20 defendant has not filed an acknowledgment, has not filed any evidence and has chosen not to attend, now, for the second time.
  14. I find that the evidence relied on by the defendant shows that the Part 20 defendant is liable to him in light of the admissions made in the Part 20 defendant’s letter of the 13th of October 2017. I attach weight to that letter. It contains an admission that payments were made to the agent, apologises within the letter for not passing on those payments to the landlord and talks about not being in a financial situation to make any payments and makes some suggestions with regard to payment plans.
  15. Before I go on to make findings, I confirm I taken account of the bundle of documents; the witness statements contained within it; the relevant exhibits; the past orders and some of the correspondence. I have paid careful attention to the case law that I have been referred to, one of which is a first instance decision by a district judge relating to the assessment of the level of penalties; the other is a High Court decision which has been significantly judicially criticised and the relevance of which is not central.
  16. I, therefore, have attached appropriate weight to all the written material and the submissions I have heard and my findings and conclusions are as follows.
  17. Firstly, there is no dispute that the claimants did pay a deposit of £950.
  18. Secondly, the defendant, in my judgment, was obliged to ensure that that this was secured. I acknowledge that the defendant had put in place a mechanism whereby he entered into an arrangement with a letting agent to assist him in the discharge of that statutory obligation.  I accept that he has been let down by the letting agent in that respect, but he is liable for the acts and omissions of his agent.  Section 216 of the Act makes it clear that he cannot escape the responsibilities from the legislation and is responsible for the acts and omissions of his agent.
  19. Thirdly, therefore, I have to find that the defendant is in breach of that obligation and I find he has breached sections 213(3) and (6). The court, in those circumstances, is obliged to go on and impose a penalty.  Section 214(1) and (4) make it clear that that penalty must be no less than one times the £950, being the amount of the deposit in this case, and can be up to three times that amount.
  20. The aggravating features in this case are these. There has been a significant length of time during which these tenants have been without the reassurance of their deposit, being secured in a relevant deposit scheme.  There have been a number of opportunities when that could have been rectified and remedied sooner which were not taken. There was, up until recently, the wrong level of deposit secured, even though that has now been remedied.  But, most significantly, the tenants have left that property.  They did not have their money made available to them at a time when I find that there was an acute financial need and they had to revert to borrowing on an interest bearing basis, which has put them in financial hardship, when they had their own £950 available to them which ought to have been paid back to them.
  21. The landlord in a letter of the 13th of July 2017 stated that the deposit would be paid back to the tenants on termination of the tenancy but, when that ultimately arose towards the end of November 2017, the deposit was not paid back. The landlord was of the view, as a litigant in person, that he needed to wait for the court to come to its final decision first. But nothing prevented him from honouring his own obligations, the promise that he had made and he failed to recognise the hardship that the tenants would have faced at a time of home moving when deposits would have been required and, indeed, the other associated difficulties and financial obligations that arise when somebody moves home.
  22. I have to recognise that, even today, the tenants still do not have the benefit of their money and, in my judgment, they have been deprived of their deposit for a significant period of time, I have to balance that against any mitigating features that I find in this case.
  23. I accept that I’m not dealing with an experienced landlord. The landlord used the services of a managing agent and has been very very badly let down by what appears to be very discreditable and negligent conduct on the part of the letting agent.  And the deposit has now been fully secured in a tenancy deposit scheme.
  24. I bear in mind all the aggravating and mitigating factors, but in the circumstances of this case I take the view that these tenants have had to come to court to pursue their legal rights; have been without their money for some period of time; they’ve had to suffer the uncertainties that that brings, everything that the legislation is designed to overcome; and, indeed, they have been denied the opportunity of having their money at a time of need and had to resort to borrowing on an interest paying basis.
  25. In these circumstances, I am satisfied that this is a proper case where three times the statutory maximum is justified. Therefore, the penalty in this case will be £2,850.
  26. The tenants were denied proper protection and, in my judgment, the level of penalty in this case should compensate them for that and, indeed, send out the correct message to landlords when they do select agents they need to pay careful attention.
  27. And when, issues emerge – and this is the unforgivable aspect in this case on the part of the landlord – he ought to have remedied the situation rather than leave the tenants in limbo without their money for three months and it ought not to have taken a court hearing for the tenants to be able to secure their legal rights, which they ought to have had from the outset.
  28. I, therefore, have to impose this level of penalty to ensure compliance with the legislative framework which is there for the protection of tenants.
  29. The deposit will be returned to the tenants. That is a matter that is agreed in this case.  I make the appropriate direction to the tenancy deposit scheme to pay the £950 to the tenants.
  30. I listened with great care to the argument that was put forward on the defendant’s behalf that the £950 should not to be paid to the tenants because the money belonged to the defendant personally, but that, in my judgment, was an argument without any merit because the defendant has previously agreed to pay the money back to the claimants and it was simply waiting for the outcome of the court’s decision.
  31. The money being lodged in a tenancy deposit service makes it absolutely plain that the defendant has acknowledged that the money is the deposit in this case, so the origins of it do not really matter. In so far as the penalty not being imposed at all – which was a submission made on behalf of the defendant – well, that simply ignores the legislative framework – the defendant is liable for the acts and omissions of his agent.
  32. I am obliged to set a penalty which must be at least one times the level of the deposit and, therefore, I do not accept the argument that there be no penalty. And in so far as the level of penalty that I’ve set, I’ve given reasons as to the significant aggravating features in this case which justify the setting of the penalty at the highest end.
  33. In so far as any argument is concerned that orders ought to be directed against the letting agent, in my judgment, that is entirely incorrect because it is a misapplication of the law. The penalty has to be paid by the defendant. The legislation makes it clear that the defendant is liable for the acts and omissions of his selected agent and, in those circumstances; I cannot make the order against the third party in the first instance.  The order will be against the defendant.  In light of the agent confirming that she has no money and is making payment proposals, it would be wrong to make the order against her as this would be to the claimant’s disadvantage.
  34. In respect of the defendant’s claim against the letting agent, I find in favour of the defendant and give judgment on the Part 20 claim in his favour. There was an agreement in place which obliged the letting agent to assist the landlord in the discharge of his obligations by following the legislative framework, to ensure that rents were collected and then passed on to the defendant.
  35. It is very plain from the decision that I’ve have given thus far that the conduct of the letting agent breached the legislative framework and the agent did not assist the landlord in the discharge of his responsibilities and has put the defendant in a position where he is liable to these claimants. Therefore, I do find that the level of penalty that has been imposed is as a direct consequence of the negligence of the letting agent and, in those circumstances, I will give judgment in favour of the defendant in the equivalent sum.
  36. In so far as unpaid rents are concerned, I invite further submissions as to where the evidence is to be found with regard to the breakdown. Subject to being satisfied as to the amount of the shortfall, of which I am satisfied, I intend to make a further award in favour of the defendant for the rent that has been collected and which has not been passed on to him.
  37. In that respect, the most forceful and compelling evidence comes not only from the defendant himself, which is sufficient to satisfy me on the balance of probabilities, but also the letting agent’s own admission contained in the letter of the 13th of October 2017.
  38. I will also go on then to consider the question of costs and where the liability for that will rest.
  39. That is my decision in the first instance on all the issues that I’ve had to deal with.