Tenancy Deposit Schemes - Lowe v The Governors of Sutton's Hospital In Charterhouse

A particularly interesting decision regarding tenancy deposit schemes came under appeal at the High Court recently. The case was fought on whether a certificate of prescribed information could contain errors as well as be unsigned.

Background to the Tenancy Deposit Scheme

Tenancy deposit protection was first introduced in April 2007 for all assured shorthold tenancies (AST) in England and Wales where a deposit is taken.

As part of this protection, landlords are required to provide "prescribed information" to the tenant in respect of their deposit. Information relating to the retention of the deposit should reference the relevant terms of the tenancy agreement. The information provided should also be accompanied by a certificate signed by the landlord confirming that the information is accurate to the best of the landlord’s knowledge and belief.

Background to the case

The defendant, The Governors of Sutton's Hospital In Charterhouse (Charterhouse), is a charity that operates Charterhouse Square, a historic space in central London, in which some properties are let as residential dwellings. 

In January 2010, the claimant, Mr Lowe, became a tenant of one of the properties in the Square. At this time, the tenancy did not qualify as an AST as the annual rent was above the threshold for such tenancies. However, that threshold was increased in October 2010, thereby capturing Mr Lowe’s tenancy and subsequently transforming it into an AST by operation of law.

The agent for Charterhouse sent Mr Lowe a letter enclosing the prescribed information required under the Tenancy Deposit Scheme in September 2010, in preparation for the transformation of the tenancy into an AST. However, the prescribed information contained an error. The form referred to "clause 6 of the Tenancy Agreement attached" but no such agreement was attached and clause 6 did not even exist in that agreement. The clause relating to the deposit was contained in clause 5.3 of the tenancy agreement. There was also another issue, in that the agent had signed the cover letter but not the certificate, which was also enclosed.

No initial issues were raised by Mr Lowe in relation to the two errors. Mr Lowe’s original tenancy expired in January 2011 and a statutory periodic tenancy continued thereafter. Between this time and August 2015, various tenancy arrangements, comprising statutory periodic tenancies and fixed-term tenancies, were enjoyed between the parties but the common theme was that they were all ASTs. Mr Lowe was only provided with the prescribed information at the beginning of his original tenancy as an AST, namely October 2010.

Eventually, the relationship between the parties broke down and Charterhouse sought to regain possession of the property. Upon being served a section 21 notice, Mr Lowe then issued the current claim.

In the original case, three complaints arose. Mr Lowe alleged that:

• The information supplied by Charterhouse in the prescribed information document was insufficient in that it did not provide him with information about how his deposit might be used, owing to the incorrect reference to clause 6.
• The certificate provided by Charterhouse was not signed.
• Mr Lowe also did not believe that Charterhouse should be able to rely on the prescribed information given in September 2010. Mr Lowe argued that the original tenancy in a sequence of tenancies must be a shorthold tenancy for Charterhouse to rely on the initial prescribed information given. Mr Lowe argued that the tenancy entered into in January 2010 was not a shorthold tenancy and that the first shorthold tenancy arose in January 2011, with Charterhouse never providing prescribed information in relation to that tenancy.
• Mr Lowe alleged that he did not seek to "recover" money as he was simply getting back something he had already paid; therefore section 9 of the Limitation Act 1980 did not apply, in that claims to recover any sum arising from statute have a limitation period of six years, and the limitation period should therefore be 12 years, not six.

The judgment of HHJ Luba in the Central London County Court rejected Mr Lowe’s claim. HHJ Luba decided:

• The mistaken reference in the prescribed information should have been obvious to Mr Lowe, and he would no doubt have known to look at the correct clause, being clause 5.3. Even with the incorrect reference, the judge pointed to the legislation, which provides that the information given should be supplied "substantially to the same effect" as the requirement. The judge decided that this was satisfied in this case.
• The judge also decided that as the covering letter had been signed by the agent on behalf of Charterhouse, this was enough to comply with the statutory requirement as the unsigned certificate enclosed with the signed letter was "substantially to the same effect" as if the certificate was provided with a signature.
• The original deposit was paid in connection with a shorthold tenancy. This was because the original January 2010 tenancy became an AST, and the January 2011 tenancy arose from the original fixed term AST granted in 2010.
• The relevant limitation period is six years, not 12. HHJ Luba decided that section 9 of the Limitation Act 1980 did apply, since the word "recover" is used throughout the Limitation Act 1980 with the meaning to "obtain" money. In this case, Mr Lowe hoped to obtain money through a right that arose under the Housing Act 2004.

Mr Lowe appealed all of these findings in the High Court. The appeal was rejected, and additional points were raised as follows:

• The High Court found that a reasonable recipient reading the prescribed information in the position of the tenant would have noticed the error and referred to the correct clause as well as understanding the meaning of its reference in respect of the prescribed information. The statutory purpose of the prescribed information, of promoting transparency, was satisfied.
• Regarding the lack of signature on the certificate, the High Court found that it did not matter in this instance as the certificate was one which the landlord was happy to give and by allowing the certificate to be sent under the cover of the agent's signed letter, showed as much.

Conclusions

The ruling provides assurance that the relevant limitation period applicable to tenancy deposit claims is six years, not 12. Moreover, landlords will no doubt breathe a sigh of relief in response to the greater flexibility afforded to them through this decision. Prescribed information may contain mistakes but will satisfy the necessary requirements so long as the reasonable recipient would understand the correct information that was intended to have been provided. A lack of signature would also not likely invalidate the certificate having been provided under a covering letter signed by the landlord or its agent.

Appeal

As of 28 May 2024, Mr Lowe has appealed the decision of the High Court. The Court of Appeal will consider two key themes from the High Court case, namely whether a signature on the covering letter, but not the certificate, is enough to comply with the requirement to sign the certificate itself and whether an incorrect reference as to the tenancy agreement may still meet the obligation of providing prescribed information.