The case of Lowe v Governors of Sutton’s Hospital in Charterhouse was recently heard in the Court of Appeal. It was concerned with some of the formalities that must be complied when a deposit is taken in connection with an assured shorthold tenancy.

High Court hearing

Our previous report of the issues and the outcome of the case when heard in the High Court can be found here.

In summary, the document titled ‘prescribed information’ mistakenly referred to the wrong clause of the tenancy when confirming the circumstances within which the deposit would be released, or deductions may be made. It mistakenly referred to clause 6 of the tenancy agreement, when indeed there was no clause 6 and the information could be found in clause 5.3.

The document titled ‘prescribed information’ contained the wording of the requisite certificate stating that the information given was accurate to the best of the landlord’s knowledge and belief, but the certificate was not signed. The covering letter enclosing the document titled ‘prescribed information’ was however signed by the landlord.

It was held that the prescribed information as required under the 2007 Order, was correctly served in respect of outlining the circumstances in which the deposit may be retained. This is because the reasonable person would recognise that the document titled prescribed information contained an error and the reasonable person could reasonably locate the correct term in the tenancy. The signed covering letter enclosing the document titled prescribed information satisfied the landlord’s obligation under the 2007 Order to confirm that the information given is accurate to the best of their knowledge and belief by providing a signed certificate to the tenant. This is because the certificate was provided in a form substantially to the same effect and the signed covering letter fulfilled the statutory purpose of the 2007 Order as the covering letter and document titled prescribed information were intended to be read together.

The tenant appealed, asserting that both of the above decisions were incorrect.

Court of Appeal hearing

The Court of Appeal has now dismissed this second appeal, confirming that it may not be fatal that the prescribed information referenced an incorrect clause in the AST, so long as the reasonable person can recognise that there is an error and can identify the correct clause in the agreement. It was clear that the reference to clause 6 was an error as there was no clause 6 in the agreement and the reasonable recipient would have understood that he was being referred to a provision in his tenancy dealing with deposits, which was clearly identified in the tenancy at clause 5.3 – the tenant had been given the relevant information.

The Court of Appeal also confirmed that an unsigned certificate within prescribed information may not be fatal to the prescribed information being correctly served if a covering letter enclosing the prescribed information is signed and is intended to be read in conjunction with the prescribed information, and for these purposes it was not necessary for the signed covering letter to expressly confirm the accuracy of its enclosures. The Certificate was duly authenticated (not simply given in a form ‘substantially to the same effect’ as that required in the 2007 Order).

Comments

The most water tight approach remains to double check if referencing a clause in the AST in the prescribed information, that it is in fact the correct clause being referred to, and for a landlord to read and sign the correctly completed prescribed information before providing it to the tenant to sign. Sending a covering letter which is signed by the landlord enclosing the prescribed information may assist in the event that the prescribed information itself is not signed by the landlord.

Overly literal and unrealistic interpretations of the 2007 Order requirements were disapproved of in this instance from the Court of Appeal, and their approach was that the reasonable person principle was not confined to obvious errors but instead was applicable where landlords or agents have made mistakes in regard to information provided to their tenants. This approach should make for welcome reading by landlords or agents that are used to being subject to technical and unjustified tenancy deposit claims.

This case was determined in the Court of Appeal and therefore is binding on County Courts.

Please note that the above case dealt with numerous issues, some of which are not discussed above.

Should you require assistance with recovering possession of your property, please contact a member of our Possession Team.

Please note that the above does not constitute legal advice.