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How To Defend A Residential Tenant’s Tenancy Deposit Claim

Our landlord client instructed us to evict his residential tenant. However, the tenant had paid a tenancy deposit to the landlord which the landlord did not protect in an authorised tenancy deposit scheme within the 30-day period required by the Housing Act 2004. This immediately exposed the landlord to a counterclaim that he should pay compensation to the tenant for an amount which would be between a minimum of one-times the deposit and a maximum of three-times the deposit.

We commenced possession proceedings against the tenant and, unsurprisingly, the tenant made a counterclaim for compensation equivalent to three-times the amount of the deposit. The tenant relied on the Court of Appeal’s decision in the case of Ayannuga v Swindells [2012] EWCA Civ 1789 in which the tenant was awarded compensation equivalent to maximum amount of three-times the deposit.

At the trial of our landlord client’s claim in the Barnet County Court, we obtained an Order for Possession and went on to successfully persuade the Judge to award compensation to the tenant limited to the minimal amount of one-times the deposit.

The tenant was disappointed with the Judge’s award and so he appealed. At the appeal hearing in the High Court in London on 23 October 2014, we successfully persuaded the Appeal Judge to dismiss the tenant’s appeal and to confirm the tenant’s entitlement to compensation was limited to just one-times the amount of the deposit. (Our landlord client also recovered his costs of the appeal from the tenant).

For the sake of completeness, we should add that our landlord client did not actually have to pay any compensation to his (former) tenant because the compensation payable was set off against rent arrears the tenant owed to our landlord client!