A failure to provide such an address results in any rent or service charge otherwise due from the tenant to the landlord shall .. be treated for all purposes as not being due from the tenant to the landlord at any time before the landlord does comply.

However, once a notice providing a suitable address has been served, [amember_protect levels='keywee' user_action='error' user_error='amember_error_default_user' visitor_action='error' visitor_error='amember_error_default_guest']all the rent then accruing becomes due and the statutory purpose of the notice is satisfied. Lindsey Trading Properties Inc v Dallhold Estates (UK) Pty Ltd (1995) 70 P. & C.R. 332.

In Zafar v Goddard, Bristol County Court, 13 December 2010, the question arose as to what the position was if the landlord served a section 48 notice “after” the tenancy had ended.

There were rent arrears in this case but the landlord had failed to furnish the tenant with an address in England or Wales. After the landlord lost proceedings against the tenant for non payment of rent, he provided such a notice and commenced fresh proceedings. However, by this time the tenancy had ended.

DDJ Batstone held that the wording in section 48 relates to “landlord” and “tenant” and as such the notice will have no effect if served after the tenancy has ended because there is no longer a “landlord” nor “tenant” to furnish the notice to.

See also the nearlylegal article

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Set off

One of the main problems of the notice seeking possession (section 8 notice) usually used for rent arrears claims is the tenant’s make a claim against the landlord for random disrepair issues, often never previously notified to the landlord (I had exactly this type of case where the tenant pleaded in court that he had had no heating or hot water for 12 months which on immediate investigation turned out that his gas meter had been removed by the gas board!)

The tenant is entitled to set off against a claim for rent a counterclaim for damages for breach of the landlord’s repairing obligations[amember_protect levels='keywee' user_action='error' user_error='amember_error_default_user' visitor_action='error' visitor_error='amember_error_default_guest'] [British Anzani (Felixstowe) v International Marine Management (U.K.) [1980] Q.B. 137; Melville v Grapelodge Developments [1979] 39 P. & C.R. 179; Asco Developments v Gordon [1978] 248 E.G. 683.] Equally, a landlord is entitled to set off a claim for rent or service charges against a tenant’s claim for damages for disrepair. Filross Securities v Midgeley [1998] 3 E.G.L.R. 43.

A set off is a true equitable defence; and accordingly may be relied on even if it would otherwise be statute barred (Filross above)

The time of the set off

If there are genuine disrepair issues at the hearing, it is lawful for the tenant to seek that any damages be set off from rent owing. This can, depending on the amounts in question, extinguish the rent and make the section 8 claim fail (because the tenant may no longer be two months or more in arrears).

It is important however to know the date of when the set off takes place i.e. is it when the disrepair became an issue or is it at the time of the court hearing (when there will likely be more arrears than the first option)?

In Fearns, the High Court held that except where there is an agreement between the parties setting a date of set off, it is for the Court to set the date. Also, while it can decide to set the offset of the liability to some earlier or later date CPR 40.13(2) the starting point for the date of offset must be the date of the order itself, as that is the point at which the liabilities were finally determined.

Therefore the correct approach in the rent arrears/disrepair scenario is for the Court to establish the arrears of rent, to establish the amounts due as compensation for disrepair, calculate the interest due on both sums, AND THEN offset the two sums against one another. If the tenant wishes to argue that the offset should happen at some other date then it is for them to do so and the Court has a discretion to allow it.
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This page offers guidance on obtaining a charging order and in particular guidance on completing form N379.

What is a charging order?

It is an order of the court placing a ‘charge’ on the judgment debtor’s property, such as a house or a piece of land. The charge will be the amount you are owed. The charging order will not normally get you your money immediately, but it may safeguard your money for the future.

If the judgment debtor owns stocks or shares or has a fund or money in court, the court can also put a charge on these in much the same way as on property.

How does it do that?

A charge on a property means that if the property is sold, the charge has usually to be paid first before any of the proceeds of the sale can be given to the judgment debtor. You should note, however, that a charging order does not compel the judgment debtor to sell the property.

If there are already charges on the property when your charge is registered, for example, arising from a mortgage, then that charge will be paid first.

When can I apply for a charging order?

[amember_protect levels='keywee' user_action='error' user_error='amember_error_default_user' visitor_action='error' visitor_error='amember_error_default_guest']You can apply at any time after you have obtained judgment. However, the judge who considers your application will not make an order unless the judgment debtor:

has failed to pay the amount of the judgment when it was due; or
has failed to pay one or more of the instalments due under the terms of the judgment.
What do I have to do to apply for a charging order?

You must complete Form N379 (Application for charging order on land or property). You can also get a copy free from any county court.

If you are seeking a charging order against stocks and shares, or money in court, you must complete Form N380 (Application for a charging order on securities).

What information will I need to complete the application form?

You will need:

• details of the judgment, that is, when it was made, at what court and under what claim number;
• the full name and address of the judgment debtor;
• the amount of the judgment, including any costs and interest; the amount owing at the time of your application, again including any interest, and the total amount of any instalments, if any, which have not been paid;
• the address of the property or land on which you want to impose a charge (and proof from the land registry);
• information as to whether the judgment debtor owns the property solely or jointly with someone else, and evidence to prove it;
• details of any other creditors you know the judgment debtor has, that is, their names and addresses and the nature of their debt;
• details of any other person who has an interest in the property;
• details of any additional reasons, apart from the fact you are owed the money, you want the court to take into account when deciding whether or not to grant your application; and,
• details of sources of information, that is, who within the organisation supplied the necessary information. But only if you are a company, corporation or firm.

The application contains a statement of truth. You will have to sign it to confirm that the facts stated in it are true. Remember that proceedings for contempt can be brought against you if you sign the statement without an honest belief in its truth.

You must also attach a copy of the details obtained from the land registry (see below).

A sample completed form N379 is available to download here.

Will I have to pay a fee?

Yes, £100.00 payable to HMCTS

How do I get the evidence about the property and ownership?

Some, but not all, land or property may be registered at HM Land Registry. If there is a registration you should obtain a copy of the entry and attach it to your application.

You can obtain information about how to do this by visiting their website www.landregistry.gov.uk.

What will the court do when it receives my application for a charging order?

Court staff will issue your application and refer it to a judge. If the judge is satisfied with the information you have provided, the judge will make an interim charging order. The order will be drawn on Form N86 (Interim charging order). A copy will be sent to you and the judgment debtor.

The order will include the date and time of a hearing at which the judge will decide whether or not to make a final charging order. You must attend that hearing, otherwise the judge may dismiss your application.

If the judge is not satisfied with the information you have given in your application the court will let you know.

Is there anything I should do when I receive the interim charging order?

Yes there is. To make sure the charge is effective immediately, you must register. Information about the procedures and fees charged by the Land Registry can be obtained by visiting their website www.landreg.gov.uk and viewing Practice Guide 19.

(Guidance coming soon …)

What will happen if the judgment debtor objects to the making of a final charging order?

If the judgment debtor (or anyone else who has been served with the interim charging order), wishes to object to the making of a final order that person must file written evidence and serve a copy on you not less than 7 days before the hearing.

You should note that the judgment debtor can make an application for the hearing to take place at another court nearer to his home or place of business.

What will happen at the hearing at which the judge considers whether or not to make a final charging order?

The judge will consider your application and any evidence the judgment debtor or any other person served with your application has filed. If objections have been raised, the judge can deal with them there and then, or give directions for a hearing later on. Directions tell you what you must do to prepare for that hearing. If the judge feels that the objections are justified, your application may be dismissed. If that happens you may not be able to recover the fee you paid to issue the application, and you may have to pay the costs of the party who raised the objections.

If your application is successful, any fees you paid are usually recoverable from the judgment debtor by being added to the judgment. An order will be drawn on Form N87 (Final charging order). You and any other party will be sent a copy.

Do I have to contact the Land Registry after the hearing?

Yes, you do. The Land Registry or (the Land Charges Registry) must be made aware of the making of a final charging order. You must also contact them if your application is dismissed to make sure that the interim charging order is removed from the register.
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When one party (the bailor) leaves his goods in the possession of another (the bailee) a legal relationship called ‘bailment’ arises automatically. Unless appropriate steps are taken, there will be an obligation on the bailee to return these goods at a later date and the bailee can be held liable for any loss or damage which occurs to the goods whilst in the care of the bailee. [Torts (Interference with Goods) Act 1977] & [Toor v Bassi [1999] EGCS 9]

Can I remove goods from the premises so that I can re-let?

[amember_protect levels='keywee' user_action='error' user_error='amember_error_default_user' visitor_action='error' visitor_error='amember_error_default_guest']In the case Jones v Gospel [1998] EGCS 108, it would seem to suggest that putting out the goods whilst taking reasonable care not to cause damage is OK. “To place or leave a chattel on the land of another without consent is a trespass and the owner of the land is entitled, taking reasonable care in the circumstances, to remove the offending chattel” [Jones v Gospel]. (See also Alionby v Cohen [1955] 1 QB 559)

Must I take reasonable care of the tenants possessions?

In an early case [Hemmings v The Stoke Poges Golf Club [1920] 1 KB 720, CA], a servant in occupation of a cottage as a service occupier refused to leave when his employment came to an end. The employer then entered the cottage and, using no more force than was necessary for the purpose, removed the occupiers and their goods and chattels. The furniture was put into the garage, which was not completely watertight, and some rain fell on it. The servant sued for assault, battery and trespass – and lost. The judge found that no appreciable damage was done to the furniture and none beyond what was necessarily incidental to its removal.

However, in a more recent case [Toor v Bassi [1999] EGCS 9] a property was let to a tenant together with car- parking spaces in a yard to the rear of the property. The tenant abandoned the tenancy in June 1993 and left behind a car which he had been renting from a colleague (Toor). Toor made enquiries about her car and was told by the agents that the car could be collected from the yard. However, in September 1993, when Toor arranged for a mechanic to collect the vehicle, he could not gain entry to the yard which was fenced and locked. By November 1993, the car had disappeared from the yard. Toor sued Bassi, the landlord, in negligence. The court held that Bassi was a bailee and owed Toor a duty of care. His failure to return the car from the time that, with reasonable diligence, an arrangement could have been made for returning it, converted his liability from a duty to take care to an absolute liability.

In a case that was actually concerned with a charging order, the defendant had been awarded costs of £40,000 and enforced the order against the claimant by a charging order. There was subsequently an order for sale and possession was obtained. There was then an issue in relation to goods left on the premises. There was a dispute as to the extent to which the claimant had been given an opportunity to collect all his belongings. The house was then sold and on the sale the purchaser removed the contents. The claimant now claimed that the defend- ant had unlawfully seized, detained and disposed of his goods. The court refused to strike out the claim and said that the matter should go to trial. By leaving goods on the premises the claimant had failed to give vacant possession. However, the judge held that the defendant could be said to be an involuntary bailer with a duty to act reasonably in regard to the goods left on the premises. [Scotland v Solomon 2002 EWHC 1886, ChD, D Kitchin QC sitting as a Deputy. (Solicitors Journal, 4 October 2002, LawBrief)].

This case also applies to a landlord and tenant relationship. The tenant should give vacant possession when they leave with all their possessions removed, however where this is not the case and goods are left at the premises, the landlord becomes an involuntary bailer with a duty to act reasonably in regard to the goods and all reasonable steps must be taken to try and reunite them with the tenant in order to avoid any liability.

May I levy the goods as distress for unpaid rent?

This is a common law remedy however, where there is an Assured or Assured Shorthold Tenancy, it is only possible with prior leave of the court [s.19 Housing Act 1988].

Tenancy agreement provisions

In the latest version of the Guild tenancy agreement there is a clause relating to the procedure of dealing with goods left at the premises. Any clause dealing with procedures relating to disposal of goods will have to comply with the Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999/2083).

“Terms sometimes deal with goods left in the property at the end of the tenancy. The law [Torts (Interference with Goods) Act 1977] makes detailed provision about how such goods should normally be treated, if they have not clearly been discarded deliberately. A contract need not reflect these rules in detail provided it does not override or contradict them. We are unlikely to object to terms indicating that belongings left behind may be sold, upon written notice or, where the tenant cannot be found, after reasonable steps have been taken to trace the tenant. There is likely to be no objection to a provision for the landlord’s costs to be deducted from the proceeds of sale, and that these may include reasonable storage costs…” [para 4.20 page 58 Guidance on unfair terms in tenancy agreements OFT 2005].

Where there is a term within the tenancy agreement dealing with goods left at the end of the tenancy, as long as it is reasonable, it will become part of the terms of the bailment agreement which automatically comes into effect. [s12(8) Torts (Interference with Goods Act 1977]. In particular it will create a term as to when the tenant should take delivery of the goods after notice. This could be one month, three months etc. (The Guild agreements use the term “promptly”).

The Torts (Interference with Goods) Act 1977

Where the bailor (tenant) is in breach of an obligation to take delivery of goods or the bailee (landlord) could impose such an obligation by giving notice to the tenant but is unable to trace or communicate with the ten- ant, or the landlord can reasonably expect to be relived of any duty to safeguard the goods on giving notice to the tenant but is unable to trace or communicate with the tenant, then the landlord may impose an obligation on the tenant to take delivery of the goods or give directions as to there delivery. [s12(1)(a) – © & (2) Torts (Interference with Goods) Act 1977].

What should I do if I do not know where the tenant has gone?

If you don’t know where the tenant has gone, you must be reasonably satisfied that the tenant owns the goods [s12(3)(b)]. You must also take reasonable steps to trace the tenant with a view to serving a notice (as detailed later) [s12(3)(b)].

Reasonable steps could include looking back on the original application for accommodation (Guild form no. 9) for details of parents, current and previous employers, then contacting these people. All conversations and letters should be recorded and filed in case of future comeback from the tenant. You could ask neighbours for any information and record this. Any other reasonable attempts in the circumstances should be taken to trace the tenant. You have a much greater defence if you are able to serve the necessary notices (as detailed later).

Where you have a home owning guarantor in relation to the tenancy, this should make tracing the tenant relatively simple in most cases.

I can not trace the tenant, how long should I hold on to the goods before I carry out a sale or dispose of the goods?

Where there is a provision within the agreement, this will often detail the procedure to be followed and the time scales involved. It is important to remember that the tenant must be in “breach of the bailment agreement” before a sale can take place. All bailment clauses within agreements (including the Guilds) provide for a notice to be served in order to make the clause valid, therefore until this is served on the tenant, they are not in breach of the bailment agreement. [s12(1)(a)].

For goods of little worth, some guidance is given in the case of Jerry Juhan Developments SA v Avon Tyres Ltd, 1999, The Times, 25 Jan 1999 in which it was held that there was an implied term in bailment contracts that the bailor would collect the goods within a reasonable time of their being available for collection – in this case, six months. The bailor’s failure to collect the goods within that time relieved the bailee of its obligations.

If it is possible to hold onto the goods for at least six months, this would certainly be the best course of action, using the above case as a defence.

I have managed to trace the tenant what notice should I serve?

Two notices should be served at the same time, the first being a power to impose obligation to collect goods [part 1 s12], the second a notice of intention to sell goods [part 2 s12]. The two notices are available under the abandoned property forms category on our stationery order page .

Part 1 notice – power to impose obligation to collect goods.

You must supply your name and address and give sufficient particulars of the goods and the address or place where they are held [s12, sch1, part1 1(1)(3)(a)].

State that the goods are ready for delivery [s12, sch1, part1 1(1)(3)(b)].

You must specify any amount (if any) which is payable by the tenant in respect of the goods and which became due before the serving of the notice (for example storage costs). [s12, sch1, part1 1(1)(3)©]. Please read be- low the question of how long the part 2 notice should be before deciding whether to make such a charge.

Part 2 notice – notice of intention to sell goods

You must supply your name and address and give sufficient particulars of the goods and the address or place where they are held [s12, sch1, part2 6(1)(a)].

This notice must specify the date on or after you propose to sell the goods. [s12 sch1, part2, 6(1)(b)].

You must specify any amount (if any) which is payable by the tenant in respect of the goods and which became due before the serving of the notice (for example storage costs). [s12 sch1, part2, 6(1)©] Please read below the question of how long the notice should be before deciding whether to ask such a charge.

How long should the notice be for?

Both notices should be served on the same day only the Part 2 notice requires a date on or after you intend to sell the goods. There are two options when serving the notice and depending on the contents of the notice, will determine the length of time you should give for the intended sale.

Option 1 – You have specified an amount payable by the tenant in respect of the goods (e.g. storage costs)

If you do specify an amount for costs in respect of the goods, then the length of the part 2 notice shall be at least three months. [s12 sch.1, part2, 6(3)]. (By implication it may be less than three months if no amount is specified). In addition, you may not exercise your right to sell the goods after expiration of the notice, where the tenant has given you notice because of a dispute concerning the goods, where the tenant is questioning or refusing to pay all or any part of what the landlord claims to be due in respect of the goods. [ s12 sch.1, part2, 7(1)]. This could leave you holding onto the goods for a long time whilst the dispute is being resolved.

Option 2 – You have not specified an amount payable by the tenant in respect of the goods

Where you have not specified any amount, the act states that the period between giving of the notice and the date specified in the notice as that on or after which the bailee (landlord) proposes to exercise the power of sale, shall be such as will afford the bailor (tenant) a reasonable opportunity of taking delivery of the goods. [s12 sch.1, part2, 6(2)].

By implication, it is suggested that this means it can be shorter than the three months, required above (option 1) however it must be reasonable in the circumstances. This will have to be established on individual merits, for example a tenant who lives next door with an empty garage could be given 7 days perhaps. However a ten- ant who has moved abroad with no means of taking delivery of the goods could be more. Clearly as detailed above where the goods are of little value, six months was judged to be a length of time where your obligations to the tenant are likely to expire.

How should I deliver the notices?

You must send both notices together in the same envelope. They must be sent by post in a registered letter or by the recorded delivery service. [s12, sch.1, part1 1(1)(4) & s12 sch.1, part2, 6(4)].

I am ready to sell the goods, what should I do?

As long as the part 2 notice has expired, or you have taken all reasonable steps to trace the tenant with a view to serving a notice, you may sell and dispose of the goods [s12(3)(a) & (b)].

Whether you have managed to trace the tenant or not, If you sell (or dispose of non valuable items) you will be liable to account to the tenant for the proceeds of the sale, less any costs of the sale [s12(5)]. And the account shall be taken on the footing that the landlord should have adopted the best method of sale reasonably avail- able in the circumstances [s12(5)(a)]. The best method would usually be at an auction. There are many avail- able that will collect the goods, itemise the goods and issue you with the relevant funds less costs of the sale.

A sale in this manner gives a good title to the purchaser as against the tenant [s12(6)].

Abandoned vehicles

The position for vehicles is similar to other effects (see above). In most cases, such vehicles can have significant value so some care will need to be taken to trace the owner.

In certain situations (and upon payment of the appropriate administration fee), the national car licensing authority (DVLA) will release information about the ownership of vehicles, based on the registration number, and this may help landlords to trace the owner of the vehicle. A form can be obtained from DVLA (form V888). Also, you might contact your local authority – often the local authority will have an Abandoned Vehicles Officer or someone similar who can offer assistance and further advice.
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A problem that this can cause is that the tenant attends the hearing and states that they paid the landlord x amount in cash three days ago which of course is more often than not a lie.

Although this article doesn’t get rid of that argument altogether, it is helpful for a landlord to remind the court of section 9, Civil Evidence Act 1995 which provides that the records of a business (which includes a rent statement) may be given as evidence “without further proof”.

A document shall be taken to form part of the records of a business if there is produced to the court a certificate to that effect signed by an officer of the business [s.9(2)].

Below is a suggested certificate for the benefit of members which may also be downloaded in word format. The certificate should be signed and attached to the court bundle at the point of commencing proceedings. If proceedings have already been commenced, then the certificate should be taken in on the day of the hearing.

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Certificate that rent statement forms part of business records

Section 9, Civil Evidence Act 1995

I, the claimant hereby certify that the rent statement provided with the section 8 notice served on the tenant and the rent statement(s) provided to the court form part of the records of my business.

Signed …………………………………………………………………………….

Dated ………………………………………………………………………………

Civil Evidence Act 1995
9.— Proof of records of business or public authority.

(1) A document which is shown to form part of the records of a business or public authority may be received in evidence in civil proceedings without further proof.

(2) A document shall be taken to form part of the records of a business or public authority if there is produced to the court a certificate to that effect signed by an officer of the business or authority to which the records belong.

For this purpose—

(a) a document purporting to be a certificate signed by an officer of a business or public authority shall be deemed to have been duly given by such an officer and signed by him; and

(b) a certificate shall be treated as signed by a person if it purports to bear a facsimile of his signature.

(3) The absence of an entry in the records of a business or public authority may be proved in civil proceedings by affidavit of an officer of the business or authority to which the records belong.

(4) In this section—
“records” means records in whatever form;
“business” includes any activity regularly carried on over a period of time, whether for profit or not, by any body (whether corporate or not) or by an individual;
“officer” includes any person occupying a responsible position in relation to the relevant activities of the business or public authority or in relation to its records; and
“public authority” includes any public or statutory undertaking, any government department and any person holding office under Her Majesty.

(5) The court may, having regard to the circumstances of the case, direct that all or any of the above provisions of this section do not apply in relation to a particular document or record, or description of documents or records.

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The tenant is pursuing the landlord for 3 x deposit for a failure to protect the deposit within 14 days (the deposit has been protected though albeit late). The landlord is counter-claiming over £3,000 in rent arrears and defending the deposit claim. However, the tenant has provided a P.O. Box for his address. This of course would make it difficult to enforce any judgement if the landlord was successful. Is a former tenant allowed to proved a P.O. Box as an address for the purpose of sending documents in relation to court proceedings?

Answer:

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Part 6 of the Civil Procedure Rules governs the rules of service. The first part governs service of the claim form and the second part governs service of other documents not being the claim form.

In relation to service of documents not including the claim form (because in this example the landlord is not serving a claim form as the tenant instigated proceedings), Civil Procedure Rule 6.23 states:

Address for service
6.23

(1) A party to proceedings must give an address at which that party may be served with documents relating to those proceedings. The address must include a full postcode unless the court orders otherwise.

(Paragraph 2.4 of Practice Direction 16 contains provisions about postcodes.)

(2) A party’s address for service must be –

(a) the business address either within the United Kingdom or any other EEA state of a solicitor acting for the party to be served; or

(b) where there is no solicitor acting for the party to be served, an address within the United Kingdom at which the party resides or carries on business.

Clearly therefore, as shown above, (1) all party’s must give an address for service and (2) the address must be in the UK “at which the party resides or carries on business”.

The landlord can therefore ask the court to order the tenant to provide such an address.

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Hi Adrian

When returning only a portion of a tenants deposit by chq in the post, if it was accompanied by a letter stating “please find enclosed the balance of your deposit as full and final settlement relating to the tenancy of xxxxxxx” and the ex-tenant then cashed/banked the chq would mean the ex-tenant could not change their mind or dispute the deducted amount.

I had heard using the phrase “full and final settlement” and the chq then being banked meant the person accepted it was final and there was no recourse.

Is there any legal merit in that and if so do you think the deposit schemes would accept it if there was a issue?

Many thanks

Answer:

There are two different situations covering this type of scenario and both have different results. Firstly, if there is no dispute in relation to the amount, then providing a cheque for a lower amount than the tenant is entitled to with a letter saying “full and final settlement” will not be binding (see below). However, if there is a dispute over the amount in question, the position will depend on the actions of the tenant on receipt of the money (see further below).

No dispute over the amount due

Take for example the position where there is a £600.00 deposit. There is no rent arrears or damage and therefore no dispute that the tenant is entitled to the full amount. However, despite this, the landlord sends a cheque for £400.00 with a letter saying “if you cash this cheque it will be deemed full and final settlement”. In this case, the tenant will not be deemed to have accepted the payment as full and final settlement because there was no consideration (or benefit to the tenant by doing so) and so not a binding contract.

payment of a lesser sum on the day in satisfaction of a greater, cannot be any satisfaction for the whole, because it appears to the Judges that by no possibility, a lesser sum can be a satisfaction to the plaintiff for a greater sum: but the gift of a horse, hawk, or robe, etc. in satisfaction is good… [as] more beneficial to the plaintiff than the money. [Pinnel's Case (1602) 5 Co. Rep. 117a].

This principle was applied in a modern dispute.  In D & C Builders Ltd v Rees [1965] 2 QB 617. The small firm had done some work for Mr. Rees but weren’t paid the £482. After a few months of being asked for the money, Mrs. Rees, acting on behalf of Mr. Rees, offered to pay them £300. She knew that they needed the money desperately but told them that it was the £300 or nothing. D & C successfully sued for the balance because she had not provided sufficient consideration.

Where the amount is in dispute

Now take an example of a £600.00 deposit paid by the tenant and at the end of the tenancy, the landlord alleges damage to the sum of £150.00. The tenant though disputes the £150.00 damage. The landlord sends a cheque for £400.00 as “full and final settlement”. Now what is the position?

The position now depends on [amember_protect levels='keywee' user_action='error' user_error='amember_error_default_user' visitor_action='error' visitor_error='amember_error_default_guest']the actions of the tenant because the tenant now has consideration (or a benefit) because he may wish to accept the payment and put an end to any on-going arbitration or legal cases.

Clearly if the cheque is returned then there can be no acceptance by the tenant of the offer made by the landlord. However, if the cheque is cashed but promptly after, the tenant contacts the landlord and states the cashing of the cheque was not acceptance of the landlords offer, then it will only have been accepted as part payment [Day v McLea (1889) 22 QB 610] and not as full and final settlement.

This was also confirmed in Stour Valley Builders v. Stuart (1974) 2 Lloyds Reports p. 13 C.A where Lloyd LJ said:

As with any other bilateral contract what matters is not what the creditor himself intends but what by his words and conduct he has led the other party as a reasonable person … to believe

And also

Cashing the cheque is always strong evidence of acceptance especially if it is not accompanied by immediate rejection of the offer. Retention of the cheque without rejection is also strong evidence of acceptance depending on the length of delay But neither of these factors are conclusive; and it would … be artificial to draw a hard and fast line between cases where payment is accompanied by an immediate rejection of the offer and cases where objection comes within a day or two days

Timing is critical

In the Stour Valley Builders case, the builders cashed the cheque and it cleared on day 5. On day 7 the builders spoke to the customer and told him that the amount could not be accepted in full and final settlement. This delay of seven days was not considered fatal and it was held that the builders were entitled to treat the cheque as a payment on account.

A delay of four days after the cheque was cashed was also not considered as fatal and not an acceptance of the offer [Inland Revenue Commissioners v Fry - [2001] All ER (D) 434 (Nov)]

However, in Upfield v Marshall (Unreported 29 March 1976), there was a delay of seven weeks and this was found to be too long and accord and satisfaction was established.

It therefore appears, that the question to ask is whether the tenants conduct caused the landlord to think that the money was accepted in satisfaction.

Otherwise, if the cheque is cashed and noting else done, then, the cashing of the cheque will have been deemed as acceptance of the landlords offer of full and final settlement as was stated in Ferguson v Davies (1996) CILL 1208.

Cheques from third parties

Where a person accepts a cheque from a third party, see Bracken & Anor v Billinghurst [2003] EWHC 1333 (TCC). As a rule, acceptance from a third party will always be an acceptance of full and final settlement (whether there is a disputed amount or not).

Bank Transfers

One of the key points is there must be some act by the tenant accepting the full and final offer. This in normal cases is the cashing of the cheque and understanding that by doing so they are accepting it as full and final settlement of the disputed amount by reference to the covering letter enclosed with the cheque. However, if a landlord simply transfers the money into the tenants bank account, this may never be considered acceptance by the tenant because they will have done no action accepting the offer. It may well be argued that the tenant should promptly return the money but the point is that you are trying to prove acceptance of the original letter. You are not trying to prove “non” acceptance of the offer … if that makes sense? Basically, when offering a full and final settlement, only send a cheque!

Tenancy Deposit Schemes

Regarding the point whether a tenancy deposit scheme would accept this, it is submitted this is far too complicated for arbitrators to understand especially as there is no hearing to explain. As in all cases when disputes occur in relation to deposits, our advice is to never use the schemes dispute resolution.

It is also submitted, that the tenant will always have the right to refer a disputed amount to the schemes because the provisions contained in the Housing Act 2004 (and the scheme rules) will most likely overrule the common law principles outlined above.

Useful links

The Law – ‘Full and final settlement’

Show me the money: offers made in full and final settlement

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Thanks to the nearlylegal blog for reporting this case.

This case is an appeal against a failure to set aside a previous order that the tenants claim be struck out.

Background

The defendant landlord, Gladehurst Properties Ltd granted an assured shorthold tenancy to the claimant tenants, Mr Hashemi and Mr Matthew Johnson which commenced on 6 September 2007. The rent being £2080.00 per calendar month and a deposit of £6240 was paid (equivalent to three months rent). The deposit was never protected.

The tenants vacated the property on 8 October 2008 and dilapidations were found.

The landlord paid back the full deposit less £1123.99 for the dilapidations, of which the tenants disputed £618.00. In addition, the tenants made a claim for three times deposit compensation due to the landlords failure to protect the deposit.

On  16th February 2009 Mr Farid Hashemi, by filing and serving an N1 Claim Form containing his Particulars of Claim purported to issue a claim against the landlord in both his own name and that of his co-tenant, Mr Matthew Johnson. The claim form was only signed by Mr. Hashemi and not by Mr. Johnson. There were issues in this case concerning the fact that only one claimant had signed which are not discussed in this article (but covered in the nearlylegal post), except to say that although this case has been allowed to go ahead despite this error, all persons making a claim must be named and must sign the particulars [Civil Procedure Rule 19.3(1)]

19.3(1) Where a claimant claims a remedy to which some other person is jointly entitled with him, all persons jointly entitled to the remedy must be parties unless the court orders otherwise.

On 2 April 2009, DJ Manners struck out the claim on the basis that the tenancy had ended before the application was made.

An application was made by the tenants to set that order aside.

On 9 July 2009, District judge Stary heard submissions and dismissed the tenants application in so far as it related to the claim pursuant to the Housing Act 2004 but allowed the order relating to the claim for £618 to be set aside.

Permission to appeal the refusal by District Judge Stary to set aside the Housing Act 2004 deposit part was granted by HHJ Mitchell on 16 October 2009. This case is that appeal.

Of particular interest in this case is the part relating to whether an application for three times deposit can be made after the tenancy has ended (see below).

Clause in tenancy agreement

A strange clause was included in the tenancy agreement which stated

“A further £100 + VAT will become payable if the tenant wishes the Landlord to register the deposit with the government deposit scheme”

Clearly, the deposit legislation is mandatory and does not apply only if the tenant requests. This clause was quite rightly promptly dismissed. (Highlights inserted by author)

In its defence filed on the 26th February 2009 the defendant pleaded that it had not been fully aware of the impact of the Housing Act 2004, but accepted that it applied. It referred to a passage in the lease about the deposit, which gave an option to enter into a government deposit protection scheme, and commented that it was not taken up by the tenant. It was unclear what the purpose of pleading that clause was since it is not relevant to the landlord’s immutable duty under the Act and is incapable of constituting a defence.

Application for three times deposit after tenancy has ended

We have discussed in detail (see here) the question as to whether an application by a tenant can be made after the tenancy has ended because s.214 Housing Act 2004 specifically refers to a “tenant” when stating who may make an application.

214 Proceedings relating to tenancy deposits

(1) Where a tenancy deposit has been paid in connection with a shorthold tenancy, the tenant or any relevant person (as defined by section 213(10)) may make an application to a county court on the grounds-

…

The question therefore is, does this literally mean “tenant” or does it include an “ex-tenant”. If the intention is to include an “ex-tenant”, why did the legislator not use the term “the person who paid the deposit” or similar? Previously however, we conclude:

“Of course, it maybe that the court states the meaning of “tenant” in s214(1) includes an “ex-tenant”. This is quite possible in particular because it seems a relevant person may make an application at any time after the tenancy has ended (because they will always be a relevant person regardless of the status of any tenancy).”

District Judge Stary (who’s decision is being appealed in this case) initially refused the tenants application because:

‘It seems to me in this case that the objective behind the scheme is the following: first to ensure the deposit is properly protected, from the point of view of the tenant, and ….. to encourage the landlords to do so, to impose draconian provisions; but secondly there is a let-out to a landlord who, on being notified, puts it right. Now, here we are in a situation that this tenancy has terminated, the deposit (less allowable deductions) has been handed back; the landlord is not in a position to ‘put it right’ because the tenancy has been determined. It is not intended in my view that the statutory provisions would force a landlord into making you payments under these draconian legislations where the deposit has actually, in the event, been properly dealt with. That is why my colleague struck out your claim at the beginning.”

And continued …

“But I do not think it is appropriate to raise, after the tenancy has finished, details about the deposit which, if you had done it at the time, they would have said to their agents: ‘Well, haven’t you covered it?’, they would have said: ‘Oh, gosh, no sorry, let’s do it now’, and that would have given them the absolute clearance from the claims that you are making. So you did not give them – you did not act fairly during the currency of the deposit, and that is why I am not allowing it.”

In this appeal, HHJ Cryan responded to the comments above and to the argument that once a tenancy has ended, an application for three times deposit can no longer be made because the applicant is no longer a “tenant” as follows:

“The district judge interpreted the act purposefully, as she saw it, but did so on a number of erroneous premises, namely that:

a) the deposit had been dealt with correctly. It had not. There is only one way that a deposit can be dealt with and that is in accordance with the Act. Clearly, it was not.

b) that tenancy had run its course and there was no longer any role for the Act. … The fact that section 214 of the Act refers to an application being made by “the tenant”, cannot mean anything other than “the tenant who paid the deposit”. Any other interpretation would deprive the tenant of the opportunity to seek relief from the court at one of the most crucial times encompassed by the Act, namely the time when the tenancy has come to an end and the tenant is actively seeking his deposit back. It is inconceivable that a tenant who only discovers at that stage that his landlord has failed to comply with the Act would be deprived of the very protection which the Act was designed to give on the basis that he was a “former tenant”

If support for such an interpretation is needed it is to be found in the use of the word “tenant” in Schedule 10 where it is clearly dealing with  former tenants. The use of the word throughout the Act must have been intended to bear the same interpretation and it is manifest that in Schedule 10 and throughout the Act it is intended to include a tenant whose tenancy has come to an end.

Although not binding on me I take note of the decisions to which Mr. Gannon has referred me of the District Bench in the cases of Woods v Harrington August 2009 Legal Action 35, and Stankova v Glassonbury June 2008 Legal Action 31 and that no reported case supports a contrary interpretation.

c) that there is available to a landlord some species of equitable defence based on the either an implied duty on the tenant to place a landlord on notice  or where a landlord has acted outside the scheme of the Act but no significant mischief has resulted. I can find noting in the Act to support either proposition, even, which I doubt, there be the  “let out” provisions argued for. The penalty provisions are statutory and not susceptible to the sort of equitable relief envisaged by the district judge.”

The appeal was allowed and the order of DDJ STary was set aside.

Authors comments

This is certainly an interesting point as to whether an “ex-tenant” can make an application. As HHJ Cryan states, “If support for such an interpretation is needed it is to be found in the use of the word “tenant” in Schedule 10 where it is clearly dealing with former tenants.”

Is this correct? Does Schedule 10 refer to the term “tenant” when in-fact meaning “ex-tenant”?

I think HHJ Cryan makes a fair point which is likely to prevail. As an example from Schedule 10, Para 4B which refers to the procedure for an “ex-tenant” to make an application to the custodial scheme to recover the deposit if the landlord is un-cooperative or absent.

The term “tenant” is used throughout but it can have no other meaning than “ex-tenant” in the example below (highlights inserted and shortened by author):

CUSTODIAL SCHEMES: TERMINATION OF TENANCIES — ABSENT OR UN-COOPERATIVE LANDLORD OR TENANT

Schedule 10 – Para 4B(6)

(6) The application must be accompanied by a statutory declaration made by the tenant stating–

(a) the date on which the tenancy ended;

(b) that the landlord and the tenant have not reached any agreement … with respect to the amount claimed, with details of any communications between them since that date …;

(c) if the tenant … has no current address for, or other means of contacting, the landlord, giving particulars of any address and other contact details (including telephone numbers or e mail addresses) which the tenant has had for the landlord;

…

Judgment

For now, please use this Guidance