Superstrike Ltd vs. Marino Rodrigues – A call for calm and greater clarity

Appeal Court judgements can create a great deal of speculation – but it is important to understand their remit

On 14 June 2013 Lord Justice Lloyd delivered his judgement on an appeal from the Wandsworth County Court in the case of Superstrike Ltd vs Marino Rodrigues. Since its publication there has been a lot of discussion on the online property forums and at local NLA meetings about the potential impact that this judgement may have on landlords.

Unfortunately, much of this commentary has not fully understood the facts of the case or the way in which a judge constructs an appeal judgement. There is a distinct need for calm and greater clarity about this case. To this end, the NLA has been in discussion with legal professionals and the officials responsible for tenancy deposit protection (TDP) legislation within the Department for Communities and Local Government (DCLG).

It is important to understand that appeal judges only consider the case presented to them, not a similar set of circumstances, or a variation on a theme. The precedent they set is therefore only applicable to cases subject to the same set of circumstances. This fact is crucial in this instance as the case of Superstrike Ltd vs Rodrigues is not representative of all landlords or private tenancies.

The specifics are as follows:

–          The tenancy (an AST) began in January 2007, before the 6 April introduction of TDP

–          The tenancy persisted, on a statutory period basis, without renewal or changes from January 2008

–          No deposit was ever protected in relation to this tenancy, as it was received prior to this becoming a requirement

–          A Section 21 notice was served in June 2011 to end the periodic tenancy

The Judgement concludes:

–          That a statutory periodic tenancy is a new and distinct tenancy, not a continuation of the tenant’s previous status.

–          The legal position was that the deposit held by the landlord at the end of the fixed term was deemed to have been received in relation to the periodic tenancy in January 2008

–          As it was received in January 2008, after the introduction of TDP, it should have been protected.

–          As the landlord did not comply with Section 213 of the Housing Act 2004, they did not have the right to serve a Section 21. This rules the Section 21 invalid.

What it DOES NOT conclude:

–          The ruling does not apply to any deposits taken after 6 April 2007. i.e. it does not introduce a requirement to re-protect deposits held lawfully in accordance with a TDP scheme’s rules when a tenancy becomes periodic.

–          The ruling does not look into financial sanctions; this case only focused on whether the landlord’s Section 21 notice was valid.

–          The ruling does not look into the need to provide prescribed information .

What does all of this mean?

–          If you have any tenancies which began pre-6 April 2007 and became periodic after 6 April 2007, for which you hold a deposit which was not protected, you may not be able to issue a Section 21 notice.

–          If you do not have any tenancies which match this description, this judgement should have no impact on you whatsoever. Depending on the TDP scheme used, you may receive correspondence in the near future asking you to confirm the status of tenancies for which the fixed term has ended but a request to unprotect the deposit has not been received.

–          Likewise, in the future you may be asked to let the scheme provider know when tenancies become periodic.

 If I have pre-2007 tenancies like this, what should I do?

There is no simple answer to that question. Due to the nature of appeals, only the exact circumstances of the particular case in question are examined. The two ways to mitigate the risk of being caught out by this precedent are:

(1)    Return the deposit. This should remove the risk of a future  Section 21 being deemed invalid and is implied by the judgement. However, Justice Lloyd deliberately reserves judgement on this matter.

(2)    Protect the deposit. Likewise this should show intention to comply with the law and remove the risk. However, given the recent amendment to Section 215 of the Housing Act 2004, this may not be sufficient to avoid sanctions. Only a further legal case could determine this.

There is a third option available to landlords affected, which is not intended to mitigate risk and may not be advisable, but could be a valid course none the less, and that is:

‘wait and see’

It is entirely possible that this case will be taken to the Supreme Court, which could overturn the judgement. The NLA is keen to speak to the landlord in this case and is seeking legal advice to determine what options may be available to challenge the decision.

Furthermore, we are keen to impress upon ministers at DCLG that it has a responsibility to regain control over this legislation and should act swiftly to amend the Housing Act 2004 to remove this uncertainty – in the same way it did in 2011 following the Tiensia case.

We will provide regular updates on this matter as soon as more information is available. 

6 thoughts on “Superstrike Ltd vs. Marino Rodrigues – A call for calm and greater clarity

  1. What concerns me more than the implications on deposits is that the Judge referred to a Statutory Periodic Tenancy as being either a ‘new’ tenancy or a ‘replacement’ tenancy. Does this mean that we need to create a new Tenancy (whether Assured or Assured Shorthold) at the end of the fixed term. In which case we would need to get the guarantor to sign again for the new tenancy or can we reword our guarantor forms to ‘cover all debts accruing from the occupation of these premises by this tenant’ instead of ‘this tenancy’.

    1. The Justice Lloyd makes very clear that, in his legal interpretation, a statutory periodic tenancy is ‘new’ and not a continuation of the tenant’s previous status. However, there is no implication that a new tenancy agreement is required. However, guarantor agreements can be contentious at the best of times, and even the most comprehensive have been known to fail landlords when needed most. I would suggest that the only way to minimise the risk of your guarantor arrangement being found deficient would be to insist on a new agreement when circumstances are deemed to have changed (either in practice or law). It is possible that a change in terminology could suffice, but such an arrangement has not been tested to my knowledge.

  2. Thank you. I think I will change my terminology to cover ‘this tenancy and any subsequent replacement tenancy, including a Statutory Periodic Tenancy, whether in writing or not’. I realise my use of the word ‘occupation’ would shoot me in the foot if the tenant leaves within the fixed term. I am surprised to hear you say guarantor agreements can be contentious, we have tested ours (at least a dozen) with 100% success in the courts.

  3. I have a similar case pending where I just did’nt know about the tds . tenency started 19 nov 2013 . and i served a S21 in Jan 2013 . but it was invalid, and i quickly knew this, so immediately secured tenents deposit , and returned the Tenents Deposit (which now leaves my house totally unprotected . Have seenn my MP. Adrian Sanders of Torbay who took this to the relavent minister at chambers. Who replied in the negative. So tenents have

    1. In this particular case I believe that sections 213-215 of the housing act 2004 are very clear. Also ignorance of the act are in my opinion no defence. The piece of information that is not given is whether the tenancy started prior to the provision of the act coming into force

  4. This judgement is rather disappointing. Those landlords that are good and have long term tenants prior to deposit protection and have not increased rents are going to get shafted. If I had increased rents post deposit protection laws, it would be very likely, I would have had deposit protection in place.

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