Students sue landlady over breach of tenancy deposit regulations

A sheriff imposed a sanction of £1253 for the landlady’s admitted breach of the tenancy deposit regulations and a financial penalty of £600 because she was repeatedly officially informed of her obligations and still failed to comply.

Sheriff Tom Welsh QC heard that the pursuers, Edinburgh University students Phoebe Russel-Smith, Stephanie Dion-Jones and Alexis Herskowit, along with another student, Marc Fitchett, took a lease over a flat at 5/25 Drummond Street, Edinburgh, which was let by the defender Ijeoma Uchegbu, a biology professor in London.

The tenancy was a short assured tenancy in terms of s32 of the Housing (Scotland) Act 1988 and the rental term ran from 1 September 2015 until 31 July 2016.

A tenancy deposit of £1550 was paid by the tenants to the landlady on 16 May 2015, and the landlady fully admitted that she breached her statutory duty and failed to lodge the deposit in an approved Tenancy Deposit Scheme in terms of the Tenancy Deposit Schemes (Scotland) Regulations 2011.

The landlady also failed to provide the tenants with information in terms of regulations 3 and 42 of the regulations.

The three tenants sued for sanction against the landlady for her breach of statutory duty in the maximum sum available of £4650 – three times the value of the deposit.

While the money had since been returned to the tenants, it was submitted that for eight months there had been no protection and no information given to the tenants as to their rights.

The court was also told that the defender had received a letter from the City of Edinburgh Council, the regulatory authority, in November 2015, reminding the landlady of her duty to comply with regulation 3, and that she was further reminded of her obligations in relation to the tenancy deposit scheme by email from a council official two months later.

As no progress was made in obtaining confirmation from the defender that the deposit had been lodged in an approved scheme, the pursuers lost patience and raised this action in May 2016.

It was only after the commencement of the action that the money was eventually paid into an approved scheme on 28 May 2016 – some 240 days late excluding the 30 working days grace given by regulation 3.

It was argued that this was a feature of the case which indicated a “wilful refusal” on the part of the landlady to comply with the regulations.

However, on behalf of the defender it was submitted that she had been aware of the obligation but had been “dilatory “in the way she had dealt with the tenants and managed the tenancy, and that she had learned her lesson.

It was accepted that it was only after the present action was raised that the defender complied with the regulations, but the answers to the summons contained a full admission that the defender was in breach, which was important in mitigation.

While the tenants were without the protection of the scheme for a long period, in the end they were not prejudiced and got their money back.

In a written judgment, Sheriff Welsh said: “In my judgement there are two broad aspects to the sanction: Firstly, the lease lasted 334 days, for 270 days of which, the deposit was unprotected and the tenants deprived of protection from the scheme and the proper information.

“In my judgement, to mark the fact that the defender breached the regulations for a sustained period of time which subjected the tenants and the deposit to a risk the regulations are designed to avoid, the proportionate and appropriate starting point for sanction in these circumstances is £1550 divided by 334 multiplied by 270. This produces a figure of £1253.

“Secondly, to that sum I will add a weighting to reflect the fact that the landlady was repeatedly officially informed of her obligations and still failed to comply. I do not accept the suggestion this was wilful defiance of the regulations. I am more inclined, on a balance of equities, even if finely judged in this aspect of the case, to accept the submission that the defender was dilatory in attending to her obligations to protect the deposit and advise the tenants of their rights rather than in wilful defiance of the purpose of the scheme.

“In assessing this aspect I also weigh in the balance the fact that no actual prejudice occurred and in the final analysis the purpose of the regulations was not defeated and the deposit was returned to the tenants, in full, without dispute. I also take into account the early admission of breach in these proceedings and the responsible way the defender has remedied the situation through her agents…

“For all these reasons, I will set the financial penalty to reflect this second factor, at £600. Accordingly, the total sanction I shall impose on the defender and award the pursuers is £1853.”