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Fox v Hill, Preston County Court, 21 December 2010, 9PR01873

We seem to be on a bit of a run at the moment as the Guild has helped win another case for it's members. 

Should a landlord get a claim for three times deposit by a tenant for a failure to protect a deposit, there is a special procedure that must be followed. A simple small claim form (N1) may not be sufficient.

On 5 July 2008, the defendant landlord (Hill) granted an assured shorthold tenancy to the claimant (Fox). The core terms being that it was a tenancy for a fixed term of 6 months at a rent of £500.00pcm. A deposit of £500.00 was paid. As can probably be assumed by now, the deposit wasn’t protected.

On the 14 July 2009 the claimant issued claim form N1 (part 7 claim) to Preston County Court, seeking the amount of £2,000 representing £500.00 for the return of the deposit and £1,500 compensation.

On 17 July 2009, the deposit was protected and prescribed information provided.

Part 56.1 of the Civil Procedure Rules provides that any claim made under section 214 Housing Act 2004 is a “landlord and tenant claim”. The practice direction accompanying provides that the claimant in a “landlord and tenant claim” MUST use the part 8 procedure.

HMCS (Her Majesty’s Court Service) has issued guidance which also confirms a tenant must use the part 8 procedure (see here). Paragraph 7 of the guidance states that part 56 is to be amended soon. However, part 56 has been amended and it seems the guidance has not been re-worded at this stage to reflect the recent changes.

Rule 56.1 [Highlights added by author]
I LANDLORD AND TENANT CLAIMS – Scope and interpretation
56.1
(1)In this Section of this Part ‘landlord and tenant claim’ means a claim under –
…
(f) section 214 of the Housing Act 2004.
(2) A practice direction may set out special provisions with regard to any particular category of landlord and tenant claim.

Practice Direction 56.2 [Highlights inserted by author]
56.2 – STARTING THE CLAIM
2.1
Subject to paragraph 2.1A, the claimant in a landlord and tenant claim must use the Part 8 procedure as modified by Part 56 and this practice direction.

The claim was defended on the grounds that (a) the deposit had already been protected so no compensation was payable (albeit after the court form was issued) and materially for this case, that the wrong procedure had been used and the claimant tenant should have used the part 8 claim form.

On 26 September 2009, without a hearing, the claim was struck out by District Judge Knifton and the order stated “The claimant must use the Part 8 procedure as set out in CPR56 and the practice direction (see the defendant’s defence and HMCS noted attached to it.)”.

An application to set aside this order was made by the claimant which went to trial on 21 January 2010. The key ground in the application notice was “it is not in the interests of justice to strike out the claim“.

It was held by the court that the order of 26 September 2009 should remain and the tenants application was dismissed. The judge in the case placed particular emphasis on the word “must” contained in the practice direction and stated that he couldn’t change the law.

It should be noted however, in a number of cases decided since the implementation of the CPR, the courts have taken a liberal approach to “technical errors” made by a party, which did not cause any real prejudice to the other party, including issuing a claim on the wrong form. In Hannigan v Hannigan [2000] 2 F.C.R. 650, the Court of Appeal said it was disproportionate, and unjust (under r.1.1 the overriding objective) to strike out a claim made on the wrong form when the defendant had been given all the information required to understand what the claimant was seeking. Although it was stated at para 39 "Nothing in this judgment must be taken as giving any kind of green light to sloppy and inefficient practices in solicitors' offices. There are a number of different devices now available for making the courts uncomfortable places for sloppy and inefficient lawyers. But they should not be extended to the denial of justice to the lawyers' clients when it would be unjust to deny them justice."

In the Hanningan case, there was a substantial windfall to be gained by the party having the case struck out. In this Fox v Hill case, by the time the tenants claim was struck out, the more important part of the deposit legislation had been complied with, namely, the deposit had been protected. Therefore, it is submitted, although Hannigan may apply, this is different because the only loss suffered was the compensation element which is only ever a bonus rather than the payment of money actually lost by the tenant. Therefore, it could be argued that the tenant in this case had got the intended result of ensuring the deposit was protected despite their claim being struck out. In addition, in this case, although disputed by the tenant, the tenant has now vacated after a possession order was obtained, leaving substantial rent arrears.

I don't propose to get a transcript of the judgement in this case as it was pretty much as straightforward as this article suggests. However, if anyone is genuinely interested, I will gladly obtain one. Please email me at guild@all4landlords.com or DM me on twitter @adrian_thompson. 

For a more in-depth summary on Hannigan v Hannigan, see here under the heading “use of the wrong procedure”