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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Superstrike Ltd v Rodrigues [2013] EWCA Civ 669 (14 June 2013) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2013/669.html Cite as: [2013] L &TR 33, [2013] HLR 42, [2013] WLR(D) 235, [2013] 1 WLR 3848, [2013] WLR 3848, [2013] 2 EGLR 91, [2013] EWCA Civ 669

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IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE WANDSWORTH COUNTY COURT
HIS HONOUR JUDGE WINSTANLEY

		Royal Courts of Justice Strand, London, WC2A 2LL
		14 June 2013

Lord Justice Lloyd:

Introduction and summary

1. This is another case about the legislation concerning tenants' deposits. Landlords of private sector residential property require their tenants to pay a deposit as security for the performance of the tenants' obligations under the tenancy. This could give rise to difficulties, especially for a tenant seeking to recover the deposit on leaving the premises. Until 2007 there was no legislation in the UK dealing with this subject. There had been a voluntary code, but it did not work well. Eventually, legislation was introduced in the Housing Act 2004, which was brought into effect with a commencement date of 6 April 2007. This appeal, from an order of His Honour Judge Winstanley in the Wandsworth County Court made on 17 September 2012, raises issues about the application of that legislation, where a deposit was paid under a tenancy already in existence on that commencement date.
2. A number of decisions of the courts about the legislation revealed problems in the drafting of the Act. It was therefore amended, with effect from 6 April 2012, by the Localism Act 2011. The events relevant to this appeal took place before that date, so we are concerned with the original text of the Act, but I will also refer to the amendments made in 2012.
3. The Defendant, who appeals with permission granted by Lewison LJ, took an assured shorthold tenancy of the relevant premises from the Claimant dated 8 January 2007 for a fixed term of one year less one day, at a monthly rent of £606.66, and paid a deposit of that amount under the terms of the tenancy agreement at that time. At the expiry of the fixed term, by the effect of section 5 of the Housing Act 1988, he became entitled to a statutory periodic tenancy on the equivalent terms. On 22 June 2011 the Claimant served a notice under section 21 of the 1988 Act requiring possession. The issue is whether it was entitled to do so, notwithstanding that the deposit, which remained outstanding, had not been protected by being dealt with in accordance with a scheme authorised under the 2004 Act.
4. The Claimant applied to the county court for possession, under the accelerated procedure which applies where notice has been given under section 21 in relation to an assured shorthold tenancy. A possession order was made on 8 May 2012 but it was then set aside by Deputy District Judge Whiteley on 26 June 2012, on the grounds of non-compliance with the provisions relating to tenants' deposits. The Claimant's appeal was allowed by His Honour Judge Winstanley, from whose order the present appeal is brought.
5. The appellant was represented before us by Mr Westgate Q.C. leading Mr Chataway, and the respondent by Mr Bhose Q.C. leading Ms Oscroft. The escalation of representation suggests a perception of the importance of the issues, for landlords and for tenants, which does not surprise me. I am grateful to Counsel for their assistance in relation to a problem which is of some importance.
6. For reasons which I set out below, my conclusion is that the legislation did require the tenant's deposit to be held in accordance with an authorised scheme, no later than the end of January 2008. Since it was not so held, the landlord was not entitled to serve a notice under section 21 in June 2011. Accordingly the landlord was not entitled to possession, and the appeal should be allowed.

The facts

7. I need to say almost nothing about the facts beyond what I have set out above in introducing the appeal. The terms of the original tenancy agreement included the following relevant obligations of the tenant:

"to pay on the signing of this agreement the sum of £606.66 held by the landlord as security against any claim by the landlord for any dilapidations or damage to the premises [etc. – the details do not matter]"

"the deposit cannot be used as the last month's rent and the tenant hereby signing the tenancy agreement hereby acknowledge this"

8. No new tenancy agreement was entered into on the expiry of the fixed term, and no change was made to the rent then or thereafter. The deposit which had been paid in January 2007 continued to be held by the landlord without any reference being made to it at that time by either landlord or tenant.

The legislation: assured shorthold tenancies

9. Under the Housing Act 1988 an assured tenancy which is for a fixed term may come to an end by an order of the court or by surrender by the tenant, or it may be replaced by a fresh contractual term. Otherwise, when it expires, the tenant "shall be entitled to remain in possession of the dwelling-house let under that tenancy and … his right to possession shall depend upon a periodic tenancy arising by virtue of this section": section 5(2). Section 5(3) provides that the periodic tenancy (a) takes effect in possession at the end of the fixed term tenancy, (b) is deemed to have been granted by the person who at the end of the fixed term was the landlord, to the person who was then the tenant, under the fixed term tenancy, (c) is of the same premises, and (d) is for the periods for which rent was last payable under the fixed term tenancy, and that:

"the other terms are the same as those of the fixed term tenancy immediately before it came to an end, except that any term which makes provision for determination by the landlord or the tenant shall not have effect while the tenancy remains an assured tenancy": section 5(3)(e).

10. There is provision for changing the terms but since nothing was done in that respect in the present case it is unnecessary to refer to this.
11. In the case of an assured shorthold tenancy, the landlord has the right to apply for possession of the premises, once any fixed term has expired, subject only to giving not less than two months' notice under section 21. The court has to be satisfied that the notice has been duly given and that any fixed term tenancy has come to an end, but otherwise there is no discretion in the court to refuse to make a possession order.
12. That is in contrast to section 8, under which the landlord can also give notice of proceedings for possession. Under sections 7 and 8 the court has to be satisfied that one of a number of grounds for making a possession order exists, that ground having been specified in the notice. Depending on which ground is relied on, the court may have to be satisfied that it is reasonable to make the order.
13. The landlord under an assured shorthold tenancy will rely on a notice under section 21 rather than on proceeding under section 8 unless there is some very good reason to do the latter. For that reason, one of the sanctions to ensure compliance with the law as regards protecting tenants' deposits is a fetter on the use of section 21.

The legislation: protection of tenants' deposits

14. Section 212 of the Housing Act 2004 obliges the Secretary of State (who is "the appropriate national authority" for England) to provide the infrastructure, so to speak, by making arrangements for securing that one or more tenancy deposit schemes are available "for the purpose of safeguarding tenancy deposits paid in connection with shorthold tenancies". Section 212(2) shows that the purpose of such a scheme is both that of safeguarding tenancy deposits paid in connection with shorthold tenancies and also that of facilitating the resolution of disputes arising in connection with such deposits. Schemes were to be either custodial or insurance schemes. A tenancy deposit means any money intended to be held (by the landlord or otherwise) as security for the performance of any obligations of the tenant or the discharge of any liability of his arising under or in connection with the tenancy: section 212(8).
15. As the legislation was originally enacted, section 213, headed "Requirements relating to tenancy deposits", was as follows:

"(1) Any tenancy deposit paid to a person in connection with a shorthold tenancy must, as from the time when it is received, be dealt with in accordance with an authorised scheme.

(2) No person may require the payment of a tenancy deposit in connection with a shorthold tenancy which is not to be subject to the requirement in subsection (1).

(3) Where a landlord receives a tenancy deposit in connection with a shorthold tenancy, the initial requirements of an authorised scheme must be complied with by the landlord in relation to the deposit within the period of 14 days beginning with the date on which it is received.

(4) For the purposes of this section "the initial requirements" of an authorised scheme are such requirements imposed by the scheme as fall to be complied with by a landlord on receiving such a tenancy deposit.

(5) A landlord who has received such a tenancy deposit must give the tenant and any relevant person such information relating to—

(a) the authorised scheme applying to the deposit,

(b) compliance by the landlord with the initial requirements of the scheme in relation to the deposit, and

(c) the operation of provisions of this Chapter in relation to the deposit,

as may be prescribed.

(6) The information required by subsection (5) must be given to the tenant and any relevant person—

(a) in the prescribed form or in a form substantially to the same effect, and

(b) within the period of 14 days beginning with the date on which the deposit is received by the landlord.

(7) No person may, in connection with a shorthold tenancy, require a deposit which consists of property other than money.

(8) In subsection (7) "deposit" means a transfer of property intended to be held (by the landlord or otherwise) as security for—

(a) the performance of any obligations of the tenant, or

(b) the discharge of any liability of his,

arising under or in connection with the tenancy.

(9) The provisions of this section apply despite any agreement to the contrary.

(10) In this section—

"prescribed" means prescribed by an order made by the appropriate national authority;

"property" means moveable property;

"relevant person" means any person who, in accordance with arrangements made with the tenant, paid the deposit on behalf of the tenant."

16. This section was amended by the Localism Act 2011 with effect from 6 April 2012 so as to substitute a period of 30 days for the 14 days specified in sub-sections (3) and (6)(b).
17. Section 214 is headed "Proceedings relating to tenancy deposits". In its original form it was as follows:

"(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—

(a) that the initial requirements of an authorised scheme (see section 213(4)) have not, or section 213(6)(a) has not, been complied with in relation to the deposit, or

(b) that he has been notified by the landlord that a particular authorised scheme applies to the deposit but has been unable to obtain confirmation from the scheme administrator that the deposit is being held in accordance with the scheme.

(2) Subsections (3) and (4) apply if on such an application the court—

(a) is satisfied that those requirements have not, or section 213(6) has not, been complied with in relation to the deposit, or

(b) is not satisfied that the deposit is being held in accordance with an authorised scheme,

as the case may be.

(3) The court must, as it thinks fit, either—

(a) order the person who appears to the court to be holding the deposit to repay it to the applicant, or

(b) order that person to pay the deposit into the designated account held by the scheme administrator under an authorised custodial scheme,

within the period of 14 days beginning with the date of the making of the order.

(4) The court must also order the landlord to pay to the applicant a sum of money equal to three times the amount of the deposit within the period of 14 days beginning with the date of the making of the order.

(5) Where any deposit given in connection with a shorthold tenancy could not be lawfully required as a result of section 213(7), the property in question is recoverable from the person holding it by the person by whom it was given as a deposit.

(6) In subsection (5) "deposit" has the meaning given by section 213(8)."

18. This was amended with effect from 2012 so as to introduce a new paragraph (a) of sub-section (1) as follows: "that section 213(3) or (6) has not been complied with in relation to the deposit", and correspondingly in sub-section (2)(a). It also introduced a new sub-section (1A):

"(1A) Subsection (1) also applies in a case where the tenancy has ended, and in such a case the reference in subsection (1) to the tenant is to a person who was a tenant under the tenancy."

19. It made consequential provision for the case where the tenancy had come to an end before the proceedings were brought. It also amended sub-section (4) so that the court must still require the landlord to pay a sum of money, but it is to be not less than the amount of the deposit and not more than three times that amount. These amendments modified the effect of the decision of the Court of Appeal in Vision Enterprises Ltd v Tiensia [2010] EWCA Civ 1224, [2012] 1 WLR 94, which held that where the landlord had failed to comply with section 213(4) within the stipulated 14 days, but had complied before the hearing of the claim, the sanction provided for by section 214(4) could not be imposed. They also overcame the effect of the decision in Gladehurst Properties Ltd v Hashemi [2011] EWCA Civ 604, [2011] HLR 36, that proceedings could not be brought under section 214 once the tenancy had come to an end. They modified the sanction in section 214(4) by giving the court power to decide, within the specified range, how much was to be paid by the landlord.
20. The issue on this appeal turns directly on section 215, which is headed "Sanctions for non-compliance". As enacted, the section was as follows:

"(1) If a tenancy deposit has been paid in connection with a shorthold tenancy, no section 21 notice may be given in relation to the tenancy at a time when–

(a) the deposit is not being held in accordance with an authorised scheme, or

(b) the initial requirements of such a scheme (see section 213(4)) have not been complied with in relation to the deposit.

(2) If section 213(6) is not complied with in relation to a deposit given in connection with a shorthold tenancy, no section 21 notice may be given in relation to the tenancy until such time as section 213(6)(a) is complied with.

(3) If any deposit given in connection with a shorthold tenancy could not be lawfully required as a result of section 213(7), no section 21 notice may be given in relation to the tenancy until such time as the property in question is returned to the person by whom it was given as a deposit.

(4) In subsection (3) "deposit" has the meaning given by section 213(8).

(5) In this section a "section 21 notice" means a notice under section 21(1)(b) or (4)(a) of the Housing Act 1988 (recovery of possession on termination of shorthold tenancy)."

21. The amendments in 2012 changed paragraph (b) of sub-section (1) so as to say "section 213(3) has not been complied with in relation to the deposit". Other minor amendments were made which do not affect the point with which this appeal is concerned.

The issues on the appeal

22. The Deputy District Judge decided the case in favour of the tenant on a ground which is no longer relied on. Judge Winstanley held in favour of the landlord principally on the basis that the deposit had been paid and received before the legislation came into force and there was nothing in the legislation which indicated that it was to apply to a deposit which had already been paid before the commencement date.
23. Before us, two provisions became the subject of close attention. On Mr Westgate's submissions, section 213 applied so as to oblige the respondent landlord to deal with the deposit in accordance with an authorised scheme within 14 days of 8 January 2008, when the appellant became tenant of the respondent under a new statutory periodic assured shorthold tenancy, the deposit being treated as paid and received in respect of that periodic tenancy when it came into being. Secondly, he submitted that, whether or not that was so, section 215(1) applied in any event in 2011 when the respondent served its section 21 notice, so as to preclude the respondent from doing so.
24. The amendments to the 2004 Act made by the Localism Act 2011 were not then in force, so that nothing turns, for these purposes, on the amended text. On the other hand, if the appellant is right, for either reason, and the section 21 notice is not valid, then the tenancy has not yet been brought to an end, and the amended provisions will apply if the respondent wishes to take further steps to obtain possession.

Does section 213 apply in these circumstances?

25. Mr Bhose's contention, consistent with the position adopted by Judge Winstanley, was that the deposit was paid and received in January 2007, before the relevant provisions came into force, and that therefore nothing in section 213 could bite on the deposit, since it refers consistently to the time, or the date, "when it is received": see sub-sections (1), (3) and (6)(b), and the phrase "on receiving such a tenancy deposit" in sub-section (4).
26. As regards the original fixed term tenancy that is no doubt the case. It is not contended that the commencement of the relevant provisions brought section 213 into play at once as regards deposits already paid and received under tenancies already in existence.
27. However, Mr Westgate argued that, when the new statutory periodic tenancy came into being in January 2008, the deposit had to be regarded as being then paid and received in respect of that new tenancy. It is clear from the 1988 Act that what happens at the end of the fixed period tenancy is the creation of a new and distinct statutory tenancy, rather than, for example, the continuation of the tenant's previous status. I do not see that there can be any doubt as to that. It was so held in relation to a comparable provision in the 1988 Act in N & D (London) Ltd v Gadson (1991) 24 HLR 64.
28. That being so, the new tenancy contained an equivalent provision as to a deposit, in replacement for the provision under the express tenancy. In theory the landlord could have exercised its right to use the original deposit to obtain compensation for any breach of the tenancy agreement as regards the condition of the property during the period of the fixed term tenancy, and could have required the deposit to be topped up as necessary. In fact it did not make any such requirement. But the legal position after 8 January 2008 must have been that the deposit was held by the landlord as security for the performance of the tenant's obligations, or for the discharge of any liability of his, arising under or in connection with the new statutory periodic tenancy, not (or not only) in respect of such obligations or liabilities arising under the original fixed term tenancy. How had that come about? It must have been on the basis that the tenant's right to be credited with the deposit at the end of the fixed period tenancy, as well as his obligation to pay, and the landlord's right to receive, an equivalent deposit under the new statutory periodic tenancy, were treated as satisfied by the landlord continuing to hold the same sum of money as before on the same basis as before but by reference to the new tenancy.
29. Mr Westgate therefore submitted that, even though no money changed hands and no book entries were made at that stage, nevertheless the landlord had to be treated as having received the amount of the deposit, referable to the new tenancy, on 8 January 2008. Otherwise the deposit would only have been held as security for obligations and liabilities under the original fixed period tenancy, which would make no sense, at least for the landlord. If the landlord is, therefore, treated as holding the deposit in relation to the new tenancy, it must be treated as having received it for that purpose. That receipt must have occurred on or about 8 January 2008. If that were so, he argued, the respondent then came under the obligation to comply with section 213(3), (4) and (5) within 14 days thereafter, which it undoubtedly had not done.
30. He pointed to the definition of "money", in section 212(8), as meaning money in the form of cash or otherwise. The width of that definition is particularly important in relation to section 213(7), prohibiting a demand for a deposit which consists of property other than money. However it shows, if there were any doubt, that a payment by cheque or by direct bank transfer could amount to the payment, and therefore the receipt by the landlord, of a deposit. He submitted that, as the provisions are intended for the protection of tenants in respect of their deposits, they should be construed broadly and purposively, so as to assure tenants of the statutory protection in all relevant cases.
31. As Mr Chataway had before Judge Winstanley, Mr Westgate relied on authority to show that statutory provisions about payment have been held to cover situations other than a payment by cash, cheque or the like. In White v Elmdene Estates Ltd [1960] 1 QB 1, [1960] AC 528, the legislation prohibited the requirement of "payment of any premium" on the grant, renewal or continuance of any tenancy. Mr and Mrs White owned and lived in a house, but it was subject to a mortgage which was in arrears, and they decided that they had to sell, repay the mortgage and then rent a flat. They found a suitable flat, but the estate agents acting on the letting required them to sell their house through them, and to sell it for £500 less than the fair market value, which they agreed to do, and did. One of the several issues in the case was whether on these facts there was a payment of any premium, which was defined as including "any fine or other like sum and any other pecuniary consideration in addition to rent". The Court of Appeal had no difficulty in holding that the imposition on Mr and Mrs White of the obligation to sell the house at £500 less than the proper price was the requirement of a premium. Lord Evershed MR then said, at page 16 of the report:

"If I am right it must follow that the exaction of such a deduction must amount to a "payment"; and I find, indeed, no difficulty in so concluding: for the word "payment" in itself is one which, in an appropriate context, may cover many ways of discharging obligations."

32. Ormerod LJ agreed, as did Willmer LJ, who said this, at page 28 of the report:

"Again, in my judgment, there can be no doubt that the defendants required a "payment" to be made. It is true that no actual money passed, but I venture to point out that a taxpayer is none the less a taxpayer because income tax which he owes is deducted at source. Similarly, the plaintiff and his wife in this case none the less "paid" £500 because it was deducted from the purchase price of the house that they had for sale."

33. The House of Lords dismissed the landlord's appeal, without saying anything that either takes away from or adds to the observations of Lord Evershed and Willmer LJ which I have quoted.
34. Later, however, the House of Lords expressly approved Lord Evershed's observations, in Hanoman v Southwark London Borough Council (No 2) [2009] UKHL 29 [2009] 1 WLR 1367, where the question was whether a section of the Housing Act 1985 (about the right to buy) which referred to "payments of rent made by the tenant" could include amounts by way of housing benefit which were credited to the tenant's rent account, but were not, and could not be, paid to the tenant, nor by him to the landlord. Lord Scott of Foscote said, at paragraph 24, that such payments could be described as a payment of the rent for the purposes of the relevant provision. He said "the word "payment" … varies with the context in which it is used" and he cited the last part of Lord Evershed's observation which I have quoted above. The other members of the House agreed with him.
35. Mr Bhose's submission was that section 213 only applies when the deposit is "physically received" after 6 April 2007. By physical receipt he meant payment by cash, cheque, bank transfer or in some other comparable way, such as occurred in the present case in January 2007. He supported this argument by a submission that, if the appellant's contention were correct, many private landlords would have been caught, and caught unawares, by a need to comply with section 213 on the expiry, after the commencement date, of a fixed term assured shorthold tenancy created before that date, if the tenant remains in possession, no new tenancy agreement being entered into, and the deposit, which had previously been paid and was still held, simply staying where it was with nothing said about it. He pointed to the absence of any transitional provision in the Act or in the commencement order. If so, he argued, the landlord would have to go to the otherwise unnecessary and pointless trouble and expense of arranging for the deposit to be held in accordance with an authorised scheme, simply in order to be able to recover possession of the premises by serving a section 21 notice.
36. I am not persuaded by that argument. The 2004 Act has to be construed in the light of the provisions of the 1988 Act as regards assured shorthold tenancies, including section 5. Once the new statutory periodic tenancy had come into being after the commencement date, a tenant's deposit being already held, it would be necessary to consider whether and if so how the 2004 Act applied. As I have said already, it must have been the landlord's position, by then, that it held the sum of £606.66 as a deposit as security for the performance of the tenant's obligations, or for the discharge of any liability of the tenant, arising under or in connection with the new tenancy. That could only be the correct legal position if that sum of money was to be treated as having been paid pursuant to the tenant's obligation under the periodic tenancy to provide a deposit. That obligation only arose on the expiry of the fixed term tenancy, so the payment at the beginning of that fixed term cannot have given rise to the position which obtained once the fixed term had expired. Something must have happened in January 2008 which led to the result that the deposit was held in relation to the new tenancy. That something could have been either an actual (or, as Mr Bhose put it, physical) payment (but none took place in this instance) or something which amounted to payment. If there was an actual payment or something treated as a payment there must also have been a corresponding receipt.
37. If the parties had been aware of the true nature of the legal consequences in January 2008 of the expiry of the express fixed term tenancy without the tenant either giving up possession or entering into a new express tenancy agreement, they might have had a conversation or other exchange about the deposit, in which they agreed that the landlord should continue to hold the deposit, and that it should for the future be treated as the deposit under the new tenancy, instead of under the former fixed term tenancy. That would have been the sensible alternative to the landlord paying the deposit back to the tenant (subject to any claim for want of repair or otherwise which he wanted to assert at that time) and the tenant paying the landlord the equivalent sum under the new tenancy.
38. In my judgment, although there is no evidence that the parties said or did anything of that kind, and it is likely that they were not aware of the nature or incidents of the legal process that took place when the fixed term tenancy came to an end, nevertheless the position as between them should be treated in the same way as if they had had such a discussion. The tenant should be treated as having paid the amount of the deposit to the landlord in respect of the new tenancy, by way of set-off against the landlord's obligation to account to the tenant for the deposit in respect of the previous tenancy, given that the landlord did not seek payment out of the prior deposit for the consequences of any prior breach of the tenancy agreement.
39. It follows that, on my analysis, the tenant did pay, and the landlord did receive, the sum of £606.66 by way of a deposit in respect of the new periodic tenancy in January 2008, and so the obligations under section 213 applied to the deposit so received. As is common ground, they were not performed. Section 215(1) therefore applied so that the landlord could not validly give notice under section 21 of the 1988 Act. The notice purportedly given on 22 June 2011 was thus ineffective and the grounds for possession were not made out.
40. For these reasons, Mr Bhose is right to point out the consequence that, once the fixed term tenancy had expired, the tenant remaining in possession, the landlord had to make arrangements for the deposit to be held in accordance with an authorised scheme if he wished to be in a position to serve a section 21 notice. That is the policy of the 2004 Act and I do not find persuasive Mr Bhose's argument that the requirement should not be imposed in these circumstances, or that it should be seen as unnecessary or pointless. I am willing to accept that the need to comply may not have been foreseen. Unfortunately, several points under this legislation turned out not to be as may have been expected or intended. The imposition of this requirement in these circumstances does not seem to me in any way anomalous, futile or pointless. To the contrary, it is entirely consistent with the policy and aim of the relevant provisions.
41. The tenant has hitherto confined his position to resisting the claim for possession, and has not sought repayment of the deposit nor payment of a sum under section 214(4). It is therefore sufficient to say that the possession order ought not to have been made, and the appeal should be allowed.
42. Under the original version of section 215, as construed in Vision Enterprises v Tiensia, it was open to the landlord to comply with the requirement to have the deposit held in accordance with an authorised scheme, even though this was not done within the 14 days then stipulated. That seems not to be the case now, given the amendment to section 215(1)(b) made in 2012. I note that, as regards failure to provide the necessary information, under section 213(6), the sanction preventing service of a section 21 notice applies until the information is given, even if that is done late: see section 215(2) and its words: "until such time as section 213(6)(a) is complied with". The time stipulation is in section 213(6)(b), so in that case the distinction is clearly deliberate: the landlord can retrieve the position, as regards that failure to comply, by complying late. The same does not appear to be the case in respect of failure to protect the deposit by an authorised scheme at all. Therefore it may be (I do not decide that it is so) that the only way in which the landlord can now escape from the provisions of section 215(1) is by returning the deposit to the tenant.

Conclusion

43. The point which I have discussed concerning section 213 was the only one taken in the grounds of appeal for which permission to appeal was granted. Towards the end of a further skeleton argument lodged thereafter by Mr Westgate and Mr Chataway another point was taken, namely that even if the provisions of section 213 had not applied to the deposit as a result of the creation of the statutory periodic tenancy in 2008, nevertheless the terms of section 215(1) were such that it applies so as to prevent a section 21 notice from being served whenever a deposit is held which is not held in accordance with an authorised scheme.
44. I can see the basis for this argument on the literal words of the section. If it is right, it would have had extensive consequences when the legislation first came into force, since it would have required any deposit to be put into an authorised scheme before the landlord could serve a section 21 notice after the commencement date, even if there would have been no other obligation to do so under section 213. It is not clear how significant would be the effect of this point now, six years after the provisions first came into force.
45. Interesting as the point is, it is not necessary to decide it for the purposes of determining this appeal. For that reason, I prefer not to deal with it but to leave it to be decided in a case in which it matters, if one such were to arise.
46. As it is, therefore, I would hold that the landlord did receive a deposit from the tenant of £606.66 on 8 January 2008, and it therefore came under the obligations set out in section 213 as it then stood. Not having complied with those obligations, it was not entitled to serve a notice under section 21 in June 2011. It was therefore not entitled to obtain possession of the premises. I would allow the tenant's appeal on that basis.

Lewison LJ

47. I agree.

Gloster LJ

48. I also agree.