Tenancy Deposit Scheme - Scottish landlord loses appeal against a decision made at Edinburgh Sheriff Court to hold them liable to pay their tenant three times the deposit taken, after their tenant took them to court over having failed to lodge their deposit in a tenancy deposit scheme.
In the case of Tenzin v Russell & Clark, the landlords had failed to pay a deposit into a tenancy deposit scheme. There was no dispute that they had failed to meet their obligations under the Regulations. The Sheriff held the landlords liable for the maximum penalty of three times the amount of the deposit to the tenant. The landlords challenged the Sheriff's decision by way of an Appeal to the Sheriff Principal. They appealed firstly on the basis of the amount of penalty awarded and that the Sheriff had unreasonably exercised their discretion in this regard. They also appealed the decision on the basis of two other procedural points in relation to the competency of the tenant's Summary Application itself.
The Sheriff Principal did not uphold the Scottish landlords' appeal in relation to their alleged technical incompetency of the tenant's Summary Application. This left the question of the amount of the award. The Sheriff Principal held that the Sheriff had 'complete and unfettered discretion' as to the amount of award to make. The level of award was within the parameters set down by the Regulations, i.e. three times the amount of the deposit taken. The Sheriff should have regard to any mitigating factors. However no evidence was led by the landlords in mitigation.
The Sheriff Principal said she regarded it as important that a penalty could be imposed to promote compliance with the Regulations, especially at this early a stage of their operation and implementation. The landlords had made deductions from the deposit at the end of the tenancy, something which should have been dealt with by a scheme, had the deposit been lodged appropriately. Accordingly, the Sheriff Principal refused the Appeal and the original Sheriff's decision stands.
It is important to note that due to the landlords' failure to succeed in their Appeal, expenses were awarded against them in favour of the tenant. It is clear from this decision that there is no discretion where a landlord has failed to lodge a deposit and/or failed to provide the prescribed written information under Regulations. The Sheriff must make an award in favour of the tenant. It is therefore entirely at the Sheriff's discretion, taking into account the facts and circumstances of the case, as to the level of the award made which can beup to a maximum of three times the amount of the deposit.
If you are a landlord and would like legal advice on the tenancy deposit scheme regulations, please get in touch.
