The recently reported case of Russell & Clark v Tenzin 2013 WL 7090698 highlights the importance of complying with the Tenancy Deposit Schemes (Scotland) Regulations 2003 (SSI 176/2011) ("the Regulations").
The Regulations require a landlord to pay any residential tenancy deposit obtained from a tenant into an approved scheme within 30 working days of receipt. Failure to comply means that a tenant can apply to the court for an order in terms of which the landlord must pay to the tenant an amount up to three times the amount of the deposit. The Regulations state that an order in favour of the tenant MUST be made where a Sheriff is satisfied that the landlord did not comply with the requirement to lodge the deposit. In recent cases the tenants have been awarded the maximum amount of three times the deposit.
In this case the landlords had been ordered by a Sheriff to pay their former tenant the maximum sum of three times his deposit for their failure to comply with the requirement to lodge the deposit. The landlords had admitted that they had not complied with the Regulations and offered no reasons in mitigation of this failure.
The landlords then appealed to the Sheriff Principal against the order on the ground (among others) that the Sheriff had erred in applying the maximum penalty as theirs was not a blatant breach, had only been for a short while and that the legislation concerned was novel and complex. The Sheriff Principal held that the object of the monetary sanction was to enforce and encourage compliance with the obligations under the Regulations and to prevent default. In addition, she held that the Sheriff had complete and unfettered discretion as to the award to make and that the appellate court had little, if any, justification for intervening:"The Sheriff is entitled to impose any penalty including the maximum to promote compliance with the regulations."
It is vital that landlords are aware of and comply with the requirement to lodge residential tenancy deposits in an approved scheme.