Saad v Hogan (2009)

In 2005 a tenant with an assured shorthold tenancy paid a deposit of £1, 000. In November 2007, the landlord granted the tenant a further one-year tenancy. This tenancy also required payment of a £1, 000 deposit, but the landlord kept the original deposit and was not paid another. In June 2008 the landlord served a Housing Act 1988 section 8 notice seeking possession because of arrears of rent. The tenant said that as the landlord had failed to protect her deposit, she wished any compensation for this to be offset against the rent arrears. Four months rent was unpaid at the date of the possession hearing.
A District Judge held that as no money was paid over under the 2007 agreement, the landlord had not been obliged to protect the deposit. A possession order was made (Housing Act 1988. Schedule 2, Part 1, Ground 8).

On appeal:
HELD: Although the Housing Act 2004 does not provide for the situation where a deposit was not physically paid over because money was retained from an earlier agreement, the judge took a purposive interpretation to it. It was held that as the purpose of s. 212 is to safeguard deposits and facilitate the resolution of disputes, as it could be considered that there had been a payment by the tenant (even though no money was physically handed over) he allowed the appeal. The landlord was liable to pay the tenant £3, 000 for failure to protect the deposit, subject to set off for the rent arrears.