The Regulations make it a requirement for a landlord to pay a deposit received in connection with a tenancy to the scheme administrator of an approved scheme and give the tenant specified information about this within 30 days of the start of the tenancy. If a landlord fails to do so then a tenant can apply to the sheriff for a order that a landlord did not comply together with an order for the landlord to pay the tenant an amount not exceeding three times the amount of the tenancy deposit. Two recent cases have considered the level of award which it is appropriate for a sheriff to make in the case of a landlord's failure.
The sheriff's decision in Marcus Jenson v Giueseppe Fappiano provides an interesting discussion of the exercise of discretion by a sheriff. The sheriff highlighted three equitable principles which constrained the exercise of a sheriff's discretion with regard to making an award under the Regulations. These are that; (a) reasons supporting it must be sound and articulated in the judgment, (b) the result must not be disproportionate (ie, trivial non-compliance could not result in the maximum sanction) and, (c) the decision based on the discretion must be fair and just.
The landlord in that case was described as an "amateur landlord" as he had no previous experience of letting out property. He had failed to lodge the tenant's deposit into an approved scheme and had also failed to give the tenant the information required by statute. However, by the time that the tenant had moved out of the property (which was following eviction action by the landlord), the deposit had been paid into an approved scheme which adjudicated on a dispute between the tenant and landlord regarding the deposit. The pursuer argued that the full award of three times the deposit should be made whereas the defender argued that a token award of £1 would be appropriate in the circumstances of the case.
The sheriff decided that an award at the level of one third of the deposit would be appropriate in the circumstances of the case. This was not a case which would warrant the severe sanction at the top end of the scale, as opposed to a situation involving repeated and flagrant non-compliance with the regulations by a large professional undertaking. However, he noted that if 'amateur landlords' decide to enter the market place they should be warned that the Regulations do not recognise this status.
The second recent case is the Inner House opinion in Samdup Tenzin v Stuart Russell and Laura Clark  CSIH 8A. In this case the pursuer was granted declarator that he was entitled to payment of £2,250 (three times his deposit) and an order for payment of the same at the first instance. However the defenders appealed this decision, first to the Sheriff Principal and then to the Inner House.
In addition to various arguments about the competency of the pursuer's pleadings, the defenders argued that the sheriff had taken into account irrelevant considerations. They had admitted the breach and that the sheriff should have taken into account the fact that they had only been in breach for 34 days (albeit their breach was longer if a breach which occurred in relation to an earlier tenancy between the parties was taken into account), the breach had occurred during the period when notice had been given in the tenancy, the regulations were new and complex and the breach had taken place during the transitional period of the regulations coming into force. They said that an award of the maximum amount was not appropriate in their case. The sheriff should have taken into account the objectives of the Regulations, which are to reduce the number of unfairly withheld deposits, to ensure that deposits are safeguarded throughout the duration of the tenancy and to ensure that deposits are returned quickly and fairly, particularly in a dispute.
The court however refused to alter the sheriff's original decision. They reiterated the unwillingness of an appeal court to interfere with a decision by a sheriff who had the advantage of hearing the evidence first hand and concluded that it was plain that the sheriff had reached the conclusion that this was a serious case and it was not insignificant that the defenders had waited until over four months after the Regulations had first come into force to register the deposit.
So what can be taken from these cases? It is clear that awards at the maximum amount of three times the level of compensation should be reserved for serious cases. Factors such as the landlord's experience and any previous breaches may be relevant for the sheriff in reaching a decision and it is possible that the length of the breach may not be relevant. However, determining what amount of award to make is a matter purely reserved for a sheriff's discretion and the result of this will be entirely dependent on the facts and circumstances of the case. From the Tenzin case it is however clear that landlords who fail to comply with the Regulations should be prepared for a maximum award to be made against them.