The Charterhouse Clarification: “Reasonable Recipient” and Substantial-Compliance Tests in Tenancy-Deposit Prescribed Information

Introduction

Lowe v Governors of Sutton’s Hospital in Charterhouse ([2025] EWCA Civ 857) is the Court of Appeal’s latest examination of the tenancy-deposit regime in Chapter 4 of the Housing Act 2004. The dispute arose after Mr Lowe, a tenant since 2010 of a residential flat owned by the historic Charterhouse charity, issued a claim for penalties exceeding £120,000 alleging that Charterhouse had breached its statutory duties when protecting his £3,300 deposit. Although the deposit was duly protected, Mr Lowe asserted two technical failures in the “prescribed information” supplied under the Housing (Tenancy Deposits) (Prescribed Information) Order 2007 (“the 2007 Order”):

Information Ground—the certificate referred to a non-existent clause 6 in a tenancy agreement that was never attached (Art 2(1)(g)(vi)).
Confirmation Ground—the certificate itself was unsigned, though it was enclosed with a signed covering letter (Art 2(1)(g)(vii)).

Both arguments failed in the County Court (HHJ Luba KC) and on first appeal (Adam Johnson J). The Court of Appeal, in a leading judgment by Lady Justice Asplin (with Andrews LJ and Nicola Davies LJ concurring), has now affirmed those decisions and—crucially—articulated the governing principles for:

Applying the Mannai investment “reasonable recipient” approach to prescribed-information errors; and
Determining when documents are “substantially to the same effect” for s.213(6) Housing Act 2004.

Summary of the Judgment

The Court of Appeal dismissed Mr Lowe’s appeal on both grounds. Key holdings:

The erroneous reference to “clause 6 of the tenancy agreement attached” was an obvious mistake. A reasonable recipient in Mr Lowe’s position would have realised the intended reference was to clause 5.3 of his tenancy agreement dealing with deposits. Hence Art 2(1)(g)(vi) was satisfied.
Although the certificate was unsigned, the signed covering letter that enclosed it authenticated the information, fulfilled the statutory purpose of landlord confirmation, and was therefore “substantially to the same effect” as a signed certificate. Article 2(1)(g)(vii) and s.213(6) were met.
Case-management discretion allowed the unpleaded Information Ground to be argued; no unfairness arose.

Consequently, Charterhouse had complied with the tenancy-deposit regime and no penalty was payable. The judgment cements a purposive, context-sensitive approach—dubbed here the “Charterhouse Clarification”—for minor informational or formal defects in prescribed-information documents.

Analysis

Precedents Cited and Their Influence

Mannai Investment Co Ltd v Eagle Star Assurance Co Ltd [1997] AC 749 – Established the “reasonable recipient” test for construing notices containing obvious errors. – The Court applied Mannai to interpret the clause-reference error.
Pease v Carter [2020] 1 WLR 1459 – Consolidated post-Mannai authorities and produced a four-step framework (Arnold LJ) for statutory notices. – Lady Justice Asplin expressly adopted Arnold LJ’s para 39 checklist.
Ayannuga v Swindells [2012] EWCA Civ 1789 – Demonstrated strictness where categories of information are wholly omitted. – Used here to distinguish a total omission (Ayannuga) from a mistaken reference (current case).
Kahlon v Isherwood [2011] EWCA Civ 602; OG Thomas v Turner [2023] 2 P & CR 15 – Examples where defects went to the substance (no notice to the right tenant / absent mandatory parts); relied upon to show the outer boundary of Mannai.
Stidolph v American School in London Educational Trust Ltd [1969] 20 P&CR 802 – Authority for reading a notice together with its covering letter; pivotal for the Confirmation Ground.
York v Casey (1998) 31 HLR 209; Speedwell Estates Ltd v Dalziel [2002] HLR 43; Fernandez v McDonald [2004] 1 WLR 1027 – Cited within Pease; underpin the contextual interpretation of errors.

Legal Reasoning

1. Scope of Article 2(1)(g)(vi)

The Court rejected Mr Lowe’s contention that landlords must reproduce in full the deposit-retention circumstances. The phrase “by reference to the terms of the tenancy” means a landlord may point the tenant to the relevant clause, providing that the reference is intelligible. Thus, an incorrect clause number—deemed an obvious slip—does not invalidate the information if the tenancy agreement is already in the tenant’s possession.

2. Applying the Mannai “Reasonable Recipient” Test

Using the Mannai/Pease framework, the Court asked:

How would a reasonable tenant, knowing his tenancy terms, read the certificate?
Would he realise clause 6 was an error, and correctly infer clause 5.3?

The answer was yes. The statutory purpose—transparency about deposit deductions—was therefore met.

3. Substantial-Compliance under s.213(6)

Turning to Article 2(1)(g)(vii), Lady Justice Asplin emphasised purpose over form. Section 213(6) expressly tolerates documents “in a form substantially to the same effect”. A signed cover letter enclosing an unsigned certificate:

Identified the landlord’s agent and bore his signature;
Declared the enclosure was the “Prescribed Information”; and
Invited the tenant to sign and return it, giving him the opportunity required by Art 2(1)(g)(vii)(bb).

This dual-document package was therefore tantamount to a signed certificate. The Court also dismissed a linguistic argument that the tenant’s opportunity to sign must precede the landlord’s confirmation; the statute’s purpose is satisfied as long as the opportunity is afforded.

Impact of the Judgment

Lower Litigation Risk for Landlords – Minor clerical errors (wrong clause number, unsigned certificate) will not automatically trigger severe penalties, provided the tenant is not prejudiced and the statutory purpose is achieved.
Guidance for Drafting and Compliance – Agents and landlords should still aim for exactitude but may rely on a signed covering letter to authenticate enclosures.
Narrowing “Strict Liability” – The decision tempers the draconian effect of automatic 1–3× deposit penalties by emphasising substance over form.
Future Case Law – Courts will likely deploy the Charterhouse Clarification when assessing deposit-information defects, potentially extending it to other housing-notice regimes.
Tenant Advice Practice – Advisers must scrutinise whether an alleged defect truly obscures the tenant’s understanding; mere typographical mistakes may no longer justify a claim.

Complex Concepts Simplified

Assured Shorthold Tenancy (AST) – The default private residential tenancy in England. After statutory changes, Mr Lowe’s tenancy automatically became an AST, bringing it under the 2004 Act.
Tenancy-Deposit Scheme (TDS) – Government-authorised custodial or insurance schemes that safeguard deposits and offer free dispute resolution.
Prescribed Information – A statutory list (Art 2 of the 2007 Order) of details a landlord must give the tenant within 30 days of receiving a deposit.
“Reasonable Recipient” Test – From Mannai: a notice (or information) is construed as it would be understood by an ordinary, reasonable person in the recipient’s position, with the relevant background knowledge.
“Substantially to the Same Effect” – A statutory safety-valve allowing courts to treat documents as compliant if they achieve the same purpose, even if not in exact form.

Conclusion

Lowe v Charterhouse refines the boundary between fatal non-compliance and harmless error in the tenancy-deposit regime. The Court of Appeal confirms that:

An obvious mis-reference within prescribed information can be cured by the Mannai “reasonable recipient” approach.
A signed covering letter can authenticate an unsigned certificate, satisfying the landlord-confirmation duty when read together.
The purposive reading of s.213(6) promotes fairness and avoids disproportionate penalties for technical lapses that cause no real prejudice.

This “Charterhouse Clarification” will steer future litigation away from hyper-technical arguments and back toward the statutory objectives of safeguarding deposits and minimising disputes—providing much-needed certainty for landlords, tenants, and practitioners alike.