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Deposit dispute

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Newbie
Posts: 18

This country used to respect landlords!

« on: April 17, 2022, 03:02:09 PM »

Hello everyone,

I am a new member who found this magnificent website/forum when searching for information on rental deposits. It really is top class! I am an experienced landlord who has always had great relationships with their tenants and prided himself on running an ethically-focused business. Unfortunately last week I received a "letter before action" from a previous tenant informing me they intend to take legal action as I did not provide them with the "prescribed information" about where their deposit was protected.

I am considering hiring a QC barrister to discuss the case but I am also interested in any practical advice from landlords who may have been in the situation. I have read lots of stuff online about tenants using special claim firms to essentially extort money from landlords so it is pretty clear there is a big problem here and many of us are being victimised. Perhaps one of you has been in the same situation and won your case?

Anyway, here are the points I see as relevant and supporting my case.

1. I have always been a responsible and good landlord. The deposit was protected correctly and the tenant was able to access it at the end of the tenancy.

2. The only reason the tenant claims not to have had the prescribed information is that I accidentally used an outdated version of my rental agreement which specifies one particular deposit service. I have since changed which scheme I use but sadly this did not match the one in the contract. Nevertheless the tenant had no trouble finding where their deposit was protected and had never raised this as an issue.

3. Unfortunately the tenant was very irresponsible towards the end of their tenancy and left the house in a poor state. Because of this I was forced to make deductions from the deposit which the tenant then challenged with the deposit service. We have since had the decision from the deposit service who CONFIRMED that the tenant was in breach of the tenancy agreement and upheld most of the damage claims. We have written proof then that the tenant has breached their own legal obligations!

My question is this, how can a tenant who was in breach of their agreement seek to sue their landlord over a smaller issue? Is it possible for me to countersue (or at least threaten to as a way of getting the tenant to drop any legal action) over the fact the tenant acted so irresponsibly in damaging my property? Like I say I have legal proof of this.

I am quite confident these arguments would stand  up in court but I am hoping that I can persuade the tenant to drop their action before it gets to that.
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« Reply #1 on: April 17, 2022, 05:33:21 PM »

They (the arguments) won't stand up in Court, though, will they?

The Deposit not being protected correctly claim is just that. It's not affected by any of these other 'things' (extenuating circumstances?) you mention. They're irrelevant and unrelated.

The case against you will be discrete and open-and-shut... did you protect the Deposit correctly? That means in-full, on-time and did you provide all the relevant details?

Your answer to that is "no".

Therefore the Court must find against you... there's no option to use any other 'related' information that you feel helps you out. I mean, it's sounding like a technicality, of course it is, so the penalty will be on the lower end. You do not say how much they are asking for... or whether they've not mentioned a figure yet... but don't let them assume (and don't you assume) that it's a mandatory 3x Deposit value. It isn't. Some ex-Tenants think this, some are told this, some Landlords are frightened by this.

But it sounds like 1x Deposit value any day of the week.... you didn't do everything you were expected to do... and neither ignorance, making a mistake or being too busy are valid excuses.

I'd probably attempt to negotiate something no-one is happy with.

I don't know why you need a QC. You've laid it all out pretty well. Sure, you might have missed stuff, but it certainly seems like you're on the hook for a penalty. Best strategy is to pay out the least you can.
Newbie
Posts: 18

This country used to respect landlords!

« Reply #2 on: April 17, 2022, 07:05:59 PM »

The tenant is trying to claim 4x the deposit on the grounds (they say) that there were two tenancies. This is something I would contest as there is only one tenancy agreement.

One thing I did not mention is that at the beginning of their tenancy I had a very incomptent agent who handled the paperwork and who I have now replaced with a professional lettings agency.

I do think it is very unfair (if it is true) that the court MUST issue a fine. The deposit was protected and the tenant was able to find it on their own accord. It is them who contacted me saying it was protected with Scheme 1 rather than Scheme 2. (This was after the tenancy).

Given the tenant will have to spend time and money on this case is it worth me offering less than the deposit (maybe one third or half) on the basis that it is better for them than spending money on court papers, lawyer etc?
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« Reply #3 on: April 17, 2022, 07:59:44 PM »

You will need to pursue your incompetent agent for your losses - but good luck with trying that.

Unfortunately, employing an agent does not absolve you, the landlord, from responsibility to comply with the law. You need to check everything an agent does on your behalf.

This is what you needed to know when the tenancy started:

You must serve your tenants with the Prescribed Information within 30 days of the agent/landlord receiving the deposit.

Prescribed Information is a specific set of information relating to a tenancy, which you're legally obliged to provide to your tenants.

- The amount of the deposit

- The address of the property

- The name, address and contact details of the administrator of the tenancy deposit scheme with which the deposit is held

- The name, address and contact details of the landlord and tenants and any third parties who have contributed to the deposit

You must also provide a copy of the Deposit Protection Company's Custodial terms and conditions with the Prescribed Information to your tenants under the Housing (Tenancy Deposits) Prescribed Information Order 2007.


It would not have been a problem if you accidentally used an outdated version of your rental agreement which specified one particular deposit service as long as you had supplied the Prescribed Information as above relating to the actual deposit scheme used.

It appears you have no defence against your former tenant's claim.


And what do you mean by " I accidentally used an outdated version of my rental agreement which specifies one particular deposit service"?

Was it your rental agreement that you used?  Or was it the agent's agreement?

It feels as though something doesn't add up here.


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« Reply #4 on: April 17, 2022, 10:12:40 PM »

Unless you are wishing to establish some legal judgement why would you want to use a QC barrister ? A friend's daughter is such a  person,and charges several thousands for a day in court. I am unsure if you provided  inappropriate deposit information,or none at all?
I think the tenant is going to be disappointed,and you would probably get the minimum penalty,so if you want to avoid court I would offer that. Given the circumstances I doubt that an ambulance chaser would take this on.Good luck.   
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« Reply #5 on: April 17, 2022, 10:37:46 PM »

The tenant is trying to claim 4x the deposit on the grounds (they say) that there were two tenancies. This is something I would contest as there is only one tenancy agreement.

How long was the tenant in residence?

Was it longer than the fixed term specified in the Assured Shorthold Tenancy (AST) agreement?

If so, did the tenancy agreement state explicitly that after the fixed term, the tenancy would continue as a monthly Contractual Periodic Tenancy (CPT)?

If so, then there was only one tenancy.

If the tenancy agreement did not state it would continue as a CPT, then the tenancy would become a Statutory Periodic Tenancy (SPT).

An SPT is a new tenancy but there doesn't have to be a new tenancy agreement. A monthly SPT arises automatically if the tenant stays beyond the fixed term.

I suspect that the basis of the claim that there were two tenancies is because the AST became a SPT.


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« Reply #6 on: April 18, 2022, 08:52:34 AM »

One thing I did not mention is that at the beginning of their tenancy I had a very incomptent agent who handled the paperwork and who I have now replaced with a professional lettings agency.

Sorry, but it's not relevant - the buck (as they say) stops with you.

Quote
I do think it is very unfair (if it is true) that the court MUST issue a fine. The deposit was protected and the tenant was able to find it on their own accord. It is them who contacted me saying it was protected with Scheme 1 rather than Scheme 2. (This was after the tenancy).

Everyone who doesn't follow the Deposit protection rules always thinks it's "unfair" when they're caught. I suppose this is the reason the claims are black-and-white / open-and-shut cases - to stop Landlords from confusing the situation so much, with various bits of interesting and extraneous information so it all becomes murky and cloudy... the Court asks questions like: Did you protect the Deposit at all? Did you protect the Deposit on time? Did you serve the appropriate Scheme's Prescribed Information? If the answer to any of those is "no" then you're fully on the hook.

I mean - your defence appears to be... I did serve some details to the Tenant, but they were entirely wrong / misleading even - therefore you might as well have served them nothing at all. The fact the Tenant could hunt it down themselves changes nothing - that's what many Tenants have to do to find Deposits (or not). An admin. bungle doesn't (and shouldn't protect you) from a penalty.

Quote
Given the tenant will have to spend time and money on this case is it worth me offering less than the deposit (maybe one third or half) on the basis that it is better for them than spending money on court papers, lawyer etc?

Absolutely, but maybe only a bit less. Lay out your position clearly, so that they understand their dreams of early retirement are just that - dreams, and decide to grudgingly take a bird in the hand. Times are hard out there and people want certainty and immediacy.

Forcefully put across your position there was only 1 tenancy, therefore only 1 penalty.
Forcefully put across your position the Deposit was protected, it was just admin., and the penalty would be on the 1x side.
Forcefully put across your position that you think they'd need to expend time, effort and likely money to get 1x from you.

Don't be tempted to write guff like - "I was surprised to receive your letter considering we had such a good relationship." and other 'softeners'. But it's OK to say stuff like - "We can bring this to an amicable and quick resolution if you accept my offer..."

Then make an offer that is tempting so you can hope to brush all this under the carpet - you want certainty and immediacy too (but maybe allow a little room to grow, because - who accepts the first offer?).
« Last Edit: April 18, 2022, 08:55:28 AM by Hippogriff »
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« Reply #7 on: April 18, 2022, 08:56:52 AM »

You've not said how much the Deposit was.

Any offer you make might look better as a rounded type of number.
Newbie
Posts: 18

This country used to respect landlords!

« Reply #8 on: April 19, 2022, 10:10:10 AM »

You've not said how much the Deposit was.

Any offer you make might look better as a rounded type of number.

The deposit was 1,900
Newbie
Posts: 18

This country used to respect landlords!

« Reply #9 on: April 19, 2022, 10:11:03 AM »

You will need to pursue your incompetent agent for your losses - but good luck with trying that.

Unfortunately, employing an agent does not absolve you, the landlord, from responsibility to comply with the law. You need to check everything an agent does on your behalf.

This is what you needed to know when the tenancy started:

You must serve your tenants with the Prescribed Information within 30 days of the agent/landlord receiving the deposit.

Prescribed Information is a specific set of information relating to a tenancy, which you're legally obliged to provide to your tenants.

- The amount of the deposit

- The address of the property

- The name, address and contact details of the administrator of the tenancy deposit scheme with which the deposit is held

- The name, address and contact details of the landlord and tenants and any third parties who have contributed to the deposit

You must also provide a copy of the Deposit Protection Company's Custodial terms and conditions with the Prescribed Information to your tenants under the Housing (Tenancy Deposits) Prescribed Information Order 2007.


It would not have been a problem if you accidentally used an outdated version of your rental agreement which specified one particular deposit service as long as you had supplied the Prescribed Information as above relating to the actual deposit scheme used.

It appears you have no defence against your former tenant's claim.


And what do you mean by " I accidentally used an outdated version of my rental agreement which specifies one particular deposit service"?

Was it your rental agreement that you used?  Or was it the agent's agreement?

It feels as though something doesn't add up here.

It was the agent's agreement. The end of the agreement says the deposit will be protected in TDS and has their terms but I had switched to another service at this point.
Full Member
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« Reply #10 on: April 19, 2022, 10:22:56 AM »

It was the agent's agreement. The end of the agreement says the deposit will be protected in TDS and has their terms but I had switched to another service at this point.
I'm still confused.

A. Did you get the agent to handle the deposit for you - but using your chosen service?

or

B. Did you take the deposit and protect it yourself in your chosen service?
Newbie
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This country used to respect landlords!

« Reply #11 on: April 19, 2022, 10:54:13 AM »

The tenant is trying to claim 4x the deposit on the grounds (they say) that there were two tenancies. This is something I would contest as there is only one tenancy agreement.

How long was the tenant in residence?

Was it longer than the fixed term specified in the Assured Shorthold Tenancy (AST) agreement?

If so, did the tenancy agreement state explicitly that after the fixed term, the tenancy would continue as a monthly Contractual Periodic Tenancy (CPT)?

If so, then there was only one tenancy.

If the tenancy agreement did not state it would continue as a CPT, then the tenancy would become a Statutory Periodic Tenancy (SPT).

An SPT is a new tenancy but there doesn't have to be a new tenancy agreement. A monthly SPT arises automatically if the tenant stays beyond the fixed term.

I suspect that the basis of the claim that there were two tenancies is because the AST became a SPT.

The tenant stayed for three years. There is no agreement for a second tenancy so how can they prove this? surely it is the same tenancy which keeps running?
Newbie
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« Reply #12 on: April 19, 2022, 10:55:15 AM »

It was the agent's agreement. The end of the agreement says the deposit will be protected in TDS and has their terms but I had switched to another service at this point.
I'm still confused.

A. Did you get the agent to handle the deposit for you - but using your chosen service?

or

B. Did you take the deposit and protect it yourself in your chosen service?

I protected it myself
Full Member
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« Reply #13 on: April 19, 2022, 11:02:44 AM »

The tenant stayed for three years. There is no agreement for a second tenancy so how can they prove this? surely it is the same tenancy which keeps running?

They don't need to prove anything.

It's not the same tenancy unless the AST agreement states explicitly that after the fixed term ends it will continue as a monthly Contractual Periodic Tenancy.

If it does not state this, then the initial AST ends and a new monthly Statutory Periodic Tenancy automatically arises on the same terms as the original tenancy.  This is the second tenancy to which they are referring.

Full Member
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« Reply #14 on: April 19, 2022, 11:07:29 AM »

I protected it myself

That's OK, provided you did it within 30 days.

Did you send the tenants the Prescribed Information, i.e. as I described in blue above?
Newbie
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« Reply #15 on: April 19, 2022, 12:51:30 PM »

I protected it myself

That's OK, provided you did it within 30 days.

Did you send the tenants the Prescribed Information, i.e. as I described in blue above?

I believe my former agent sent them the certificate via post. I waiting to confirm this.
Full Member
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« Reply #16 on: April 19, 2022, 01:31:43 PM »

I believe my former agent sent them the certificate via post. I waiting to confirm this.

The certificate and the Deposit Protection Company's Custodial terms and conditions?
Both are required.

Did you keep copies of these? Plus a record of when you sent them to the agent to pass on?  These will help your defence.

You need to establish what evidence the agent has, if any, that they were actually sent to the tenants. It's normal to require a signature, or at least an email from the tenants confirming receipt.

At the start of this thread you said:

"The only reason the tenant claims not to have had the prescribed information is that I accidentally used an outdated version of my rental agreement which specifies one particular deposit service. I have since changed which scheme I use but sadly this did not match the one in the contract. Nevertheless the tenant had no trouble finding where their deposit was protected and had never raised this as an issue."

If they were sent had the correct prescribed information (regardless of what the tenancy agreement said) and you can supply evidence to that effect, then you will be able to reject this vexatious claim.

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« Reply #17 on: April 19, 2022, 01:36:48 PM »

if the certificate and terms were sent in the post, how can I prove this? would a written statement by the agent be useful?
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« Reply #18 on: April 19, 2022, 01:42:59 PM »

if the certificate and terms were sent in the post, how can I prove this? would a written statement by the agent be useful?
If the agent has a record of their sending of the PI to the tenants, then yes.

But I'm still not understanding why the agent didn't handle the registering deposit for you?  Was that an extra cost service that you declined?
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« Reply #19 on: April 19, 2022, 01:54:48 PM »

The tenant is trying to claim 4x the deposit on the grounds (they say) that there were two tenancies. This is something I would contest as there is only one tenancy agreement.

Quote
The tenant stayed for three years. There is no agreement for a second tenancy so how can they prove this? surely it is the same tenancy which keeps running?

Sounds like there's two tenancies then. There was a fixed term for X (where X < 3 years). When that ended, the tenant continued living there on a periodic tenancy that arose as a matter of law. One plus one equals two.

Quote
Given the tenant will have to spend time and money on this case is it worth me offering less than the deposit (maybe one third or half) on the basis that it is better for them than spending money on court papers, lawyer etc?

You can offer it, but unless they need money right now and what you're offering will cover it, nobody with sense would accept it. The minimum penalty is 1x deposit per tenancy. Yeah there'll be cost, but you're the one paying it since you will be lossing the case. (General principle in English courts, loser pay winners cost.)

You should go speak to a lawyer (with the appropriate specialisation), i.e. a solicitor working in landlord and tenant law. A QC, as in a barrister, won't deal with you unless they offer direct access, which still doesn't really make sense for you at this stage. You need someone with the relevant knowledge to see your tenancy agreement, and anything that was given to the tenant to see if you actually gave the prescribed information (and on time). If the answer is yes, then go ahead and fight it. If the answer is no, settle.

Exactly what is required for prescribed information depends on the scheme in question, and possibily whether there was joint tenant. From the various posts above, you had an agent who sent a "certificate" to the tenant, an agent whose own tenancy agreement says they uses TDS. However you had protected it with a different company. This the agent was unaware of? If so, I don't see how the agent could had provided sufficient or correct prescribed information. So my guess is that yes, the tenant have a case, and yes they will win, probably 1x per tenancy for 2 tenancies.
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« Reply #20 on: April 19, 2022, 01:55:43 PM »

if the certificate and terms were sent in the post, how can I prove this? would a written statement by the agent be useful?
If the agent has a record of their sending of the PI to the tenants, then yes.

But I'm still not understanding why the agent didn't handle the registering deposit for you?  Was that an extra cost service that you declined?

I had taken over the deposit protection stuff myself as I had just changed schemes having had extremely unprofessional experience with the previous tenancy protection service.

The agent tells me they sent the PI but do not have a record. I will obtain a written statement from them.

It is becoming very clear here that the tenants only have one motivation here and that is to get as much money as possible. I am not willing to be shaken down like this.
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« Reply #21 on: April 19, 2022, 02:10:38 PM »

The agent tells me they sent the PI but do not have a record.

How do they know they sent it then?

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« Reply #22 on: April 19, 2022, 02:14:44 PM »

Because they remember doing so and will write a statement to that effect.
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« Reply #23 on: April 19, 2022, 02:27:51 PM »

Because they remember doing so and will write a statement to that effect.

Your agent is not an independent witness. Their words to the effect of "yes we did" has as little weight as you as defendent saying "I did send it" with no evidence to back up the claim.

Your tenancy agreement says the deposit would be protected in TDS, it wasn't. On the balance of probability, you didn't provide correct prescribed information. You lose.
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« Reply #24 on: April 19, 2022, 02:30:17 PM »

To be more specific. The specific requires for a landlord to fully comply with the requirements is more complicated than many landlords or agents realises. Even if the court accept that your agent sent something they think of as the prescribed information, you can't prove it fully meets the requirements of the legislation.
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« Reply #25 on: April 19, 2022, 02:59:48 PM »

It is becoming very clear here that the tenants only have one motivation here and that is to get as much money as possible. I am not willing to be shaken down like this.

You say this as though with some surprise. What would you - really - expect?

Whatever noise you create surrounding this issue it seem - at least to me - that the ex-Tenant has a valid claim. I'll tell you this... if you'd done everything correctly - then they wouldn't have a claim.

So I don't think you can blame them, not really... you're the one at fault in the cold light of day.

The Court may shake you down.
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« Reply #26 on: April 19, 2022, 04:23:29 PM »

It is becoming very clear here that the tenants only have one motivation here and that is to get as much money as possible. I am not willing to be shaken down like this.

You say this as though with some surprise. What would you - really - expect?

Whatever noise you create surrounding this issue it seem - at least to me - that the ex-Tenant has a valid claim. I'll tell you this... if you'd done everything correctly - then they wouldn't have a claim.

So I don't think you can blame them, not really... you're the one at fault in the cold light of day.

The Court may shake you down.

I am sorry but this situation is ridiculous... the tenants have not been negatively impacted whatsoever by this. In fact I believe they discovered the breach during the tenancy and then waited until the tenancy was over before letting me know!

As I have said they also damaged the property, breached their contract and had social contact throughout the lockdowns. Surely these kind of character factors should be put in front of the judge?
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« Reply #27 on: April 19, 2022, 04:41:19 PM »

Because they remember doing so
You are kidding! How can they possibly remember sending on the deposit info when it was over 3 years ago.
 
 
 
You've made a number of incorrect assertions throughout this thread:

"I am quite confident these arguments would stand up in court"  No they won't.

"I had a very incompetent agent who handled the paperwork"   Blame shifting. It appears that you, in part, handled the paperwork (badly).

"There is no agreement for a second tenancy so how can they prove this? surely it is the same tenancy which keeps running?"  Not so. An SPT is a new tenancy

"I am not willing to be shaken down like this."   You won't have a choice in the matter I'm afraid.

"Surely these kind of character factors should be put in front of the judge?" Surely not. Because they are not relevant to the case and won't be allowed.

"I am an experienced landlord" Not experienced enough to have complied with the law.

Honestly, it would be better to climb down from your "I've got the moral high ground" position, carefully re-read the whole thread, take on board what KTC and others have said, and then be prepared to make a sensible offer to settle the claim.



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« Reply #28 on: April 19, 2022, 04:45:40 PM »

Parliament / the government wanted landlord to protect tenant's deposit and give tenant information regarding it. They decided the best way for this to be enforced is to let the tenants do it themselves, by giving them the financial incentives from any resulting penalty being payable to the tenant (or person who directly paid the deposit on the tenant's behalf). From the law's point of view, everything else is irrelevant. You're running a business (yes, even if you only have one property and a day job), which has rules which you have to comply by. If you don't, you may be punished for it.

For the tenant's damages etc., you had a recourse, which you exercised. You claimed a compensation from your tenant for you loss by claiming it against the deposit. If the deposit was insufficient to cover your loss, you are entitled to take the tenant to court.

If the tenant broke lockdown rules, that's a matter for the police. Report them if you want. It's got nothing to do with the above.
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« Reply #29 on: April 19, 2022, 05:31:07 PM »

Surely these kind of character factors should be put in front of the judge?

Not even related. I'm sorry, but I said this early on. I know you don't want it to be true... but they are actually unrelated matters. I realise you think it's ridiculous, but it isn't.

You can't nullify your own wrongdoing by trying to point-out that someone else did something wrong.

What matters - or should - to you is that the notion of 4x the Deposit's value isn't likely to be a penalty here... so there's room for education and realistic negotiation. It certainly seems like there were 2 discrete tenancies here... but I think there might be legs in you standing by your assertion (in communication with the ex-Tenants) that it was only a single tenancy (but it does sound like they've read up on this, or have had advice). If you're a good Landlord and have no bad track record then the likely penalty is 1x (per tenancy).

Now, you don't want to go to Court, surely?
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