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Kent letting agent duo banned for twelve years for failing to protect tenant deposits

13 December 2013 10:00

Insolvency Service

Joseph Newman and Kerry Sebestyen, directors of Joseph Richards Limited (which traded as ‘Joseph Newman’), based in Canterbury, Kent have been disqualified from acting a company directors for seven and five years respectively for failing to secure and pass on tenants deposits as they were required to do by the laws regulating letting agents.

The disqualifications follow an investigation by the Insolvency Service.

Joseph Newman, 73, and Kerry Sebestyen, 30, have given undertakings to the Secretary of State for Business, Innovation and Skills that they will not act as a director of a limited company for seven and five years respectively as a result of their conduct as directors of Joseph Richards Limited.

Joseph Richards Limited operated as letting agents collecting deposits and rents on behalf of landlords. The company ceased trading in April 2012 owing over £400,000 to creditors, of which over £100,000 was owed to tenants and landlords for deposits.

  • In giving his undertaking, Mr Newman admitted that he failed to deal with 92 deposits totaling £119,778 taken by Joseph Richards Limited, including protecting them, as he was required to by law; instead, he used the money as part of the company’s general funds.
  • Ms Sebestyen, who resigned as a director of the company on 23 June 2011, admitted in her undertaking that she failed to deal with 28 deposits totaling £32,238 taken Joseph Richards Limited, including protecting them, as she was required to by law; instead, she used the money as part of the company’s general funds.

The disqualifications means that Mr Newman and Ms Sebestyen may not be directors of a company or be involved in the management of a company in any way for the duration of their disqualifications unless they have permission from Court.

Commenting on the disqualification, David Brooks, a Chief Examiner with the Insolvency Service said:

"The undertakings signed by Mr Newman and Ms Sebestyen send a clear message to other company directors: The Housing Act 2004 places those who receive tenancy deposits under clear obligations to protect tenants and landlords from loss. If your company has failed and you have not taken seriously your responsibilities as a director when dealing with tenancy deposits, the Insolvency Service will investigate you and you could be removed from the business environment.”

Notes to Editors


  1. Joseph Newman, 73, was director of Joseph Richard Limited, which was incorporated in September 1996 and traded from 74 St Dunstans Street, Canterbury as “Joseph Newman”. Kerry Louise Sebestyen, 30, was also a director of the company, until 23 June 2011.
  2. Mr Newman has undertaken not to act in the management of a company for a period of 7 years from 21 October 2013.
  3. Ms Sebestyen has undertaken not to act in the management of a company for a period of 5 years from 27 November 2013.
  4. .Landlords and tenants can find contact details for the approved deposit protection schemes and information about how to check if their deposits are protected at https://www.gov.uk/tenancy-deposit-protection/overview

5. Under the Housing Act 2004, for tenancies that have been started or renewed since 6 April 2007, landlords and agents in receipt of a deposit are required to protect it using an approved tenancy deposit scheme created for the purpose of “safeguarding tenancy deposits paid in connection with shorthold tenancies and facilitating the resolution of disputes arising in connection with such deposits”.

6. One of the main purposes of the Company Directors Disqualification Act is to ensure that proper standards of conduct of company directors is maintained and to raise those standards where appropriate.

7. The Housing Act 2004 places those who receive tenancy deposits under clear obligations to protect tenants and landlords from loss, and The Insolvency Service will ensure that action is taken against those who place deposits at risk by disregarding these protections.

8. Joseph Richards Limited ceased trading in April 2012 and was placed into voluntary liquidation on 18 April 2012 with a deficiency of £413,421. £113,346.24 was owed in respect of deposits taken from creditors.

9. Disqualification: a disqualification order has the effect that without specific permission of a court, a person with a disqualification cannot

      • act as a director of a company;
      • take part, directly or indirectly, in the promotion, formation or management of a company or limited liability partnership;
      • act as an insolvency practitioner; or
      • be a receiver of a company’s property.
      • In addition many other restrictions are placed on disqualified directors by other regulations.

10. Disqualification undertakings are the administrative equivalent of a disqualification order but do not involve court proceedings.

11. Further information on director disqualifications and restrictions can be found at http://www.bis.gov.uk/insolvency/Companies/insolvent-companies/director-disqualification-and-other-action.

12. The Insolvency Service administers the insolvency regime, investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. It may also use powers under the Companies Act 1985 to conduct confidential fact-finding investigations into the activities of live limited companies in the UK. In addition, the agency authorises and regulates the insolvency profession, deals with disqualification of directors in corporate failures, assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees, provides banking and investment services for bankruptcy and liquidation estate funds and advises ministers and other government departments on insolvency law and practice.

13. Further information about the work of the Insolvency Service, and how to complain about financial misconduct, is available from: http://www.bis.gov.uk/insolvency Media Enquiries should be directed to Kathryn Montague, Media Relations Manager, 020 7674 6910, Ade Daramy, Press Officer 020 7596 6187.

14. To subscribe to get e-mail alerts from The Insolvency Service go to the www.bis.gov.uk/insolvency website and you will see a button to “sign up for email alerts and newsletters” or click on the following link:https://public.govdelivery.com/accounts/UKBIS/subscriber/new

Contact Information

Ade Daramy
Name
Ade Daramy
Job Title
Mr
Division
Insolvency Service
Phone
020 7596 6187
Fax
Mobile
Email
ade.daramy@insolvency.gsi.gov.uk
Kathryn Montague
Name
Kathryn Montague
Job Title
Division
Phone
0207 674 6910
Fax
Mobile
Email
kathryn.montague@insolvency.gsi.gov.uk