23/12/2020

AST statutory notices and signing as a company

Northwood Solihull Ltd v Fearn & Ors (2020) EWHC 3538 (QB)

There were two linked issues in this appeal. Where the landlord is a company, does i) a Section 8 Notice and ii) the deposit prescribed information confirmation certificate have to be signed in accordance with section 44 of the Companies Act 2006 (so signed either by two directors or a director and company secretary). The outcome has much wider significance. We’ve seen previous county court cases on both issues, here, and here.

At first instance on this possession claim, the county court had held section 44 of the CA 2006 did not apply to a notice seeking possession but did apply to a confirmatory certificate. A possession order had been made, and penalties for breach of s.214(4) Housing Act 2004 awarded to the tenants. The landlord appealed and the tenants crossed appealed, with possession order and penalties stayed.

In this case, the section 8 notice was signed by the claimants’ property manager (not a director of the company), and the prescribed information signed by a sole director of the company.

i)  the section 8 Notice,

The prescribed section 8 notice set out in The Assured Tenancies and Agricultural Occupancies (Forms) (England) (Amendment No. 2) Regulations 2016 SI 2016/1118 has a signature section as follows:

“6 Name and address of landlord/licensor
To be signed and dated by the landlord or licensor or the landlord’s or licensor’s agent (someone acting for him). If there are joint landlords each landlord or the agent must sign unless one signs on behalf of the rest with their agreement.
Signed… Date…
Please specify whether: landlord/licensor/joint landlords/landlord’s agent
Name(s) (Block Capitals)…
Address…
Telephone: Daytime… Evening…

In this case, the landlord’s property manager had signed, but under the signature, has crossed out all other options except ‘landlord’. It was common ground that the notice would ave been valid if she had left ‘landlord’s agent’ instead. The tenant argued that in leaving ‘landlord’ the manager had taken on responsibility for the notice to comply with s.44 Companies Act .

Was a section 8 Notice a document that was required to be ‘executed’ by the company in terms of s.44?

A section 8 Notice is effectively a preliminary warning to the tenant and a precondition for the landlord (in particular for ground 8).

Purely as a matter of context and purpose of the Regulations and Section 8 of the 1988 Act, it is hard to identify a convincing reason why (when furthering these two purposes) the formality of execution complying with section 44 CA 2006 would be necessary as a condition of validity of a Notice. Why does it matter to a tenant that the corporate landlord has undertaken this technical step when serving this very preliminary (albeit important) notice? Although a Notice has important consequences it does share many characteristics with a letter before claim.

Further, the very fact that the Notice can be signed by a landlord’s agent like Ms Miles (where no section 44 requirement would apply), strongly suggests that less formal methods of verifying notification were considered as acceptable by the draftsman of the Regulations.

The conclusion that the High Court drew from Hilmi & Associates Ltd v 20 Pembridge Villas Freehold Ltd (2010) EWCA Civ 314 was that s.44 CA applied

if the legislation in issue and context expressly requires a signature by the relevant person itself, there is no other way of a corporate person satisfying this requirement other than by way of the general law (which requires execution under section 36A or its successor).

In terms of a section 8 notice, the judge at first instance was quite right to identify that a signature by the landlord was not statutorily required on a section 8 notice, as an agent could sign it. On that basis, the notice did not fall under what was taken to tbe the ipmort of Himli, even though the statutory formalities of a section 8 had to be met.

While the agent had crossed out the ‘wrong’ identifiers

In short, in the absence of any express statutory requirement that the Notice be signed “by” the landlord, it could be (and was) validly signed on behalf of the landlord by an authorised signatory without the need to comply with s. 44 of the 2006 Act. There was no other feature of the statutory context which persuaded me that this was not a determinative matter.

The section 8 notice was valid.

ii) The Prescribed information certification.

The prescribed information was given to the tenants in July 2014.

Before the Deregulation Act 2015 amendments, the Housing (Tenancy Deposits) (Prescribed Information) Order SI 2007/797, at Article 2(1)(g) provided:

(vii) confirmation (in the form of a certificate signed by the landlord) that—
(aa) the information he provides under this sub-paragraph is accurate to the best of his knowledge and belief; and
(bb) he has given the tenant the opportunity to sign any document containing the information provided by the landlord under this article by way of confirmation that the information is accurate to the best of his knowledge and belief.

The statute therefore prescribed signing by the landlord. It fell under Himli requirements and so must comply with s.44 CA, as it required a signature by the relevant person (in this case, the company).

This was the finding in Bali v Manaquel Company Limited (Central London County Court, 15 April 2016) (our note).

On the issue of ‘substantially to the same effect’, for which s.214(6) Housing Act 2004 provided:

(6) The information required by subsection (5) must be given to the tenant and any relevant person—
(a) in the prescribed form or in a form substantially to the same effect, (…)

This had been addressed in the judgment in Bali v Manaquel thoroughly:

It seems to me that the information required is about the compliance of the landlord with the initial requirements of the scheme in relation to the deposit, the authorised scheme, and the operation of the provisions of this Chapter in relation to the deposit by means of the information as has been prescribed. What has been prescribed is that there should be a certificate signed by the landlord. It seems to me very difficult to say that if there is not a certificate signed by the landlord then there has been the provision of information in a form substantially to the same effect. Either it is a certificate signed by the landlord or it is not.

The achievement of a signature by the landlord was not something that could be ‘substantially carried out, it either was or it wasn’t. In addition:

(1) The confirmatory certificate signed by the landlord (under Article 2(1)(g)(vii)), is not, in the context of this Article, something in the nature of “information” which must be given in the “prescribed form or in a form substantially to the same effect” (Section 213(6)(b) of the 2004 Act).
(2) The language of Article 2(1)(g)(vvi) strongly suggests that such a certificate is a freestanding document which confirms the accuracy of the actual “information” set out in the sub-paragraphs above. That actual “information” is matters such as details of the deposit and names and addresses of parties such as the landlord.

So the landlord’s signature requirement fell outside s.214(6)(a) ‘substantially to the same effect’.

Therefore the prescribed information certification did have to be signed in accordance with s.44 CA.

Appeal and Cross Appeal dismissed.

Comment

This presents some significant outcomes, with wider effects.

Section 8 notices from corporate landlords don’t need to be signed in accordance with s.44 Companies Act. The earlier County Court case of Ratcliffe & Ratcliffe v Patterson & Porter. County Court at Luton, 17 March 2020 (our note) was not right on this point. It can be signed by anyone authorised by the landlord to do so.

Deposit prescribed information certifying, prior to The Deregulation Act 2015 amendments (ie to 25 March 2015), could only be done by the landlord, and where that was a corporate landlord, the signature must comply with s.44 CA – by two directors or a director and company secretary, or if a sole director, then the director’s signature must be witnessed by another party. A failure to do so not only gives rise to a penalty for breach of s.214 Housing Act 2004, but would also invalidate a section 21 notice, if not rectified prior to service of a s.21.

[Edit – update. As has correctly been pointed out in the comments, the effect of section 30(3) Deregulation Act 2015 was to make the change to ‘landlord or initial agent’ retrospective to 6 April 2007, for all except penalty or s.21 cases that were extant when the amend came into force – 26 March 2015.  So prescribed info signed by an ‘initial agent’ prior to 26 March 2015 was retrospectively validated. This also means that in this case, where the penalty claim post dated the Dereg Act, it should have been the amended form of the prescribed information order that should have been addressed. This does not seem to have been put to the court. ]

What of the position from 26 March 2015? The s.30 Deregulation Act 2015 amendment makes clear that ‘landlord’ in article 2(1)(g)(vii) is to be read as ‘the landlord or the initial agent’.  There are two options here:

i) that the same conclusion as with section 8 notices must apply from that point – that the statute no longer expressly requires a signature from the landlord specifically; or

ii) That the ‘landlord or initial agent’ are specified, and are relevant people in the alternative, so following Himli, s.44 CA signatures required.

I’m leaning towards the second option. The Deregulation Act amends added a new article 2(3), which reads

(3)     In a case where the initial requirements of an authorised scheme have been complied with in relation to the deposit by a person (“the initial agent”) acting on the landlord’s behalf in relation to the tenancy—

(a)     references in paragraph (1)(b), (g)(iii) and (vii) to the landlord are to be read as references to either the landlord or the initial agent

(b)     references in paragraphs (1)(d), (e), (g)(iv) and (vi) and (2) to the landlord are to be read as references to either the landlord or a person who acts on the landlord’s behalf in relation to the tenancy.

The relevant sub para is 1(3)(a). Now this applies only in a case where the ‘initial agent’ was the one who protected the tenancy deposit. So, there are two possible, but mutually exclusive signatories – the agent’s signature is only valid if they protected the deposit on the landlord’s behalf. if the landlord protected the deposit, the landlord must sign. The position is not the same as it is with the section 8 Notice.

Now if that is right, I think that the s.44 CA requirements would arguably still apply for a corporate landlord signing, but also arguably, for a corporate agent signing!

If nothing else, then, there are arguments to come….

 

 

 

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts.

17 Comments

  1. Ben Reeve-Lewis

    This is tremendously useful for tenancy sustainment and worth mentioning that the prescribed information must be served on the tenant “And any relevant person”. It is common practice for local authority prevention teams to pay the deposit on behalf of a homeless applicant, making the council a “Relevant person”, creating a double whammy of potential non compliance.

    Reply
  2. Otto

    However a private company can be constituted with one director and no secretary. What a muddle !!

    Reply
    • Giles Peaker

      In that case, one director can sign but the signature needs to be witnessed by someone else – s.44(2)(b) Companies Act 2006.

      Reply
  3. Otto

    Yes, but not emntioned. I guess one should not comment or take at face value what is posted as there is always an angle not considered. thks for reply

    Reply
    • Giles Peaker

      Hi Otto – you were quite right to raise it. I’ll add it to the post. I only hadn’t because in this specific case there were a number of directors.

      Reply
  4. Sam

    The failure to consider and apply Elim Court may be problematic. Not sure how this can be authoritative when the key case on signing property notices by companies is not even considered. While I reckon the tenant would still win (as unlike in Elim Court there is a requirement that the certificate be signed by a particular person) it isn’t a given that this automatically means that this invalidates the whole process.

    Reply
    • Giles Peaker

      I’m not entirely sure Elim Court makes that much of a difference, given that the issue was precisely the statutory designation. Elim Court would, if anything, simply support the findings on Section 8 notices, surely? (And we have to note that the argument on signing of notice in Elim by the unsuccessful applicant was described as ‘technical in the extreme’ ;-) )

      Case is here, for anyone else – https://www.bailii.org/ew/cases/EWCA/Civ/2017/89.html

      Reply
      • J

        Nothing wrong with technical arguments. Even extreme ones. Shows you really understand the detail :-)

        Reply
      • Sam

        I agree on s.8 (Sorry my post was very unclear and I blame first day back fog and two weeks of playing with young children). My reference to Elim Court was in respect of the signing of the certificate for deposit purposes, Although I think the tenant would still win (even if a technical argument because of the statutory requirement that a specified person sign), it is not unarguable and it is a shame that the Elim Court “its a silly technical point” was not put to bed.

        Reply
  5. D

    Surely the judge was wrong to decline to consider the Deregulation Act changes. The entire point of the changes to the Prescribed Information Order being done in an Act or Parliament was that they are backdated to 2007. So, in fact, the amended wording incorporated by the Deregulation Act was already applicable here

    Reply
    • Giles Peaker

      The judge didn’t decline to consider the Dereg Act changes. I don’t think they were raised as relevant.

      But that does indeed raise an interesting point. You are quite right that as the penalty claim post-dated the Dereg Act being in force, it is the amended form that should have been considered. (I had forgotten the transitional provisions myself and will amend the post to point this out). But, if I’m right on the ‘specified person’ point, it would not have availed the landlord, as there was no ‘initial agent’ and it was the landlord’s signature that was defective.

      Reply
      • D

        Well on the agent point I guess the argument is that the employee is the agent. It is well accepted that directors operate as agents of companies and there is no requirement for formal appointment as an agent, just a holding out and acceptance of responsibility. I am not sure this is what the legislation intended but this is a consistent issue with current landlord and tenant regulation in that there is an expectation that agency is formally documented and is an almost irrevocable and binding appointment, almost like a court of protection deputy.

        Reply
        • Giles Peaker

          Hmm. A director, possibly, but then they would need to be the specific person who had protected the deposit if they signed alone, and – I think – protect it in their name.

          I’d be a lot less happy with the idea that an employee in general could be an agent for their employer. If someone protects a deposit as a part of their employment for a corporate landlord (or indeed corporate agent), they do so in their employer’s name, not as their employer’s agent.

  6. Alex A

    Reading the comments so far, I’m unclear if the following point has been addressed.

    If on a prescribed form there is the requirement for a signature (with the option to indicate that the signature is “On behalf of the landlord”) can a solicitors firm use their standard generic signature? For example, if someone from the solicitors firm Samantha Peterson LLP (made up name a la Joe Lycett) completes and submits the form on behalf of their client, can they use the company’s standard “Samantha Peterson” signature (even though there is no such person at the company)? In other words, does a signature have to be that of an actual person or can a solicitors firm use their corporate one?

    Reply
    • Giles Peaker

      The point of this judgment is that a section 8 notice (a prescribed NSP) does not have to be signed in accordance with s.44 Companies Act.

      Reply
  7. Alex A

    OK, understood. But can a section 8 notice be signed with a legal firm’s standard generic signature, or does it need to be signed by an actual person?

    Reply
    • Giles Peaker

      I don’t think it matters. Although apparently this judgment is being appealed and cross appealed. So if it turns out that s.8 notices do have to comply with s.44 CA, there may be complications if the firm is a company.

      Reply

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