We looked at Northwood Solihull Ltd v Fearn & Ors (2020) EWHC 3538 (QB) in this post (now with an addition) and I discussed it in this video. But it turns out there is something a bit problematic about this High Court decision.
The High Court had held that on the wording of the Housing (Tenancy Deposits) (Prescribed Information) Order SI 2007/797 before the amendments made made Deregulation Act 2015, that the prescribed information certification had to be signed by the landlord and if the landlord was a corporate body, this must be in accordance with section 44 Companies Act 2006 – 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. If not, it was not valid and penalty claim (and potential s.21 invalidity ) resulted.
Now, while the court notes in the judgment that the Deregulation Act 2015 did amend the prescribed information order, as of 26 March 2015, the judgment, and it appears the argument from both sides, was on the basis that the unamended order applied.
But, as was pointed out in a comment from David Smith on our last post, that was not how the Deregulation Act amendments worked.
The relevant amendment was adding a new article 2(3) to the 2007 Order
(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.
But it also added a new article 3(1)
Paragraphs (3) to (5) of article 2 are treated as having had effect since 6th April 2007, subject to the following provisions of this article.
(The ‘following provisions’ basically exclude previously decided claims and proceedings existing at the time of the change coming into force, so not relevant here).
So, in the Northwood case, beginning in 2017, the version of the prescribed information order that applied (even though the prescribed information itself predated the Dereg Act) was that as amended by the Deregulation Act – ie the version that could be signed either by the landlord, or the ‘initial agent’ depending on which of them had protected the deposit.
In the case itself, a sole director had signed on behalf of the landlord, so there was not an obvious get out for the landlord in this. But it remains that the case was decided on the wrong version of the Prescribed Information Order.
Does this matter? Yes. While my view, as in the previous post and in the video, is that the amended version of the Order still meets the ‘statutorily specified person’ test as set out in Northwood (as it is only the landlord, or the ‘initial agent’ who can sign, depending specifically on who protected the deposit), that was not the wording argued – by either party – or decided upon by the court.
Given that there are potentially significant ramifications for both corporate landlords and, maybe more so, for corporate agents, this is not at all a satisfactory state of affairs. What is now the leading judgment on the issue (at least supposedly for pre 26 March 2015 signings) was, I am afraid, decided on the wrong version of the Prescribed Information Order.
I’m not sure where this goes from here – perhaps it would need a leapfrog appeal to the Court of Appeal in another case. Until then, things are a bit uncertain.