Northwood (Solihull) Ltd v Fearn & Ors (2022) EWCA Civ 40
This was a second appeal on the issue of the signing of tenancy deposit prescribed information certificates and section 8 notices by company landlords. The first appeal (our note here) had held that while signing a section 8 notice did not have to comply with the requirements of section 44 Companies Act, the signing of the prescribed information certificate did, so that it could not be signed by a sole director.
The landlord appealed and the tenant cross appealed.
The Court of Appeal distinguished Hilmi & Associates Ltd v 20 Pembridge Villas Freehold Ltd (2010) EWCA Civ 314, on the basis that it was about the precise statutory wording for notices under section 99(5) of the Leasehold Reform, Housing and Urban Development Act 1993, and
There is no equivalent in the Housing Act 2004 or the 2007 Order.
Further
Second, the legislation under consideration in Hilmi did not include any equivalent to section 212 (9) of the Housing Act 2004 or article 2 (3) of the 2007 Order both of which expressly envisage actions being carried out by agents. Moreover, the decision in Hilmi was statutorily reversed in England by the Leasehold Reform (Amendment) Act 2014, which came into force on 13 May 2014; and in Wales by the Housing (Wales) Act 2014, which came into force on 1 December 2014. In relation to notices given since those dates notices may be signed by or on behalf of the tenant. That statutory reversal tends to show that Parliament did not set great store by formal execution by a company (or, indeed, personal signature by the tenant).
The general position was that notices signed by a person on behalf of the person who should give the notice were good notice, so long as the person giving the notice was authorised to do so on the other’s behalf. A basic principle of agency.
On the prescribed information certificate, s.212(9) HA 2004 at the time provided:
(9) In this Chapter–
(a) references to a landlord or landlords in relation to any shorthold tenancy or tenancies include references to a person or persons acting on his or their behalf in relation to the tenancy or tenancies…”
The Court of Appeal found:
The certificate was given on 25 July 2014. The amendments made by the Deregulation Act 2015 were not then in force. The 2007 Order (as it then stood) required the certificate under paragraph (g) (vii) to be “signed by the landlord”. But section 11 of the Interpretation Act 1978 requires expressions used in subordinate legislation to be given the same meaning as in the primary legislation, unless the contrary intention appears. On 25 July 2014 there was no contrary intention. It follows that “landlord” in the 2007 Order had at that time the meaning given by section 212 (9) of the Housing Act 2004. It therefore included a person acting on behalf of the landlord in relation to the tenancy. Accordingly, interpreting article 2 (1)(g)(vii) of the 2007 Order in conformity with section 212 (9), the certificate was valid at the time it was given if signed by a person acting on behalf of the landlord in relation to the tenancy. Ms Brown was such a person. On the face of it, therefore, the certificate was valid at the time it was given. In addition, what the landlord is to certify is that certain information “is accurate to the best of his knowledge and belief”. In the case of a company, that knowledge and belief can only be that of a human being, whose knowledge and belief is attributable to the company under the rules of attribution.
The signature of a director of the landlord, clearly as a person authorised to sign on the company’s behalf, was good.
The position was arguably changed by the Deregulation Act 2015, which retrospectively disapplied s.212(9) of the 2007 Act. While that would potentially mean that a signature validated by s.212(9) on a notice prior to the Deregulation Act amendment could become invalid, this was not something that should be found unless compelled to. (We noted the Dereg Act amendment issue here).
Given that the amendment provided that
Article 2 (3) (a) allows references in paragraph (g) (vii) to “the landlord” to be read as including a person who acts on the landlord’s behalf. That extension applies where the initial requirements of an authorised scheme have been complied with in relation to the deposit by a person acting on the landlord’s behalf. In the present case the certificate was given in the name of the landlord: Northwood Solihull Ltd. But it was signed by Ms Brown. Ms Brown is self-evidently not personally the landlord. The only rational conclusion is that she was a person acting on behalf of the landlord.
So, the notice remained good. In any event, it was ‘substantially to the same effect’ as the prescribed form, as allowed by s.213(6) HA 2004.
So, the certificate was valid – landlord’s appeal allowed.
On a section 8 notice, this was dispatched quickly.
The primary legislation governing notice given under section 8 of the Housing Act 1988 does not require signature of anything. It merely requires “service” by the landlord of a notice in a particular form.
It follows, in my judgment, from Newbold that on the face of it a landlord complies with section 8 if an agent serves notice on his behalf, even if the agent signs the notice in the landlord’s name. In addition, the form prescribed by the relevant regulations explicitly allows notice to be given by and signed by an agent for the landlord.
In the present case the notice under section 8 was signed by an authorised agent of the landlord. That complies both with the primary legislation and the prescribed form. The only conceivable error is that Ms Miles crossed out the wrong part of the rubric underneath her signature.
This was an obvious error that did not affect the validity of the notice. Tenant’s cross appeal dismissed.
On non-compliance, even if the prescribed information notice had not complied with the strict statutory requirements (which it had been held it did):
In so far as there is a requirement of signature by the landlord, it is not to be found in the primary legislation. It is introduced into the 2007 Order as a parenthesis and without any explicit mandatory language.
That Parliament did not consider that authentication by an agent was fatal to the validity of a certificate is, to my mind, clearly shown both by section 212 (9) of the Housing Act 2004 and also by the intention behind the amendments introduced by the Deregulation Act 2015. The certificate in fact gave the tenants all the information that was required to be given to them. Thus the requirement to give the tenant “the prescribed information” was fully and precisely complied with. It is not suggested that any of the information was inaccurate. That information was authenticated on behalf of the landlord by someone authorised to do so. If an authorised and authenticated certificate, containing all the right information, is given to the tenant, I cannot see that any harm has been done. I would hold that even if the certificate did not strictly comply with the requirements about authentication by the landlord, it was still valid.
Comment
So, that is the end of the argument first run in Bali v Manaquel Company Limited on the Companies Act signature requirements. This makes things considerably easier in an administrative sense for both company landlords and company letting agents, and removes a technical defence to s.21 possession proceedings. (Though thankfully, I don’t have to update the s.21 validity flowchart.)
Thank goodness for a sensible decision. Landlords who had their s21 notices thrown out because of this technicality will feel aggrieved es[eciallu as they may also have been fined or had a defaulting tenant offer to accept “only” twice the amount of the deposit being knocked off the arrears unless the landlord fancied his chances of avoiding a three times penalty. It is a pity the Parliamentary draftsmen could not have made this process clearer.
At 52/53 of the judgment, it says that says Art 2(3)(a) allows refs in (g)(vii) to ‘ther LL’ to be read as including their agent but I thought (3)(a) was only the initial agent, who first registered the deposit. I can’t spot where (g)(vii) is opened up to be the LL and their agent (even one who was not the initial agent). I may have become irretrievably confused.
Yes, initial agent – at 52 “That extension applies where the initial requirements of an authorised scheme have been complied with in relation to the deposit by a person acting on the landlord’s behalf. “
On a slightly different question, but tenancy deposit related, is there any reason you are aware of why social landlords don’t take deposits for social lets?
What would be the point on a tenancy that is likely to last many years?
Because if a social tenant trashes their property, it’s the taxpayer that picks up the tab. No surprises there then.
No, it isn’t.
The point would be for the very same reasons in the private rented sector. I do a lot of work for Housing Associations, their female tenants are often single mothers or families that increase the number of occupants, so they get moved into better properties two or three times and when the kids are old enough they have to downsize. My clients tell me that vast majority of tenants leave the property in a condition far far worse than when they were let. However, they don’t have an adequate deposit to claim against and legal action is difficult because social often means vulnerable. Also for Housing Associations going to Court is a last resort, so they would be very grateful for the free ADR service included in Deposit Protection.
Housing Associations are merging to get economies of scale, they may take on 50,000 properties and they employ firms like Savills to check the value of the properties matches the finance. They may not check every single property but say 10% within each development. One client told me of a single tenant who caused £30,000 of damage, the tenant had been dealing drugs and was subletting to 6 addicts; the Police raided the property and cut holes in most walls looking for drugs. Ultimately a family member carries out the repairs, but if they had not the HA would have been forced to make the repairs and get no return on investment for 5 years. If the HA’s took a month’s rent as a deposit from ALL tenants and held it as a stakeholder in it’s own accounts it could obtain interest to offset repairs.
Now let us consider it from the Tenant’s point of view; they give a deposit which is held in the rent account, it is not protected. The Landlord makes clerical errors that see the deposit reduced by small amounts until one day the HA tells the client they are in arrears, despite their rent being paid in full and directly by the Local Authority. An audit discovered that the Councils only pay increased rent from when they are notified, the HA tells the Tenant the rent between February and March, but often fails to inform the Council until one or two months after April 1st. So the rent account is depleted by the difference in rent and service charge. If the deposit was held in a deposit scheme and client account, then the error would come to light a lot sooner, but as you say they are likely to last many years and so it is often too late.
Sadly HA’s have had to learn the hard way that legal action is to be avoid in all but the most extreme circumstances, this is why they do not provide curtains, carpets, cookers or fridges, so that they are not liable for their condition and repair.