The Court of Appeal (the “CoA”) heard the second appeal of Northwood Solihull v Fearn & Ors. The outcome of this case has serious implications for landlords, tenants and agents in England and Wales and possibly in recognition of this, judgment was handed down only 8 days after the hearing. JMW acted for the landlord.
The main questions before the CoA in summary were:
What is the correct way for a deposit prescribed information certificate to be signed by a landlord who is a company?
What is the correct way for a section 8 notice to be signed by a landlord who is a company?
The CoA also considered what the consequences are where these documents are not signed in compliance with the relevant statutory provisions.
In summary, the following cheat sheet contains the practical essence of the CoA’s decision:
i. Possession notices and prescribed information certificates may be validly signed by an authorised individual on behalf of a corporate landlord or agent.
ii. These documents may also be signed in accordance with s.44 of the Companies Act 2006.
iii. Non-compliance with i. & ii. or other relevant statutory requirements does not necessarily invalidate the document and the effect of non-compliance will depend on the specific defect and factual context.
Brief case history
The case began as a possession claim based on a s.8 notice served by the landlord on the ground of rent arrears and involved a counterclaim for damages for failure to provide valid prescribed information certificate. Both the s.8 notice and the deposit certificate were signed by the landlord company but through the hand of a company director or a property manager.
The tenant’s case is that the only way for a company to sign these documents is in accordance with s.44 of the Companies Act 2006, e.g. signed by two directors or one director whose signature is witnessed.
The tenant’s proposed position, if right, would have been very troubling to landlords and agents as it would mean that every possession notice and certificate will have to be signed by at least one director and a witness. Inevitably, this would cause huge practical and logistical challenges to companies who operate multiple office locations, and the issues are even more obvious when one thinks of bigger agents and landlords with national operations who need to authenticate hundreds of these documents every day.
The landlord’s position was that the documents in question do not require the level of formality to which s.44 is intended to apply. The landlord’s case was that wider common law agency principles apply and that a properly authorised individual is fully capable of validly authenticating these documents on behalf of the landlord with their personal signature.
On first appeal, Mr Justice Saini found that the s.8 notice was valid and the prescribed information certificate was invalid. This second appeal at the CoA dealt with an appeal by the tenant against the validity of the s.8 notice and a cross-appeal by the landlord on the invalidity of the certificate.
The CoA’s decision
The CoA agreed with the landlord’s position.
On consideration of the relevant law in respect of the prescribed information certificate, the CoA found that the certificate could be signed by a person acting on behalf of the landlord. As the certificate was signed by the property manager who was authorised to sign these documents, the document was properly authenticated.
The s.8 notice was also capable of being served and signed by an agent on behalf of the landlord. The notice was signed by an authorised agent of Northwood Solihull (its director) and therefore complied with the relevant primary and secondary legislation.
Lewison LJ proceeded to consider the consequences of non-compliance and found that on both occasions non-compliance would not invalidate the documents.
Practical Implications and Conclusion
The CoA judgment addressed a number of important legal principles of agency and company law and there is a lot in it to unpack. All of these principles have direct and immediate practical implications for the way landlords and agents operate their businesses on a day-to-date basis.