Company Signing - Northwood Case

The decision of Northwood (Solihull) Ltd v Fearn & Ors [2022] EWCA Civ 40 has been handed down, and it's good news for landlords and agents alike.

Background (High Court)

In the Northwood case at the High Court (our report is included in this article - links to England), it was held that the deposit prescribed information must be signed under section 44 of the Companies Act 2006 to be valid. 

This meant by two directors or a director and a witness. It left a question mark about the position of an agent signing deposit information if that agent was a limited company. 

The High Court held that a section 8 notice served by a limited company did not have to follow the section 44 formalities. 

The position in Bali v Manaquel Company Limited, County Court at Central London (HHJ Hand QC) was that deposit prescribed information was invalid if a company did not follow the section 44 procedure. 

The Northwood case went to the Court of Appeal, with the tenant appealing against the decision about the section 8 notice and the landlord appealing against the deposit prescribed information part. The decision was handed down on 26 January 2022.

Northwood Court of Appeal

Deposit Prescribed Information

The deposit prescribed information was given to the tenant on 25 July 2015. The confirmation certificate within the information began with the words. 

We (being the Landlord) certify that (I) .... 

It was signed by Ms A Brown, a director of the landlord company Northwood (Solihull) Ltd. Under the deposit prescribed information rules, the information must include "confirmation (in the form of a certificate signed by the landlord)". 

As this wording in the 2007 Order (at the time of service in this case) didn't include an ability for an agent to sign on behalf of the landlord, the High Court had followed Hilmi & Associates Ltd v 20 Pembridge Villas Freehold Ltd [2010] EWCA Civ 314 which essentially held if legislation requires something to be signed by "the landlord" (for example) and no mention of 'or by an agent' then the formalities of Companies Act must be followed (where the landlord is a company). 

However, the Court of Appeal held Hilmi shouldn't be followed in this case. LJ Lewison said at paras 22 - 25:

22. There are a number of reasons why I consider that the reasoning in Hilmi is not directly applicable to this case. First, as a general rule, a person is treated as having signed a document if it is signed on his behalf and with his authority. In London County Council v Agricultural Food Products Ltd [1955] 2 QB 218, Romer LJ put it this way:

“It is established, in my judgment, as a general proposition that at common law a person sufficiently “signs” a document if it is signed in his name and with his authority by somebody else; and in such case the agent's signature is treated as being that of his principal.”

23. In the same case, Denning LJ said:

“On the wording of this tenancy agreement, I think that a signature by proxy was permissible on this notice to quit. Take the case where the tenants desire to determine the tenancy. The notice has to be in writing “signed by the tenants.” But the tenant is a limited company which cannot write its own name. It can only sign by proxy, as, for instance, by a director or secretary signing on its behalf.” ...

24 In Newbold v Coal Authority [2013] EWCA Civ 584, [2014] 1 WLR 1288 legislation provided for compensation for damage caused by coal mining. In order to make the claim, the owner of the property was required to give the required notice. Notice had been given in the name of one of three co-owners of the property in question, and was signed by engineers (Mr Talby and Mr Harbord) instructed by the co-owners. Sir Stanley Burnton said:

“58. I have difficulty in seeing how either Mr Talby or Mr Harbord can be regarded as the giver of a damage notice in any meaningful sense. If I ask my personal assistant to type up a notice to quit in my name, and to post it, the notice is given by me, not by my personal assistant. If I ask her to sign it in my name or expressly on my behalf, and to post it, it remains a notice given by me. It is not a notice given by her. So I do not think that Mr Talby and Mr Harbord can be regarded as the givers of the notices, notwithstanding that they filled in the forms and in Mr Harbord's case signed it."

...

25 The question is one of agency and authority. If the giver or signatory of the notice is authorised, then the giving and signing of the notice counts as giving or signing the notice by the principal. That is what Lloyd J himself said in St Ermins Property Co Ltd.

In addition, the High Court had failed to consider section 212(9) of the Housing Act 2004, which provides:

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 ...

And Section 11 of the Interpretation Act 1978 provides:

“Where an Act confers power to make subordinate legislation, expressions used in that legislation have, unless the contrary intention appears, the meaning which they bear in the Act.”

Therefore, section 212(9) followed through into The Housing (Tenancy Deposits) (Prescribed Information) Order 2007. 

Furthermore, and in any event, the legislation was changed in England to expressly allow agents to insert their details by the Deregulation Act 2015 (although this change was after the prescribed information was served in this case, it is retrospective in its application). 

As if this wasn't enough already, the Court of Appeal went further to say that even if they were wrong on the points above, the question as to whether a document such as a notice or prescribed information is valid or not is to be answered by the case of Osman v Natt.

61. If I am wrong on the question whether the documents complied with the statutory requirements, the question then arises whether that non-compliance is fatal to their validity. In answering that question, I consider that caution must be exercised in relying on cases decided before the landmark decision of this court in Osman v Natt [2014] EWCA Civ 1520, [2015] 1 WLR 1536. That case rejected the previous distinction that cases had drawn between requirements that were mandatory and requirements that were directory. Instead it proposed a much more nuanced test ...

62. ... The court must go on to consider the consequences of the non-compliance.

And continued

67. ... 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.

68. Any other outcome would, in the words of Males LJ, be “contrary to … common sense”, whether commercial or otherwise.

Section 8 notice

On 27 March 2017, the landlord served the tenants with a section 8 notice seeking possession due to rent arrears. 

The notice listed the landlord as Northwood (Solihull) Ltd. Ms Miles, who signed the notice, was the landlord’s property manager, but she accidentally struck out the words “landlord’s agent” from the form. 

The same principles as outlined above were followed for the deposit information. Notably, where the notice is in the landlord's name, the person signing is signing as the landlord.

In any event, the notice was substantially to the same effect as prescribed. LJ Lewison said at paras 56 - 60:

56. 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. 57. 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.

58. 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.

59. Once again, since Ms Miles was authorised by the landlord to sign the section 8 notice, her signature counted as that of the company. Since her signature counted as that of the company, she was entitled to cross out the part of the rubric that she did. The notice could not have sensibly been read as asserting that Ms Miles personally was the landlord. The landlord in this case was a limited company. Ms Miles is a natural person. So by definition she personally cannot be the landlord. If it is suggested that the notice purports to describe her personally as the landlord (i.e. as being the same legal person as the landlord) that is again the sort of obvious error that does not affect the validity of the notice. But even if the error cannot be cured in that way, the effect of the notice is substantially the same.

60. The judge correctly held at [47] that the purpose of the notice is (a) to warn the tenant that the landlord is considering seeking an order for possession and to give the tenant time to remedy any default and (b) as a gateway to proceedings. Both these purposes were fulfilled by the notice that was in fact given: so the effect of the notice was substantially the same as it would have been if Ms Miles had not crossed out the wrong part of the rubric underneath her signature. I would hold therefore that the section 8 notice was valid.

Even if the Court of Appeal was wrong on this point, section 8 was nevertheless valid:

69. The form of the notice was as prescribed by the Regulations. It was signed by an agent in the manner permitted by both the primary legislation and the Regulations. It gave the tenants all the information that they needed. The error was in crossing out the wrong part of the rubric. The operative part of the form concludes with the words “To be signed and dated by the landlord or licensor or the landlord's or licensor's agent (someone acting for him).” In this case that was complied with: the form was signed by Ms Miles as agent for the landlord. The rubric, on the other hand, is introduced by the words “Please indicate” which hardly suggests that it is of the utmost importance. It is more in the nature of an invitation than a command. I cannot think that it could have been Parliament’s intention that such an immaterial error would invalidate the notice. I would hold that even if the section 8 notice failed to comply strictly with the statutory requirements, it was still valid.

Comment

A landlord or an agent (with authority from the landlord) who is a limited company can sign tenancy agreements, deposit information, and notices without the formalities of section 44, where the facts meet those in this case.