26 January 2022 saw the Court of Appeal hand down the judgment in the case of Northwood Solihull v Fearn & Ors (2022) EWCA Civ 40, which could have had a major impact on landlords and letting agents.
The Court of Appeal ruled that any authorised employee of a landlord or a letting agent can sign a Section 8 Notice or a prescribed information tenancy deposit certificate and did not have to comply with the requirements of Section 44 of the Companies Act 2006.
Background to the case
In 2019, Mr Fern and Ms Cooke (the tenants) were served a Section 8 Notice (the notice) after they fell in to rent arrears. The notice was signed by the property manager of Northwood Solihull, who was acting in the normal course of her duties as she was employed by the landlord.
The claim for possession was defended and the basis of their defence was that the notice was invalid. They argued that as the landlord was a corporate body and in order for them to rely on the notice it needed to be signed in accordance with Section 44 of the Companies Act 2006.
Section 44 of the Companies Act 2006, sets out that a limited company may execute a document either by affixing its common seal, or by a director of the company signing the document in the presence of a witness or by two authorised signatories.
The tenants brought a counterclaim relating to the prescribed information certificates for the security deposit, which was only signed by one director of the landlord and without a witness signature, whereas in their view it needed to be signed by landlord.
At the possession hearing, the trial judge granted the landlord an order for possession. However, the judge did uphold the tenant’s counterclaim that the prescribed information did need to be executed in accordance with s.44.
The landlord’s positon was that even if the prescribed information did have a second signature on it, it did not have any impact on the tenant’s position.
The tenants appealed against the trial judge’s findings in relation to the notice and the appeal was dismissed. However, the landlord was granted permission to cross-appeal in relation the tenants counterclaim on the prescribed information.
The Court of Appeal’s decision
The Court of Appeal looked at the issue of the prescribed information certificate and the notice.
The Court of Appeal agreed with the landlord’s position with regards to the signature of the certificate.
They held, “if an authorised and authenticated certificate, containing all the information is given to the tenant, I cannot see that any harm has been done”
The certificate was signed by the property manager who was authorised to do so on behalf of the landlord.
The Section 8 Notice
With regards to the notice, the Court of Appeal held “it was signed by an agent in the manner permitted by both the primary legislation and Regulations”.
The notice was signed by the director of Northwood Solihull, who was an agent of the landlord.
Furthermore, the Court of Appeal also considered the implications of non-compliance for both the certificate and notice and it was held that non-compliance would not invalidate the documents.
The Court of Appeal decision is a very welcome one for landlords and agents. Had the judgment not gone in the favour of the landlord, it would have had a detrimental impact on any notices served and prescribed information certificates, which would have been signed on behalf of the landlord.
The decision means that landlords and letting agents can continue in the way they have been doing so, provided that all the required information is provided to tenants on a notice and the prescribed information certificates.
For information contact Habib Khan in our housing management team, who can guide, help support you and your teams to deal with any housing management and litigation issues you face during these evolving times.
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Habib is part of the social housing litigation team. He engages with all stakeholders to ensure landlords and property managers achieve their goals for their housing stock.
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