Landlord’s Agents Beware: A New Notice Trap

Author: Conor Kennedy
In: Article Published: Monday 09 April 2018

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Those working in the lettings business will be familiar with the myriad of technical defences that can be raised by astute tenants wishing to resist possession proceedings. Often these defences relate to defective notices. In a recent fast track trial, a particularly novel defective notice defence was raised by the defendant tenant, based on s.44 of the Companies Act 2006. That section provides:

'(1) Under the law of England and Wales or Northern Ireland a document is executed by a company—

(a) by the affixing of its common seal, or

(b) by signature in accordance with the following provisions. 

(2) A document is validly executed by a company if it is signed on behalf of the company—

(a) by two authorised signatories, or

(b) by a director of the company in the presence of a witness who attests the signature.'

The argument the defendant ran was that the section 8 notice was defective because it had been completed by the landlord's agent, which was a company, but had only been signed by 1 individual. It was argued that in light of s.44, the notice should have been signed by 2 authorised signatories, or by a director of the company attested by a witness. Counsel for the defendant offered no authority in support of the argument, but they did refer to an unreported county court decision (Bali v Manaquel Company Limited, April 2016) where it was said that a circuit judge on appeal had held that a certificate provided under s.2(1)(g)(vii) of The Housing (Tenancy Deposits) (Prescribed Information) Order 2007 had not been signed in a manner compliant with the Companies Act 2006. As the decision is unreported, it is not possible to properly assess the judgment, and in any case it does not constitute binding authority. It is worth noting however, that the aforementioned certificate under s.2(1)(g)(vii) is to certify that the information provided by the landlord 'is accurate to the best of his knowledge and belief' and that 'he has given the tenant the opportunity to sign any document containing the information provided by the landlord […] by way of confirmation that the information is accurate to the best of his knowledge and belief.' The certificate in question, does therefore appear to be materially different from a section 8 notice which contains no comparable statement of truth.

Returning to the recent fast track trial, the defendant's argument proved unsuccessful. The judge observed that the prescribed form for section 8 notices should always be used. That form has been drafted carefully so that its use will avoid any disputes as to deficiency of notices. The prescribed form has only space for 1 signature. Accordingly, the judge adopted a purposive construction of the Companies Act 2006. Noting that the relevant part of the Companies Act is headed "Formalities of doing business", the judge held that the requirements in s.44 were drafted with the intention of regulating commercial transactions of companies which might bind them. The purpose of section 8 of the Housing Act 1988, by way of contrast, was to inform tenants of their rights and of the landlord's intention to take possession – a “shot across the bows of the tenant” (per Oliver L.J. in Torridge District Council v. Jones (1985) 18 H.L.R. 107 when discussing a similar provision). These were 2 entirely distinct situations, governed by appropriately distinct considerations. As the prescribed form allowed space for only 1 signature, those completing prescribed forms should not be encouraged to re-draft carefully designed forms as they see fit. On that basis, the judge rejected the defendant's contention that the notice was defective.

That, in the author's view, is the right decision, but claimant landlords should not be complacent about such arguments, particularly in light of the apparent decision in Bali v Manaquel above. It was said by counsel for the defendant that there had been a number of county court decisions where this s.44 defence had succeeded. Whilst the author's view is that single-signature section 8 notices are not defective, landlords may wish to consider whether to ensure that 2 signatures are used where the agent is a company, simply for the pragmatic purpose of avoiding such arguments arising in the first place.

CONOR KENNEDY © 2018
BARRISTER
33 BEDFORD ROW

NOTICE: This article is provided free of charge for information purposes only; it does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of Chambers or by Chambers as a whole.