Good news for Landlords and Letting Agents - Northwood v Fearn - Court of Appeal decision - January 2022

A recent Court of Appeal decision concerning the signing of documents on behalf of a landlord, has been welcomed by many landlords and agents.

Background

Northwood (Solihull) Ltd v Fearn & Ors (2022) EWCA Civ 40  considered the requirements for authenticating the following documents:

• A certificate given to the tenant under section 213 of the Housing Act 2004, providing prescribed information about the deposit scheme; and
• A notice of seeking possession, given under section 8 of the Housing Act 1988.

In particular, the Courts considered whether the execution requirements of section 44 of the Companies Act 2006 should be followed – that is, whether or not both documents must be signed by two authorised signatories or by a company director in the presence of a witness in order for the document to be valid.

In the High Court, it was held that a certificate given under s.213 Housing Act 2004 is invalid unless it is authenticated in the manner required by s.44 Companies Act 2006; whilst a s.8 notice did not have to follow the s.44 formalities. Therefore, the s.8 notice was held to be valid even though it had only been signed by the landlord’s agent.

The above decision raised a huge concern for many landlords and agents as it potentially rendered possession notices that had been served on behalf of landlords invalid. Further, there was a risk that the landlords would face a penalty claim from their tenants for failure to provide correct tenancy deposit prescribed information.

The tenant appealed against the conclusion regarding the s.8 notice; and the landlord cross-appealed against the finding that a s.213 certificate should meet the requirements of s.44 Companies Act 2006.

Court of Appeal decision handed down on 26 January 2022

Section 213 Certificate

The Court of Appeal held that, even though the certificate was not authenticated by the landlord itself (and was instead signed by an agent authorised to sign on the landlord’s behalf), the certificate nonetheless provided the tenant with all the information required under s.213. Therefore, the Court considered that it would be ‘contrary to common sense’ to find that the certificate was invalid on the grounds that it did not strictly comply with the execution requirements of s.44 Companies Act 2006. Consequently, the landlord’s cross-appeal was allowed.

Section 8 Notice

With regard to the s.8 notice, the Court of Appeal held that, even if the statutory requirements are not strictly complied with, it is still valid. On this occasion, the s.8 notice contained all of the information needed and was signed by an agent in a manner permitted by primary legislation and the Regulations. The only error contained within the s.8 notice was that the incorrect part of the rubric was crossed out, indicating that the document was signed by the ‘landlord’ rather than the ‘landlord’s agent’. The Court considered that the error was insignificant, and therefore should not render the notice invalid.  As such, the tenant’s appeal was dismissed.

Implications

Given that the tenant lost on both elements of the case, this serves as positive news for landlords and letting agents. A finding in favour of the tenant that s.44 must be complied with would have caused huge logistical and practical issues, particularly for larger companies who potentially administer hundreds of deposit protection certificates and s.8 notices each day. This would have meant that these documents would have needed two authorised signatories or a company director in the presence of a witness to validate them before they are served on the tenant.

The Court of Appeal’s long-awaited decision offers clarity, and will no doubt come as a relief to landlords who can continue to have documents executed by an agent on their behalf, with the knowledge that its validity will not be challenged.

Written by : Nitika Singh (Partner) and Ellis Crow (Paralegal).

If you are a landlord or a managing agent and would like assistance with the eviction of your tenant, please email: nsingh@judge-priestley.co.uk.