Collective enfranchisement – Leasehold Reform, Housing and Urban Development Act 1993 – Four out of seven qualifying tenants wanting to enfranchise – Notice to enfranchise signed by three individual tenants and a director of fourth corporate tenant – Whether notice validly signed “by” corporate tenant within meaning of section 99(5) of 1993 Act – Whether signature of two directors or one director and company secretary required under section 36A of Companies Act 1985 – Whether notice consequently invalid on ground that not given by majority of qualifying tenants – Appeal allowed
The respondent was the nominee purchaser for the purposes of an application, by four of seven qualifying tenants of flats in a building, to acquire the freehold of the premises by collective enfranchisement under the Leasehold Reform, Housing and Urban Development Act 1993. Three of the participating tenants were individuals and the fourth was a company. Notice of the application was given to the appellant freeholder under section 13 of the 1993 Act, signed by the three individual tenants and a director of the company.
The appellant disputed the right to enfranchise under the notice. It argued that: (i) the notice had not been validly signed “by” the company, within the meaning of section 99(5) of the 1993 Act, since it did not bear the company’s common seal or the signatures of two directors or one director and the company secretary, as provided by section 36A of the Companies Act 1985 for the execution of documents; and (ii) accordingly, the notice was not given by a majority of qualifying tenants as required by the 1993 Act.
In the county court, signature by a single director was held to be sufficient and the notice was held to be valid. The judge ruled that a distinction should be drawn between the requirements for executing a document, as set out in section 36A of the 1985 Act, and a signature for the purposes of section 99(5) of the 1993 Act. The appellant appealed.
Held: The appeal was allowed.
It was extremely unusual to find a statutory provision that required a personal signature of a document of a kind relevant to a company that was not a contract or deed. The answer to the question of how an artificial person carried out the act of signing a document might be answered by reference to either or both of the company’s own constitutional documents and the general law governing such entities. In the instant case, where no reliance was placed on the former, only the provisions of the general law were relevant; the material provision of the general law was section 36A of the 1985 Act. That provision prescribed how a company registered under the Companies Acts could sign a document that was required for formal legal purposes. Although it referred to the “execution” of a document, that term was not confined to the execution of deeds but could apply also to a document made under hand rather than by deed. It was appropriate, as a matter of ordinary language, to refer to the “execution” of a document in a context where a degree of formality was required to make it valid and effective for a particular legal purpose, particularly in relation to a document that was to be signed “by”, as distinct from “on behalf of” a legal entity such as a limited company. A notice under section 13 or section 42 of the 1993 Act was such a document. The notice in the instant case, which was signed by only one director, was not signed by the company. It was insufficient that the company had given authority to the single director to sign. It had been required to sign the document itself by following the appropriate legal process in accordance with section 36A(2), by affixing its common seal, or section 36A(4), using the signatures of two directors or a director and the secretary. Since it had not done so, the notice was invalid.
Christopher Heather (instructed by Charles Russell LLP, of Guildford) appeared for the appellant; Gerard van Tonder (instructed by John May Law) appeared for the respondent.
Sally Dobson, barrister
