Wallace wins case that lays down new requirements for tenant companies signing notices

April 2006

In a recent County Court decision the court determined that where a company is a tenant and is seeking to acquire a new lease of the a flat in accordance with the provisions of the Leasehold Reform Housing and Urban Development Act 1993 (“the 1993 Act”) the tenant must sign the notice of claim in accordance with the provisions of the Companies Act 1985, that is by executing the Notice by signature of two directors or a director and a company secretary.

The provisions of the 1993 Act provide that a tenant must sign a notice of claim personally in order for the notice of claim to be valid. When companies as tenants became entitled to seek lease extensions, there was some ambiguity as to how a notice of claim was required to be signed by the tenant company.

Under the Companies Act, for a company to sign a document it must be signed by either a director and a company secretary or by two directors. In the context of enfranchisement claims the 1993 Act only requires the notices to be signed ‘personally’. In such instances, many companies and their advisors have adopted a common practice of having companies sign the notice in accordance with the Companies Act.

In this case the tenant, Plowden Investments served a notice of claim seeking a new lease of a flat from the landlord, City and Country Properties. The notice of claim was signed by only one director of the company. The landlord therefore served a counter-notice contending that the notice of claim was invalid and of no effect because the notice of claim had not been signed in accordance with the required provisions of the 1993 Act. The tenant company rejected this contention and the Landlord issued County Court proceedings seeking a declaration that on the relevant date the tenants’ notice of claim was invalid and of no effect.

The case was heard before His Honour Judge Reid QC who determined that the notice of claim was invalid and of no effect because where a tenant is a company the notice of claim should be signed in accordance with the Companies Act. His Honour Judge Reid QC determined this position on the basis of the provisions in Section 36A of the Companies Act read in conjunction with Section 744 which defined 'document' to include summons, notices, orders and other legal process and registers.

Samantha Bone, partner at Wallace, said: “The implications of the case are that in circumstances where a tenant is a company a notice seeking to acquire a new lease or the freehold of premises will be required to sign the notice in the manner stipulated by the Companies Act.”

Wallace acted on behalf of City and Country Properties. Wallace instructed Gary Cowen of Falcon Chambers to appear on its behalf.