Hilmi & Associates Ltd v 20 Pembridge Villas Freehold Ltd

A company signs a formal statutory notice itself only by using the method of corporate execution prescribed by the applicable companies legislation. Under section 36A of the Companies Act 1985, a non-contractual document could be executed by affixing the company’s common seal or by the signatures of two directors, or of a director and the secretary.

An authorised director’s sole signature was merely a signature on behalf of the company. It did not satisfy a statutory requirement that the notice be signed by the tenant. Compliance depends upon the requirements of the relevant statute, rather than the recipient’s understanding or whether the statutory purpose was fulfilled.

The long leasehold tenants of four of seven flats served a notice under section 13 of the Leasehold Reform Housing and Urban Development Act 1993 seeking to acquire the freehold. One participating tenant was a company. Its notice was signed by one authorised director and bore no common seal.

His Honour Judge Dight held in the Central London County Court that the director’s signature satisfied section 99(5), distinguishing the signing of a notice from the execution of a document under section 36A of the Companies Act 1985. The freeholder appealed. The central issue was whether the single signature amounted to signature by the company itself.

1. Appeal allowed. Lord Justice Lloyd delivered the judgment, with which Lord Justice Pitchford and Lord Justice Ward agreed. The notice was invalid because it had not been signed by the corporate qualifying tenant in the manner required by law.

2. The validity of a statutory notice depends upon whether it complies with the particular statutory requirements governing it. The question was whether the company had signed the notice, rather than what the freeholder reasonably understood or whether the apparent purpose of section 99(5) of the Leasehold Reform Housing and Urban Development Act 1993 had been fulfilled. Section 99(5) deliberately distinguished notices signed by a tenant from notices signed by or on behalf of a tenant.

3. Section 36A of the Companies Act 1985 prescribed how a company could execute a document required for a formal legal purpose. Its scope was not confined to deeds or to an undefined class of particularly formal documents. “Execution” naturally included the completion of a document under hand where legal formalities were necessary for its validity. A contrary construction would create an uncertain class of corporate documents governed by no general rule.

4. A notice under section 13 or section 42 of the 1993 Act was a document falling within section 36A. The company could therefore sign it by affixing its common seal under section 36A(2), or by using the signatures of two directors or of a director and the secretary under section 36A(4). Section 36A(8), which specially permitted an authorised individual to sign for a corporate director or secretary, reinforced the conclusion that a single signature did not ordinarily suffice.

5. Authority from the board could not convert one director’s signature into the company’s own signature. The director had signed on behalf of the company. The court approved the approach in City and County Properties Limited v Plowden Investments Limited [2007] L&TR 15 and rejected Judge Dight’s contrary conclusion. The notice should have borne the common seal or the prescribed two signatures.

1. Court of Appeal (Civil Division): The appeal was allowed unanimously. The court held that the section 13 notice had not been signed by the corporate tenant and was invalid: [2010] EWCA Civ 314.

2. Central London County Court: His Honour Judge Dight held that the signature of one authorised director satisfied section 99(5) of the Leasehold Reform Housing and Urban Development Act 1993. That decision was reversed.