Carlton Vale Limited v Adam Jason Gapper

A forged company signature does not necessarily make a transaction incapable of binding the company. The doctrine of ostensible authority may operate where the company, through its conduct, represented that an agent had authority to confirm that a document was validly executed, and the other party reasonably relied on that representation. The doctrine requires an unusual factual foundation in a forgery case.

Companies Act 2006, section 44(5), does not deem a document duly executed where the apparent company signatures are genuine forgeries. A contractual reference to a disposal of property may include dealings taking effect in equity, unless the agreement indicates otherwise. Where a restriction is to be removed on the earlier of payment or expiry of a specified period, that wording is effective notwithstanding an unpaid payment obligation.

The appellant, the registered proprietor of a freehold public house, sought removal of a restriction entered on its registered title following the surrender of a lease held by a company owned by the respondent. The restriction derived from a payment agreement requiring a payment of £90,000 on specified events and providing for removal of the restriction on payment or expiry of five years, whichever was earlier.

The First-tier Tribunal found that the appellant’s director had not signed the agreement, but held that the appellant was nevertheless bound by it through ostensible authority and section 44(5) of the Companies Act 2006. It also held that an equitable charge was a disposal triggering payment and that the restriction remained required while payment was outstanding. The appeal concerned forgery, statutory execution, the meaning of disposal, and the duration of the restriction.

1. Appeal allowed in part. The finding that the appellant was bound by the Payment Agreement was upheld. The finding based on section 44(5) was set aside as erroneous, although it had been strictly obiter and did not affect the result.
2. The rule in Ruben v Great Fingall Consolidated [1906] AC 439 does not exclude ostensible authority in every forgery case. It was distinguishable because the company there had no involvement in the transaction and had made no relevant representation. The approach in Lovett v Carson Country Homes Ltd [2009] EWHC 1143 (Ch) was correct: a company may be estopped from relying on a forged signature where the facts establish holding out and reasonable reliance.
3. The findings that the appellant’s agent and solicitors had represented that the agreement was validly executed, and that the respondent reasonably relied on those representations, were open to the First-tier Tribunal. The agreement was therefore binding by estoppel.
4. Section 44(5) of the Companies Act 2006 does not apply to an actual counterfeit signature. Its application would produce an unjust result by binding a company to a document created by persons having no connection with it, and would effect an unjustified departure from the common-law rule illustrated by Ruben v Great Fingall Consolidated [1906] AC 439.
5. “Disposal” in the Payment Agreement was not confined to a transfer of legal title. Read in context, it included dealings with the property taking effect in equity. The creation of the charge therefore triggered the payment obligation.
6. Clause 6.4 required removal of the restriction on the earlier of actual payment or expiry of five years. Clause 3.3 concerned the duration of the payment obligation and did not qualify that separate removal obligation. The principle against profiting from one’s own breach did not apply because there was no causal connection between the breach and reliance on clause 6.4.
7. The restriction was no longer required under rule 97 of the Land Registration Rules 2003. The relevant part of the First-tier Tribunal’s decision was remade, and the Chief Land Registrar was directed to cancel the restriction.

• Upper Tribunal (Lands Chamber) [2023] UKUT 141 (LC): appeal allowed in part; the relevant order and conclusions of the First-tier Tribunal were set aside, and the Chief Land Registrar was directed to cancel the restriction.
• First-tier Tribunal (Property Chamber) (Land Registration Division): the appellant’s application for removal of the restriction was refused and the application was directed to be cancelled.