Understanding the Court of Appeal Decisions on Assured Shorthold Tenancy Notices

As residential landlords will be well aware, the procedure for terminating assured shorthold tenancies, whether by service of a notice under section 8 of the Housing Act 1988 (as amended) for non-payment of rent or other breaches of the tenancy agreement, or by service of a notice under section 21, has become increasingly regulated with landlords required to comply with a range of legislation before notice can be served.

There have been a number of Court of Appeal cases where residential tenants have relied upon technical arguments to challenge the validity of notices served to terminate their tenancies: in Trecarrell House Ltd v Rouncefield in 2020, a landlord’s ability to serve a section 21 notice was challenged on the basis that the gas safety certificate had not been provided until part way through the tenancy, although it had been obtained before the tenancy began and provided before the section 21 notice was served. That argument failed in the Court of Appeal, as did the challenge recently to the validity of a section 8 notice, as well as a notice served in connection with the receipt of a tenancy deposit, in Northwood (Solihull) Limited v Fearn & Others. 2022 EWCA Civ 40.

The Facts  

The Northwood case reached the Court of Appeal after the tenants of a house in Birmingham, Mr Fearn and his partner (the Tenants), were served with a section 8 notice in March 2017 (the Notice), at which time 5 months’ rent was in arrears. The Tenants challenged the validity of the Notice, not because there were no arrears, but because the Landlord’s agent had signed the Notice, crossing out the words “Landlord’s Agent” underneath her signature so that it appeared to have been signed by the Landlord, Northwood (Solihull) Limited.

Prescribed Form of section 8 Notice

The Assured Tenancies and Agricultural Occupancies (Forms) (England) Regulations 2015 (the Regulations) provide that a Landlord wishing to serve a notice under section 8 of the 1988 Act must use Form 3, prescribed in the schedule to the Regulations or a “form substantially to the same effect”. 

The Notice served by the Landlord in 2017 was in Form 3 which provides for a section 8 notice to be signed by “the Landlord or Licensor or the Landlord’s or Licensor’s agent (someone acting for him)”. 

Section 44 of the Companies Act 2004

However, as the agent had deleted the words “Landlord’s agent” the Tenants argued that the Notice should have been signed in compliance with section 44 of the Companies Act 2006 (the 2006 Act) which requires documents to be signed by two authorised signatories or a director of the company with a witness. 

The Court of Appeal found that the formalities for the execution of documents at section 44 of the 2006 Act were not required as a condition of validity of a section 8 notice and noted, in particular, that Form 3 allowed for the notice to be signed by a landlord’s agent. 

In this case, the issue only arose because the Landlord’s agent had deleted the wrong words and signed on behalf of the Landlord instead of as its agent. The High Court had found that the Notice was valid and noted… “the fact that it is argued that the choice of crossing out is crucial amply demonstrates the excessively technical nature of the point advanced by the tenant”. The Court of Appeal upheld the High Court’s decision.

Confirmatory Certificate for the Deposit

The Tenants also raised the same technical argument in connection with the Confirmatory Certificate (the Certificate) which the Landlord was required to provide under the Housing (Tenancy Deposit) (Prescribed Information) Order 2007 (the 2007 Order). Again, they argued  that the Confirmatory Certificate was invalid because it had not been signed by one of the methods set out in Section 44 of the 2006 Act (see above), having been signed by only one Director.

Housing Act 2004  - Information to be provided to a Tenant

Under Section 213(5) of the Housing Act 2004 (the 2004 Act), a Landlord who has received a deposit must give the tenant information relating to the authorised scheme applying to the deposit and to compliance by the Landlord with initial requirements of the scheme, amongst other information. 

The information required by Section 213(5) of the 2004 Act must be given to the tenant in a prescribed form, or form substantially to the same effect, within a period of 30 days beginning on the date in which the deposit was received by the Landlord. Under section 214(4) of the 2004 Act, if a valid Certificate is not provided, tenants will be entitled to a penalty award and this was claimed by the Tenants in the proceedings. 

There was no suggestion that the Landlord had not provided the relevant information or complied with those requirements, having received the deposit on or around 25 July 2014 with the Certificate having been served that same day.

The Court of Appeal held that, at the time the Certificate was given to the Tenants, Section 212(9) of the 2004 Act expressly extended the definition of “Landlord” to include a person acting on behalf of the Landlord so that the Certificate was valid. 

Deregulation Act 2015

However, the Certificate had been given before the introduction in March 2015 of the Deregulation Act 2015 (the 2015 Act) which amended the 2007 Order, retrospectively from 6 April 2007. 

One of the amendments to Article 2 of the 2007 Order disapplied Section 212(9) of the 2004 Act so that the Certificate could not be signed by a person acting on behalf of the Landlord. However, the Court of Appeal found that the Certificate was valid, in any event, when it was signed and could not be invalidated retrospectively: “…..even if the certificate did not strictly comply with the requirements about authentication by the landlord, it was still valid.”

To be clear though, whilst the amendments to the 2007 Order mean Certificates cannot be signed “….on the landlord’s behalf” – i.e. in Northwood, by one Director (as opposed to by two Directors), Article 2 of the 2007 Order provides that the Confirmatory Certificate can be signed by the landlord or its “initial agent”, defined as a person acting on the landlord's behalf in relation to the tenancy. So, Certificates signed by the landlord’s managing agents (who administered the deposit) going forward, should be valid.

Practical Steps to avoid “Excessively” Technical Points 

The Court of Appeal decision in Northwood removes potential uncertainty around the execution of a section 8 notice and tenancy deposit confirmatory certificate for landlords.  This is a helpful decision for landlords because it has removed the known practical difficulties arising from the earlier High Court decision.

Although, in both Court of Appeal decisions, the Landlords were successful in establishing the validity of their notices (and, in Northwood, of the Certificate) both demonstrate the need for residential landlords and their agents to comply strictly with the relevant regulations to prevent tenants taking “excessively” technical points.

Landlords, whether corporate or individuals, should therefore ensure:

• All the relevant regulations have been complied with before serving notice under section 8 or 21 of the 1988 Act; and
• The relevant prescribed forms are used.

This insight is not a substitute for legal advice on the specific circumstances of your case.

For more information on the above please contact Rachel Morrish or your usual Charles Russell Speechlys contact.