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Who is liable? Me personal or the company I signed on behalf of?


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Hi,

 

Me and a friend setup our own business back in 2003. We found a small office that we went for and everything was fine until we fell into problems and could no longer afford the property. We wrote to the landlord (we were in a 3 year lease) explaining the situation.

 

We moved out to a more affordable office whilst we tried to get back on our feet.

 

I then sold my shares in the company over to the other two directors and walked away to concentrate on another project.

 

It then turned out that I personally was liable for the council tax/Non Domestic Rates and lease as I had signed the lease.

 

The 1st page states:

of
, trading as (“the tenant”)
however the final page I signed as

Name:

Title: Director

 

was a limited company so I could not have been 'trading as' this.

 

Does this mean that I would be the liable party personally or the limited company as a whole?

 

Hope this makes sense, its just that I have ended up with the liability orders for both the office since the company moved out and the flat above (The VOA office will not rate the property as a whole even though it was when we took out the lease) for just over 2 years of rates!

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The Limited company is Limited Liability you signed on behave of the company not for yourself ..........If you sold the shares and left the company ...It is not your Liability . tell them they are not on .....and pursue the Limited company .......I got conned by Capital Bank out of £1500 on a similar ...........And I'm going to get it back

 

If you did not give a personal guarantee then it is nothing to do with you

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Ah great, I did raise this point with the council but their response was:

 

I have now recieved a reply from my legal section concerning the lease in resect of .

 

The legal opinion is that you as an individual are rsponsible under the lease. In law, an unincorporated association does not have the capacity to enter into a lease. This would apply to a trading name such as (as stated on the copy of the lease that you supplied). The actual tenant in law would therefore be yourself and not the trading name. I am therefore satisfied that you have been billed correctly and you are responsible for charges incurred up to the end of your lease.

 

But after reading this tonight I would agree that yes an unincorporated association does not have the capacity to enter into a lease, however, this was the fundermental point I had raised as I belived that I signed on behalf on an incorporated company and not an unincorporated association.

 

I have scanned the 1st and last page of the lease just to clarify. Where do you think I stand? If I am right and the company is liable then how do I proceed raise a court case against the council or stop payments and wait for it to be taken to Magistrates court and argue my defence there?

 

Your help is most appreciated.

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My comments:

 

If you have a VAT registration certificate in the name of the LTD CO. or a bank statement that shows the LTD CO details, then I think you should send a copy to the council and say that the 'trading as' was just an error. BTW whose name was the council sending the invoice, if it was incorrect did you notify them?

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The council was sending the bills to that premises in my name as thats what the landlord had told them when we took the lease out.

 

It was after we moved out that I started getting the bills to my home address.

 

I will try and write back to them and argue this with them.

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Must admit I still think you are not liable, but looking at the pages I have a reservation . However the "trading as" usually denotes a Sole trader or Partnership.and not a Ltd company and by accepting the signing as Director they knew that it was a Ltd company and not the others

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Well thats what I thought, the first and last page seem to contradict each other and wasn't sure which would overrule which (I bet the council will belive it is in their favour!)

 

Sending letter to council in morning and will let you know the response.

 

Tom

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Hi,

 

Just got a snotty letter back from council:

 

I refer to your letter dated 10th January 2007 regarding the above [address].

 

Your letter is almost identical to the one you wrote on 19th January 2006 and does not supply any new information.

 

I enclose a copy of my reply to you and a copy of your tenancy agreement. The tenancy agreement states the lease is between and yourself (trading as ). It may have been your intention to sign the lease in the name of Limited but that is not what the lease states.

 

I obtained the opinion of the council's solicitor with regard to your lease and he was satisfied the lease was signed in your name, not a limited company name. In my opinion you have been billed correctly and liability orders have been obtained which means the court were satisfied that you were billed correctly. If you wanted to dispute the liability orders, you should have attended the magistrates court when a summons was issued to you.

 

I shall not be amending my records further and if you still dispute the fact that you have been held liable then I suggest that you seek independent legal advice on the matter and appeal to an independent tribunal at the following address:....

A few questions I have,

1. Could I legally trade as when a Limited already existed?

2. Where can I seek legal advice? I cannot afford a solicitor and the Law Centre was not able to help.

3. How would the tribunal work?

 

Tom

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I don't have any of these any more as I left the company and sold my shares back to the other directors.

 

However I have provided them the company number and date it was incorporated (about 3 months before we took the lease on).

 

Tom

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1. Could I legally trade as Blue Box Technology when a Blue Box Technology Limited already existed?

Yes and No the no would be if the ltd company took action against you using the registed name

2

. Where can I seek legal advice? I cannot afford a solicitor and the Law Centre was not able to help.

Try Citzens Advise as you are an individual

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Thanks for your comments. I have CAB previously but they cannot take any more cases on at the moment as they are too busy.

 

Well I have found out that I need to make my appeal to the Valuation Tribunal. I contacted them and they sent me a form.

 

I have completed the form and sent them my case with a print out showing the date of Ltd company incorporation, the 1st and last page of the lease and the following:

 

I believe that I not the liable party for the property as I believe that I signed the lease on behalf of the limited company that I was a director of.

 

Chesterfield Borough Council’s position is that I signed the lease as an individual, unincorporated person trading as .

 

My defence to this would be:

 

.

a)The company Limited was incorporated on . (Attachment A). The lease was signed on , 3 months after the incorporation of the company. I would not be a Director of a Limited Company and also an unincorporated association with exactly the same name.

b)The cover page (Attachment B) detailing the two parties states “ of

trading as ” which I believe was a clerical error and should have Limited or Ltd appended to the end to coincide with the correctly signed final page.

c)The lease is clearly signed (Attachment C) as Director, and as such an unincorporated body does not have a Director.

d)Whilst the property was occupied all lease payments and insurance premiums were billed to, and paid by Limited.

e)All utilities were in the name of the Limited company.

 

 

Attached is the letter sent to Chesterfield Borough Council and their response.

 

Further clarification can be provided on request.

 

Now I have found out that the council want a face-to-face hearing. HELP!!! how do these things work? Do I need to get a solicitor? I fear the guy from the council is going to eat me!

 

Tom

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If you can get the details of

1) Limited company liability ...ie where their liability stops .It does not come near you as an indvidual

2) directors ability to sign on behave of a Limited Company

the second should sort the lot out

There was mention of the vat registration earlier , if you needed the certificate and can't get a copy .....write to the Customs and excise and ask following

could you please comfirm that the firm of XXXXXXX

A)used the name of XXXXXXXXX ltd

B)was registered for Vat in the period XXXXXXXX

To reinforce your case

Write to Companies House and ask the date you resigned from the company

that should give you written evidence.

send copies and keep originals safe ( but you knew that)

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  • 2 months later...

Hi, thanks for that last post. for some reason I didnt see my thread had been replied to.

 

I will get the VAT confirmation and the details regarding my Directorship.

 

What do you mean about 1 & 2? Should I find out the exact text on how a Ltd company works?

 

I have the tribunal sometime in May.

 

Best Regards

 

Thomas Kirk

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  • 4 weeks later...

Hi,

 

Just a quick update, I have a date for 30th May for my hearing.

 

Companies House have provided confirmation of my directorship but nothing back from Inland Revenue regarding VAT.

 

I'm gonna start drafting my case as I want everything to be right.

 

Will post it up here once I've got something started.

 

Tom

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  • 2 weeks later...

Hi, Sorry for the delay, but I have just read your case.

There seems to be quite a lot of advice going on here that is not quite correct.

Unfortunately you will have to look at how you signed the lease and in what capacity. If you were signing on behalf of the company you should have signed as:

Director, For and On behalf of (the name of the company) furthermore the name on the lease should have been the company name including the word Limited and the Registration Number.

There is legislation under section 351 of the Companies Act, that quite clearly states that if an Director or Officer of a Limited Company enters into an agreement for the supply or purchase of goods or services without disclosing the Limited status of the company then he is personally liable for any debts that are incurred by the company that they fail to pay.

It really is a matter of whether you signed the agreement correctly, as it would appear that the lease was made out as if you were running a business not a company in which case you will find it difficult to get out of it as you should have noticed it and had it changed.

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Thanks for the info.

 

Where would I get a full copy of the Companies act? I have googled and it has brought up a copy of one from 1989 but there's also mention of a version 2006. Which would my lease fall under now? It was signed pre 2006 so I would have thought it was the earlier version.

 

Tom

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Just a quickie here. If the council knew you were a newly formed ltd company then standard practise is to get a directors guarantee if the company has been trading for less than 3 years. What does surprise me is that you were never asked for any accounts if they viewed you as a sole trader or partnership, again standard practise in leasing. Just a couple of thoughts on the counter arguments.

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Hi Tom,

Again was the name on the lease in the name of the company or yourself, thats the important thing tp prove and the Intent. However if you did sign as Director that does help your case and you should appeal in writing against the Personal Liability on that ground and deny any laibility. The fact that the council have you down for the rates etc implies that you are personally named on the lease and that they have used this information. I do not think the valuation Tribunal is the correct method of you fighting this either as they will only make a decision on the rateable charge for the premises not on who is liable, you need to Appeal against the Liability itself, that way you can produce all your evidence to show that it was in fact the Limited Company. An Affidavit from the Landlord stating that he was fully aware that the tenant was a Limited Company would also be beneficial and most certainly show that the Council have got it wrong if indeed they have.

There is also another point to look at, has the landlord re-let the property, if he has who is paying the business rates??? and are the council trying to obtain two lots of money for the same time period, secondly if you or the company vacated the company premises to move to smaller place, I do not think that you are liable for the rates if the property is not occupied.

Unfortunately again I do not think that the Valuation Tribunal will help you at all unless you can get them to formally agree that you were not the legal tenant, bu this doesn't really fall within their remit.

Take the council on, presumably they haven't issued a Liablity Order against you yet, if they do and send the Bailiff's around to you, do not let the Bailiff's into your home under any circumstances and file an appeal at the local Magistartes Court against the Order.

 

With respect to the Companies Act you can purchase it from HMSO or any Law Stationer's, but it does not have anything to do with the lease but gives the legal requirements that a company and its officers must comply with.

Unfortunately I have been unable to read the lease as it doesn't come out very well, try and OCR it with a scanner and I will have a look.

Furthermore reading your previous posts regarding the signing of the lease, you have been ill advised in that you cannot trade with the same name as the Limited Company. Under the Trademarks Act the only person that can stop you is the Limited Company itself and only then if you are trading within 35 miles of them if it was a seperate entity. There is absolutely no reason why your Limited Company could not trade as Blue Box Technology, as you can claim that it was a "Trading Name" of the Company as thousands of other companies do. However this brings me back to my earlier point about whether you disclosed the Limited status fo the Comapny or not.

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thanks for your reply.

 

Regarding the Valuation Tribunal - it is an appeal against the council's decision that I am liable. They handle both appeals regarding the rateable value and any dispute with the council.

They do have liabilty orders aginst me. It was after these were obtained that I went to the law centre and they pointed out that I may not be liable.

Thats when I wrote to the council and they said that they believed I was.

The Landlord has is not involved. He is extremely awkward and will try to be spiteful in any way he can.

Although his invoices for rent were in the companies name, although I don't have copies of them.

I already have 50% discount for the property being empty but this still amounts to over £1000 a year for both the business and residential parts, although I did try to get the building reclassified as one whole business premises as thats what it was when we got it and how we left it, but the VOA wouldn't revalue it unless they could get in to inspect and obviously I didn't have access and the landlord ignored all my requests to allow access to an assessor.

 

The property is still empty so cannot go down that route.

 

Regarding the 'trading as', I could claim this as we often called ourselves that, however all our letters etc would have been written to the landlord etc showing the full name, address and registered number.

 

One thing that has just come to the front of my memory - A while back, the council changed the liabilty for the period when the company was there to the company after I proved that it had traded from there. They would only change it for the 10 months that it actually traded from there though. Would this have any scope to investigate?

 

Tom

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"Regarding the 'trading as', I could claim this as we often called ourselves that, however all our letters etc would have been written to the landlord etc showing the full name, address and registered number."

 

Hi mate, the basis of your defence is that you operated as a limited company. If you state that you often called yourselves trading as then you would blow your whole case and this could be viewed as deliberately saying you were "trading as" by the council. I urge you to stick to your original plan.

 

1. You were a ltd company.

2. You can prove date of incorporation from companies house.

3. You can prove date you left the company as a director.

 

As it was a new ltd company and you had not been a director before that you firmly 100% believe you signed on behalf of the ltd company, a legal entity, in it's own right and that at no time were you aware you were, nor prepared to be personally liable for any debts of the company. It is also worth adding that the new landlord knew this and never asked for accounts etc. Stuff what he says to the council, make a plan bud and stick to it. If I can help you in any way I can lemme know.

 

I take it it was setup as most new ltd companies, 100 shares at £1.00 each? liability for the company will be £100.00.

But ffs mucka don't say that you were ever "trading as" when you were ltd, it opens up a whole can of worms and blows your counter argument to the moon.

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Hi Tom,

good news about the tribunal. However it seems to me that you are between a rock & a hard place. You might wish to look at isuing a Witness Summons against the Landlord and the other Directors of the company, but I am not sure whether there is sufficient grounds for this to be applicable at a Tribunal, suggest you check it out. If you can them serve them all with one, they will have to turn and give evidence.

With respect to Calvi's post, I am afriad he is totally wrong, it is quite normal and acceptable for a limited company to use another name for its trading name and as there is no register anymore for trading names there is little aruement reagarding the use of such. The critical point as I stated before is whether you disclosed the limited status of the company to the Landlord, do you have any witnesses when you signed the lease. If you did then the council have got it wrong, they can bill who they like but the onus is on them to get it right before they take any action. As to his poiint about you leaving the company that is totally irrelevant as it is the day you signed the leaase that counts. Also his point about the share capital is incorrect, the share liability is only relevant for the shares issued and this would only apply to when a company went into Liquidation.

Another point to look at, has the company been Liquidated or is it still trading if it is still trading,what about the Directors attending again to support your claims, if it is not then as a shareholder of the original company the accountant should be able to supply you with proof that the comany was paying the bills especially the "rent" did the Lnadlord send this out in the name of the limited compant if he did then again it showws that somewhere an error has been made,

You seem to have lots of evidence for your benefit get hold of any bills that were made out in the name of the company and use them as well, and I mean anything iot will all help, and I believe that the whole arguements will be based on the information supplied to the council by the landlord. As an aside if the council chnage tack and say that part of the agreement includes a personal gaurantee, there is recent case law from the Court of Appeal that states that unless the personal gaurantee is specicially and deliberately explained to "The Director" then it doesn't stand.

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Thanks for your advice, I'd rather not call on the other Directors - at the end of the day, I'm trying to prove they owe the money, not me. We didn't part company on the best of terms.

 

One thing I have found:

letter.png

This is a letter the landlord sent to the council when I tried to terminate the lease using the break clause.

It seems to contradict itself in point 5 as it clearly says that the company Ltd is still trading today and is responsible for the outgoings of the lease, yet he then goes on to say the lease was signed by myself trading as etc.

 

I think its just gonna be a case of what the tribunal decides.

 

Tom

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The landlord accepted the risk, i have been in a similar situation. It is immaterial that you are not on good terms with the other Directors. What is important is the fact that you wre ltd, not a partnership nor sole trader. Stay on this track and you should be ok as my prev posts a ltd company is a legal entity and you signed on behalf of that company.

 

Hi Calvi,

 

The landlord was a private landlord not the council. The reason for my post is the fact that the Council are holding me liable for the Rates & Council tax.

 

Tom

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