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

[basil010]

Hi Tom,

I agree with Calvi, the letter quire clearly implies that it was the Ltd Company and thatvthey vare vliable in the landlord opinion. However it also states that "you" signed the lease trading as Blue Box Technology and this is where I think this is why the council are putting the liablibility down to you. It also states that "you " paid the rent by bank transfer, if this was from your private bank account then again they have grounds for their calim against you. If the company was unable to pay the rent and you paid it out on their behalf, the payments should have been written into the company account as a Directors Loan and a formal agreement to this effect should have been signed by the company and yourself.

You should really aquire a copy of the lease for the tribunal hearing, as again I can only reiterate that if you failed to disclose the Limited status of the company then you bare vpersonally liable for an debts that it incurs. Unfortunately Calvi's point about signing "on behalf" of the company is only relevant if full disclosure was made and normally as per my previous post an agreement should be signed "for and on behalf of".

[fbnts]

Hi,

Just an update. I had the hearing yesterday. All went very well just keeping my fingers crossed and await the decision.

 

At one point the panel started questioning whether the lease is actually executed correctly as when it was signed, I actually signed the side that was for my witness, and my witness signed the side I was supposed to sign. All in all I came out very optimistic and will let you know.

 

Tom

[calvi36]

if it is executed incorrectly then you enjoy your walk, as you walk away and smile. However I hope the advice we have given you has helped my friend.

[fbnts]

Yes, your help has been very useful. I managed to present a very good case based on your advise including the letter from Companies House confirming my Directorship.

 

I'm just anxiously awaiting the post to see what their decision was!

 

I will let you know how this concludes!

 

Tom

[calvi36]

let us know the conclusion when you get it Tom.

[Aequitas]

The first question that needs to be answered is: who is the tenant? To find the answer you need to look at the lease. It says:

 

Thomas Matthew Kirk of , Chesterfield, S40 ***, trading as Blue Box Technology (“the tenant”)

 

I think that is absolutely clear; Thomas Mattew Kirk is the tenant. The words "trading as..." are merely descriptive. It would make no difference if the word "limited" were included. The fact that you wrote "director" after your signature does not help - the lease says you are the tenant. Signing "in the wrong place" also does not help - the fact is that you signed. A lease for three years or less does not require any special formalities and indeed does not even need to be in writing. The only way the company could be the tenant is if you assigned the lease by deed.

 

The next question is: who is liable for the rates? I am not a expert on rating law, but it has always been my understanding that it is the person entitled to occupation who is liable and where there is a tenant it is the teant who is entitled to occupation. (An exception to the rule is if the lease makes the landlord liable for the rates.) There may be a way round it by arguing that it was the company that was in actual occupation, but you are still in difficulty for any period after the company vacated.

 

If the tribunal does not find in your favour you may have a case for claiming indemnity from the company.

 

If a solicitor acted on the grant of the lease then you may have a claim against him if he did not explain that you were taking on personal liability.

[Janet-M]

Please keep this thread on topic

 

Do not post personal insults about other users, any posts containing them or quoting them have been removed .

 

You may report any post you are concerned about by clicking the red warning triangle (bottom left of the post )

 

Please remember this is an open forum people may give conflicting advice please use your own judgement on whos advice you listen to .

[Aequitas]

The purpose of this post is to clarify some legal points that have been lost in the deleted posts.

 

Are Tom's intentions at the time he signed the lease relevant?

 

I do not think they are. You have to take a legal document as you find it. No evidence may be admitted to contradict a document if it is clear. (That is not an absolute principle, but I think it has to apply to the parties to a document.) I say the document is clear because where the parties are set out Tom is stated to be the tenant. Whatever words he included after his signature do not change that because, apart from the fact that it would be insufficient to overturn the clear indication in the document who the tenant was, it is the part signed by the landlord that creates the tenancy and is the primary evidence of it and its terms. Consider a slightly different situation. Suppose Tom controlled two different companies: Blue Box Technology (Brighton) Limited and Blue Box Technology (Hove) Limited and it was intended that the lease should be granted to Blue Box Technology (Brighton) Limited, but it was in fact granted to Blue Box Technology (Hove) Limited. Can there be any doubt that the tenant is Blue Box Technology (Hove) Limited?

 

Is Tom helped by the fact that he signed “in the wrong place”?

 

I do not think he is. A point has just occurred to me that I had completely overlooked and it is this: the validity of a lease does not depend on its being signed by the tenant. We are so used to tenancy agreements and leases being prepared in duplicate that we are apt to forget that it is the part signed by the landlord that creates the tenancy. The sole purpose of the counterpart signed by the tenant is so that the landlord has something to produce as evidence of the terms of the tenancy, in particular the obligations imposed on the tenant. The execution of a counterpart by the tenant also signifies the tenant's acceptance of the tenancy, but is not essential for acceptance. Clearly there must be some act on the part of the tenant to accept the tenancy (otherwise unscrupulous landlords would go round granting lease gratuitously); taking delivery of the part signed by the landlord, paying rent and going into possession are sufficient. Since Tom's signature was not necessary, it must follow that signing “in the wrong place” does no affect the validity of the grant of the tenancy.

 

 

But suppose that the tenant's signature is needed. There are many types of document that require certain formalities for them to be valid and the absence of the formalities may be fatal or require a further document to “perfect” them. The creation of a tenancy for three years or less in writing requires no formalities, it just has to be signed; no witness is needed. Even if a witness were needed I have to doubt that the document would be invalid if the signatory and witness each erroneously signed where the other was supposed to sign.

[fbnts]

Thanks for your comments Aequitas, however, I don't understand your point on the lease does not have to be signed by the tenant.

 

I can understand that ocupancy can show acceptance of a tenancy, however, its my understanding that the lease cannot be enforced if its not signed because who says it wasn't a different lease verbally agreed to.

 

All bills including rates, council tax and rent were paid for the period it was occupied which was 9 months.

 

But surely the contract has not been correctly executed as according to the lease, It was signed by my co-director.

 

Anyhow, it doesn't really matter now as the hearing has taken place and its now a case of waiting for the outcome.

 

Tom

[Aequitas]

There is a very important difference between a lease and an “ordinary” contract. A lease creates an interest in land (more precisely a legal estate). The creation or transfer of a legal estate is a one way affair – it only takes one to tango.

 

 

The point is more easily made by looking at freehold land. It is perfectly possible to transfer property by a document that is only signed by the landowner; this happens quite a lot. The person taking the transfer (“transferee”) only needs to sign if he is agreeing to something, and even then his signature is not essential for the land to be transferred. In fact the law goes further and says that if you ought to have signed you will be deemed to have signed. (“The law regards as done that which ought to have been done.”) It is a principle of land law that you cannot take a benefit without the corresponding burdens. (I mention for the record that in the case of registered land the Land Registry will decline to accept a transfer that has not been signed by the transferee when it should be signed by the transferee.)

 

 

[it is theoretically possible to repudiate a conveyance or transfer of land if you have not signed the conveyance or transfer, though possibly only in the case of a gift (I have not thought the matter through). How you would go about doing it I have no idea.]

 

 

In the case of a tenancy, it is the landlord and the landlord alone who creates the legal estate. Once it is created and the tenant accepts it (normally the two will take place simultaneously) all the conditions attached to it are enforceable. You cannot take the benefit of occupation without the burden of the tenant's obligations. The reason a tenant signs and hands to the landlord a signed counterpart of the lease is that it is the best evidence that the landlord can produce in court if he wishes to sue the tenant for breach of covenant. It is, however not essential as, if necessary, the terms of the lease could be proved by other means. We are so used to the tenant signing a counterpart when a tenancy is created by writing that it we are to forget that, strictly, it is not necessary.

 

 

So, in your case, whether or not the counterpart was signed in the right place or by the right person is irrelevant. I appreciate that it seems as if it ought to be, but it is not.

 

 

Anyway, it is to be hoped that the tribunal do not take these points and that they take the pragmatic view that for all practical purposes (if not for strict legal ones) that the company is the tenant.

[fbnts]

Thank you for your reply which makes it much clearer now. So, in effect hypothetically speaking, If the lease was in my name I could actually have let it to the company for a period of 3 years and not have a signed document to prove it, just simply that the company occupied the premises shows their acceptance?

Obviously I still maintain it was intended and was entered into by the company and the landlord but this could be another argument?

 

Tom

[calvi36]

There is a very important difference between a lease and an “ordinary” contract. A lease creates an interest in land (more precisely a legal estate). The creation or transfer of a legal estate is a one way affair – it only takes one to tango.

 

 

The point is more easily made by looking at freehold land. It is perfectly possible to transfer property by a document that is only signed by the landowner; this happens quite a lot. The person taking the transfer (“transferee”) only needs to sign if he is agreeing to something, and even then his signature is not essential for the land to be transferred. In fact the law goes further and says that if you ought to have signed you will be deemed to have signed. (“The law regards as done that which ought to have been done.”) It is a principle of land law that you cannot take a benefit without the corresponding burdens. (I mention for the record that in the case of registered land the Land Registry will decline to accept a transfer that has not been signed by the transferee when it should be signed by the transferee.)

 

 

[it is theoretically possible to repudiate a conveyance or transfer of land if you have not signed the conveyance or transfer, though possibly only in the case of a gift (I have not thought the matter through). How you would go about doing it I have no idea.]

 

 

In the case of a tenancy, it is the landlord and the landlord alone who creates the legal estate. Once it is created and the tenant accepts it (normally the two will take place simultaneously) all the conditions attached to it are enforceable. You cannot take the benefit of occupation without the burden of the tenant's obligations. The reason a tenant signs and hands to the landlord a signed counterpart of the lease is that it is the best evidence that the landlord can produce in court if he wishes to sue the tenant for breach of covenant. It is, however not essential as, if necessary, the terms of the lease could be proved by other means. We are so used to the tenant signing a counterpart when a tenancy is created by writing that it we are to forget that, strictly, it is not necessary.

 

 

So, in your case, whether or not the counterpart was signed in the right place or by the right person is irrelevant. I appreciate that it seems as if it ought to be, but it is not.

 

 

Anyway, it is to be hoped that the tribunal do not take these points and that they take the pragmatic view that for all practical purposes (if not for strict legal ones) that the company is the tenant.

Tom, please do not get bogged down with technicalities at this point. This is certainly not a court of law. I will not respond to hypothesis. Your case has been heard. Once you have the decision of the tribunal we might be able to aid you more, should you need it.

 

Aequitas is obviously well read in this area of law however I would suggest that the input at this time is unhelpful, could you please await the outcome aequitas as most land law and property lawyers are not as switched on as you. I sincerely appreciate your comments and I may pm you about a possible large claim I may have.

 

It is theoretically possible to repudiate a conveyance or transfer of land if you have not signed the conveyance or transfer, though possibly only in the case of a gift (I have not thought the matter through).

 

How you would go about doing it I have no idea?

 

We do not normally deal in theory here. It is good to theorise but I always try to deal with the facts presented. No court in the land will deal in theory, just precedents. I am not making an objectionable post. I make a valid point that we are not talking about transfer of land, we are talking about a business lease on a property.

 

Your comments whilst always welcome seem to cloud the issue for Tom at this stage.

 

In the case of a tenancy, it is the landlord and the landlord alone who creates the legal estate. (Landlord grants tenancy by agreement with tenant. It is the landlords right to create the legal estate as he/she is the owner, however as you state tenancy: then this is a mutual agreement.)

 

Once it is created and the tenant accepts it (as does the landlord) (normally the two will take place simultaneously) all the conditions attached to it are enforceable. (All conditions are enforceable by both parties, ie. shed is leaking, please fix it (tenant). Or I aim to build an extension on the property.(landlord) You cannot take the benefit of occupation without the burden of the tenant's obligations. (You also cannot take the burden of being landlord without taking a landlords obligations)

 

The reason a tenant signs and hands to the landlord a signed counterpart of the lease is that it is the best evidence that the landlord can produce in court if he wishes to sue the tenant for breach of covenant. (Both documents should be signed by all parties, if not then where is the agreement with one set of documents, it could fall in court if the tenant or landlord were not in receipt of both documents, obviously unless one side or the other admits to one document being a statement of fact.)?

 

It is, however not essential as, if necessary, the terms of the lease could be proved by other means. (It would be up to the aggrieved party, landlord or tenant, to prove the terms of the lease were lawful or unlawful or even reasonable.) We are so used to the tenant signing a counterpart when a tenancy is created by writing that it we are to forget that, strictly, it is not necessary.

 

You are also forgetting that in the UK, there are both rights of landlord and tenant. I would say those laws, for those that live with them, are stacked in a landlords favour. That is until you find CAG. As above my friend, you may pick tiny teeny weeny holes in my statements. That is your choice. I sincerely hope you do as you will be educating me.

 

 

Calvi36

[Aequitas]

Thank you for your reply which makes it much clearer now. So, in effect hypothetically speaking, If the lease was in my name I could actually have let it to the company for a period of 3 years and not have a signed document to prove it, just simply that the company occupied the premises shows their acceptance?

 

Yes, there could have been a subletting, but I think a subletting would only arise if there were evidence of an intention to create one; the company paying the rent to the landlord would not be enough. The law recognises the possibility that a tenant can part with possession without creating a sub-tenancy.

[Aequitas]

I acknowledge that my comments are unhelpful in the sense that they are of no practical value as the arguments have been put to the tribunal. I had not appreciated that when I made my first post, but I may well have posted anyway just to give my views on the legal points that had arisen. However, having started, I shall carry on.

 

 

Just as the man who has lived all his life in the forest may believe that the wind is caused by the trees waving their branches, so lawyers often make assumptions that they do not have to consider until they are challenged.

 

 

Just as a conveyance is first and foremost a document that transfers land from one person to another, so a lease is first and foremost a document that creates a legal estate. It is quite possible for a lease to be as short as this:

 

 

A demises to B 23 High Street Newtown for a term of six years at an annual rent of one hundred pounds.

 

 

All that is required to make the lease valid and to create a legal estate is for the landlord to execute it as a deed. In practice a lease is never made unless there is a tenant who has agreed to take it. I raised the point about repudiation because there was a suggestion or implication (made in the posts that were deleted) that if the arguments I had put forward were correct, a landlord could foist a lease on an unsuspecting tenant. I just wanted to emphasise that in the event that a lease was granted to an unwilling or unsuspecting tenant, the tenant would be able to repudiate it.

 

 

In practice, especially when the parties are legally represented, there will rarely be any doubt as to whether a lease has been granted – it will be when the matter is completed, which will involve the exchange of lease and counterpart. But the fact that an exchange of lease and counterpart is almost always involved does not mean that it is essential. The matter can be completed by the tenant signifying his acceptance of the tenancy by other means.

 

 

I digress to recount something that actually happened. I acted for a tenant who took an assignment of a lease. Not long afterwards the landlord wanted the tenant to do something (I forget what it was). I said that it was not in the lease and they said it was. To cut a long story short, it turned out that the lease and counterpart differed significantly – this had arisen because the lease was granted in the days before word processors and in those days one solicitor's office would type out one part and the other the other; it seemed that the two parts must have been prepared from different versions of the draft lease. The landlord's solicitor tried to argue that the counterpart overrode the lease as it was the part signed by the tenant. I pointed out that that could not be the case. An assignee surely could rely on the lease as that was all he saw. They (reluctantly) conceded when I asked them whether, as a matter of practice, they asked to see the counterpart lease when they acted for someone taking an assignment. The case is not on all fours with Tom's, but it emphasises (leaving out remedies such as rectification) that the lease overrides the counterpart.

 

 

It was always the practice for the landlord to sign one part and the tenant another, rather than for both to sign both parts. The reason for this was simple: a duplicate lease signed by both parties was chargeable with stamp duty at the full rate. (Whether this applies under SDLT I have no idea.)

 

 

It is arguable whether the law is stacked in favour of the landlord – they are many rights and remedies available to tenants which the law has seen fit to create. What is unarguable is that all leases are drafted to favour landlords. That is why if you are a tenant you need to instruct a good lawyer who will explain what you are letting yourself in for and do his best to tilt the balance more in your favour.

 

 

Coming to the Unfair Terms in Consumer Contracts Regulations 1999, which have been referred to, the following provisions of Regulation 5 are sometimes overlooked:

 

 

5. — (1) A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer. (2) A term shall always be regarded as not having been individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term.

 

If you have a case where a landlord submits a draft lease for the tenant's approval I think there has to be a strong argument that the Regulations do not apply, but that is a discussion for another thread.

[fbnts]

Hi, Thanks for all your replies.

 

I have had the decision - Appeal Dismissed! Grr!

 

Here is the response:

Having due and careful consideration to the evidence submitted the appeal was dismissed. The tribunal must have regard to the legislation and the dispute in this case centred on the status of and whether he was, in law, the 'owner', namely the person holding a material interest in the property. The tribunal was satisfied that intended to take the tenancy on the behalf of this company, Blue Box Technology Ltd. He was clearly a director of that company which had been incorporated in October 1992 and as such would have had the authority to enter in such an agreement.

However, the lease did not refer to Blue Box Technology Ltd as being the tenant but instead referred to of

, trading as Blue Box Technology ("the tenant"). Furthermore the lease had been signed by and withnessed by who gave his occupation as director. Whilst the tribunal understood 's contention they considered that the lease in fact stated differently. They concluded that the Council was correct in their view that the lease was not signed in a limited company name. The authority had correctly interpreted the legislation in terms of the hierachy of liability and accordingly was held to be the liable person for Council Tax purposes.

 

 

So is that it over? Do I have a case regarding the lease being incorrectly signed?

 

Tom

[fbnts]

Also, from re-reading the above, i take it the Counterpart is the copy that I kept? If so, it appears that both my copy and the landlord's copy has been signed incorrectly - (I have a photocopy of the landlords version supplied by the council)

 

Tom

[Aequitas]

So is that it over? Do I have a case regarding the lease being incorrectly signed?

 

I do not think so for the reasons I set out above. I believe the Council's and the tribunal's reasoning is correct.

 

Please remember that you probably have a right to be indemnified by the company.

 

The counterpart is the part that the landlord retains.

[fbnts]

I don't think reclaiming from the company directly is an option. They have big financial backing now and would spend more than the claim is worth just in spite.

 

Also, If I can't prove that I signed on behalf of the company then why do I have a right to be indemnified by the company?

 

 

So just to get it clear in my head, both my copy of the lease and the copy held by the Landlord has been signed in the wrong places. Does this still not matter at all?

 

Tom

[Aequitas]

1. There clearly was a tenancy. What were its terms? As set out in writing. Where were the terms set out in writing? In the document that was signed, even if it was signed wrongly, who was named as tenant? You. Who is the tenant? You. If you had had a dispute with the landlord you would have looked at what was signed and produced it. Would you have been impressed if the landlord had said that the terms were inapplicable as the document was wrongly signed?

 

2. Since there is no requirement for a lease for three years or less to be in writing it has to follow that there can be no requirements as to how such a lease should be signed. Again turn it round the other way. What would you have said if the landlord wanted to throw you out after a week on the basis that the documents were signed in the wrong place?

 

3. I do not think there is any harm in at least writing to the company. You do not say how much is involved. If it less than five thousand pounds you can claim through the Small Claims procedure.

[fbnts]

Hi,

 

Thanks for reply, On points 1 & 2 I fully understand now.

 

The sums are around £3000 which is for the council tax for 18 months and non-domestic rates for 18 months.

 

Like I said before, I have no grounds to chase the company directly; I can't say the lease was supposed to be their name as has already been clarified, the intention was, but legally it was in my name.

 

I'm now at the stage where I'm going to have to accept that I have lost. Its sooo anoying as its me that has been left out of pocket after all this and the company is make significant profits.

 

Oh well, lesson learned - NEVER sign a lease which mentions my name personally!

 

Thanks for all your help guys, it has been most appreciated.

 

Tom

[Aequitas]

Like I said before, I have no grounds to chase the company directly; I can't say the lease was supposed to be their name as has already been clarified, the intention was, but legally it was in my name.

 

Even though you were the legal tenant, as between you and the company it was the company who occupied the building. I appreciate you may not wish to get involved in litigation, but I would certainly write a few letters to get back £3000.

 

Oh well, lesson learned - NEVER sign a lease which mentions my name personally!

 

I go even further. Whilst I am all for do-it-yourself whenever possible, you should always take legal advice before entering into a lease. I know it costs money, but you should be thinking about your total liability under the lease. If you take a lease at £15000 p.a. for five years that is £75000 in rent alone. Would you buy any sort of property for that amount without a lawyer? The legal issues involved in taking a lease are usually far more complex than when buying and the potential liability almost always greater. Any competent commercial conveyancer on seeing a draft of the lease you signed would have asked: "Who exactly is supposed to be taking this lease?"

[fbnts]

One last question - Does Unfair Terms in a Consumer Contract regulations apply to a lease and if so, would it apply to a term for an 18 month break clause which required all rent and bills to be paid upto date before it can be used?

 

We specifically asked for an 18 month break clause and when we left the property wrote to the landlord informing him that we were wish to terminate at the 18 month break (we provided over 3 months notice as required) yet later he said that we could not use the break clause as we had not paid up rent, utility bills and insurance costs.

 

However, I consider this unfair because the main reason to invoke the break clause was if we were in financial difficulty its a way to terminate the lease early, and that being the case, we would be unable to pay up the rent before the 18 month point. Its really a catch 22 clause is'nt it?

 

Tom

[Aequitas]

The Unfair Terms in Consumer Regulations are not going to apply as a "consumer" is defined for the pusposes of the regulations as "any natural person who, in contracts covered by these Regulations, is acting for purposes which are outside his trade, business or profession".

 

Many break clauses are drafted so that they are only exercisable if the tenant is not in breach of covenant. They have to be complied with strictly, though minor breaches can be ignored.