ON APPEAL FROM THE HIGH COURT OF JUSTICE
THE HON MR JUSTICE LEWISON
CLAIM No. HC09C02486
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE HUGHES
LADY JUSTICE BLACK
| ROGER WILLIAMS & ORS
|- and -
|REDCARD LIMITED & ORS
MR EVAN ASHFIELD (instructed by Davies Battersby) for the Respondents
Hearing date: 16th March 2011
Crown Copyright ©
Lord Justice Mummery:
Judgment of Lewison J
"21… If a contract is to be signed by a person, both on his own behalf and also on behalf of a company, I cannot see why he should not be able to sign with a single signature provided that the signature is expressed to be a signature on his own account and also on behalf of the company. After all, the general principle of English Law is that no formalities are required to make a contract and it seems to me that if statute is to impose limitations on that general principle it must do so clearly. Accordingly, I consider that provided that, on the fair interpretation of the words in a contract, the reasonable reader would understand the signatures of the natural persons are signatures both on their own account and on behalf of the company, that is sufficient to amount to proper execution for the purposes of section 44. In this respect I respectfully differ from Master Price who held that the contract must state expressly in a testimonium clause that the natural person is signing for and on behalf of the company or some words to that effect.
22. Accordingly, I apply the test which I favour to the supplemental agreement. Would a reasonable reader with the background knowledge reasonably available to the parties have understood that the contract was signed on behalf of Redcard? The signatures appear in a box headed "Seller." In order to understand what was meant by the word "seller", the reasonable reader would have looked at the front page of the supplemental agreement. On seeing that he would have seen that the seller included Redcard. He would next have looked at the signatures themselves. "
"25. The reasonable reader would also have known from his background knowledge that all the directors of the company had committed themselves personally to performance of a contract which could only be carried out with the co-operation of the company of which they were directors and majority, if not sole, shareholders. He would also have understood that the contract was intended to be effective rather than ineffective. Faced with that choice, the reasonable reader would have concluded that the signatures of at least Ms Silberstein and Mrs Auber were appended to the contract both on their own account and also on account of Redcard."
Companies Act 2006
"(1) Under the law of England and Wales…a document is executed by a company-
(a) by the affixing of its common seal; or
(b) by signature in accordance with the following provisions.
(2) A document is validly executed by a company if it is signed on behalf of the company –
(a) by two authorised signatories, or
(b) by a director of the company in the presence of a witness who attests the signature.
(3) [definition of authorised signatories]
(4) A document signed in accordance with subsection (2) and expressed, in whatever words, to be executed by the company, has the same effect as if executed under the common seal of the company.
(5) In favour of a purchaser a document is deemed to have been duly executed by a company, if it purports to be signed in accordance with subsection (2).
A "purchaser" means a purchaser in good faith for valuable consideration and includes a lessee, mortgagee or other person who for valuable consideration acquires an interest in property.
(6) Where a document is to be signed by a person on behalf of more than one company, it is not duly signed by that person for the purposes of this section unless he signs it separately in each capacity."
(1) Section 44, like its neighbouring sections 43 and 45, relates to the formalities of doing business, in particular the formalities for the making of contracts and the execution of documents by companies.
(2) The purpose of s.44 was to facilitate the formalities of the execution of documents by companies by allowing signatures either of two authorised signatories or of one director, if attested, to count as execution by a company under its the common seal.
(3) In order to achieve that result s.44 uses the familiar legislative technique of "deeming." Thus, in the case of a document signed in accordance with s.44, the document has the same effect "as if" executed under the common seal.
(4) The legal effect of words in subsection (4) "and expressed in whatever words to be executed by the company" are central to Mr Dutton's contention that, in order to give rise to a deemed execution of a document by a company, the signatures relied on must be expressed in words conveying that they are by or on behalf of the company.
(5) As for subsequent purchasers for value in good faith, subsection (5) deems, in their favour, that a document was duly executed by a company, if it purports to be signed in accordance with subsection (2). We were referred to Lovett v. Carson County Homes Ltd  EWHC 1143(Ch);  BCLC 196 at  for the proposition that "purports" in subsection (5) "operates to refer to the impression a document conveys" focusing on what appears to be the case rather than what actually is the case. That particular point does not arise here, as the appellants are immediate, not "subsequent", purchasers, but the provision is relied on by Mr Dutton as supporting his submissions on the construction of the key words in subsection (4).
(6) Similarly, subsection (6) does not apply here, because only one company is involved, but it is relied on by both sides as an aid to the construction of subsection (4). It provides that, where a document is to be signed by a person on behalf of more than one company, it must, for the purposes of due execution, be signed separately in each capacity. On this subsection we were referred to the recommendations of the Law Commission No. 253,1998, The Execution of Deeds and Documents by or on behalf of Bodies Corporate paragraphs 3.30 to 3.35, which preceded the enactment of s.44(6).
Discussion and conclusion
Lady Justice Black:
Lord Justice Hughes: