CHANCERY DIVISION
Fetter Lane, London, EC4A 1NL |
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B e f o r e :
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STEVEN JAMES HUNT |
Appellant |
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- and - |
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RODERICK WITHINSHAW (Former trustee in bankruptcy of Steven James Hunt) (2) CONWY COUNTY BOROUGH COUNCIL Second Respondent |
First Respondent |
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Mr Graham Sellers (instructed by DWF LLP) for Mr Withinshaw
Mr Louis Doyle (instructed by Head of Legal and Democratic Services, Conwy County Borough Council) for Conwy County Borough Council
Hearing dates: 13, 14 and 15 October 2015
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Crown Copyright ©
MR JUSTICE MORGAN:
Introduction
(1) whether the trustee effectively disclaimed the freehold in the pier and the consequences of an effective disclaimer, alternatively, of an ineffective attempt to disclaim; and(2) whether the court should make a vesting order in favour of Mr Hunt and, if so, the extent of the property to be vested by such order.
(1) as at the date of the presentation of the bankruptcy petition and as at the date of the bankruptcy, one part of a pavilion on the pier came with the definition of "dwelling house" in section 385(1) of the Insolvency Act 1986 ("the 1986 Act");(2) as at the date of presentation of the bankruptcy petition, Mr Hunt was in occupation of, or entitled to occupy, that dwelling house for the purposes of sections 320(2)(c) and 320(3)(c) of the 1986 Act; and
(3) as at the date of the bankruptcy, that dwelling house was the sole or principal residence of Mr Hunt for the purposes of section 283A of the 1986 Act.
(1) an appeal by Mr Hunt against an order dated 13 January 2014, made in the Caernarfon County Court, dismissing an application by him for a declaration that the pier vested in him under section 283A of the 1986 Act;(2) an application of 9 October 2015 by Mr Hunt for various heads of relief including an order striking out Conwy County Borough Council ("Conwy") as a respondent to the above appeal; and
(3) two issues directed to be tried by an order of 8 May 2013, such issues being the remaining issues arising in an application by Mr Hunt, pursuant to section 320 of the 1986 Act, for a vesting order in relation to the pier.
The facts
(1) the judge set out the background facts;(2) he held that it was too late for Mr Hunt to attempt to challenge the validity of the bankruptcy order or the entitlement of Conwy to be the respondent to the appeal: [21];
(3) he stated that Conwy accepted that the case came within section 283A(1) of the 1986 Act: [24];
(4) he held that the trustee's application for possession of the pier was made within the three years referred to in section 283A: [27];
(5) he held that, assuming that the disclaimer was valid, then the dismissal of the application for possession of the pier on 19 August 2011 did not trigger the application of section 283A(4) because the freehold had been disclaimed before the application for possession was dismissed: [29];
(6) he held that the trustee could validly extend the three year period in section 283A by making a valid application for possession within the three year period: [31];
(7) he referred to two arguments put forward by Mr Hunt that there was no valid disclaimer; he noted an objection from Conwy to these arguments on the ground that they had not been put and were inconsistent with the application for a vesting order; however, the judge said that he would deal with the arguments because he was of the view that they were without merit: [32];
(8) Mr Hunt's first argument was that the pier was not onerous property within section 315 of the 1986 Act; the judge was not persuaded by this argument and he added at [36]:
"36 I am also of the view that it was far too late, very many months later, when an application for a vesting order was before the court which assumed the validity of the disclaimer, to seek to run an argument that, in truth, there was no valid disclaimer either because the property was not "onerous" within the meaning of section 315 or because the trustee's act in seeking to disclaim the property was in some other way open to challenge."(9) the judge then dealt with the second challenge to the validity of the disclaimer; he ruled that a failure to serve a copy of the notice of disclaimer on the Chief Land Registrar (if there had been such a failure) did not invalidate the disclaimer: [42];
(10) in the course of considering the arguments as to the effect of non-service of a copy of the notice of disclaimer on the Chief Land Registrar, the judge referred to sections 317 and 318 of the 1986 Act and he said at [42]:
"Likewise, section 318 provides that disclaimer of a dwelling house "does not take effect unless a copy of the disclaimer has been served (so far as the trustee is aware of their addresses) on every person in occupation of or claiming a right to occupy the dwelling-house". The obvious purpose of giving such notice is to enable the person so notified either to challenge the validity of the disclaimer or, if otherwise eligible, to apply for a vesting order under section 320. (Mr Hunt has not suggested that that provision was not satisfied in his case by the service on him of a copy of the disclaimer within the stipulated period.)"(11) the judge then addressed the arguments as to the operation of section 320 of the 1986 Act on the basis that there had been a valid disclaimer: [43];
(12) he rejected Mr Hunt's argument that the whole of the pier was a "dwelling house" within the definition of that phrase in section 385(1) of the 1986 Act: [44];
(13) he held that to qualify under section 320(2)(c) of he 1986 Act, it was not necessary to show that the whole of the disclaimed property was a dwelling house: [48];
(14) he held that the court had power under section 320(3) of the 1986 Act to make a vesting order in relation to all of the disclaimed property or to a part of it: [48];
(15) the judge then considered in detail the exercise by Judge Jarman of his discretion under section 320(3); I will not set out all of that reasoning at this stage although I will need to refer to some of it later in this judgment; the judge concluded that Judge Jarman's exercise of his discretion was flawed and the matter should be remitted for him to consider the matter afresh: [55] and [64];
(16) finally, the judge considered various matters in relation to an application made by Mr Hunt's mother for a vesting order, but it is not necessary to refer to those matters.
The application of 9 October 2015
The appeal
(1) did the disclaimed property include a dwelling house at the time of the disclaimer for the purposes of section 318?(2) if so, was Mr Hunt a person in occupation of the relevant dwelling house at that time or was he a person claiming a right to occupy the dwelling house at that time?
(3) if section 318 applied on the facts at the time of the disclaimer, did the copy of the notice of disclaimer given to Mr Hunt on 24 August 2011 have the effect that the disclaimer operated pursuant to section 315 with effect from 18 or 19 August 2011 (prior to the dismissal of the application for possession on 19 August 2011)?
(4) if section 318 applied on the facts at the time of the disclaimer, did the copy of the notice of disclaimer given to Mr Hunt on 24 August 2011 have no effect because before that date (i.e on 19 August 2011), the pier had vested in Mr Hunt pursuant to section 283A(4)?
(5) if the case came within section 283A(4), did the pier or only the dwelling house vest in Mr Hunt?
(6) if only the dwelling house vested in Mr Hunt under section 283A(4), then did the disclaimer nonetheless take effect in relation to the remainder of the pier?
(7) if the dwelling house vested in Mr Hunt under section 283A(4), but the disclaimer was effective in relation to the remainder of the pier, would Mr Hunt enjoy any easements over the remainder of the pier for the benefit of his freehold dwelling house?
The application for a vesting order
(1) the whole of the pier;(2) the dwelling house only;
(3) the dwelling house and another part or other parts of the pier; or
(4) a part of the pier not including the dwelling house.
"51 The court has a discretion under section 320(3) whether to make an order in favour of a qualifying applicant. Except that there are limits to what the court may order when the applicant qualifies under section 320(2)(b) and certain requirements exist where the vesting order relates to property of a leasehold nature (see sections 320(4) and 321), the discretion is at large in the sense that the legislation provides no guidance as to how it is to be exercised. In the absence of some competing applicant for a vesting order and in the absence of some good reason to the contrary, I would have thought that the court's discretion ought ordinarily to be exercised in favour of the qualifying applicant, at any rate where the interest in the property in question is a freehold interest in land. The bankrupt's estate is no longer interested since, by the disclaimer, the trustee makes clear that he has no further wish to exploit the disclaimed property for the benefit of the bankruptcy estate. The interest of the Crown arises, so to speak, by default in that the consequence of the disclaimer has been to cause the property to revert automatically to the Crown."
(1) he has standing to apply for a vesting order;(2) there is no competing applicant;
(3) the interest of the Crown and those deriving title under the Crown, such as Conwy, arises by default;
(4) Conwy's statutory powers in relation to the condition of the pier will be available to it following the pier revesting in Mr Hunt;
(5) there is no good reason to deny Mr Hunt a vesting order;
(6) the court's discretion to make a vesting order should therefore be exercised in his favour.