The effect of the dissolution and subsequent restoration of a foreign registered company on the devolution of real property in England and Wales was one of the issues for determination by the court in Margarita Hamilton v Her Majesty’s Attorney – General and others and Walton Properties Limited v Her Majesty’s Attorney-General [2022] EWHC 2132 (Ch).
Margarita Hamilton (MH) and Walton Street Properties (WPL) both sought vesting orders in respect of Walton Castle in Somerset. MH occupied and carried out a wedding and events business from the property. WPL had, at all material times, held the legal title to the property having acquired it from MH in August 2013. WPL held the property on trust as to a two-thirds share to another company, Mercantil. The parent company of WPL and Mercantil was Ministros: all three were Guernsey-registered.
The claims arose on the dissolution of WPL and Ministros, in May 2020. The owner of Ministros was bankrupt and his trustees in bankruptcy were joined as defendants to the action. Both companies were restored to the Guernsey register in May 2021. MHs claim was disputed by the trustees on the ground that she was unsuitable to act as trustee and that such an order may jeopardise their interest, as ultimate shareholder, in the property.
The court was clear that the law governing devolution of freehold property in England held on trust by a foreign registered company is English common law, and not the law of the place of incorporation of the company. The legal estate does not pass by escheat to the Crown, but rather vests in the Crown subject to all existing interests on which it is held. So, there was no automatic revesting of the legal estate in the property in WPL on its restoration to the register. The court rejected WPLs reliance on its status as registered proprietor of the property under section 58 of the Land Registration Act 2002 since legal title remains with the Crown until an order is made vesting it in another person.
The court decided that MH had sufficient standing to seek a vesting order on the basis that Mercantil’s two-thirds share in the property had been assigned to her in 2017 in satisfaction of a debt or, if the assignment could be set aside, that she had a valid charging order over Mercantil’s beneficial interest for the debt at the date of the assignment.
The court has a wide discretion under section 44 of the Trustee Act 1925 to determine in whose favour a vesting order should be made, although there is little guidance on determining competing claims. The court will exercise its power to do justice and is not obliged to restore the status quo Potier v Treasury Solicitor (Bona Vacantia) [2021] EWHC 1524 (Ch).
The court vested legal title to the property in MH, who occupied and was operating a business from the property. The continuity of the business was more likely if a vesting order was made in favour of MH than WPL. There was no compelling evidence as to why MH was not a suitable trustee.
Louise Clark is a property law consultant and mediator
