Even if an appellant has no legal right to occupy property the law is not indifferent to the legality of the means by which they are compelled to leave.
The Court of Appeal has considered this issue in continuing a stay on an order for possession of property in Carvill-Biggs and another v Reading [2024] EWCA Civ 1005.
The appellant and his family occupied a large property set in a one-acre gated estate in Orpington. The freehold of the property was owned by a special purpose company vehicle set up by the appellant and of which he was sole director.
In April 2023, the company defaulted on a loan of £2.85m secured by a legal charge over the property made by TFG Capital. The appellant’s occupation of the property was in breach of loan documentation preventing such occupation.
TFG appointed LPA receivers in August 2023 and sought an order for possession of the property in Bromley County Court. The appellant indicated an intention to defend the proceedings challenging TFG’s security.
In November 2023, TFG changed tack, appointing the respondents as joint administrators of the company to realise the property for the company’s creditors. The appointment imposed an automatic stay on the possession proceedings against the company.
However, as the Court of Appeal pointed out the administrators were not entitled to realise the property of a company subject to a fixed charge until they obtained a court order under paragraph 71 of Schedule B1 to the Insolvency Act 1986 authorising them to dispose of the property free of the fixed charge.
In an application under the 1986 Act, the administrators sought and obtained an order for delivery up of the property. The appellant obtained permission to appeal challenging the basis upon which the order was made. A stay of execution on the possession order was granted which the administrators sought to set aside.
Despite the administrators having followed the wrong procedure, the court was prepared to reconsider its decision. The balance of the risk of injustice lay clearly in favour of continuing the stay. The lifting of the stay would render the appellant’s appeal academic since he would be evicted but by continuing the stay the court would not be “authorising a trespass”.
The appeal against the legality of the order under the 1986 Act had a realistic prospect of success. It was not on a pure point of form and not substance. A stay for a limited period pending determination of the appeal would not cause the administrators any material financial prejudice.
Louise Clark is a property law consultant and mediator
