Husband and wife being adjudged bankrupt with beneficial shares in property passing to different trustees – Purported legal transfer of estate in property to claimant – Claimant commencing proceedings for possession – Transfer of estate subsequently completed – Whether possession order to be granted – Application allowed – Appeal dismissed
In 1987 Mr and Mrs J acquired Grove End, Grove Hill, Harrow, Middlesex (the property). In May 1991 a company obtained judgment against Mr J for £422,678 and, on 12 July 1991, it obtained a charging order absolute against the property. In February 1992 Mr J was adjudged bankrupt and, consequently, his beneficial share in the property was transferred to his trustee in bankruptcy (A). In December 1992 the company assigned to the first defendant both the judgment debt owed to it by Mr J and the benefit of the charging order over the property. Mr J was discharged from the bankruptcy in February 1995. However, that did not affect the functions of A as trustee in bankruptcy and the fact that Mr J’s beneficial interest in the property remained vested in A.
In late 1995 Mr and Mrs J were both adjudged bankrupt and B was appointed as trustee in bankruptcy for them both. Accordingly, Mrs J’s beneficial interest in the property passed to B, although Mr J’s remained with A under his first bankruptcy. Subsequently, B sold Mrs J’s beneficial interest in the property to the claimant. In February 1998 the claimant commenced proceedings for possession. In February 1999 Mr and Mrs J and B executed a transfer of the legal estate in the property to the claimant.
It was accepted by the defendants that the first defendant’s equitable charge over the property gave no right of occupation to either the first or second defendants, and that the third to fifth defendants were in occupation by reason of “tenancies” that neither the first nor the second defendant had the power to grant. The defendants’ defence was founded in Part 2 of the Supreme Court Practice 1999 at pp1490-1491, which stated that the proper claimant was the person in whom the legal estate was vested, not the person entitled in equity. The defendants contended that, accordingly, the claimant did not have any right to bring the action, since it did not have the freehold title to the property. This reposed in Mr and Mrs J, albeit that Mr J’s interest was held on trust for A and Mrs J’s interest was held on trust for the claimant. On 3 February 1999 the county court made a possession order against the defendants, who appealed. Subsequently, A was removed from office and replaced by C as Mr J’s trustee in bankruptcy, and, by a deed dated 7 April 1999, C sold Mr J’s interest in the property to the claimant.
Held: The appeal was dismissed.
1. In November 1995 Mr J’s beneficial interest in the property was held by A and not by B, notwithstanding that B had been made his trustee in his second bankruptcy. A had not been a party to the deed of February 1999, which had been an oversight subsequently rectified by C’s assignment of 7 April 1999. However, until C’s assignment, which had taken place after the county court hearing, the claimant had held only Mrs J’s beneficial interest. After 7 April 1999 the claimant had held the entire beneficial interest in the property.
2. However, the county court should not have refused the possession order. It was clear from the note in section 17B-1 of vol 2 of the Supreme Court Practice 1999 that Part 2 was good practice and guidance rather than black-letter law. Under r 6 of Ord 15 of the Rules of the Supreme Court, the county court had possessed the power to join Mr and Mrs J as claimants, and, equally, it had possessed the power to order that the cause or matter should not be defeated by their nonjoinder, if it was satisfied that they would do whatever the court had wished in that regard. Clearly, it had been so satisfied. Although neither A nor C had assigned their beneficial interest to the claimant by the date of the county court hearing, by the date of the appeal all the interested parties had agreed to assign to the claimant the legal title of the property. Since the defendants had no defence once the claimant’s legal title was complete, the county court’s order had been correctly made.
Michael Lyndon-Stanford QC and Robert Deacon (instructed by Deverney Brooke Taylor) appeared for the claimant; Marilyn Kennedy McGregor (instructed by Cartier & Co) appeared for the defendants.
Thomas Elliott, barrister
