Appellant paying mortgage on matrimonial home following husband’s bankruptcy — Husband residing in matrimonial home until his death — Whether appellant liable for occupation rent — Appeal dismissed
The appellant’s husband was adjudged bankrupt in 1991. Thereafter, the appellant took over the mortgage payments on the family home, which was in their joint names. The couple lived together in the property until the husband died in 2000. In proceedings initiated by the respondent trustee in bankruptcy, the judge found, inter alia, that the appellant was liable for occupation rent for the period following her husband’s bankruptcy.
The appellant appealed. She contended that the general rule at common law was that one joint owner did not have to pay an occupation rent to the other merely because he or she was in sole occupation of the property unless the joint owner had occupied the property to the exclusion of the other. The only way in which the appellant could have excluded the trustee in the instant case would have been by refusing to co-operate with the sale of the property, and this had not been the case. The trustee had, for some considerable time, failed to take any action to protect his interests. Thus, in the spirit of section 383A of the Insolvency Act 1986 (to be introduced by way of section 261 of the Enterprise Act 2002, which was not then in force), it was inequitable for the trustee in bankruptcy to bring any action at such a late stage.
Held: The appeal was dismissed.
An occupation rent was not a rule of law but a rule of convenience that would enable the courts to exercise broad justice between co-owners. Physical occupation of the property, ouster, or forcible exclusion from the property were not necessarily deciding factors in respect of the trustee’s entitlement to charge occupation rent. The trustee had been unable to obtain any financial benefit from the property during the time that the bankrupt’s spouse resided in it, and creditors could derive no such benefit until the trustee was able to exercise the remedies available to him.
The appellant had sought and obtained an account of mortgage interest payments. It was inequitable for her to claim such an account where she had remained in occupation unless she had been willing to submit to an occupation rent: see Leake (formerly Bruzzi) v Bruzzi [1974] 1 WLR 1528.
Section 261 of the 2002 Act provided that if a trustee failed to take steps to realise his interest in the home of a bankrupt or his or her spouse within three years of the bankruptcy, the property would vest in the bankrupt. However, even if this provision had been in force, it would have been of little assistance. Although the trustee could have realised his remedies earlier, the appellant had benefited from the trustee’s inactivity: house prices, for instance, had risen steeply during that period of time.
Roger Bartlett (instructed by Shah & Burke) appeared for the appellant; Adam Deacock (instructed by Darbys Mallam Lewis, of Oxford) appeared for the respondent.
Vivienne Lane, barrister
