Bankruptcy – Disclaimer – Vesting order – Appellant pier owner being declared bankrupt – Appellant occupying dwelling house on pier – Respondent former trustee in bankruptcy disclaiming whole of pier – Appellant appealing against refusal of vesting order in relation to dwelling house and applying for vesting order in his favour – Whether respondent effectively disclaiming freehold in pier – Whether appellant being entitled to vesting order – Appeal dismissed – Application dismissed
The freehold of the Victoria Pier, Colwyn Bay, a Grade II listed building, had been owned by the appellant until he was made bankrupt and the freehold vested in the first respondent trustee in bankruptcy. As at the date of the presentation of the bankruptcy petition and the bankruptcy, one part of a pavilion on the pier came within the definition of “dwelling house” in section 385(1) of the Insolvency Act 1986. The appellant was in occupation of, or entitled to occupy, that dwelling house for the purposes of section 320(2)(c) and 3(c) of the 1986 Act and was his sole or principal residence for the purposes of section 283(A).
The first respondent subsequently signed a notice of disclaimer of the freehold interest in the pier pursuant to section 315 of the 1986 Act. The pier was transferred to the second respondents via the Crown subject to all third party interests in the pier including the right of any person to obtain a vesting order in respect of the pier.
The appellant applied for a vesting order in relation to the freehold of the pier under section 320. The court refused the application because the dwelling house was only part of the property disclaimed so that section 320(2)(c) was not satisfied. Furthermore, the court had no power to make a vesting order in relation to a part of the disclaimed property.
The appellant appealed against a county court order dismissing his separate application for a declaration that the pier vested in him under section 283A of the 1996 Act on the basis that the disclaimer was ineffective. There were also remaining issues before the court arising from the appellant’s application under section 320 for a vesting order in relation to the pier.
Questions arose whether the first respondent had effectively disclaimed the freehold in the pier and the consequences of an effective disclaimer or of an ineffective attempt to disclaim; and whether the court should make a vesting order in favour of the appellant.
Held: The appeal was dismissed. The application was dismissed.
(1) As the appellant had wished to contend that the disclaimer was ineffective, he should have amended his earlier application for a vesting order which was premised on the disclaimer being effective. He ought therefore to have applied for permission to amend that application. Instead the appellant had simply started a new inconsistent claim and failed to join the second respondents as the obviously relevant respondents. It was plainly an abuse of process for the appellant to bring a new application for a declaration on a basis which was inconsistent with his own previous application for a vesting order. Accordingly, the appeal against the application for a vesting order under section 283A would be dismissed as both the application and the appeal were an abuse of the process of the court: Hunt v Conwy County Borough Council [2013] EWHC 1154 (Ch); [2013] PLSCS 119 followed.
(2) Section 320 appeared to be designed to meet the simple case where the court vested in the applicant something which benefited from ancillary easements prior to the disclaimer. The section did not contain language designed to deal with a case like the present where a freehold was being split so that part of a pre-existing freehold was to be vested and the other part was terminated on escheat to the Crown. Section 320(3) allowed the court to impose terms on the applicant on such terms as it thought fit. That plainly allowed the court to impose terms on the applicant for the vesting order.
Section 320(2)(c) was one of a number of provisions in the 1986 Act which were designed to protect the rights of occupation of the bankrupt or a spouse or others in relation to a dwelling house. It was consistent with the statutory purpose to confer on such persons rights in relation to the dwelling house, or a part of it. It went beyond the statutory purpose to confer on such persons rights in relation to the dwelling house and, in addition, other land which was not needed to enable such persons to enjoy the dwelling house.
(3) Because the court had a discretion whether to make a vesting order in respect of the dwelling house in favour of the appellant, it needed to consider the consequences for all relevant persons of making such an order. There was no reason to leave out of account the public interest. The second respondents were a public body as local authority for the area in question with duties and responsibilities which included acting in the interests of the public in that area.
The present position was that the pier was unsafe, was a serious risk to public safety and might collapse at any moment. There was no evidence that the appellant was in a financial position to restore the dwelling house, or any part of the pier, to enable him to have access to it. If no vesting order was made, the second respondents were resolved to demolish the pier and had obtained planning permission for that purpose. Standing back and weighing the almost total lack of benefit to the appellant from a vesting order and the adverse consequences for the public interest, represented by the second respondents, the scales came down very heavily in favour of not making a vesting order in respect of either the dwelling house or the pier as a whole.
(4) The whole purpose of section 320(2)(c) and (3)(c) was to enable a person, with a right to occupy a dwelling house, to enjoy occupation of that house, or conceivably its normal value as a dwelling house. The making of a vesting order to give the appellant a nuisance value wholly unconnected with the occupation of, or the normal value of, a dwelling house was outwith anything that was contemplated by section 320. The result of a vesting order would give the appellant nuisance value but it would not be right for the court to exercise its discretion to confer nuisance value on the appellant at the expense of the public interest.
The claimant appeared in person; Graham Sellers (instructed by DWF LLP) appeared for the first defendant; Louis Doyle (instructed by Conwy County Borough Council) appeared for the second defendants.
Eileen O’Grady, barrister
Read a transcript of Hunt v Withinshaw (former trustee in bankruptcy of Hunt) and another here
