Freehold property — Death of joint tenant — Insolvency administration order made in respect of estate — Whether effect of order was to sever joint tenancy with retrospective effect — High Court held that it did with result that undivided moiety in property devolved as part of deceased’s estate — Court of Appeal allowing surviving joint tenant’s appeal against that decision — Interest in joint tenancy never formed part of estate — Appeal allowed
In 1989 147 Wigton Lane, Alwoodley, Leeds, was conveyed to P and his wife as joint tenants at law and in equity. P was a solicitor who had practiced in partnership with B. The partnership was terminated in October 1990 and P became a partner in another firm. In November 1990 B claimed that P had been guilty of serious defalcation. He reported him to the Law Society. P died shortly thereafter. By his will he appointed B and M to be his executors. B renounced probate and the will was proved by M alone. In August 1991 M presented petition for an insolvency administration order, which was made. There were large claims against P’s estate for which B was also liable as his partner and for which he had a claim for contribution from the estate.
The High Court held that the effect of the insolvency administration order was to sever the joint tenancy with retrospective effect so that an undivided moiety of the proceeds of sale and of the net rents and profits until sale of the property devolved as part of P’s estate: see [1993] EGCS 62. That conclusion was based on certain specified provisions of the current insolvency law which, for the purposes of section 283 of the Insolvency Act 1986, were to have effect as if the insolvency administration order had been made on the date of death of the deceased. Those provisions were combined with the common law rule that a judicial act (the administration order) was presumed to have been made on the first moment of the day when it was done and took precedence over other non-judicial acts on the same day. The wife appealed.
Held The appeal was allowed.
1. Section 421 of the Insolvency Act 1986 alone gave power to regulate the administration of the insolvent estates of deceased persons. The Act itself provided for the affairs of living persons who became bankrupt. P did not die a bankrupt, nor was a deceased person whose estate became insolvent necessarily insolvent when he died.
2. Nothing in the 1986 Act or in the Administration of Insolvent Estates of Deceased Persons Order 1986 (which governed the administration of an insolvent estate) empowered the court to make an insolvency administration order in respect of the estate of a person who was not deceased, nor could any rule of law be relied upon to produce the fictional result that a person was dead at a time when in fact he was still alive.
3. The trustee of P’s estate could not claim more than that the insolvency administration took effect, on a true construction of the statutory provisions, at the moment of P’s death. His interest in the joint tenancy of the property could only continue while he was alive. On his death his wife was entitled to P’s interest in the property as surviving beneficial joint tenant.
4. The order could only take effect when he died. It followed that the interest was not affected by the order. It never formed part of his estate.
Roger Kaye QC and Lexa Hilliard (instructed by Bury & Walkers, of Leeds) appeared for the wife; Daniel Serota QC and John Briggs (instructed by RC Moorhouse & Co, of Leeds) appeared for the trustee.
