Bankruptcy – Trustee – Realisation of interest – Section 283A of the Insolvency Act 1986 — Former spouse occupying dwelling house registered in bankrupt’s name – Claimant trustees in bankruptcy applying for order for possession and sale of property – Whether claimants applying within prescribed three year period – Preliminary issue determined in favour of claimants
The claimants had been appointed as the trustees in bankruptcy of S (the bankrupt). At the date of the bankruptcy, a dwelling house occupied by his former wife as her sole or principal residence, was registered in the bankrupt’s name.
Under Section 283A(2) of the Insolvency Act 1986, at the end of three years beginning with the date of the bankruptcy, such a property ceased to be comprised in the bankrupt’s estate and vested in the bankrupt unless the trustee in bankruptcy had applied for an order for sale in respect of, or an order for possession of, the dwelling house (section 283A(3)(b), (c)).
In the present case, the bankruptcy order had been made in the Coventry county court but various contested claims within the bankruptcy were transferred to the Birmingham county court, which had a specialist Chancery list. The entire bankruptcy file was transferred to Birmingham even though the order effecting the transfer did not transfer the bankruptcy proceedings as such but merely the particular claims specified in the order. Accordingly, the bankruptcy proceedings remained in Coventry, despite the physical transfer of the file to Birmingham.
The claimant’s application for orders for possession and sale of the property were made to the Coventry county court within the three year period specified in section 283A(2). When it was discovered that the file had been sent to Birmingham, the application was sent for processing to Birmingham county court which eventually issued the application after the three period had expired.
A preliminary issue arose whether the trustees had made their application during the prescribed period. It was accepted that, before the period of three years had expired, an attempt had been made to apply for orders for possession and sale. The question was whether that application had been made in time. It was accepted that, had Coventry issued the proceedings before sending them to Birmingham, the application would have been validly made.
Held: The preliminary issue was determined in favour of the claimants.
The trustee had applied for an order for possession and sale within section 283A(3) when they delivered the application notice and tendered the relevant fee to the county court in Coventry, which that court centre then passed on to Birmingham upon finding that the papers were there. Section 283A(3) merely required the making of an application by the trustees. What happened to the application thereafter was out of the trustees’ hands but was in the hands of the court. The operation of section 283A(3) was not dependent upon the court doing anything. It merely required that “the trustee applies”, which they had done within the requisite period. It could not be right to construe those words so as to require something to be done by the court when the section focused on something to be done by the trustee alone. Accordingly, the trustees had applied in time. They could not have done anything over and above what they did and therefore they had complied with the statutory condition. It was immaterial that that resulted in the disapplication of substantive property rights which would otherwise arise. Furthermore, any construction of the 1986 Act which prevented the rights of the parties being subject to the vagaries of the court system had to be preferable to one which allowed the vagaries of the court system to intrude. The application had been made, in the sense that it was brought, in time and that was sufficient for the purposes of section 283A(3): Salford City Council v Garner [2004] EWCA Civ 364, Barnes v St Helens Metropolitan Borough Council [2007] 1 WLR 879, Secretary of State v Vahora [2008] Bus LR 161 and Lewis v Metropolitan Property Realisations Ltd [2009] EWCA Civ 448 considered.
John De Waal QC (instructed by Wright Hassall LLP, of Coventry) appeared for the claimants; Joseph Curl (instructed by Dent Abrams Solicitors, of Hammersmith) appeared for the first, second and third defendant; Lydia Pemberton (instructed by Barker Gooch and Swailes, of Winchmore Hill) appeared for the fourth, fifth and sixth defendants.
Eileen O’Grady, barrister
