In a ruling which illustrates the difficulties of enforcing bankruptcy orders against residential property, a businessman has scored a High Court success in his fight to wrestle control of a crumbling Victorian pier from a local authority. The court ordered reconsideration of the man’s arguments that the property should be vested in him on the basis that he has his dwelling house on the pier.
The businessman paid £100,000 for the pier and the foreshore on which it stands in 2003 with the intention of restoring it to its former glory. However, in 2008 he was declared bankrupt in respect of unpaid council tax and rates demands. His assets therefore passed to his trustee in bankruptcy, who subsequently disclaimed any interest in the pier.
The property passed into the hands of the Crown Estate Commissioners, who transferred it to the Welsh government in exercise of powers under the Crown Estate Act 1961 and Section 79(1) of the Land Registration Act 2002. The local authority claimed ownership of the property on the basis that it had bought it from the Welsh government for £36,000 in March 2012.
However, the property’s transfer from the commissioners to the Welsh government was subject to ‘all third party interests’, including the right of any person to obtain a vesting order in respect of it. The businessman duly applied for such a vesting order under Section 320(2)(c) of the Insolvency Act 1986 but had his case dismissed at first instance.
In allowing the businessman’s appeal and remitting the case to the county court, the High Court noted his plea that he was in occupation of a dwelling house on the pier at the time that the bankruptcy petition was presented against him by the local authority.
Notwithstanding the local authority’s arguments that any dwelling house was unfit for human habitation – the pier had been fenced off on the basis that it was a dangerous structure – the court ruled that it could not be satisfied that the first instance judge had exercised his discretion in a correct manner.