In an unusual case upon which the future of a crumbling Victorian pier depended, the High Court has given important guidance on the extent to which the homes of those who are declared bankrupt are protected from their creditors.
A businessman was made bankrupt five years after buying the pier for £100,000. It passed, along with his other property, to his trustee in bankruptcy. The latter decided that the pier was worthless and disclaimed his freehold title to it. The pier thereupon passed to the Crown and finally, by assignment, to a local authority.
The businessman occupied or was entitled to occupy a dwelling house on the pier and argued that the trustee’s disclaimer was thus invalid. In those circumstances, he applied to have the pier, or at least that part of it where the dwelling house was located, vested in him pursuant to Section 283A of the Insolvency Act 1986.
The Court acknowledged that it had power to make such an order. However, in declining to do so, it noted that the dwelling house was not in a habitable condition and could only be accessed via the dangerous pier, which was at risk of falling into the sea at any moment. If that happened, the businessman would be left owning nothing more than part of the airspace many feet above the beach.
The pier had a negative value of up to £1 million and a vesting order in favour of the businessman would neither afford him any practical benefit nor be in the public interest. He had come forward with no plans for the restoration of the pier, which the local authority viewed as a public hazard. In the circumstances, the pier was vested in the local authority, which only required listed building consent in order to press ahead with its plans to demolish it.