Hunt v Withinshaw & Anor

A vesting order following disclaimer of property by a trustee in bankruptcy is discretionary. Where standing arises because the applicant occupied a dwelling house, the order may extend beyond that dwelling house, but its scope must remain consistent with the statutory purpose of protecting occupation or the normal value of the dwelling house.

The court may consider the real and current consequences of an order, including public safety, the condition and value of the property, practical access, ancillary rights and the effect on a public authority. A vesting order should not be made merely to confer a nuisance value or to obstruct necessary public works. Procedural abuse may also prevent a party from raising a new, inconsistent challenge to the disclaimer after the matter has proceeded to trial and appeal.

The case concerned the freehold of Victoria Pier, Colwyn Bay. The appellant had become bankrupt, and the freehold vested in the trustee in bankruptcy. The trustee subsequently disclaimed the freehold. The appellant sought a declaration that the disclaimer was ineffective, relying on the statutory provisions concerning disclaimer of property containing a dwelling house. He also sought a vesting order under the Insolvency Act 1986.

The County Court dismissed both applications. The appellant appealed the dismissal of his later declaration application. The High Court also tried the issues remitted following an earlier appeal concerning the extent and exercise of the vesting-order jurisdiction. The central questions were whether the later challenge was an abuse of process and whether, in the circumstances, any part of the pier should be vested in the appellant.

1. Appeal and procedural application. The application seeking removal of Conwy County Borough Council as a respondent was dismissed. Conwy was the obvious party affected by the ownership dispute and had been properly joined under CPR r 19.2(2). The appellant’s later challenge to the disclaimer was an abuse of process. He had proceeded to trial and appeal on the premise that the disclaimer was effective, and the new challenge should have been raised by amendment to the vesting-order application. That proposed amendment would have raised factual issues which had not been investigated. The appeal was therefore dismissed.
2. Scope of the vesting jurisdiction. The appellant had standing under section 320(2)(c) of the Insolvency Act 1986 because he had occupied the dwelling house when the bankruptcy petition was presented. The dwelling house was confined to the accommodation unit and did not comprise the whole pier. Nevertheless, section 320(3) permitted an order in respect of the whole disclaimed property or only part of it. The jurisdiction was not limited to the precise property which gave the applicant standing.
3. Exercise of discretion. The discretion under section 320(3) was broad, but had to be exercised consistently with the statutory purpose of protecting occupation of a dwelling house or its normal residential value. The court considered the appellant’s position, the pier’s dangerous and deteriorating condition, its negative value, the absence of any viable restoration plan, the difficulty of creating access and support rights, and the public interest represented by the local authority.
4. The dwelling house was uninhabitable and could not realistically be used or restored by the appellant. Vesting it, or the whole pier, would provide no practical benefit but would impede demolition, increase public expenditure and create a nuisance value. Those were good reasons to refuse relief. The application for a vesting order was dismissed.

• High Court (Chancery Division): the appeal from the County Court’s dismissal of the declaration application was dismissed, and the remitted vesting-order application was refused.
• Caernarfon County Court: Judge Jarman dismissed the application for a vesting order on 17 August 2012 and dismissed the later declaration application on 13 January 2014.
• High Court: Sir William Blackburne’s earlier judgment dated 8 May 2013, reported at [2014] 1 WLR 254, remitted limited vesting-order issues for reconsideration.