Hawk Recovery Ltd v Hall & Ors

Where an application to sell a home depends on the outcome of pending appeals concerning beneficial ownership, the court may defer the sale until those appeals are determined. The court should consider the practical consequences of ordering an immediate sale and balance the competing prejudice.

Where the bankrupt owners offer to discharge the bankruptcy debt in cash if their beneficial ownership is established, an immediate sale may be an inappropriate exercise of the discretion under section 14 of the Trusts of Land and Appointment of Trustees Act 1996. The protection of the home under article 8 of the European Convention on Human Rights may reinforce the result.

The claimant sought directions enabling it to recover an assigned bankruptcy debt by selling the residential property occupied by the first and second defendants. Earlier interlocutory orders had declared that the claimant could trace into the property and required a transfer of the legal title, but possession had not been ordered. Those orders were subject to pending appeals.

The defendants said that a family member was willing to pay the bankruptcy debt if their appeal succeeded. The issue was whether the court should direct a sale before the appeals determined the parties’ competing claims to the beneficial interest.

1. Application dismissed. The court should wait for the pending appeals where the proposed sale depended materially on their outcome and the appeals were expected to be heard within a few months.
2. If the defendants’ appeal succeeded, the route based on the rule in Saunders v Vautier would fall away. In addition, the defendants’ evidence that a family member would pay the bankruptcy debt meant that an order for sale under section 14 of the Trusts of Land and Appointment of Trustees Act 1996 would be difficult to justify while the debt was being offered in cash.
3. If the claimant’s position ultimately prevailed, it could pursue the appropriate remedies after the appeals, including sale or completion of the transfer. The claimant would therefore suffer delay, whereas an immediate sale could cause the defendants serious and irreversible disruption if their appeal succeeded.
4. Balancing the competing prejudice, greater justice was achieved by allowing the defendants to remain in possession pending the appeals. The right to respect for the home under article 8 of the European Convention on Human Rights reinforced that conclusion.
5. The court was provisionally minded to order costs against the claimant under section 194 of the Legal Services Act 2007, subject to further submissions or agreement.

The judgment records that earlier interlocutory decisions and the present judge’s order concerning possession were subject to pending appeals, which were intended to be heard together. This judgment determined only the claimant’s interim application for directions and did not determine those appeals.