Graham Wolloff & Anor v Jagruti Kantilal Patel

On a reference under section 73(7) of the Land Registration Act 2002, the First-tier Tribunal may decide factual and legal issues necessary to determine an application for a restriction and an objection to it. That includes whether a bankrupt had any beneficial interest in registered land immediately before bankruptcy.

Sections 363 and 373 of the Insolvency Act 1986 confer broad supervisory bankruptcy jurisdiction on the court, but do not impliedly exclude this specific statutory jurisdiction. The Tribunal retains a discretion under section 110(1) to direct court proceedings where that is more appropriate, particularly where the extent of a beneficial interest is genuinely disputed.

The appellants, trustees in bankruptcy of a joint registered proprietor, applied for a Form J restriction against the title to a house. The respondent objected, maintaining that she was the sole beneficial owner and that the bankrupt had held only legal title.

On a reference by the Chief Land Registrar under section 73(7) of the Land Registration Act 2002, the First-tier Tribunal held that it had jurisdiction to determine whether the bankrupt had a beneficial interest. It found that the property was held on constructive trust for the respondent alone and directed cancellation of the application.

The trustees appealed only on jurisdiction. The central issue was whether the Tribunal’s jurisdiction was excluded or required referral to a court by the bankruptcy provisions of the Insolvency Act 1986.

1. Appeal dismissed. The First-tier Tribunal had jurisdiction on the section 73(7) reference to determine whether the bankrupt had any beneficial interest in the property before bankruptcy. That issue was necessary to decide whether the objection succeeded and whether a restriction was necessary or desirable.

2. Section 86(4) of the Land Registration Act 2002 concerns a different situation: land solely registered in the bankrupt’s name, where the legal estate has vested in the trustee but the register has not been updated. A Form J restriction affecting jointly owned legal title is instead governed by sections 42 and 43 and rule 93(j) of the Land Registration Rules 2003. It protects a trustee only if a beneficial interest held under a trust of land has vested in the trustee.

3. Sections 363 and 373 of the Insolvency Act 1986 do not confer an exclusive jurisdiction excluding the Tribunal’s express statutory function. They give the bankruptcy court broad control of the bankruptcy process. Clearer statutory language would be needed to displace the separate land-registration regime.

4. The question whether the bankrupt had an interest immediately before the bankruptcy order was not, in this context, a question arising in the bankruptcy. It did not require a determination of the extent of any interest, nor of whether identified property formed part of the bankrupt estate.

5. The Tribunal may direct court proceedings under section 110(1) where a court is the more appropriate forum. That may be appropriate where the extent of a beneficial interest is in live dispute. It was not mandatory here. The trustees’ proposed interim entry of a restriction pending court proceedings was incompatible with section 73(5), which prevents determination of the application until the objection has been disposed of.

• Upper Tribunal (Lands Chamber): Appeal dismissed in [2019] UKUT 333 (LC). The Tribunal upheld the First-tier Tribunal’s jurisdiction to decide whether the bankrupt had any beneficial interest.

• First-tier Tribunal (Property Chamber): On 17 January 2019, it held that the respondent was sole beneficial owner, that the bankrupt had no beneficial interest, and directed the Chief Land Registrar to cancel the trustees’ application for a restriction.