Mistral Asset Finance Ltd v Registrar of Companies & Anor

A Crown disclaimer of property vested as bona vacantia on a company’s dissolution does not extinguish third-party proprietary rights, including a mortgagee’s rights. Where the disclaimer of leasehold property is not served on the mortgagee, it cannot take effect until the statutory period has expired without an application for a vesting order. If the company is subsequently restored, its property is generally treated as having remained vested in it, because the restoration provisions avoid transmissions of title resulting from dissolution. A disclaimer is not, in itself, a disposition protected by the statutory provisions preserving dispositions of bona vacantia property.

The claimant held a legal charge over leasehold property owned by Buzzlines Coaches Limited. The company was dissolved after being struck off the register, and the Treasury Solicitor issued a disclaimer of the company’s property. The disclaimer was served on the claimant shortly before proceedings were commenced.

The company was subsequently administratively restored to the register. The claimant sought declarations concerning the survival and effectiveness of its charge, and the effect of the disclaimer and restoration under Part 31 of the Companies Act 2006.

1. Survival of the charge. The claimant’s rights under the 2017 Charge survived the Crown’s disclaimer. Section 1015(2) of the Companies Act 2006 protects the rights and liabilities of persons other than the dissolved company, except so far as necessary to release the company from liability. The same principle was established in Hindcastle Ltd v Barbara Attenborough Ltd [1997] AC 70. The charge operated as a legal mortgage, so the claimant retained the rights associated with its proprietary interest.

2. Failure to serve the disclaimer. Under section 1016(1), a disclaimer of leasehold property does not take effect until a copy has been served on every person claiming under the company as mortgagee or underlessee and the relevant 14-day period has expired without an application for a vesting order, unless the court directs otherwise. The claimant issued proceedings within that period and sought a vesting order. The disclaimer therefore had not taken effect.

3. Effect of restoration. Even if the disclaimer had taken effect, restoration deemed the company to have continued in existence as if it had not been dissolved or struck off. A transmission of title resulting from dissolution was therefore prima facie avoided. Section 1034 preserved dispositions made while property was vested as bona vacantia, but a statutory disclaimer was not such a disposition.

4. The court followed Allied Dunbar Assurance plc v Fowle, [1994] BCC 422, re Fivestar Properties Ltd [2016] 1 WLR 1104 and re Carrowreagh Management Company [2018] NICh 18, and declined to follow the contrary approach in ELB Securities Limited v Love [2015] CSIH 67, partly because the Scottish statutory regime differed.

5. Declarations were made that the disclaimer had not taken effect and that, alternatively, the leasehold title had automatically revested in the company on restoration. The court was also minded to declare that the 2017 Charge remained vested in the claimant. Notice of the judgment was to be served on the restored company, which could apply within 28 days for variation or setting aside.