Lizzium Ltd v The Crown Estate Commissioners

This is a Part 8 application for a vesting order under section 181 of the Law of Property Act 1925 following the dissolution of a Gibraltar company (Clairvale) which caused its English freehold to escheat to the Crown. The court held that the jurisdiction under s.181 was engaged and that a vesting order in favour of Clairvale (restored to the register) would correct the mistake that led to the escheat, would restore the pre-dissolution position and was consistent with the purpose of restoration provisions in company legislation. The court refused, however, to vest the property in Lizzium: the phrase "the person who would have been entitled to the estate which determined had it remained a subsisting estate" must be read to refer to a legal entitlement subsisting at the date of the escheat (or contingent on events giving rise to a legal right), and not to a mere counterfactual expectation or post-dissolution intention that the original owner might at some later date have transferred the land.

Background and parties:

• The claimants are Lizzium Limited (Jersey) and Clairvale Limited (Gibraltar). The defendant is The Crown Estate Commissioners. The application, made as a Part 8 claim, sought a vesting order under section 181 of the Law of Property Act 1925 in respect of Rutleigh Lodge, Newmarket ("the Property").

Factual matrix:

• Clairvale was registered proprietor of the Property in 1995. In 1997 Clairvale transferred Warren Towers to Lizzium; the claimants say the smaller Property was intended to be transferred at the same time but was overlooked. Clairvale was struck off and dissolved in Gibraltar in December 1998 and the freehold escheated to the Crown. Clairvale was restored to the Gibraltar register in 2020.
• Primary evidence was documentary. The claimant relied on a 1996 valuation (Knight Frank) which incorrectly suggested the Property had been incorporated into Warren Towers, and on witness statements from Ms Livingston (director of the trustee shareholder) and Mr Vasquez (Gibraltar lawyer on restoration). The Crown did not oppose the claim and indicated it would not take steps amounting to acts of ownership; it was also willing to sell the Property at market value.

Issues framed:

1. Whether the court's jurisdiction under s.181 was engaged following escheat of the legal estate by reason of Clairvale's dissolution.
2. If jurisdiction was engaged, whether the court should exercise its discretion to vest the estate in one of the claimants, and if so in which of them: Clairvale (restored) or Lizzium.
3. The correct construction of the phrase "the person who would have been entitled to the estate which determined had it remained a subsisting estate", in particular whether it permits vesting into a person who would only have become entitled by reason of a speculative or counterfactual transfer at some date after dissolution.

Court's reasoning and subsidiary findings:

• The jurisdiction under s.181 was engaged because the legal estate had determined by reason of dissolution and escheat.
• Section 181 is discretionary. Relevant factors favouring exercise in favour of Clairvale included the apparent administrative error leading to dissolution while property remained in Clairvale, the Crown's lack of opposition (and its willingness to sell at market value), and the restorative purpose of company restoration provisions in Gibraltar and England.
• The court gave limited weight to portions of the oral evidence where the witness did not identify the source of her knowledge; primary weight was given to documentary material and legal submissions.
• The court examined authorities (notably UBS Global Asset Management and Quadracolour) and concluded those cases treated "would have been entitled" narrowly to mean a legal entitlement subsisting at the date of escheat (even if contingent on steps still to be taken under an existing legal agreement), rather than a mere expectation that the dissolved company would in future have chosen to transfer the land.
• On that construction, Lizzium had no subsisting legal right to the Property at the date of Clairvale's dissolution and could not be treated as the person who "would have been entitled"; accordingly the application to vest the Property in Lizzium failed.

Outcome: The court was prepared to make a vesting order in favour of Clairvale but refused to vest the Property in Lizzium for the reasons above.

This first-instance application was allowed in part. The court concluded that it had jurisdiction under section 181 of the Law of Property Act 1925 and that, on the facts and in the exercise of its discretion, a vesting order restoring the Property to Clairvale (restored company) was appropriate to correct the administrative error and to restore the pre-dissolution position. The court refused to vest the Property in Lizzium because "would have been entitled" requires a legal entitlement subsisting at the date of demise/escheat, and Lizzium had no such subsisting legal right at that date.