Margarita Hamilton v Her Majesty's Attorney-General & Ors.

This is a first instance decision resolving competing applications for a vesting order under section 44(ii)(c) of the Trustee Act 1925 in respect of Walton Castle. The court held that where real property in England is held on trust by a foreign registered company which is dissolved, the legal estate vests in the Crown subject to the trust (and does not pass by escheat), and English law (the lex situs) governs the devolution of the English land. Consequently there is no automatic revesting of the legal estate in the company upon restoration and section 181 of the Law of Property Act 1925 is not engaged.

The court admitted late evidence from the claimant concerning a refinancing offer because the evidence arose recently, prejudice to other parties was minimal and the interests of justice required admission. The claimant was held to have sufficient standing to apply for a vesting order by reason of a deed of assignment of a majority beneficial interest (or, alternatively, by virtue of a charging order) and the trustees had not proved that the assignment was inauthentic.

Exercising the broad discretion under section 44(ii)(c), and weighing continuity of the business, the claimant's occupation and a realistic refinancing offer capable of redeeming the first charge, the court made an order vesting legal title to Walton Castle in Margarita Hamilton rather than in the restored company.

Background and parties:

• The property in dispute is Walton Castle in Somerset. The claimants are Margarita Hamilton (an occupier operating an events business from the Castle) and Walton Properties Limited (WPL), a Guernsey company formerly the registered proprietor. WPL and its parent were dissolved on 12 May 2020 and restored on 7 May 2021. The trustees in bankruptcy of Roderic Hamilton opposed the claimant's application. Her Majesty's Attorney-General was not represented.

Nature of the applications:

• Both claimants sought vesting orders under section 44(ii)(c) of the Trustee Act 1925 to vest legal title in their favour. WPL advanced an alternative case under section 181 of the Law of Property Act 1925. MH sought a vesting order to protect the business and to enable refinancing; WPL / the trustees relied on the restoration of the company and on reinstating the pre-dissolution position.

Procedural and evidential matters:

• The court allowed a late fifth witness statement from MH relating principally to a mortgage offer because the evidence was recently obtained, prejudice was minimal and the interests of justice favoured admission (with reference to CPR Part 8 and Denton principles by analogy).

Issues identified:

1. Effect of dissolution and restoration of a foreign company on the devolution of real property in England held on trust.
2. Whether MH had standing to seek a vesting order.
3. To whom, in the exercise of the court's discretion under section 44(ii)(c), the property should be vested.

Court's reasoning and conclusions:

• The law governing devolution of land in England is the lex situs. Where a company holding land as trustee is dissolved the legal estate vests in the Crown subject to the trust; the situation is not an escheat of a determined freehold and therefore section 181 of the Law of Property Act 1925 does not apply. Section 58 of the Land Registration Act 2002 and registration do not alter this legal position where a disposition operates by law on dissolution and restoration. The court rejected applying Guernsey company law as determining devolution of English land and rejected an automatic revesting argument on restoration.
• MH had standing. The court accepted the assignment evidence or, alternatively, held that a charging order gave MH sufficient equitable interest to apply for a vesting order (Midland Bank v Pike applied). Challenges to authenticity, capacity and undervalue were not substantiated.
• On the exercise of the broad discretion under section 44(ii)(c) the court considered the changed factual matrix, MH's occupation and operation of the business, the creditor/mortgage risk and MH's realistic refinancing offer capable of redeeming the first charge. The trustees' professional status and oversight did not outweigh the pragmatic considerations favouring continuity of the business and protection of third-party interests. Accordingly the court vested legal title in MH.

The court noted the wide, pragmatic nature of the discretion to make vesting orders and that there is limited judicial guidance on competing claims, but held that vesting in MH was just and proportionate in the circumstances.

First instance: The court granted MH's application and made an order vesting legal title to Walton Castle in Margarita Hamilton. The court held that (i) English law (lex situs) governs devolution of land in England held on trust by a dissolved foreign company; (ii) the legal estate vests in the Crown subject to the trust on dissolution and does not automatically revest in the company on restoration; (iii) section 181 of the Law of Property Act 1925 is not engaged; (iv) MH had standing by assignment or by a charging order; and (v) in the exercise of the broad discretion under section 44(ii)(c) of the Trustee Act 1925, vesting in MH was the appropriate and pragmatic outcome to protect the business and redeem the first charge.