David William Dixon & Anor. v The Crown Estate Commissioners

On an escheat following disclaimer of company property, subordinate interests in the land survive. A vesting order under Law of Property Act 1925, s. 181 requires the applicant to show a legal right to the property subsisting when the company was dissolved, even if further steps remained necessary. Where the dissolved company held the property on trust, the appropriate jurisdiction is under Trustee Act 1925, s. 44(ii)(c). A proprietary estoppel may establish the necessary equitable interest where the company encouraged an expectation of ownership, the claimants relied detrimentally, and denial would be unconscionable. Post-dissolution detriment may reinforce earlier detriment and assist in selecting the remedy. Vesting orders were made transferring both legal and beneficial interests to the intended recipients.

The claimants were former directors and shareholders of a solvent property-development company. They believed that two freehold properties had been distributed to them before the company was struck off and dissolved, but the properties remained registered in the company’s name. The Treasury Solicitor later disclaimed the properties under s. 1013 of the Companies Act 2006, causing them to vest in the Crown Estate Commissioners by escheat.

The Commissioners did not oppose the claim and were unrepresented. The claimants sought vesting orders under s. 181 of the Law of Property Act 1925 and s. 44(ii)(c) of the Trustee Act 1925. The central issues were whether the claimants had a sufficient legal or equitable interest, including through proprietary estoppel, and which statutory jurisdiction applied.

1. Escheat. The court accepted that dissolution first vested the company’s property in the Crown as bona vacantia under s. 1012 of the Companies Act 2006. Disclaimer under s. 1013 then produced an escheat to the Commissioners. An escheat terminates the existing freehold estate, but subordinate interests, including equitable interests, survive and affect the new freehold estate: Pennistone Holdings Ltd v Rock Ferry Waterfront Trust [2021] EWCA Civ 1029; Scmlla Properties Ltd v Gesso Properties (BVI) Ltd [1995] BCC 793.
2. Vesting-order jurisdictions. Section 181 of the Law of Property Act 1925 is available where, by reason of dissolution, a legal estate has determined. That includes a later disclaimer producing escheat. The applicant must establish a legal right subsisting at dissolution, although further steps may remain before the entitlement becomes enforceable. Where the dissolved company was already trustee, the application should instead proceed under s. 44(ii)(c) of the Trustee Act 1925: Re Strathblaine Estates Ltd [1948] Ch 229; UBS Global Asset Management (UK) Ltd v Crown Estate Commissioners [2011] EWHC 3368 (Ch); Lizzium Ltd v The Crown Estate Commissioners [2021] EWHC 941 (Ch); Quadracolour Ltd v Crown Estate Commissioners [2013] EWHC 4842 (Ch).
3. Proprietary estoppel. The claimants established encouragement, detrimental reliance and unconscionability. The company, through its accountant, led them to believe that the properties had been distributed. They relied on that belief by accepting the distribution, dealing with tax on that basis, procuring dissolution and failing to seek restoration in time. The later omission concerning restoration was of some relevance because it reinforced the pre-dissolution detriment and affected the available remedy.
4. Relief and order. Applying the principles discussed in Guest v Guest [2022] UKSC 27, [2022] 3 WLR 911, it was unconscionable for the Commissioners to deny the claimants’ ownership. The proprietary estoppel created a sufficient trust interest existing at dissolution to engage s. 44(ii)(c). Alternatively, s. 181 was engaged. The Part 8 claim succeeded. Legal and beneficial interests in Rodham Terrace were vested in the first claimant and those in Little Corby Road in the second claimant. There was no order as to costs.