Simon Carvill-Biggs v Ashley Valentine Reading

The Court of Appeal allowed the appeal and set aside the High Court order that administrators obtain possession of registered freehold land occupied by the company director. The court held that section 234 of the Insolvency Act 1986 is a summary procedure to get in company property but does not give an administrator better rights than the company itself. Where land is subject to a legal mortgage and receivers have been validly appointed by the mortgagee, the mortgagor (and therefore the administrator) does not have an entitlement to possession of the charged land for the purposes of section 234 beyond the equity of redemption. The appointment of receivers and the mortgagees steps to assert possession meant the land was not "property to which the company appears to be entitled" within section 234(2), so the administrators could not obtain a possession order under that provision.

The company (Rose Cottage Farm Limited), a single-asset special purpose vehicle, owned registered freehold land. The director (Mr Reading) occupied the property with family; the company granted a legal mortgage to TFG Capital No.2 Limited (TFG2). After default, TFG2 appointed receivers under the Law of Property Act 1925 and issued possession proceedings in the County Court. TFG2 later appointed administrators under the company's floating charge; the administrators issued an application in the High Court framed under section 234 of the Insolvency Act 1986 seeking declarations and orders for sale and vacant possession.

Nature of the claim: administrators sought declarations of title and unsatisfied security, orders for sale with vacant possession and an order requiring the director and other occupiers to deliver possession.

Issues before the court:

• whether section 234 permitted an administrator to obtain an order for delivery of possession of mortgaged land occupied by the director when receivers had been appointed by the mortgagee;
• whether the application should have followed CPR Part 55 procedures;
• whether issuing parallel proceedings in the High Court was an abuse of process given existing County Court possession proceedings.

Reasoning and outcome: the court emphasised that section 234 provides a summary mechanism for an insolvency office-holder to recover company property but cannot confer rights superior to those of the company. Under land law and the Law of Property Act 1925 a legal mortgage confers extensive rights on the mortgagee (including a statutory 3,000-year term by section 87), and a receiver appointed under the mortgage exercises powers primarily for the mortgagees benefit. Once receivers have been appointed and the mortgagee has asserted its right to possession, the mortgagors entitlement to possession is curtailed and the company's interest is limited to the equity of redemption. Consequently the land was not "property to which the company appears to be entitled" within section 234(2), so the administrators could not rely on section 234 to obtain possession. The court allowed the appeal on that ground and set aside the possession order; it expressed provisional views that, if section 234 had been available, CPR 55 would nevertheless be applied (with any necessary modifications under the Insolvency Rules) and that issuing duplicate proceedings may have been an abuse of process.

Appeal allowed. The court held that section 234 of the Insolvency Act 1986 cannot be used to obtain possession of land that is subject to a legal mortgage where receivers have been appointed and the mortgagee has asserted its rights: an administrator cannot have better rights than the company and the mortgagors entitlement was limited to the equity of redemption, so the land was not "property to which the company appears to be entitled" under section 234(2).

Appeal from the High Court of Justice, Business and Property Courts in Leeds (His Honour Judge Klein sitting as a High Court Judge), judgment given 16 May 2024 (Claim No. CR-2023-LDS-001028). Permission to appeal granted 9 July 2024 (Court of Appeal). An interim stay was granted and subsequently upheld (see [2024] EWCA Civ 1005). This judgment is the Court of Appeal determination: [2025] EWCA Civ 619.