Gavin Maher & Anor v Investalet Limited & Anor

Section 234 of the Insolvency Act 1986 is a summary procedure enabling an office-holder to recover company property, but it does not create rights which the company itself lacks.

The section does not authorise an order requiring a trespasser merely to vacate land. A trespasser may have a possessory interest enforceable against persons with no better title, but a person with the superior right to possession terminates that interest by requiring the trespasser to leave; the interest is not delivered, transferred, conveyed or surrendered to the office-holder.

Possession proceedings should ordinarily be brought under CPR Part 55. The administrators’ underlying entitlement to possession did not enlarge the jurisdiction conferred by section 234.

The applicants were the joint administrators of Pocket Renting Limited. They applied under section 234 of the Insolvency Act 1986 for vacant possession of five residential properties let to Investalet Limited.

The contractual tenancies had been terminated following substantial non-payment of rent. Investalet alleged that it had permission to sub-let, that rent had been withheld because of disrepair, and that a rent-free arrangement existed. The applicants disputed those matters and said that any occupiers were trespassers.

The central issue was whether section 234 empowered the court to order vacant possession against persons whose occupation was said to be unauthorised, or whether the applicants’ remedy lay in ordinary possession proceedings.

1. Application dismissed. Section 234 of the Insolvency Act 1986 did not confer jurisdiction to order vacant possession from a trespasser.

2. Section 234 is a summary procedure assisting an insolvency office-holder to perform the office-holder’s functions. It does not create new rights or give the office-holder better rights than the company possessed. The inclusive definition of property in section 436 includes land and interests in land.

3. A trespasser may possess an interest in land which is enforceable against persons with no better title and may be capable of transfer generally. However, that interest cannot be transferred or surrendered to a person with a superior right to possession. The superior title-holder vindicates its right by terminating the trespasser’s interest and compelling departure.

4. The concept of vacant possession, including delivery of premises free from people, chattels and legal interests, arises in a different context in cases concerning break clauses. It does not establish that a trespasser transfers an interest to the superior title-holder for section 234 purposes.

5. The proper route was possession proceedings under CPR Part 55, with enforcement under CPR Parts 83.12 and 83.26. Had section 234 applied, the court would have ordered possession: the tenancies had ended, sub-letting was prohibited, the alleged permissions and rent-free agreement were unproved, and the disrepair allegations were unsupported. Those conclusions were alternative and unnecessary to the dismissal.