Karyn Coburn considers the decision in Sleight v The Crown Estate Commissioners  EWHC 3489 (Ch) where a trustee in bankruptcy didn’t have sufficient ‘interest’ in a disclaimed property to apply for a vesting order to claim surplus sale proceeds.
This December 2018 decision involved a trustee in bankruptcy (“the Trustee”) applying for vesting orders pursuant to Section 320 of the Insolvency Act 1986 (“IA 1986”) in relation to two properties of the deceased bankrupt. The Trustee had previously disclaimed these properties as ‘onerous property’ pursuant to Section 215 IA 1986. The properties were subsequently sold by the respective mortgagees resulting in surplus sale proceeds totalling circa £19,000.
The Trustee applied for an order that the properties, and the corresponding surplus, vest in him. Section 320 IA 1986 confers a power to apply for a vesting order in relation to disclaimed property on “any person who claims an interest in the disclaimed property”, and any person who is under any liability in relation to the disclaimed property. The Trustee claimed an interest “because he is claiming to have an interest vested in him under the vesting order he seeks”. However, the Court considered this argument to be “obviously bad. It is simply circular to confer a right to apply a vesting order on any person who applies for one”. The Court went on to hold that Section 320 applies to a person who, at the time of the application, has “a proprietary interest in the asset in question and not simply someone who is “interested” in a much looser legal sense in the asset”. The Trustee lost that proprietary interest when he disclaimed the properties, and therefore had no standing to apply for a vesting order.
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