Possession claims by trustee in bankruptcy

Garwood v Bolter & Anor (2015) Ch D 18 November 2015 (Not on BAILII. Note of extempore judgment on Lawtel)

I’m working off the lawtel note, which in some (many) respects doesn’t entirely make sense. I’ll try to flag the bits where I am ‘interpreting’.

This was an appeal arising from a claim for possession against three properties by the trustee in bankruptcy of a bankrupt landlord. The lawtel note rather confusingly refers to it as ‘accelerated possession proceedings for an order for sale’, which it can’t possibly have been.

It appears that the tenants of the properties had not co-operated with the trustee (which of course they did not have to do) in providing their details. So the possession claims were against ‘persons unknown’, but it is not clear if they were served on the properties. They were served on the bankrupt, who attended the hearing. The hearing was adjourned when the bankrupt indicated he could provide details of the tenancies of the properties.

This was done. Two of the tenancies post-dated the bankruptcy (because landlords are so often responsible like that), but one pre-dated the bankruptcy. The trustee served a section 21 notice on the valid tenant after the first hearing.

At the resumed hearing, the Judge refused to make a possession order, because separate possession proceedings had not been brought against the tenants under Pt 55, and that they had not been served with notice of the hearing. The trustee’s counsel showed the Judge a copy of the s.21 notice on their phone, but the Judge was not persuaded.

The trustee appealed, arguing that:

(1) the judge should have taken a flexible approach to service as, although the evidence was not in the bundle, the trustee had been able to show evidence that the tenants had been served; she could have merely directed another witness statement rather than dismissing the application altogether;

(2) the court had wide powers under the jurisdiction in the Insolvency Act 1986 s.363 to make a possession order pursuant to Pt 7, as was the case in the instant matter, so that the normal possession procedure under Pt 55 did not apply;

(3) it was clear that there was no defence to the possession proceedings so any irregularity could be dispensed with.

The High Court found:

On (1) while the first instance Judge could have taken a flexible approach to service of notice, it was right that the tenants should have been parties to the proceedings.

On (2) the bankruptcy based possession proceedings under Part 7 were not governed by Part 55. However, the Court had reservations about the idea that, having terminated the tenancy, the trustee coud gain possession without any form of pleading against the tenants. All the trustee had been required to do was to plead that the tenancies had come to an end. But this was far from clear. The claim could not proceed without allegations against the occupiers. The Judge below had been correct about procedure – a Part 55 possession claim following service of the s.21 notice was required, at least (without deciding this point) where no other notice of proceedings had been send to the occupiers.

On (3) while there may be no defence to properly constituted possession proceedings against the tenants based on the s.21 notices, it was clearly open to the Judge below not to be willing to dispense with the procedural irregularities.

Appeal dismissed

Comment

Another case that supports my view that everyone should have a housing lawyer with them at all times. Clearly there weren’t any involved here.

Trying to decipher both the lawtel note and the basis of the judgment made my head hurt. One can’t bring ‘accelerated proceedings’ – assuming that means accelerated possession proceedings – against ‘persons unknown’ and without service of a s.21 notice, for starters.

And then, a ‘pre bankruptcy of the landlord’ tenancy surely is and remains a valid tenancy as against the trustee (though not necessarily against a mortgage lender). It can only be terminated via Housing Act 1988 – either s.21 or s.8 and schedule 2 grounds. Counsel for the trustee turning up with a copy of a s.21 notice on their phone, served after the commencement of the proceedings to which the tenant is not even a party, cannot possibly be sufficient.

The case against the post-bankruptcy tenants might be quite different – the bankrupt might grant a tenancy but I don’t think it could be binding on the trustee. But heaven knows what the trustee thought they were arguing as against the valid tenant. It is just a pity that it is not clearer why the appeal was dismissed.

About Giles Peaker

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts, and still is Nearly Legal on Google +.
Posted in Assured Shorthold tenancy, Housing law - All, Possession and tagged , .

8 Comments

  1. Pingback: Possession claims by trustee in bankruptcy – Nearly Legal | Current Awareness

  2. But what an extraordinary case to plead that not following the rules shouldn’t matter because, if you had followed the rules, there would have been no defence. There are quite a few defences to section 21 proceedings and you don’t need a defence if there’s no case for possession.

    The trustee in bankruptcy seems to have gone AWOL

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  5. My understanding is that the Trustee’s application was for orders for possession & sale in the Insolvency Act sense and not orders for possession in the Housing Act sense. I am very confused by this one; I do not see why the Court could not grant the Trustee his order for possession and sale against the bankrupt (and any other legal owner of the properties) given that such an order does not affect any rights of occupiers – their rights subsist and it is incumbent on the Trustee to serve notice properly on any occupiers should he wish to obtain vacant possession, but he should not be under a duty to serve the occupiers before making his application for possession and sale against the bankrupt in my view.

    • I think that is possibly right. From the lawtel note it is very hard to make out what was going on. But it does appear that the trustee was trying to evict the tenants within the application for possession against the bankrupt. Which is bonkers.

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