Key points

  • Section 306 of the Insolvency Act 1986 (“1986 Act”) provides that a bankrupt’s estate shall vest immediately in the trustee in bankruptcy and no registration is required to effect that vesting;
  • A bankrupt’s tenancy had vested in the trustee so that the bankrupt was no longer the qualifying tenant for the purposes of enfranchisement under the Leasehold Reform Act 1967 (“1967 Act”).

The facts

Mr James was the registered proprietor of a long lease entitled to serve notice claiming the freehold pursuant to the 1967 Act. He charged the long lease and the chargee sub-charged. Mr James was adjudicated bankrupt. A trustee was appointed, as were receivers under the charges. The trustee gave notice to disclaim the long lease. The receivers subsequently sold the charged property and simultaneously purported to give notice (acting as agents of Mr James pursuant to the charges) under the 1967 Act to claim the freehold. The Landlord challenged the validity of the receivers’ notice.

Decision

The Court of Appeal held Mr James was not a qualifying tenant entitled to claim the freehold under the 1967 Act. The receivers had no better right to claim the freehold than Mr James.

Comment

At the date the receivers gave notice, Mr James was not the tenant. The tenancy had, by operation of Section 306 1986 Act vested in the trustee upon his appointment. Whilst the wide powers in the charges (including the right to give notice) survived bankruptcy, the fact was Mr James was not a "qualifying tenant" as defined in the 1967 Act at the time the notices were given.

The Keepers and Governors of the possession, revenues and goods of the Free Grammar School of John Lyon v. Sacha Warren George Helman